UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~November~~August 28, ~~2021~~2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-37830

LAMB WESTON HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware		61-1797411
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

599 S. Rivershore Lane Eagle, Idaho		83616
(Address of principal executive offices)		(Zip Code)

(208) 938-1047

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	LW	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~December 30, 2021,~~September 28, 2022, the Registrant had ~~145,203,600~~143,831,204 shares of common stock, par value $1.00 per share, outstanding.

Table of Contents

Table of Contents

Part I. FINANCIAL INFORMATION
	Item 1	Financial Statements (Unaudited)
		Consolidated Statements of Earnings	3
		Consolidated Statements of Comprehensive Income	4
		Consolidated Balance Sheets	5
		Consolidated Statements of Stockholders’ Equity	6
		Consolidated Statements of Cash Flows	7
		Condensed Notes to Consolidated Financial Statements (Unaudited)	8
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	1920
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	3128
	Item 4	Controls and Procedures	3129

Part II. OTHER INFORMATION			3230
	Item 1	Legal Proceedings	3230
	Item 1A	Risk Factors	3230
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	3230
	Item 3	Defaults Upon Senior Securities	3230
	Item 4	Mine Safety Disclosures	3230
	Item 5	Other Information	3230
	Item 6	Exhibits	3331

~~Signatures~~Signature		34	32

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

Lamb Weston Holdings, Inc.

Consolidated Statements of Earnings

(unaudited, in millions, except per share amounts)


	Thirteen Weeks Ended				Twenty-Six Weeks Ended				Thirteen Weeks Ended
	November 28,		November 29,		November 28,		November 29,		August 28,		August 29,
	2021		2020		2021		2020		2022		2021
Net sales	$	1,006.6	$	896.1	$	1,990.8	$	1,767.6	$	1,125.6	$	984.2
Cost of sales		801.1		672.6		1,634.0		1,330.3		852.3		832.9
Gross profit		205.5		223.5		356.8		437.3		273.3		151.3
Selling, general and administrative expenses		91.1		83.9		182.2		162.0		116.3		91.1
Income from operations		114.4		139.6		174.6		275.3		157.0		60.2
Interest expense, net		82.4		30.0		110.3		60.3		26.0		27.9
Income before income taxes and equity method earnings		32.0		109.6		64.3		215.0		131.0		32.3
Income tax expense		9.6		31.9		18.3		59.9		73.7		8.7
Equity method investment earnings		10.1		19.2		16.3		31.1		174.6		6.2
Net income	$	32.5	$	96.9	$	62.3	$	186.2	$	231.9	$	29.8
Earnings per share:
Basic	$	0.23	$	0.66	$	0.43	$	1.27	$	1.61	$	0.20
Diluted	$	0.22	$	0.66	$	0.42	$	1.27	$	1.60	$	0.20
Weighted average common shares outstanding:
Basic		146.0		146.5		146.1		146.4		144.0		146.3
Diluted		146.3		147.1		146.6		147.1		144.6		146.9

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

Lamb Weston Holdings, Inc.

Consolidated Statements of Comprehensive Income

(unaudited, dollars in millions)

Thirteen Weeks Ended

Thirteen Weeks Ended

November 28, 2021

November 29, 2020

Tax

Tax

Pre-Tax

(Expense)

After-Tax

Pre-Tax

(Expense)

After-Tax


Amount

Benefit

Amount

Amount

Benefit

Amount
Net income

$
42.1

$
(9.6)

$
32.5

$
128.8

$
(31.9)

$
96.9
Other comprehensive income (loss):


Reclassification of post-retirement benefits out of accumulated other comprehensive income

0.1

—

0.1

—

—

—
Unrealized currency translation gains (losses)

(15.6)

0.7

(14.9)

8.1

(0.1)

8.0
Comprehensive income

$
26.6

$
(8.9)

$
17.7

$
136.9

$
(32.0)

$
104.9


	Twenty-Six Weeks Ended						Twenty-Six Weeks Ended						Thirteen Weeks Ended						Thirteen Weeks Ended
	November 28, 2021						November 29, 2020						August 28, 2022						August 29, 2021
			Tax						Tax						Tax						Tax
	Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax
	Amount		Benefit		Amount		Amount		Benefit		Amount		Amount		Benefit		Amount		Amount		Benefit		Amount
Net income	$	80.6	$	(18.3)	$	62.3	$	246.1	$	(59.9)	$	186.2	$	305.6	$	(73.7)	$	231.9	$	38.5	$	(8.7)	$	29.8
Other comprehensive income (loss):
Reclassification of post-retirement benefits out of accumulated other comprehensive income		0.2		—		0.2		0.1		—		0.1		—		—		—		0.1		—		0.1
Unrealized currency translation gains (losses)		(39.4)		2.2		(37.2)		50.0		(2.6)		47.4		(31.7)		1.0		(30.7)		(23.8)		1.5		(22.3)
Other														0.2		—		0.2		—		—		—
Comprehensive income	$	41.4	$	(16.1)	$	25.3	$	296.2	$	(62.5)	$	233.7	$	274.1	$	(72.7)	$	201.4	$	14.8	$	(7.2)	$	7.6

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

Lamb Weston Holdings, Inc.

Consolidated Balance Sheets

(unaudited, dollars in millions, except share data)

November 28,

May 30,


2021

2021
ASSETS




Current assets:




Cash and cash equivalents

$
621.9

$
783.5
Receivables, less allowance for doubtful accounts of $1.1 and $0.9

423.2

366.9
Inventories

613.9

513.5
Prepaid expenses and other current assets

58.8

117.8
Total current assets

1,717.8

1,781.7
Property, plant and equipment, net

1,568.0

1,524.0
Operating lease assets

136.1

141.7
Equity method investments

294.7

310.2
Goodwill

318.6

334.5
Intangible assets, net

35.0

36.9
Other assets

85.4

80.4
Total assets

$
4,155.6

$
4,209.4

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:




Current portion of long-term debt and financing obligations

$
32.2

$
32.0
Accounts payable

445.4

359.3
Accrued liabilities

215.4

226.9
Total current liabilities

693.0

618.2
Long-term liabilities:

Long-term debt and financing obligations, excluding current portion

2,692.1

2,705.4
Deferred income taxes

161.4

159.7
Other noncurrent liabilities

243.9

245.5
Total long-term liabilities

3,097.4

3,110.6
Commitments and contingencies

Stockholders' equity:




Common stock of $1.00 par value, 600,000,000 shares authorized; 148,028,060 and 147,640,632 shares issued

148.0

147.6
Additional distributed capital

(825.8)

(836.8)
Retained earnings

1,238.3

1,244.6
Accumulated other comprehensive income (loss)

(7.5)

29.5
Treasury stock, at cost, 2,827,412 and 1,448,768 common shares

(187.8)

��
(104.3)
Total stockholders’ equity

365.2

480.6
Total liabilities and stockholders’ equity

$
4,155.6

$
4,209.4


	August 28,		May 29,
	2022		2022
ASSETS
Current assets:
Cash and cash equivalents	$	485.3	$	525.0
Receivables, less allowance for doubtful accounts of $1.8 and $1.1		449.5		447.3
Inventories		635.5		574.4
Prepaid expenses and other current assets		59.9		112.9
Total current assets		1,630.2		1,659.6
Property, plant and equipment, net		1,690.9		1,579.2
Operating lease assets		112.3		119.0
Equity method investments		372.5		257.4
Goodwill		352.2		318.0
Intangible assets, net		32.8		33.7
Other assets		218.8		172.9
Total assets	$	4,409.7	$	4,139.8

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings	$	9.1	$	—
Current portion of long-term debt and financing obligations		32.2		32.2
Accounts payable		462.7		402.6
Accrued liabilities		276.3		264.3
Total current liabilities		780.3		699.1
Long-term liabilities:
Long-term debt and financing obligations, excluding current portion		2,700.1		2,695.8
Deferred income taxes		218.7		172.5
Other noncurrent liabilities		200.6		211.9
Total long-term liabilities		3,119.4		3,080.2
Commitments and contingencies
Stockholders' equity:
Common stock of $1.00 par value, 600,000,000 shares authorized; 148,286,975 and 148,045,584 shares issued		148.3		148.0
Additional distributed capital		(796.9)		(813.3)
Retained earnings		1,501.8		1,305.5
Accumulated other comprehensive loss		(46.1)		(15.6)
Treasury stock, at cost, 4,456,388 and 3,974,156 common shares		(297.1)		(264.1)
Total stockholders' equity		510.0		360.5
Total liabilities and stockholders’ equity	$	4,409.7	$	4,139.8

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

Lamb Weston Holdings, Inc.

Consolidated Statements of Stockholders’ Equity
(unaudited, dollars in millions, except share data)

Thirteen Weeks Ended November 28, 2021 and November 29, 2020






Additional



Accumulated


Common Stock,

Common

Treasury

Paid-in

Other

Total

net of Treasury

Stock

Stock

(Distributed)

Retained

Comprehensive

Stockholders’

Shares

Amount

Amount

Capital

Earnings

Income (Loss)

Equity
Balance at August 29, 2021

146,061,016

$
148.0

$
(137.7)

$
(830.2)

$
1,240.0

$
7.3

$
427.4
Dividends declared, $0.235 per share

—

—

—

—

(34.2)

—

(34.2)
Common stock issued

11,427

—

—

—

—

—

—
Stock-settled, stock-based compensation expense

—

—

—

4.4

—

—

4.4
Repurchase of common stock and common stock withheld to cover taxes

(871,795)

—

(50.1)

—

—

—

(50.1)
Comprehensive income

—

—

—

—

32.5

(14.8)

17.7
Balance at November 28, 2021

145,200,648

$
148.0

$
(187.8)

$
(825.8)

$
1,238.3

$
(7.5)

$
365.2

Balance at August 30, 2020

146,324,943

$
147.4

$
(77.8)

$
(856.5)

$
1,119.9

$
(1.0)

$
332.0
Dividends declared, $0.230 per share

—

—

—

—

(33.7)

—

(33.7)
Common stock issued

35,494

0.1

—

0.4

—

—

0.5
Stock-settled, stock-based compensation expense

—

—

—

5.3

—

—

5.3
Common stock withheld to cover taxes

(5,355)

—

(0.2)

—

—

—

(0.2)
Other

—

—

—

0.4

(0.3)

—

0.1
Comprehensive income

—

—

—

—

96.9

8.0

104.9
Balance at November 29, 2020

146,355,082

$
147.5

$
(78.0)

$
(850.4)

$
1,182.8

$
7.0

$
408.9


	Twenty-Six Weeks Ended November 28, 2021 and November 29, 2020														Thirteen Weeks Ended August 28, 2022 and August 29, 2021
							Additional				Accumulated										Additional				Accumulated
	Common Stock,		Common		Treasury		Paid-in				Other		Total		Common Stock,		Common		Treasury		Paid-in				Other		Total
	net of Treasury		Stock		Stock		(Distributed)		Retained		Comprehensive		Stockholders’		net of Treasury		Stock		Stock		(Distributed)		Retained		Comprehensive		Stockholders’
	Shares		Amount		Amount		Capital		Earnings		Income (Loss)		Equity		Shares		Amount		Amount		Capital		Earnings		Income (Loss)		Equity
Balance at May 30, 2021		146,191,864	$	147.6	$	(104.3)	$	(836.8)	$	1,244.6	$	29.5	$	480.6
Dividends declared, $0.470 per share		—		—		—		—		(68.6)		—		(68.6)
Balance at May 29, 2022																144,071,428	$	148.0	$	(264.1)	$	(813.3)	$	1,305.5	$	(15.6)	$	360.5
Dividends declared, $0.245 per share																—		—		—		—		(35.2)		—		(35.2)
Common stock issued		387,428		0.4		—		1.5		—		—		1.9		241,391		0.3		—		0.2		—		—		0.5
Stock-settled, stock-based compensation expense		—		—		—		9.6		—		—		9.6		—		—		—		7.6		—		—		7.6
Repurchase of common stock and common stock withheld to cover taxes		(1,378,644)		—		(83.5)		—		—		—		(83.5)		(482,232)		—		(33.0)		—		—		—		(33.0)
Other		—		—		—		(0.1)		—		—		(0.1)		—		—		—		8.6		(0.4)		—		8.2
Comprehensive income		—		—		—		—		62.3		(37.0)		25.3		—		—		—		—		231.9		(30.5)		201.4
Balance at November 28, 2021		145,200,648	$	148.0	$	(187.8)	$	(825.8)	$	1,238.3	$	(7.5)	$	365.2
Balance at August 28, 2022																143,830,587	$	148.3	$	(297.1)	$	(796.9)	$	1,501.8	$	(46.1)	$	510.0

Balance at May 31, 2020		146,038,893	$	147.0	$	(68.2)	$	(862.9)	$	1,064.6	$	(40.5)	$	240.0
Dividends declared, $0.460 per share		—		—		—		—		(67.4)		—		(67.4)
Balance at May 30, 2021																146,191,864	$	147.6	$	(104.3)	$	(836.8)	$	1,244.6	$	29.5	$	480.6
Dividends declared, $0.235 per share																—		—		—		—		(34.4)		—		(34.4)
Common stock issued		472,695		0.5		—		0.6		—		—		1.1		376,001		0.4		—		1.5		—		—		1.9
Stock-settled, stock-based compensation expense		—		—		—		11.3		—		—		11.3		—		—		—		5.2		—		—		5.2
Common stock withheld to cover taxes		(156,506)		—		(9.8)		—		—		—		(9.8)
Repurchase of common stock and common stock withheld to cover taxes																(506,849)		—		(33.4)		—		—		—		(33.4)
Other		—		—		—		0.6		(0.6)		—		—		—		—		—		(0.1)		—		—		(0.1)
Comprehensive income		—		—		—		—		186.2		47.5		233.7		—		—		—		—		29.8		(22.2)		7.6
Balance at November 29, 2020		146,355,082	$	147.5	$	(78.0)	$	(850.4)	$	1,182.8	$	7.0	$	408.9
Balance at August 29, 2021																146,061,016	$	148.0	$	(137.7)	$	(830.2)	$	1,240.0	$	7.3	$	427.4

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

Lamb Weston Holdings, Inc.

Consolidated Statements of Cash Flows

(unaudited, dollars in millions)


	Twenty-Six Weeks Ended				Thirteen Weeks Ended
	November 28,		November 29,		August 28,		August 29,
	2021		2020		2022		2021
Cash flows from operating activities
Net income	$	62.3	$	186.2	$	231.9	$	29.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangibles and debt issuance costs		94.9		94.7		49.8		47.3
Loss on extinguishment of debt		53.3		1.0
Stock-settled, stock-based compensation expense		9.6		11.3		7.6		5.2
Earnings of joint ventures in excess of distributions		(2.2)		(24.4)
Equity method investment (earnings) loss in excess of distributions						(174.6)		3.5
Deferred income taxes		4.3		2.5		34.5		1.7
Other		(0.5)		15.5		(2.8)		1.5
Changes in operating assets and liabilities:
Changes in operating assets and liabilities, net of acquisition:
Receivables		(57.7)		(8.5)		9.9		(35.1)
Inventories		(101.3)		(140.3)		(51.5)		43.4
Income taxes payable/receivable, net		3.1		33.0		42.3		9.7
Prepaid expenses and other current assets		58.5		51.8		45.5		33.0
Accounts payable		94.7		138.5		24.3		10.0
Accrued liabilities		(11.5)		(42.5)		(24.8)		11.8
Net cash provided by operating activities	$	207.5	$	318.8	$	192.1	$	161.8
Cash flows from investing activities
Additions to property, plant and equipment		(147.1)		(42.3)		(101.2)		(78.9)
Acquisition of interest in joint venture, net						(42.3)		—
Additions to other long-term assets		(1.0)		(11.4)		(20.0)		—
Other		0.5		0.4		(3.4)		0.1
Net cash used for investing activities	$	(147.6)	$	(53.3)	$	(166.9)	$	(78.8)
Cash flows from financing activities
Proceeds from issuance of debt		1,655.4		—		13.8		—
Repayments of debt and financing obligations		(1,682.1)		(289.6)		(8.0)		(7.9)
Dividends paid						(35.3)		(34.4)
Repurchase of common stock and common stock withheld to cover taxes		(83.5)		(9.8)		(34.4)		(33.4)
Dividends paid		(68.7)		(67.2)
Payments of senior notes call premium		(39.6)		—
Repayments of short-term borrowings, net		—		(498.8)
Other		(0.8)		(1.8)		0.4		(0.1)
Net cash used for financing activities	$	(219.3)	$	(867.2)	$	(63.5)	$	(75.8)
Effect of exchange rate changes on cash and cash equivalents		(2.2)		1.6		(1.4)		(1.0)
Net decrease in cash and cash equivalents		(161.6)		(600.1)
Net (decrease) increase in cash and cash equivalents						(39.7)		6.2
Cash and cash equivalents, beginning of period		783.5		1,364.0		525.0		783.5
Cash and cash equivalents, end of period	$	621.9	$	763.9	$	485.3	$	789.7

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

Lamb Weston Holdings, Inc.

Condensed Notes to Consolidated Financial Statements

(Unaudited)

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Lamb Weston Holdings, Inc. (“we,” “us,” “our,” the “Company,” or “Lamb Weston”), along with our joint ~~venture partners,~~ventures, is a leading global producer, distributor, and marketer of value-added frozen potato products and is headquartered in Eagle, Idaho. We have 4four reportable segments: Global, Foodservice, Retail, and Other. See Note 13, Segments, for additional information on our reportable segments.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements present the financial results of Lamb Weston for the thirteen ~~and twenty-six~~ weeks ended ~~November~~August 28, ~~2021~~2022 and ~~November~~August 29, ~~2020,~~2021, and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of ~~America.~~America (“U.S”).

These consolidated financial statements are unaudited, and include all adjustments that we consider necessary for a fair presentation of such financial statements and consist only of normal recurring adjustments. The preparation of financial statements involves the use of estimates and accruals. ~~The inputs into our judgments and estimates consider the economic implications of the effects of the COVID-19 pandemic on our critical accounting estimates and significant accounting policies.~~ The actual results that we experience may differ materially from those estimates. Results for interim periods should not be considered indicative of results for our full fiscal year, which ends the last Sunday in May.

These financial statements and condensed notes should be read together with the consolidated financial statements and notes in our Annual Report on Form 10-K for the fiscal year ended May ~~30, 2021~~29, 2022 (the “Form 10-K”), ~~which~~where we include additional information on our critical accounting estimates, policies, and the methods and assumptions used in our estimates. We filed the Form 10-K with the Securities and Exchange Commission on July 27, ~~2021.~~

~~Certain amounts in the prior period consolidated financial statements have been reclassified to conform with the current period presentation.~~

~~New and Recently Issued Accounting Pronouncements~~

~~Accounting Pronouncements Not Yet Adopted~~

~~Reference Rate Reform~~

~~In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update 2020-04,~~ ~~Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~. This update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and the London Interbank Offered Rate (“LIBOR”). This guidance includes practical expedients and exceptions to the current guidance on contract modifications and hedge accounting. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. This guidance was effective immediately and generally can be applied through December 31, 2022. ~~We are currently evaluating the potential impact of the transition from LIBOR to alternative reference rates, however we do not expect a significant impact on our consolidated financial statements.~~

There were no ~~other~~ accounting pronouncements recently issued that had or are expected to have a material impact on our consolidated financial statements.

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2. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per common share for the periods presented:


	Thirteen Weeks Ended				Twenty-Six Weeks Ended				Thirteen Weeks Ended
	November 28,		November 29,		November 28,		November 29,		August 28,		August 29,
(in millions, except per share amounts)	2021		2020		2021		2020		2022		2021
Numerator:
Net income	$	32.5	$	96.9	$	62.3	$	186.2	$	231.9	$	29.8

Denominator:
Basic weighted average common shares outstanding		146.0		146.5		146.1		146.4		144.0		146.3
Add: Dilutive effect of employee incentive plans (a)		0.3		0.6		0.5		0.7		0.6		0.6
Diluted weighted average common shares outstanding		146.3		147.1		146.6		147.1		144.6		146.9

Earnings per share:
Basic	$	0.23	$	0.66	$	0.43	$	1.27	$	1.61	$	0.20
Diluted	$	0.22	$	0.66	$	0.42	$	1.27	$	1.60	$	0.20

(a)

~~Potentially~~Potential dilutive shares of common stock ~~from~~under employee incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options and the assumed vesting of outstanding restricted stock units and performance awards. As of ~~November~~August 28, ~~2021, 0.3~~2022, 0.6 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive. As of ~~November~~August 29, ~~2020,~~2021, an insignificant number of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive.

3. INCOME TAXES

Income tax expense was ~~$9.6~~$73.7 million and ~~$31.9~~$8.7 million for the thirteen weeks ended ~~November~~August 28, ~~2021~~2022 and ~~November~~August 29, ~~2020, respectively; and $18.3 million and $59.9 million for the twenty-six weeks ended November 28,~~ 2021, ~~and November 29, 2020,~~ respectively. The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was ~~22.8%~~24.1% and ~~24.8%~~22.6% for the thirteen weeks ended ~~November~~August 28, ~~2021~~2022 and ~~November~~August 29, ~~2020, respectively; and 22.7% and 24.3% for the twenty-six weeks ended November 28,~~ 2021, ~~and November 29, 2020,~~ respectively, in our Consolidated Statements of Earnings. The effective tax rate varies from the U.S. statutory tax rate of 21% principally due to the impact of U.S. state taxes, foreign taxes, permanent differences, and discrete items. Excluding the impact of both the gain associated with the acquisition of an additional 40% interest in our Argentina joint venture, Lamb Weston Alimentos Modernos S.A. (“LWAMSA”), and the mark-to-market adjustments associated with changes in natural gas and electricity derivatives at our Lamb-Weston/Meijer v.o.f (“LWM”) joint venture, which are discussed at Note 6, Joint Venture Investments, and Note 13, Segments, respectively, our effective tax rate was 25.0%.

Income Taxes Paid

Income tax refunds, net of taxes paid, ~~net of refunds~~ were ~~$10.3~~$3.2 million and ~~$24.0~~$2.9 million during the ~~twenty-six~~thirteen weeks ended ~~November~~August 28, 2022 and August 29, 2021, ~~and November 29, 2020,~~ respectively.

~~Unrecognized Tax Benefits~~

There have been no material changes to the unrecognized tax benefits disclosed in Note 3, Income Taxes, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of the Form 10-K. The expiration of statute of limitations could reduce the uncertain tax positions by approximately $7 million during the next 12 months.

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4. INVENTORIES

Inventories are valued at the lower of cost (determined using the first-in, first-out method) or net realizable value and include all costs directly associated with manufacturing products: materials, labor, and manufacturing overhead. The components of inventories were as follows:


	November 28,		May 30,		August 28,		May 29,
(in millions)	2021		2021		2022		2022
Raw materials and packaging	$	206.1	$	89.8	$	89.3	$	96.1
Finished goods		361.1		377.8		493.7		426.5
Supplies and other		46.7		45.9		52.5		51.8
Inventories	$	613.9	$	513.5	$	635.5	$	574.4

5. PROPERTY, PLANT AND EQUIPMENT

The components of property, plant and equipment were as follows:


	November 28,		May 30,		August 28,		May 29,
(in millions)	2021		2021		2022		2022
Land and land improvements	$	112.1	$	108.2	$	118.2	$	114.1
Buildings, machinery, and equipment		2,815.2		2,763.3		2,982.7		2,919.0
Furniture, fixtures, office equipment, and other		98.6		97.1		98.2		92.1
Construction in progress		181.3		122.5		236.5		156.1
Property, plant and equipment, at cost		3,207.2		3,091.1		3,435.6		3,281.3
Less accumulated depreciation		(1,639.2)		(1,567.1)		(1,744.7)		(1,702.1)
Property, plant and equipment, net	$	1,568.0	$	1,524.0	$	1,690.9	$	1,579.2

Depreciation expense was ~~$44.7~~$47.3 million and ~~$45.2~~$44.5 million for the thirteen weeks ended ~~November~~August 28, ~~2021~~2022 and ~~November~~August 29, ~~2020, respectively; and $89.2 million and $90.1 million for the twenty-six weeks ended November 28,~~ 2021, ~~and November 29, 2020,~~ respectively. At ~~November~~August 28, ~~2021~~2022 and May ~~30, 2021,~~29, 2022, purchases of property, plant and equipment included in accounts payable were ~~$14.5~~$64.4 million and ~~$23.1~~$38.3 million, respectively.

Interest capitalized within construction in progress for the thirteen weeks ended ~~November~~August 28, 2022 and August 29, 2021, ~~and November 29, 2020,~~ was ~~$1.6~~$2.0 million and ~~$0.5~~$1.2 million, ~~respectively; and $2.8 million and $1.0 million for the twenty-six weeks ended November 28, 2021 and November 29, 2020,~~ respectively.

6. ~~EQUITY METHOD~~JOINT VENTURE INVESTMENTS

~~We hold a 50% ownership~~Consolidated Joint Ventures

In July 2022, we acquired an additional 40% interest in ~~Lamb-Weston/Meijer v.o.f. (“Lamb-Weston/Meijer”),~~LWAMSA, which increased our total ownership from 50% to 90%. We recorded LWAMSA’s assets and liabilities at fair value, which included remeasuring our previously held equity interest at fair value, and we recognized a ~~joint venture with Meijer Frozen Foods B.V., that is headquartered~~$15.1 million gain in “Equity method investment earnings” in our Consolidated Statement of Earnings. The fair value was determined utilizing industry EBITDA multiples and control premium comparable information, which are unobservable inputs, or Level 3 in the ~~Netherlands and manufactures and sells frozen potato products principally in Europe, Russia, and~~fair value hierarchy. We recorded the ~~Middle East. We hold a 50%~~preliminary fair values as of the date of acquisition.

In connection with the purchase of the additional interest in Lamb-Weston/RDO Frozen (“Lamb Weston RDO”), a potato processing joint venture based in the United States. We also hold a 50% interest in Lamb Weston Alimentos Modernos S.A. (“LWAMSA”), a joint venture with Sociedad Comercial del Plata S.A., that is headquartered in Argentina. LWAMSA, ~~manufactures and sells frozen potato products, principally in South America. These investments are accounted for using~~we ceased equity method ~~accounting.~~accounting and began consolidating LWAMSA’s financial statements. The ~~carrying value of these investments at November 28, 2021~~net sales, income from operations, and ~~May 30, 2021, was $294.7 million~~total assets acquired were not material to our consolidated net sales, income from operations, and ~~$310.2 million, respectively, and~~total assets. LWAMSA’s operating results are included in ~~“Equity method investments” on~~ our ~~Consolidated Balance Sheets.~~Global segment.

For the thirteen weeks ended November 28, 2021 and November 29, 2020, we had sales to our equity method investments of $3.3 million and $3.9 million, respectively, and purchases from our equity method investments of $5.8 million and $2.2 million, respectively. For the twenty-six weeks ended November 28, 2021 and November 29, 2020, we had sales to our equity method investments of $8.2 million and $6.9 million, respectively, and purchases from our equity method investments of $7.2 million and $3.3 million, respectively. Total dividends received from our equity method investments were $4.5 million and $3.9 million for the thirteen weeks ended November 28, 2021 and November 29, 2020,

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~~respectively;~~On September 6, 2022, we announced an expansion of french fry processing capacity in Argentina with the planned construction of a new manufacturing facility in Mar del Plata. The new processing facility is expected to produce more than 200 million pounds of frozen french fries and ~~$14.2~~other potato products per year. Construction of the new line is expected to be completed in fiscal 2025. The total investment is expected to be approximately $240 million. This investment will add to the capacity produced at LWAMSA’s existing production facility in Buenos Aires.

Noncontrolling Interest

As of August 28, 2022, total LWAMSA interest not directly attributable to Lamb Weston, or NCI, was $8.2 million and ~~$6.6 million for~~was recorded in “Additional distributed capital” on our Consolidated Balance Sheet. For the ~~twenty-six~~thirteen weeks ended ~~November~~August 28, ~~2021~~2022, the net loss attributable to NCI was not significant and ~~November 29, 2020, respectively.~~was recorded in “Selling, general and administrative expenses” in our Consolidated Statement of Earnings.

Unconsolidated Joint Ventures

Our equity method investments were as follows:


	August 28,		May 29,
(in millions)	2022		2022
LWM (a)	$	347.8	$	211.2
Lamb-Weston/RDO Frozen ("Lamb Weston RDO") (b)		24.1		19.4
LWAMSA (c)		—		26.1
Other		0.6		0.7
	$	372.5	$	257.4

(a)

We own 50% of LWM, a joint venture with Meijer Frozen Foods B.V., headquartered in the Netherlands that manufactures and sells frozen potato products principally in Europe and the Middle East. The investment balance includes $146.3 million of unrealized gains related to mark-to-market adjustments associated with changes in natural gas and electricity derivatives as commodity markets in Europe have experienced significant volatility during the thirteen weeks ended August 28, 2022. In September 2022, LWM completed the previously announced withdrawal from its joint venture in Russia.

(b)	We own 50% of Lamb Weston RDO, a joint venture with RDO Frozen Co., that operates a potato processing facility in the U.S.

(c)	In July 2022, we acquired an additional 40% interest in LWAMSA, increasing our total ownership to 90% and began consolidating the joint venture.

We have an agreement to share the costs of our global enterprise resource planning (“ERP”) system and related software and services with ~~Lamb-Weston/Meijer.~~LWM. Under the terms of the agreement, ~~Lamb-Weston/Meijer~~LWM will pay us for the majority of its portion of the ERP costs in 5five equal annual payments, plus interest, beginning in the period the system is deployed at ~~Lamb-Weston/Meijer. As of November~~LWM. At August 28, ~~2021~~2022 and May ~~30, 2021, Lamb-Weston/Meijer’s~~29, 2022, LWM’s portion of the ERP costs ~~was $17.4~~totaled $29.5 million and ~~$16.8~~$23.4 million, respectively. ~~Related to this project, we~~We had ~~$14.1~~$25.3 million and ~~$13.2~~$20.5 million of receivables recorded in “Other assets” on our Consolidated Balance Sheets ~~as of November~~at August 28, ~~2021~~2022 and May ~~30, 2021,~~29, 2022, respectively. We expect the total receivable from ~~Lamb-Weston/Meijer~~LWM to increase as development and implementation of the next phase of our ERP system ~~progresses.~~continues throughout fiscal 2023.

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7. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

The following table presents changes in goodwill balances, by segment, during the ~~twenty-six~~thirteen weeks ended ~~November~~August 28, ~~2021:~~2022:


(in millions)	Global		Foodservice		Retail		Other		Total		Global		Foodservice		Retail		Other		Total
Balance at May 30, 2021	$	276.3	$	42.8	$	10.9	$	4.5	$	334.5
Balance at May 29, 2022											$	259.8	$	42.8	$	10.9	$	4.5	$	318.0
Acquisition of interest in joint venture (a)												42.1		—		—		—		42.1
Foreign currency translation adjustment		(15.9)		—		—		—		(15.9)		(7.9)		—		—		—		(7.9)
Balance at November 28, 2021	$	260.4	$	42.8	$	10.9	$	4.5	$	318.6
Balance at August 28, 2022											$	294.0	$	42.8	$	10.9	$	4.5	$	352.2

(a)	In July 2022, we acquired an additional 40% interest in LWAMSA, which increased our total ownership from 50% to 90%, and we recorded $42.1 million of goodwill, that is not deductible for tax purposes, in our Global segment. See Note 6, Joint Venture Investments, for more information.

Other identifiable intangible assets were as follows:


	November 28, 2021							May 30, 2021							August 28, 2022							May 29, 2022
	Weighted							Weighted							Weighted							Weighted
	Average	Gross						Average	Gross						Average	Gross						Average	Gross
	Useful Life	Carrying		Accumulated		Intangible		Useful Life	Carrying		Accumulated		Intangible		Useful Life	Carrying		Accumulated		Intangible		Useful Life	Carrying		Accumulated		Intangible
(dollars in millions)	(in years)	Amount		Amortization		Assets, Net		(in years)	Amount		Amortization		Assets, Net		(in years)	Amount		Amortization		Assets, Net		(in years)	Amount		Amortization		Assets, Net
Non-amortizing intangible assets (a)	n/a	$	18.0	$	—	$	18.0	n/a	$	18.0	$	—	$	18.0	n/a	$	18.0	$	—	$	18.0	n/a	$	18.0	$	—	$	18.0
Amortizing intangible assets (b)	11		41.5		(24.5)		17.0	11		42.2		(23.3)		18.9	10		41.1		(26.3)		14.8	10		41.4		(25.7)		15.7
		$	59.5	$	(24.5)	$	35.0		$	60.2	$	(23.3)	$	36.9		$	59.1	$	(26.3)	$	32.8		$	59.4	$	(25.7)	$	33.7

(a)	Non-amortizing intangible assets represent brands and trademarks.

(b)

Amortizing intangible assets are principally composed of licensing agreements, brands, and customer relationships. Developed technology, which is excluded from this balance, is recorded as “Other assets” on our Consolidated Balance Sheets. Amortization expense, including developed technology amortization expense, was ~~$1.5~~$1.4 million and ~~$1.4~~$1.5 million for the thirteen weeks ended ~~November~~August 28, ~~2021~~2022 and ~~November~~August 29, ~~2020, respectively; and $3.0 million and $2.1 million for the twenty-six weeks ended November 28,~~ 2021, ~~and November 29, 2020,~~ respectively. Foreign intangible assets are affected by foreign currency translation.

8. ACCRUED LIABILITIES

The components of accrued liabilities were as follows:


	November 28,		May 30,		August 28,		May 29,
(in millions)	2021		2021		2022		2022
Compensation and benefits	$	70.1	$	83.2	$	84.6	$	81.0
Accrued trade promotions		47.2		39.9		43.4		41.2
Income taxes payable						36.1		1.7
Dividends payable to shareholders		34.2		34.4		35.2		35.3
Current portion of operating lease obligations		26.3		29.1		22.8		22.4
Accrued interest						14.9		42.1
Franchise, property, and sales and use taxes		11.9		11.3		14.1		10.4
Accrued interest		6.3		7.9
Other		19.4		21.1		25.2		30.2
Accrued liabilities	$	215.4	$	226.9	$	276.3	$	264.3

1112

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9. DEBT AND FINANCING OBLIGATIONS

~~At November 28, 2021 and May 30, 2021,~~The components of our debt, including financing obligations, ~~was~~were as follows:


	November 28,		May 30,		August 28,		May 29,
(in millions)	2021		2021		2022		2022
Short-term borrowings:
Other credit facilities					$	9.1	$	—

Long-term debt:
Term A-1 loan facility, due June 2024	$	266.3	$	273.8		255.0		258.7
Term A-2 loan facility, due April 2025		304.7		312.8		292.5		296.6
4.625% senior notes, due November 2024		—		833.0
4.875% senior notes, due November 2026		—		833.0
RMB loan facility, due February 2027 (a)						31.0		19.7
4.875% senior notes, due May 2028		500.0		500.0		500.0		500.0
4.125% senior notes, due January 2030		970.0		—		970.0		970.0
4.375% senior notes, due January 2032		700.0		—		700.0		700.0
		2,741.0		2,752.6		2,748.5		2,745.0
Financing obligations:
Lease financing obligations due on various dates through 2040 (a)		7.5		7.3
		7.5		7.3
Lease financing obligations due on various dates through 2040 (b)						7.0		7.0

Total debt and financing obligations		2,748.5		2,759.9		2,764.6		2,752.0
Debt issuance costs (b)		(24.2)		(22.5)
Debt issuance costs (c)						(23.2)		(24.0)
Short-term borrowings						(9.1)		—
Current portion of long-term debt and financing obligations		(32.2)		(32.0)		(32.2)		(32.2)
Long-term debt and financing obligations, excluding current portion	$	2,692.1	$	2,705.4	$	2,700.1	$	2,695.8

(a)	The effective average interest rate on this facility was 4.60% as of August 28, 2022.

(b)	The interest rates on our lease financing obligations ranged from 2.08% to ~~4.10% as of November 28, 2021, and 2.49% to 4.10%~~3.32% as of August 28, 2022 and May ~~30, 2021.~~29, 2022.

~~(b)~~(c)

Excludes debt issuance costs of ~~$4.1~~$3.1 million and ~~$2.1~~$3.3 million as of ~~November~~August 28, ~~2021~~2022 and May ~~30, 2021,~~29, 2022, respectively, ~~primarily~~ related to our ~~Amended Revolving Credit Facility,~~revolving credit facility, which are recorded in “Other assets” on ~~the~~our Consolidated Balance Sheets.

~~4.125%~~ ~~Senior Notes due 2030 and~~ ~~4.375%~~ ~~Senior Notes due 2032~~

On November 8, 2021, we issued (i) $970.0 million aggregate principal amount of 4.125% senior notes due 2030 (“2030 Notes”) and (ii) $700.0 million aggregate principal amount of 4.375% senior notes due 2032 (“2032 Notes” and, together with the 2030 Notes, the “Notes”) pursuant to indentures, dated as of November 8, 2021 (together, the “Indentures”), among Lamb Weston, as issuer, certain of our subsidiaries named therein as guarantors and Computershare Trust Company, N.A., as trustee. Our obligations under the 2030 Notes and 2032 Notes are unconditionally guaranteed on a senior unsecured basis by each of our subsidiaries that guarantee our obligations under our existing credit facilities.

Interest payments on the Notes are due semi-annually each January 31 and July 31, with the first interest payment due on July 31, 2022. The 2030 Notes will mature on January 31, 2030, unless earlier redeemed or repurchased, and are subject to the terms and conditions set forth in the applicable Indenture. The 2032 Notes will mature on January 31, 2032, unless earlier redeemed or repurchased, and are subject to the terms and conditions set forth in the applicable Indenture.

We may redeem some or all of the Notes at the redemption prices and on the terms specified in the applicable Indenture. If we experience specific kinds of changes in control and certain negative actions are taken with respect to the ratings of the Notes of a series, we must offer to repurchase such Notes on the terms set forth in the applicable Indenture.

The Notes are effectively subordinated to all of our existing and future secured debt, rank equally with all of our existing and future senior debt and rank senior to all of our existing and future subordinated debt. The guarantees of the Notes are effectively subordinated to all of the guarantors’ existing and future secured debt, rank equally with all of their existing and future senior debt and rank senior to all of their existing and future subordinated debt. The Notes are structurally subordinated to all of the liabilities of our non-guarantor subsidiaries.

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The Indentures limit our ability and the ability of our subsidiaries to, among other things, incur or suffer to exist liens and consolidate, merge, amalgamate or transfer all or substantially all of our assets. The Indentures contain customary events of default that include, among other things (subject in certain cases to customary grace and cure periods): non-payment of principal, interest or premium; failure to perform or observe covenants; cross-acceleration with certain other indebtedness; certain judgments; and certain events of bankruptcy or insolvency. Generally, if an event of default occurs (subject to certain exceptions), the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.

~~In connection with the 2030 Notes and 2032 Notes issuance, we capitalized $17.5 million of debt issuance costs within long-term debt on our Consolidated Balance Sheet.~~

~~4.625%~~ ~~Senior Notes due 2024 and~~ ~~4.875%~~ ~~Senior Notes due 2026~~

On November 18, 2021, we used the net proceeds of the issuance of the 2030 Notes and 2032 Notes, together with cash on hand, to redeem all of our outstanding $833.0 million aggregate principal amount of 4.625% senior notes due 2024 (the “2024 Notes”) and $833.0 million aggregate principal amount of 4.875% senior notes due 2026 (the “2026 Notes”). The 2024 Notes were redeemed at a price of 102.313% of the principal amount and the 2026 Notes were redeemed at a price of 102.438% of the principal amount. The aggregate call premium for the 2024 Notes and 2026 Notes was $39.6 million (included in the redemption prices noted above) and in connection with these redemptions, we also wrote off $13.7 million of previously unamortized debt issuance costs. Both of these amounts are included as “Interest Expense, net” in our Consolidated Statements of Earnings for the thirteen and twenty-six weeks ended NovemberAt August 28, ~~2021.~~

~~Amended Revolving Credit Facility~~

On August 11, 2021, we amended our credit agreement, dated as of November 9, 2016 (“Amended Revolving Credit Facility”). The Amended Revolving Credit Facility, among other things, increased the aggregate principal amount of available revolving credit facility borrowings to $1.0 billion and extended the maturity date to August 11, 2026. In addition, we may add incremental term loan facilities, increase commitments and/or add new revolving commitments in an aggregate principal amount of $650.0 million or greater based on conditions described in the agreement. Borrowings under the Amended Revolving Credit Facility bear interest at LIBOR, the Base Rate, the Alternative Currency Daily Rate, or the Alternative Currency Term Rate (each as defined in the Amended Revolving Credit Facility) plus an applicable rate ranging from 1.125% to 1.75% for LIBOR-based loans, Alternative Currency Daily Rate-based loans, and Alternative Currency Term Rate-based loans and from 0.125% to 0.75% for Base Rate-based loans, depending upon our consolidated net leverage ratio. In addition to paying interest, we pay an annual commitment fee for undrawn amounts at a rate of 0.15% to 0.25%, depending on our consolidated net leverage ratio. The Amended Revolving Credit Facility requires us to maintain a consolidated net leverage ratio no greater than 5.00 to 1.00, decreasing to 4.75 to 1.00 on February 23, 2025 through maturity; and an interest coverage ratio no less than 2.75 to 1.00.

~~In connection with the Amended Revolving Credit Facility, we capitalized $2.0 million of debt issuance costs in “Other assets” on our Consolidated Balance Sheet.~~

~~At November 28, 2021,~~2022, we had 0no borrowings outstanding under ~~the Amended Revolving Credit Facility~~our revolving credit facility and $994.6 million of availability under the facility, which is net of outstanding letters of credit of $5.4 million. For the ~~twenty-six~~thirteen weeks ended ~~November~~August 28, ~~2021,~~2022, we had 0no borrowings under the facility.

~~Term A-1 and A-2 Loan Facilities~~

On August 11, 2021, in connection with the Amended Revolving Credit Facility, we amended the credit agreement, dated as of June 28, 2019, relating to our Term A-1 and A-2 Loan Facilities (“Term Loan Facilities”), to, among other things, modify the Term Loan Facilities to make conforming changes to the covenants under the agreement. Under the amended Term Loan Facilities, we are required to maintain a consolidated net leverage ratio no greater than 5.00 to ~~1.00, decreasing to 4.75 to~~ ~~1.00~~ ~~on February 23, 2025 through maturity; and an interest coverage ratio no less than 2.75 to~~ ~~1.00~~.

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~~Other~~

For the ~~twenty-six~~thirteen weeks ended ~~November~~August 28, ~~2021~~2022 and ~~November~~August 29, ~~2020,~~2021, we paid ~~$61.4~~$56.8 million and ~~$60.5~~$2.7 million of interest on debt, respectively.

For more information on our debt and financing obligations, interest rates, and debt covenants, see Note 8,7, Debt and Financing Obligations, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K.

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10. STOCK-BASED COMPENSATION

The Compensation and Human Capital Committee (“the Committee”) of our Board of Directors administers our stock compensation plan. The Committee, in its discretion, authorizes grants of restricted stock units (“RSUs”), performance awards payable upon the attainment of specified performance goals (“Performance Shares”), stock options, dividend equivalents, and other stock-based awards. ~~During the twenty-six weeks ended November 28, 2021, we granted 0.3 million and 0.1 million RSUs and Performance Shares, respectively, at an average grant date fair value of $66.00.~~ As of ~~November~~August 28, ~~2021, 7.1~~2022, 6.2 million shares were available for future grant under the plan.

Our stock-based compensation expense is recorded in “Selling, general and administrative expenses.” Compensation expense for stock-based awards recognized in the Consolidated Statements of Earnings, net of forfeitures, was as follows:RSUs

Thirteen Weeks Ended

Twenty-Six Weeks Ended

November 28,

November 29,

November 28,

November 29,
(in millions)

2021

2020

2021

2020
Total compensation expense

$
4.4

$
5.3

$
9.6

$
11.3
Income tax benefit (a)

(0.9)

(0.9)

(1.8)

(2.0)
Total compensation expense, net of tax benefit

$
3.5

$
4.4

$
7.8

$
9.3

We grant RSUs to eligible employees and non-employee directors. The employee RSUs generally vest over a three-year period while the non-employee director RSUs generally vest after one year. We estimate the fair value of the RSUs based upon the market price of our common stock on the date of grant. Compensation expense is recognized over the period the employee or non-employee director provides service in exchange for the award.

Performance Shares

Performance Shares are granted to certain executives and other key employees with vesting contingent upon meeting various Company-wide performance goals. Awards actually earned range from 0% to 200% of the targeted number of Performance Shares for each of the performance periods. Awards, if earned, would be paid in shares of our common stock. Subject to limited exceptions set forth in our stock plan, any shares earned will generally vest over a three-year service period. The value of these Performance Shares is adjusted based upon the market price of our common stock and the anticipated attainment of Company-wide performance goals at the end of each reporting period and amortized as compensation expense over the service period.

We have also granted Performance Shares with vesting contingent upon relative total shareholder return goals, and, under special circumstances, stock price growth goals. Awards actually earned range from 0% to 200%, in the case of awards contingent on total shareholder return goals, or 0% to 300%, in the case of awards contingent on stock price growth goals, of the targeted number of Performance Shares. These Performance Shares are equity-settled awards that vest over a three-year service period, and the number of units that actually vest is determined based on the achievement of the performance criteria set forth in the respective award agreement. The awards are measured based on estimated fair value as of the date of grant using a Monte Carlo simulation, and are amortized over the service period.

The weighted average Monte Carlo assumptions for Performance Shares granted during the thirteen weeks ended August 28, 2022 were:

~~(a)~~	~~Income tax benefit represents the marginal tax~~
		Assumptions
Dividend yield (%)			0.00 - 1.42
Expected volatility of stock (%)			42.99
Risk-free interest rate ~~excluding non-deductible compensation.~~(%)			2.89
Expected life (years)			2.82
Weighted average grant date fair value per unit		$	91.43 - $118.97

~~Based on estimates at November 28, 2021, total unrecognized compensation expense related to stock-based awards was as follows:~~

Stock Options

Remaining

Weighted

Unrecognized

Average

Compensation

Recognition
(dollars in millions)

Expense

Period (in years)
Stock-settled RSUs

$
29.3


2.1
Performance Shares

7.5


1.9
Total unrecognized compensation expense

$
36.8


2.1

Under special circumstances, we have granted options to employees for the purchase of stock at exercise prices equal to the fair market value of the underlying stock on the grant date. Options generally become exercisable in three annual installments beginning on the first anniversary of the grant date and have a maximum term of seven years.

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The weighted average Black-Sholes assumptions for stock options granted during the thirteen weeks ended August 28, 2022 were:


	Assumptions
Weighted average fair value	$	25.90
Dividend yield (%)		1.22
Expected volatility of stock (%)		34.06
Risk-free interest rate (%)		2.82
Expected life of stock option (years)		5.75
Weighted average exercise price per share	$	79.66

Stock Based Compensation Grants

During the thirteen weeks ended August 28, 2022, we granted 0.3 million, 0.3 million, and 0.6 million RSUs, Performance Shares, and stock options, respectively, at an average grant date fair value of $79.47, $92.85, and $25.90, respectively.

Compensation Expense


	Thirteen Weeks Ended
	August 28,		August 29,
(in millions)	2022		2021
Stock-settled RSUs	$	4.7	$	3.6
Performance Shares		2.4		1.6
Stock options		0.5		—
Total compensation expense	$	7.6	$	5.2
Income tax benefit (a)		(1.3)		(0.9)
Total compensation expense, net of tax benefit	$	6.3	$	4.3

(a)	Income tax benefit represents the marginal tax rate, excluding non-deductible compensation.

Based on estimates at August 28, 2022, total unrecognized compensation expense related to stock-based awards was as follows:


			Remaining
			Weighted
	Unrecognized		Average
	Compensation		Recognition
(in millions, except data in years)	Expense		Period (in years)
Stock-settled RSUs	$	44.6		1.9
Performance Shares		33.9		2.5
Stock options		13.8		2.0
Total unrecognized compensation expense	$	92.3

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11. FAIR VALUE MEASUREMENTS

For information about our fair value policies, methods and assumptions used in estimating the fair value of our financial assets and liabilities, see Note 1, Nature of Operations and Summary of Significant Accounting Policies and Note 12, Fair Value Measurements, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of the Form 10-K.

The fair values of cash equivalents, receivables, accounts payable, and short-term debt approximate their carrying amounts due to their short duration.

The following table presents our financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall:


										As of August 28, 2022
																Fair Value
	As of November 28, 2021															of Assets
(in millions)	Level 1		Level 2		Level 3		Fair Value of Assets (Liabilities)			Level 1		Level 2		Level 3		(Liabilities)
Derivative assets (a)	$	—	$	3.0	$	—	$	3.0	��		—		3.5		—		3.5
Derivative liabilities (a)		—		(0.6)		—		(0.6)			—		(0.5)		—		(0.5)
Deferred compensation liabilities (b)		—		(24.9)		—		(24.9)			—		(22.2)		—		(22.2)
Fair value, net	$	—	$	(22.5)	$	—	$	(22.5)		$	—	$	(19.2)	$	—	$	(19.2)


									As of May 29, 2022
															Fair Value
	As of May 30, 2021														of Assets
(in millions)	Level 1		Level 2		Level 3		Fair Value of Assets (Liabilities)		Level 1		Level 2		Level 3		(Liabilities)
Derivative assets (a)	$	—	$	15.3	$	—	$	15.3		—		7.0		—		7.0
Deferred compensation liabilities (b)		—		(23.5)		—		(23.5)		—		(21.6)		—		(21.6)
Fair value, net	$	—	$	(8.2)	$	—	$	(8.2)	$	—	$	(14.6)	$	—	$	(14.6)

(a)

Derivative assets and liabilities included in Level 2 primarily represent commodity swap and option contracts. The fair values of our Level 2 derivative assets and liabilities were determined using valuation models that use market observable inputs including both forward and spot prices for commodities. Derivative assets are presented within “Prepaid expenses and other current assets” and derivative liabilities are presented within “Accrued liabilities” on our Consolidated Balance Sheets.

(b)

The fair values of our Level 2 deferred compensation liabilities were valued using third-party valuations, which are based on the net asset values of mutual funds in our retirement plans. While the underlying assets are actively traded on an exchange, the funds are not. Deferred compensation liabilities are primarily presented within “Other noncurrent liabilities” on our Consolidated Balance Sheets.

At ~~November~~August 28, ~~2021,~~2022, we had $2,170.0 million of fixed-rate and ~~$571.0~~$587.6 million of variable-rate debt outstanding. Based on current market rates, the fair value of our fixed-rate debt was estimated to be ~~$2,195.9~~$2,006.2 million. Any differences between the book value and fair value are due to the difference between the period-end market interest rate and the stated rate of our fixed-rate debt. The fair value of our variable-rate term debt approximates the carrying amount as our cost of borrowing is variable and approximates current market prices.

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12. STOCKHOLDERS’ EQUITY

Share Repurchase Program

~~In December 2018, our~~Our Board of Directors authorized a program, with no expiration date, to repurchase ~~shares~~up to $500.0 million of our common ~~stock in an amount not to exceed $250.0 million in the aggregate.~~stock. During the thirteen weeks ended ~~November~~August 28, ~~2021,~~2022, we repurchased ~~868,753~~404,476 shares for ~~$50.0~~$28.4 million, or a ~~weighted-average~~weighted average price of ~~$57.55 per share. During the twenty-six weeks ended November 28, 2021, we repurchased 1,264,114 shares for $76.0 million, or a weighted-average price of $60.15~~$70.11 per share. As of ~~November~~August 28, ~~2021, $93.6~~2022, $240.6 million remained authorized for repurchase under the program. In December 2021, our Board of Directors authorized the repurchase of an additional $250.0 million of our common stock under the program. We have $343.6 million remaining under the updated share repurchase authorization.

~~Dividends~~

During the twenty-six weeks ended November 28, 2021, we paid $68.7 million of dividends to common stockholders. On December 3, 2021, we paid $34.3 million of dividends to stockholders of record as of the close of business on November 5, 2021. On December 17, 2021, our Board of Directors increased our quarterly dividend approximately 4% and declared a dividend of $0.245 per share of common stock. The dividend will be paid on March 4, 2022, to stockholders of record as of the close of business on February 4, 2022.

~~Accumulated Other Comprehensive Income (“AOCI”)~~

~~Changes in AOCI, net of taxes, as of November 28, 2021 were as follows:~~

Foreign

Accumulated

Currency

Pension and

Other

Translation

Post-Retirement

Comprehensive
(in millions)

Gains (Losses)

Benefits

Income (Loss)
Balance as of May 30, 2021

$
36.0

$
(6.5)

$
29.5
Other comprehensive income before reclassifications, net of tax

(37.2)

—

(37.2)
Amounts reclassified out of AOCI, net of tax

—

0.2

0.2
Net current-period other comprehensive income (loss)

(37.2)


0.2

(37.0)
Balance as of November 28, 2021

$
(1.2)

$
(6.3)

$
(7.5)

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Dividends

During the thirteen weeks ended August 28, 2022, we paid $35.3 million of dividends to common stockholders. On September 2, 2022, we paid $35.2 million of dividends to stockholders of record as of the close of business on August 5, 2022. On September 28, 2022, our Board of Directors declared a dividend of $0.245 per share of common stock. The dividend will be paid on December 2, 2022, to stockholders of record as of the close of business on November 4, 2022.

Accumulated Other Comprehensive Income (“AOCI”)

Changes in AOCI, net of taxes, as of August 28, 2022 were as follows:


	Foreign						Accumulated
	Currency		Pension and				Other
	Translation		Post-Retirement				Comprehensive
(in millions)	Gains (Losses)		Benefits		Other		Income (Loss)
Balance as of May 29, 2022	$	(12.9)	$	(3.3)	$	0.6	$	(15.6)
Other comprehensive income before reclassifications, net of tax		(30.7)		—		0.2		(30.5)
Amounts reclassified out of AOCI, net of tax		—		—		—		—
Net current-period other comprehensive income (loss)		(30.7)		—		0.2		(30.5)
Balance as of August 28, 2022	$	(43.6)	$	(3.3)	$	0.8	$	(46.1)

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13. SEGMENTS

We have 4four operating segments, each of which is a reportable segment: Global, Foodservice, Retail, and Other. Our chief operating decision maker receives periodic management reports under this structure that generally focus on the nature and scope of our customers’ businesses, which enables operating decisions, performance assessment, and resource allocation decisions at the segment level. The reportable segments are each managed by a general manager and supported by a cross functional team assigned to support the segment.


	Thirteen Weeks Ended				Twenty-Six Weeks Ended				Thirteen Weeks Ended
	November 28,		November 29,		November 28,		November 29,		August 28,		August 29,
(in millions)	2021		2020		2021		2020		2022		2021
Net sales
Global	$	516.7	$	475.9	$	1,017.9	$	923.4	$	559.7	$	501.2
Foodservice		313.9		241.1		635.3		477.8		366.3		321.4
Retail		142.6		140.7		275.1		294.6		169.6		132.5
Other		33.4		38.4		62.5		71.8		30.0		29.1
Total net sales		1,006.6		896.1		1,990.8		1,767.6	$	1,125.6	$	984.2
Product contribution margin (a)
Global		80.9		92.7		123.5		170.5	$	83.7	$	42.6
Foodservice		104.4		87.7		200.8		173.5		138.2		96.4
Retail		21.4		30.1		36.2		65.9		48.7		14.8
Other (b)		(6.2)		10.5		(12.8)		23.7		(1.8)		(6.6)
		200.5		221.0		347.7		433.6		268.8		147.2
Add: Advertising and promotion expenses (a)		5.0		2.5		9.1		3.7		4.5		4.1
Gross profit		205.5		223.5		356.8		437.3		273.3		151.3
Selling, general and administrative expenses		91.1		83.9		182.2		162.0		116.3		91.1
Income from operations		114.4		139.6		174.6		275.3		157.0		60.2
Interest expense, net ~~(c)~~		82.4		30.0		110.3		60.3		26.0		27.9
Income tax expense		9.6		31.9		18.3		59.9		73.7		8.7
Equity method investment earnings(c)		10.1		19.2		16.3		31.1		174.6		6.2
Net income	$	32.5	$	96.9	$	62.3	$	186.2	$	231.9	$	29.8

(a)	Product contribution margin represents net sales less cost of sales and advertising and promotion expenses. Product contribution margin includes advertising and promotion expenses because those expenses are directly associated with segment performance.

(b)	The Other segment primarily includes our vegetable and dairy businesses and unrealized mark-to-market adjustments and realized settlements associated with commodity hedging contracts.

(c)

~~The~~Equity method investment earnings for the thirteen ~~and twenty-six~~ weeks ended ~~November~~August 28, 2022 and August 29, 2021 include a ~~loss on the extinguishment of debt of $53.3~~$146.3 million ~~which includes an aggregate call premium of $39.6~~and $5.0 million unrealized gain, respectively, related to ~~the redemption of the 2024 Notes and 2026 Notes, and the write-off of $13.7 million of previously unamortized debt issuance costs~~mark-to-market adjustments associated with ~~those notes.~~changes in natural gas and electricity derivatives as commodity markets in Europe have experienced significant volatility.

~~Concentrations~~In July 2022, we acquired an additional 40% interest in LWAMSA, increasing our total ownership from 50% to 90%. See Note 6, Joint Venture Investments, for more information.

~~Lamb Weston’s largest customer, McDonald’s Corporation, accounted for approximately 11% of consolidated “Net sales” in all periods presented in our Consolidated Statements of Earnings.~~

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14. COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS

We have financial commitments and obligations that arise in the ordinary course of our business. These include long-term debt, lease obligations, purchase commitments for goods and services, and legal proceedings. There have been no material changes to the guarantees and indemnifications disclosed in Note ~~15,~~14, Commitments, Contingencies, Guarantees, and Legal Proceedings, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K.

We are a party to legal actions arising in the ordinary course of our business. These claims, legal proceedings and litigation principally arise from alleged casualty, product liability, employment, and other disputes. In determining loss contingencies, we consider the likelihood of loss as well as the ability to reasonably estimate the amount of such loss or liability. An estimated loss is recognized when it is considered probable that a liability has been incurred and when the amount of loss can be reasonably estimated. While any claim, proceeding or litigation has an element of uncertainty, we believe the outcome of any of these matters that are pending or threatened will not have a material adverse effect on our financial condition, results of operations, or cash flows.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations, which we refer to as “MD&A,” should be read in conjunction with our condensed consolidated financial statements and related notes included in "Financial Information" of this Quarterly Report on Form 10-Q (this "Form 10-Q") and in “Financial Statements and Supplementary Data” of the Company's Annual Report on Form 10-K for the fiscal year ended May ~~30, 2021~~29, 2022 (the “Form 10-K”), which we filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) on July 27, ~~2021.~~2022.

Forward-Looking Statements

This report, including the MD&A, contains forward-looking statements within the meaning of the federal securities laws. Words such as “will,” “continue,” “may,” “expect,” ~~“anticipate,~~“would,” “believe,” ~~“estimate,~~“increase,” “implement,” “mitigate,” “manage,” “grow,” ~~“take,” “mitigate,” “support,” “remain,” “increase,” “manage,”~~ “improve,~~” “create,~~” “outlook,” and variations of such words and similar expressions are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding our plans, execution, capital investments, operational costs, pricing actions, cash flows, liquidity, dividends, ~~share repurchases,~~ enterprise resource planning (“ERP”) system implementation and business and financial outlook and prospects, as well as ~~the impact of the COVID-19 pandemic on~~supply chain constraints, inflation, our industry, and the global economy. These forward-looking statements are based on management’s current expectations and are subject to uncertainties and changes in circumstances. Readers of this report should understand that these statements are not guarantees of performance or results. Many factors could affect our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including those set forth in this report. These risks and uncertainties include, among other things: the availability and prices of raw materials; labor shortages and other operational challenges; disruptions in the global economy caused by the war in Ukraine and the possible related heightening of our other known risks; impacts on our business due to health pandemics or other contagious outbreaks, such as the COVID-19 pandemic, including impacts on demand for our products, increased costs, disruption of supply, other constraints in the availability of key commodities and other necessary services or restrictions imposed by public health authorities or governments; ~~the availability and prices of raw materials; labor shortages and other operational challenges;~~ levels of pension, labor and people-related expenses; our ability to successfully execute our long-term value creation strategies; our ability to execute on large capital projects, including construction of new production lines or facilities; the competitive environment and related conditions in the markets in which we and our joint ventures operate; political and economic conditions of the countries in which we and our joint ventures conduct business and other factors related to our international operations; disruption of our access to export mechanisms; risks associated with possible acquisitions, including our ability to complete acquisitions or integrate acquired businesses; our debt levels; changes in our relationships with our growers or significant customers; the success of our joint ventures; actions of governments and regulatory factors affecting our businesses or joint ventures; the ultimate outcome of litigation or any product recalls; our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; and other risks described in our reports filed from time to time with the SEC. We caution readers not to place undue reliance on any forward-looking statements included in this report, which speak only as of the date of this report. We undertake no responsibility for updating these statements, except as required by law.

Overview

Lamb Weston Holdings, Inc. (“we,” “us,” “our,” “the Company,” or “Lamb Weston”), along with our joint ventures, is a leading global producer, distributor, and marketer of value-added frozen potato products. We, along with our joint ventures, are the number one supplier of value-added frozen potato products in North America and a leading supplier of value-added frozen potato products internationally, with a strong and growing presence in high-growth emerging markets. We, along with our joint ventures, offer a broad product portfolio to a diverse channel and customer base in over 100 countries. French fries represent the majority of our value-added frozen potato product portfolio.

This MD&A is provided as a supplement to the consolidated financial statements and related condensed notes included elsewhere herein to help provide an understanding of our financial condition, changes in financial condition and results of our operations. Our MD&A is based on financial data derived from the financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and certain other financial data (including product contribution margin, on a consolidated basis, Adjusted ~~Diluted EPS, Adjusted~~ EBITDA, ~~and~~ Adjusted EBITDA including unconsolidated joint ~~ventures)~~ventures, Adjusted Net Income, and Adjusted Diluted EPS) that is prepared using non-GAAP financial measures. ~~Refer to “Non-GAAP~~

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Refer to “Non-GAAP Financial Measures” below for the definitions of product contribution margin, Adjusted EBITDA, Adjusted EBITDA including unconsolidated joint ventures, Adjusted Net Income, and Adjusted Diluted EPS, and a reconciliation of these non-GAAP financial measures to gross profit, net income, or diluted earnings per share, as applicable.

Executive Summary

~~We made good~~The following highlights our financial ~~and operating progress~~results in the first quarter as we continue to navigate through a difficult and volatile macro environment defined by cost inflation, supply chain disruptions and production challenges due to a tight labor market. We generated strong sales as solid demand across our food-away-from-home channels drove volume growth, and as we continued to implement recent pricing actions. While earnings declined versusof fiscal 2023, compared with the prior year quarter. For more information, refer to the ~~pricing actions and other strategic actions we have taken to offset cost increases and improve throughput in our factories led to sequential gross margin gains. Specifically, in the quarter:~~“Results of Operations” section below.

●

Net sales increased ~~12%~~14% to ~~$1,006.6~~$1,125.6 million

●

Income from operations ~~declined 18%~~increased 161% to ~~$114.4~~$157.0 million

●

Net income ~~declined 66%~~increased 678% to ~~$32.5~~$231.9 million,

●

~~Diluted~~ and diluted earnings per share ~~declined 67%~~increased 700% to ~~$0.22~~$1.60, including items impacting comparability of $161.4 million ($123.7 million after-tax, or $0.85 per share)

●

Adjusted Net Income increased 315% to $108.2 million, and Adjusted Diluted EPS ~~declined 24%~~increased 317% to ~~$0.50~~$0.75

●

Adjusted EBITDA including unconsolidated joint ventures ~~declined 15%~~increased 92% to ~~$180.9~~$227.8 million

●

We returned ~~$84.3~~$63.7 million of cash to stockholders, including ~~$34.3~~$35.3 million in dividends and ~~$50.0~~$28.4 million of share repurchases

~~Compared with~~We drove strong sales, earnings growth, and gross margin expansion in the ~~second~~ quarter by executing pricing actions across each of ~~fiscal 2021, the~~our business segments and generating productivity savings to counter significant input, manufacturing, and supply chain cost inflation. The increase in net sales was ~~driven~~partially offset by a ~~balance of higher~~decline in sales ~~volumes~~volume, primarily reflecting softer restaurant traffic and ~~price/mix.~~ demand trends in the U.S., especially at casual dining and full-service restaurants, as consumers adjusted to the severe inflationary environment. Overall traffic at large quick service restaurants (“QSR”) in the U.S. remained solid. Our sales volume also reflects our inability to fully serve customer demand in our foodservice and retail channels due to widespread industry supply chain constraints, including labor and commodities shortages, that affected production run-rates and throughput in our factories.

The increase in our ~~sales volumes~~net income was driven by ~~the ongoing recovery in demand for frozen potato products across~~higher income from operations as well as sharply higher equity method investment earnings, which include our ~~restaurant and foodservice channels in the U.S. The increase in sales volumes was most pronounced in~~share of earnings from our Foodservice segment, which has a higher proportion of its sales to on-premise dining establishments, including independent restaurants and non-commercial operations, such as lodging and hospitality, healthcare, schools and universities, sports and entertainment, and workplace environments. Sales volumes also continued to increase at the large chain restaurant customers served by our Global segment, but to a lesser extent as sales volumes in this channel had largely recovered to pre-pandemic levels byunconsolidated joint ventures. In the first quarter of fiscal 2021. Sales volumes in our Retail segment declined primarily due to lower shipments of private label products resulting from incremental losses of certain low-margin business, and was partially offset by an2023, the increase in ~~branded product sales volumes. Our~~equity method investment earnings included a $146.3 million unrealized gain ($108.6 million after-tax, or $0.75 per share) on derivatives for natural gas and electricity contracts in Europe, reflecting the volatility of those energy markets in that region. Equity method investment earnings also included a $15.1 million gain (before and after-tax, or $0.10 per share) recognized in connection with our acquisition of an additional 40% interest in Lamb Weston Alimentos Modernos S.A. (“LWAMSA”). The gain related to the remeasuring of our previously held 50% ownership interest to fair value. The net sales, increase was also driven by higher price/mix in each of our core business segments, primarily reflecting the initial benefit of product pricing actions taken earlier in the year, as well the benefit of higher prices charged to customers for product delivery.

Outside of North America, demand was solid in most of our key international markets. However, our international sales volumes, which are included in our Global segment, declined as a result of limited shipping container availability along the U.S. West Coast and disruptions to ocean freight networks across the Pacific Ocean.

Sales volumes in Europe, which is served by our Lamb-Weston/Meijer joint venture, increased as restaurant traffic continued to improve, although earnings were negatively affected by inflation, production, and transportation challenges.

Despite a strong increase in sales, our income from operations declined largely due to higher manufacturing and distribution costs on a per pound basis. The increase in costs per pound primarily reflected double-digit cost inflation from key inputs and transportation, as well as higher costs and inefficiencies related to labor shortages across our manufacturing network. While we expect the increasing benefits from product and freight pricing actions that we implemented earlier this year, along with additional recently-announced pricing actions and supply chain productivity initiatives, will improve future earnings, the benefits that we realized to date were insufficient to fully offset the cost pressures during the second quarter.

The decline in income from operations was also due to higher selling, general and administrative expenses (“SG&A”) expenses that were largely driven by an increase in advertising and promotion (“A&P”) expenses and higher employee-related costs.

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~~Approximately one-third of the decline in net income and diluted earnings per share was due to lower~~ income from operations, and ~~equity method investment earnings. Approximately two-thirds of the decline was due~~total assets acquired were not material to ~~an approximately $53 million (approximately $41 million, or $0.28 per share, after-tax) non-recurring loss associated with the extinguishment of debt.~~our consolidated net sales, income from operations, and total assets. We have identified both of these ~~costs~~gains as ~~“items~~items impacting ~~comparability”~~comparability and have excluded their impact when providing Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA including unconsolidated joint ventures.

In September 2022, Lamb-Weston/Meijer v.o.f. ("LWM"), our joint venture in ~~our non-GAAP results. For more information see “Liquidity and Capital Resources”~~Europe, completed the previously announced withdrawal from its joint venture in ~~this MD&A.~~Russia.

Outlook

WeIn the remainder of fiscal 2023, we expect ~~our net sales in fiscal 2022~~price/mix to increase versus the prior year ~~driven by a combination of higher price/mix and higher sales volumes. We expect price/mix to increase~~ largely due to carryover benefits of pricing actions ~~that we began to implement~~taken in the prior year as well as earlier in fiscal ~~2022 in an effort~~2023 to ~~mitigate higher~~counter manufacturing and distribution ~~costs.~~cost inflation. We expect ~~solid~~demand and sales volumes growth will continue to be volatile as consumers respond to the current inflationary environment, and that our volume ~~growth as~~will be affected by production capacity and logistics constraints due to disruptions in the global ~~demand for frozen potato products continues to rise. In~~supply chain network. We expect the ~~U.S., during the first half of fiscal 2022, aggregate demand, as well as our shipments, returned to pre-pandemic levels. The~~ rate of recovery inof demand in our key international markets ~~remained~~will be mixed, ~~while the recovery in~~and that our international shipments ~~was also~~will continue to be tempered by limited shipping container availability and disruptions to ocean freight networks. We expect overall frozen potato demand in the U.S. and in our key international markets will continue to be solid through the remainder of this fiscal year, although sales volumes may be tempered by disruptions in our production and logistics networks, as well as efforts to divert the ~~effect~~production volumes to higher-margin sales channels in the U.S.

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During the ~~COVID-19 variants on restaurant traffic and consumer demand.~~

Wefirst half of fiscal 2023, we expect our ~~earnings in fiscal 2022 to~~gross margins will be pressured ~~largely~~ as ~~a result of input cost~~compared to normalized seasonal rates as we continue to manage through significant inflation ~~including~~as well as higher raw potato costs, and industrywide supply chain challenges. We anticipate that the rate of inflation for many of our manufacturing, commodity, and transportation costs, including, but not limited to edible oils, grains and starches used for product coatings, rail, trucking, ocean freight, and packaging, will remain higher than we experienced in fiscal 2021. We also expect our potato costs on a per pound basis ~~will rise as the year progresses~~ due to the impact of ~~the~~ extreme summer heat that negatively affected the yield and quality of potato crops in the Pacific ~~Northwest.~~Northwest in the fall of 2021. We ~~anticipate~~also expect our gross margins in the first half of fiscal 2023 will be pressured by ongoing ~~effects of the pandemic~~industrywide operational challenges, including labor and ~~disruptions to~~commodities shortages, resulting from volatility in the broader ~~global~~ supply chain will continue to pressure our operations, including the shortage of manufacturing labor, through the remainder of fiscal 2022, which is expected to lead to volatile operating conditions and incremental manufacturing and distribution costs. Our experienced team is continuing to take specific actions to mitigate these challenges, most notably executing pricing actions intended to offset commodity inflation, restructuring freight policies, modifying production and crewing schedules, adopting new policies and practices to attract and retain manufacturing employees, and optimizing our product portfolio.chain.

In addition, we expect overall SG&A in fiscal 2022 will be higher than the prior year largely due to increased compensation and benefit expenses, as well as continued investments to improve our information technology infrastructure over the long term. This includes resuming our efforts inDuring the second half of fiscal 2023, we expect our gross margins to approach normalized annual levels based on our continued successful implementation of our pricing actions to offset input and transportation costs inflation, as well as our preliminary assessment that the overall quality of the 2022 ~~to implement~~potato crop will be in line with historical averages, although significant heat waves late in the ~~next phase of~~season affected yields in our growing regions in the Pacific Northwest. We expect LWM’s earnings will be affected by a ~~new ERP system.~~below-average potato crop in Europe resulting from high temperatures and drought conditions, as well as likely production disruptions resulting from energy constraints.

While the near-term ~~impact~~global demand trends may be volatile as consumers navigate this inflationary environment, our recent announcement to expand capacity in Argentina, along with our ongoing investments in Idaho and China, demonstrate our confidence in the long-term health and growth outlook of the ~~pandemic on sales volumes and costs continues to be volatile, we believe we have sufficient liquidity to manage through the uncertainty.~~frozen potato category.

We remain focused on our strategic objectives, and believe that our investments in productivity, technology, and capacity to support customer growth will create value for our stakeholders over the long term.

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Results of Operations

We have four reportable segments: Global, Foodservice, Retail, and Other. We report net sales and product contribution margin by segment and on a consolidated basis. Product contribution margin, when presented on a consolidated basis, is a non-GAAP financial measure. Net sales and product contribution margin are the primary measures reported to our chief operating decision maker for purposes of allocating resources to our segments and assessing their performance. Product contribution margin represents net sales less cost of sales and A&P expenses. Product contribution margin includes A&P expenses because those expenses are directly associated with the performance of the Company’s segments. For additional information on our reportable segments and product contribution margin, see “Non-GAAP Financial Measures” below and Note 13, Segments, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report.

Thirteen Weeks Ended ~~November~~August 28, ~~2021~~2022 compared to Thirteen Weeks Ended ~~November~~August 29, ~~2020~~2021

Net Sales, Gross Profit, and Product Contribution Margin


	Thirteen Weeks Ended					Thirteen Weeks Ended
	November 28,		November 29,		%	August 28,		August 29,		%
(in millions)	2021		2020		Inc/(Dec)
(dollars in millions)						2022		2021		Inc/(Dec)
Segment net sales
Global	$	516.7	$	475.9	9%	$	559.7	$	501.2	12%
Foodservice		313.9		241.1	30%		366.3		321.4	14%
Retail		142.6		140.7	1%		169.6		132.5	28%
Other		33.4		38.4	(13%)		30.0		29.1	3%
	$	1,006.6	$	896.1	12%	$	1,125.6	$	984.2	14%

Segment product contribution margin
Global	$	80.9	$	92.7	(13%)	$	83.7	$	42.6	96%
Foodservice		104.4		87.7	19%		138.2		96.4	43%
Retail		21.4		30.1	(29%)		48.7		14.8	229%
Other		(6.2)		10.5	(159%)		(1.8)		(6.6)	(73%)
		200.5		221.0	(9%)		268.8		147.2	83%
Add: Advertising and promotion expenses		5.0		2.5	100%		4.5		4.1	10%
Gross profit	$	205.5	$	223.5	(8%)	$	273.3	$	151.3	81%

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Net Sales

Compared to the prior year quarter, Lamb Weston’s net sales for the ~~second~~first quarter of fiscal ~~2022~~2023 increased ~~$110.5~~$141.4 million, or ~~12%~~14%, to ~~$1,006.6~~$1,125.6 million. Price/mix increased 19%, reflecting the benefit of pricing actions across each of our core business segments to offset input, manufacturing, and transportation cost inflation. Volume declined 5%, primarily reflecting softer casual dining and ~~price/mix each increased 6%. The ongoing recovery~~full-service restaurant traffic in ~~demand for frozen potato products in our~~the U.S. as well as the timing of shipments to large chain restaurant customers. Shipments into foodservice and ~~foodservice~~retail channels in the U.S. ~~drove the increase~~continued to be affected by an inability to fully serve customer demand due to widespread industry supply chain constraints, including labor and commodities shortages, that impacted production run-rates and throughput in ~~sales volumes, while the initial benefits of product pricing actions, as well as higher prices charged to customers for product delivery, primarily drove the increase in price/mix.~~our production facilities.

Global segment net sales increased ~~$40.8~~$58.5 million, or 9%12%, to ~~$516.7~~$559.7 million. Price/mix increased 5%14% while volume ~~increased 4%~~decreased 2%. The benefit of domestic and international product and freight pricing actions to offset inflation, as well as favorable mix, drove the increase in price/~~mix largely reflected the benefit~~mix. The timing of ~~pricing actions, including higher prices charged for freight. Strong growth in~~ shipments to ~~restaurant~~large QSR chain customers in the U.S., including the effect of lapping a notable limited time product offering in the prior year quarter, largely drove the ~~increase~~decline in volume. Export shipments declined modestly, primarily due to production volumes being diverted to higher-margin sales ~~volumes. While demand~~channels in ~~most of our key international markets was solid, export sales volumes declined as a result of limited shipping container availability and disruptions to ocean freight networks.~~the U.S.

Foodservice segment net sales increased ~~$72.8~~$44.9 million, or ~~30%~~14%, to ~~$313.9~~$366.3 million. ~~Volume increased 22% while price/~~Price/mix increased 8%26% and volume decreased 12%. ~~Strong demand at small~~The carryover benefits of product and ~~regional chain restaurants,~~freight pricing actions taken in the prior year as well as ~~independently-owned restaurants,~~early in fiscal 2023 to offset inflation drove the increase in ~~sales volumes. Shipments to~~price/mix. Demand in the segment’s restaurant and non-commercial ~~customers, such~~channels (such as lodging and hospitality, healthcare, schools and universities, sports and entertainment, and workplace ~~environments,~~environments) softened along with restaurant traffic as consumers adjusted to the severe inflationary environment. The slowdown in restaurant traffic and consumer demand was more pronounced in casual dining and other full-service restaurants than in QSRs. Shipments were also ~~increased versus the prior year quarter, but remained below pre-pandemic levels. The segment’s overall volume growth was tempered~~affected by ~~our~~an inability

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to fully serve ~~full~~ customer demand due to widespread industry supply chain constraints, including labor and commodities shortages, that ~~resulted in lower~~impacted production run-rates and throughput in our ~~factories. The increase in price/mix largely reflected the initial benefits~~production facilities, as well as incremental losses of ~~pricing actions taken earlier in the year, higher prices charged for freight, and favorable mix.~~certain low-margin non-commercial business.

Retail segment net sales increased ~~$1.9~~$37.1 million, or 1%28%, to ~~$142.6~~$169.6 million. Price/mix increased 5%32% while volume decreased 4%. The carryover benefits of pricing actions across the branded and private label portfolios taken in the prior year as well as earlier in fiscal 2023 to offset inflation drove the increase in price/~~mix was largely driven by favorable price in our branded portfolio, including higher prices charged for freight. The sales volume decline largely reflects lower~~mix. Lower shipments of private label products, resulting from incremental losses of certain low-margin business, ~~partially offset~~drove the sales volume decline. Shipments of branded products increased, although growth was tempered by an ~~increase in branded product sales volumes. Product shipments were tempered by the~~ inability to fully serve ~~full~~ customer demand due to ~~lower~~constrained production run-rates and throughput in our ~~factories.~~production facilities.

Net sales in our Other segment ~~declined $5.0~~increased $0.9 million, or ~~13%~~3%, to ~~$33.4 million, with~~$30.0 million. Price/mix increased 11% while volume ~~down 24% and price/mix up 11%~~decreased 8%. The ~~decline~~increase in price/mix was driven by ~~lower volume~~higher prices in our vegetable business, ~~reflecting~~while the decrease in volume reflected the negative effect of the extreme summer heat on the yield and quality of the vegetable crops.

Gross Profit and Product Contribution Margin

Gross profit ~~declined $18.0~~increased $122.0 million, or 8%81%, to ~~$205.5~~$273.3 million, as the benefits from ~~increased sales volumes and~~ higher price/mix ~~were~~and productivity initiatives more than offset bythe impact of higher manufacturing and distribution costs on a per-pound ~~basis.~~basis, as well as lower sales volumes. The higher costs per pound ~~predominantly~~primarily reflected double-digit cost inflation from key inputs, ~~particularly~~including: edible ~~oils;~~oils, ingredients such as grains and starches used in product ~~coatings; transportation;~~coatings, labor costs, and ~~packaging.~~transportation costs. The increase in costs per pound also reflected higher costs associated with the ~~effect~~impact of extreme summer heat that negatively affected the yield and quality of potato crops in the Pacific Northwest in fall 2021, as well as the effects of labor and commodities shortages on production ~~run-rates, as well as lower raw potato utilization rates due to the poor crop harvested in fall 2021.~~run-rates. The increase ~~in per pound costs was partially offset by supply chain productivity savings. The decline~~ in gross profit also included a ~~$6.1~~$2.8 million ~~decrease~~increase in unrealized mark-to-market adjustments associated with commodity hedging contracts, which includes a ~~$1.0~~$4.0 million loss in the ~~current~~first quarter, compared with a ~~$5.1~~$6.8 million ~~gain~~loss related to these items in the prior year quarter.

Lamb Weston’s overall product contribution margin, defined as gross profit less A&P expenses, ~~declined $20.5~~increased $121.6 million, or 9%83%, to ~~$200.5~~$268.8 million. The ~~decline~~increase was largely due to ~~lower~~higher gross profit (as described above) ~~and a $2.5 million increase in A&P expenses.~~.

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Global segment product contribution margin ~~declined $11.8~~increased $41.1 million, or ~~13%~~96%, to ~~$80.9~~$83.7 million. ~~Higher~~Favorable price/mix, primarily reflecting the benefit of pricing actions, drove the increase, more than offsetting higher manufacturing and distribution costs per ~~pound more than offset the benefit of favorable price/mix and higher sales volumes.~~pound. Global segment cost of sales was ~~$434.8~~$475.1 million, up ~~14%~~4% compared to the ~~second~~first quarter of fiscal ~~2021,~~2022, primarily due to higher ~~sales volumes and higher~~ manufacturing and distribution ~~costs.~~costs, partially offset by lower sales volumes.

Foodservice segment product contribution margin increased ~~$16.7~~$41.8 million, or ~~19%~~43%, to ~~$104.4~~$138.2 million. Favorable ~~price/mix and higher sales volumes~~price drove the increase, and was partially offset by higher manufacturing and distribution costs per ~~pound.~~pound, and the impact of lower sales volumes. Foodservice segment cost of sales was ~~$208.3~~$226.9 million, up ~~37%~~1% compared to the ~~second~~first quarter of fiscal ~~2021,~~2022, primarily due to higher ~~sales volumes and higher~~ manufacturing and distribution ~~costs.~~costs, partially offset by lower sales volumes.

Retail segment product contribution margin ~~declined $8.7~~increased $33.9 million, or ~~29%~~229%, to ~~$21.4~~$48.7 million. ~~Higher~~The benefits of pricing actions and favorable mix drove the increase, partially offset by higher manufacturing and distribution costs per ~~pound, a $1.9 million increase in A&P expenses, and lower sales volumes drove the decline.~~pound. Retail segment cost of sales was ~~$118.5~~$118.6 million, ~~up 8%~~a 3% increase compared to the ~~second~~first quarter of fiscal ~~2021,~~2022, primarily due to higher manufacturing and distribution costs, partially offset by lower sales volumes.

Other segment product contribution margin ~~declined $16.7~~increased $4.8 million to a loss of ~~$6.2~~$1.8 million in the ~~second~~first quarter of fiscal ~~2022,~~2023, as compared to ~~$10.5~~a loss of $6.6 million in the first quarter of ~~income in~~ fiscal ~~2021.~~2022. These amounts include ~~an $8.6~~a $8.8 million loss related to unrealized mark-to-market adjustments and realized settlements associated with commodity hedging contracts reported in the Other segment in fiscal 2023, and a ~~$4.3~~$8.2 million ~~gain~~loss related to the contracts in fiscal ~~2021.~~2022. Excluding these mark-to-market adjustments and realized settlements, Other segment product contribution margin ~~declined $3.8~~increased $5.4 million, largely due to ~~higher manufacturing costs and lower sales volumes~~favorable price in our vegetable business.

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Selling, General and Administrative Expenses

SG&A increased ~~$7.2~~$25.2 million to $116.3 million in the first quarter of fiscal 2023, as compared to $91.1 million in the ~~prior year~~first quarter of fiscal 2022, primarily due to ~~a $2.5 million increase in A&P expenses,~~ higher ~~sales commissions associated with increased sales volumes,~~compensation and benefits expense, and higher expenses ~~largely~~ related to ~~employee recruiting and retention. The increase in SG&A was partially offset by lower consulting expenses associated with~~ improving our ~~commercial~~information and supply chain operations, as well as fewer expenses for our new ERP system. Approximately $2 million of the ERP-related costs in the quarter consisted primarily of consulting expenses that will not continue after we implement the new system, compared to approximately $5 million in the prior year quarter.technology services infrastructure.

Interest Expense, Net

Compared with the prior year quarter, interest expense, net ~~increased $52.4~~decreased $1.9 million to ~~$82.4 million. The increase reflects a $53.3~~$26.0 million, ~~($40.5 million after-tax) loss on extinguishment of debt associated with the redemption in full of our outstanding 4.625% senior notes due 2024 (the “2024 Notes”)~~primarily reflecting higher capitalized interest and ~~4.875% senior notes due 2026 (the “2026 Notes”).~~higher interest income. For more information see “Liquidity and Capital Resources” in this MD&A.

Income Tax Expense

Income tax expense for the ~~second~~first quarter of fiscal 2023 and 2022 ~~and 2021~~ was ~~$9.6~~$73.7 million and ~~$31.9~~$8.7 million, respectively. The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was ~~22.8%~~24.1% and ~~24.8%~~22.6% for the ~~second~~first quarter of fiscal ~~2022~~2023 and ~~2021,~~2022, respectively. The effective tax rate varies from the U.S. statutory tax rate of 21%, principally due to the impact of U.S. state taxes, foreign taxes, permanent differences, and discrete items. Excluding items impacting comparability, our effective tax rate for the first quarter of fiscal 2023 was 25.0%.

Equity Method Investment Earnings

We conduct business through unconsolidated joint ventures in Europe and the U.S.~~, and South America~~ and include our share of the earnings based on our economic ownership interest in them. Our share of earnings from our equity method investments was ~~$10.1~~$174.6 million and ~~$19.2~~$6.2 million for the ~~second~~first quarter of fiscal ~~2022~~2023 and ~~2021,~~2022, respectively. Equity method investment earnings included a $3.6 million unrealized gain related to mark-to-market adjustments associated with currency and commodity hedging contracts in the current quarter, compared to a $0.1 million unrealized loss related to these items in the prior year quarter. Excluding the mark-to-market adjustments, earnings from equity method investments declined $12.8 million compared to the prior year period. The earnings decline largely reflects input cost inflation and higher manufacturing costs in Europe and the U.S.

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~~Twenty-Six Weeks Ended November 28, 2021 compared to Twenty-Six Weeks Ended November 29, 2020~~

~~Net Sales, Gross Profit, and Product Contribution Margin~~

Twenty-Six Weeks Ended


November 28,

November 29,

%
(in millions)

2021

2020

Inc/(Dec)
Segment net sales

Global

$
1,017.9

$
923.4

10%
Foodservice

635.3


477.8

33%
Retail

275.1

294.6

(7%)
Other

62.5

71.8

(13%)

$
1,990.8

$
1,767.6

13%

Segment product contribution margin

Global

$
123.5

$
170.5

(28%)
Foodservice

200.8


173.5

16%
Retail

36.2

65.9

(45%)
Other

(12.8)

23.7

(154%)

347.7

433.6

(20%)
Add: Advertising and promotion expenses

9.1

3.7

146%
Gross profit

$
356.8

$
437.3

(18%)

~~Net Sales~~

Compared to the first half of fiscal 2021, Lamb Weston’s net sales increased $223.2 million, or 13%, to $1,990.8 million. Volume increased 9% and price/mix increased 4%. The ongoing recovery in demand for frozen potato products in our restaurant and foodservice channels drove the increase in sales volumes. In the prior year period, demand was affected by reduced shipments related to government-imposed social restrictions on restaurant traffic. The initial benefits of product pricing actions, as well as higher prices charged to customers for product delivery, primarily drove the increase in price/mix.

Global segment net sales increased $94.5 million, or 10%, to $1,017.9 million. Volume increased 6% while price/mix increased 4%. Strong growth in shipments to restaurant chain customers in the U.S., including the benefit of limited time product offerings, drove the increase in sales volumes. Demand in most of our key international markets was solid, although limited shipping container availability and disruptions to ocean freight networks tempered growth of our export sales volumes. The increase in price/mix largely reflected the benefit of pricing actions, including higher prices charged for freight.

Foodservice segment net sales increased $157.5 million, or 33%, to $635.3 million. Volume increased 28% while price/mix increased 5%. Solid demand at small and regional chain restaurants, as well as independently-owned restaurants, drove the increase in sales volumes. Shipments to non-commercial customers also increased versus the prior year period, but remained below pre-pandemic levels. The segment’s overall volume growth was tempered by our inability to serve full customer demand due to widespread industry supply chain constraints, including labor shortages, that resulted in lower production run-rates and throughput in our factories. The increase in price/mix largely reflected the initial benefits of pricing actions taken earlier in the year, as well as higher prices charged for freight.

Retail segment net sales declined $19.5 million, or 7%, to $275.1 million. Volume declined 11% while price/mix increased 4%. The sales volume decline primarily reflects lower shipments of private label products resulting from incremental losses of certain low-margin business. Branded product sales volumes were well above pre-pandemic levels, but were essentially flat versus the prior year period because of our inability to serve full customer demand due to lower production run-rates and throughput in our factories. The increase in price/mix was largely driven by favorable price, including higher prices charged for freight.

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Net sales in our Other segment declined $9.3 million, or 13%, to $62.5 million, with volume down 23% and price/mix up 10%. The decline primarily reflects lower volume in our vegetable business, reflecting the negative effect of the extreme summer heat on the yield and quality of the vegetable crops.

~~Gross Profit and Product Contribution Margin~~

Gross profit declined $80.5 million, or 18%, to $356.8 million, as the benefits from increased sales volumes and higher price/mix were more than offset by higher manufacturing and distribution costs on a per-pound basis. The higher costs per pound predominantly reflected double-digit cost inflation from key inputs, particularly edible oils; transportation; ingredients, such as grains and starches used in product coatings; and packaging. The increase in costs per pound also reflected the effect of labor shortages on production run-rates, as well as lower raw potato utilization rates due to the poor crop harvested in fall 2021. The increase in per pound costs was partially offset by supply chain productivity savings. The decline in gross profit also included an $11.8 million decrease in unrealized mark-to-market adjustments associated with commodity hedging contracts, which includes a $0.2 million gain in the first half of fiscal 2022, compared with a $12.0 million gain related to these items in the first half of fiscal 2021.

Lamb Weston’s overall product contribution margin declined $85.9 million, or 20%, to $347.7 million. The decline was largely due to lower gross profit (as described above) and a $5.4 million increase in A&P expenses.

Global segment product contribution margin declined $47.0 million, or 28%, to $123.5 million. Higher manufacturing and distribution costs per pound resulting from input and transportation cost inflation, reduced production run-rates and lower raw potato utilization rates more than offset the benefit of favorable price/mix and higher sales volumes. Global segment cost of sales was $892.5 million, up 19% compared to the first half of fiscal 2021, primarily due to higher sales volumes and higher manufacturing and distribution costs.

Foodservice segment product contribution margin increased $27.3 million, or 16%, to $200.8 million. Higher sales volumes and favorable price/mix drove the increase, and was partially offset by higher manufacturing and distribution costs per pound. Foodservice segment cost of sales was $432.3 million, up 43% compared to the first half of fiscal 2021, primarily due to higher sales volumes and higher manufacturing and distribution costs.

Retail segment product contribution margin declined $29.7 million, or 45%, to $36.2 million. Higher manufacturing and distribution costs per pound, lower sales volumes and a $3.9 million increase in A&P expenses, drove the decline. Retail segment cost of sales was $234.1 million, up 3% compared to the first half of fiscal 2021, primarily due to lower sales volumes and higher manufacturing and distribution costs.

Other segment product contribution margin declined $36.5 million to a loss of $12.8 million in the first half of fiscal 2022, as compared to $23.7 million of income in the first half of fiscal 2021. These amounts include a $16.9 million loss related to unrealized mark-to-market adjustments and realized settlements associated with commodity hedging contracts, and a $12.1 million gain related to the contracts in fiscal 2021. Excluding these mark-to-market adjustments and realized settlements, Other segment product contribution margin declined $7.5 million, largely due to higher manufacturing costs and lower sales volumes in our vegetable business.

~~Selling, General and Administrative Expenses~~

SG&A increased $20.2 million compared to the first half of fiscal 2021, primarily due to a $5.4 million increase in A&P expenses to support new product launches; higher compensation and benefits expense; investments to improve our information technology, commercial and supply chain operations over the long term; expenses largely related to employee recruiting and retention and temporary labor; and higher sales commissions associated with increased sales volumes. SG&A included approximately $6 million of ERP-related costs in the first half of fiscal 2022 and 2021. In both periods, these costs consisted primarily of consulting expenses that will not continue after we implement the new ERP system.

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~~Interest Expense, Net~~

Compared with the first half of fiscal 2021, interest expense, net increased $50.0 million to $110.3 million. The increase reflects a $53.3 million ($40.5 million after-tax) loss on extinguishment of debt associated with the redemption in full of our 2024 Notes and 2026 Notes. For more information see “Liquidity and Capital Resources” in this MD&A.

~~Income Tax Expense~~

Income tax expense for the first half of fiscal 2022 and 2021 was $18.3 million and $59.9 million, respectively. The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 22.7% and 24.3% for the first half of fiscal 2022 and 2021, respectively. The effective tax rate varies from the U.S. statutory tax rate of 21%, principally due to the impact of U.S. state taxes, foreign taxes, permanent differences, and discrete items.

~~Equity Method Investment Earnings~~

We conduct business through unconsolidated joint ventures in Europe, the U.S., and South America and include our share of the earnings based on our economic ownership interest in them. Our share of earnings from our equity method investments was $16.3 million and $31.1 million for the first half of fiscal 2022 and 2021, respectively. Equity method investment earnings included a $7.9$144.6 million unrealized gain related to mark-to-market adjustments associated with currency and commodity hedging contracts in the first ~~half~~quarter of fiscal ~~2022, compared~~2023, of which $146.3 million ($108.6 million after-tax, or $0.75 per share) related to changes in natural gas and electricity derivatives as commodity markets in Europe have experienced significant volatility. Equity method investment earnings in the prior year quarter included a ~~$4.6~~$4.3 million unrealized gain for mark-to-market adjustments, of which $5.0 million related to ~~these~~changes in natural gas and electricity derivatives. Equity method investment earnings in the first quarter of fiscal 2023 also included a $15.1 million gain (before and after-tax, or

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$0.10 per share) recognized in connection with the Company’s acquisition of an additional 40% interest inLWAMSA. The gain related to remeasuring our previously held 50% ownership interest to fair value.

Excluding the items ~~in fiscal 2021. Excluding~~impacting comparability noted above and the other mark-to-market adjustments, earnings from equity method investments ~~declined $18.1~~increased $13.0 million compared to the ~~first half of fiscal 2021. The earnings decline largely reflects input cost inflation and~~prior year quarter, reflecting favorable price/mix, partially offset by higher manufacturing and distribution costs in both Europe and the U.S.

Liquidity and Capital Resources

Sources and Uses of Cash

We ended the first ~~half~~quarter of fiscal ~~2022 in a strong financial position~~2023 with ~~$621.9~~$485.3 million of cash and cash equivalents and $994.6 million of availability under our revolving credit facility, net of letters of credit. During the first half of fiscal 2022, we lowered the interest rates and extended the maturities on $1,670.0 million of our outstanding debt (see Note 9, Debt and Financing Obligations, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report) and amended our revolving credit facility to increase its capacity to $1.0 billion and extend its maturity date to August 11, 2026. At the end of the first ~~half~~quarter of fiscal ~~2022,~~2023, no borrowings were outstanding under the ~~amended~~ revolving credit facility.

~~While we expect the near-term impact of the pandemic on costs to remain volatile, we~~We believe we have sufficient liquidity to meet projected capital expenditures, service existing debt and meet working capital requirements for at least the next 12 months with current cash balances and cash from operations, and in the longer term, supplemented as necessary by available borrowings under our currently undrawn revolving credit facility.

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Cash Flows

Below is a summary table of our cash flows, followed by a discussion of the sources and uses of cash through operating, investing, and financing activities:


	Twenty-Six Weeks Ended				Thirteen Weeks Ended
	November 28,		November 29,		August 28,		August 29,
(in millions)	2021		2020		2022		2021
Net cash flows provided by (used for):
Operating activities	$	207.5	$	318.8	$	192.1	$	161.8
Investing activities		(147.6)		(53.3)		(166.9)		(78.8)
Financing activities		(219.3)		(867.2)		(63.5)		(75.8)
		(159.4)		(601.7)		(38.3)		7.2
Effect of exchange rate changes on cash and cash equivalents		(2.2)		1.6		(1.4)		(1.0)
Net decrease in cash and cash equivalents	$	(161.6)	$	(600.1)
Net (decrease) increase in cash and cash equivalents					$	(39.7)	$	6.2

Operating Activities

In the first ~~half~~quarter of fiscal ~~2022,~~2023, cash provided by operating activities ~~decreased $111.3~~increased $30.3 million to ~~$207.5~~$192.1 million, compared with ~~$318.8~~$161.8 million in the same period a year ago. The ~~decrease~~increase related to a ~~$65.1~~$57.4 million ~~decrease~~increase in income from operations, adjusted for non-cash income and expenses, ~~and $46.2~~offset by $27.1 million of cash used for unfavorable changes in working capital. ~~Lower income from operations was driven by higher manufacturing and distribution costs on a per pound basis, reflecting cost inflation for key inputs and transportation.~~ See “Results of Operations” in this MD&A for more ~~information.~~information related to the increase in income from operations. Unfavorable changes in working capital primarily related to ~~an increase in receivables attributable~~higher-cost finished goods inventories, due primarily to ~~higher sales at the end of the first half of fiscal 2022, compared with the end of the first half of fiscal 2021,~~increased potato and input cost inflation, and a decrease in ~~accounts payable~~accrued liabilities due to a shift in the timing of interest payments for our senior notes due 2030 and 2032, which were issued in fiscal 2022. These unfavorable changes were partially offset by a decrease in receivables due to timing of collections, and ~~a decrease~~an increase in income taxes payable due to ~~lower~~higher taxable income in the first ~~half~~quarter of fiscal ~~2022,~~2023, compared with the prior year period. The unfavorability was partially offset by lower finished goods inventories compared with the prior year period, an increase in trade promotion accruals due to higher sales, and an increase in other accrued liabilities due to timing.quarter.

Investing Activities

Investing activities used ~~$147.6~~$166.9 million of cash in the first ~~half~~quarter of fiscal ~~2022,~~2023, compared with ~~$53.3~~$78.8 million in the same period in the prior year. The increase primarily relates to our ~~investment~~investments in our chopped and formed capacity expansion, our french fry processing line in American Falls, Idaho, and our greenfield french fry processing facility in Ulanqab, Inner Mongolia, China. We expect to use approximately ~~$450~~$475 million to $525 million for capital expenditures, excluding acquisitions, in fiscal ~~2022.~~2023. We also used $42.3 million to acquire an additional ownership interest in our joint

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venture in Argentina and used $20.0 million to acquire assets associated with the improvement of our information and technology services infrastructure.

Financing Activities

During the first ~~half~~quarter of fiscal ~~2022,~~2023, cash used for financing activities decreased ~~$647.9~~$12.3 million to ~~$219.3~~$63.5 million, compared with ~~$867.2~~$75.8 million used during the same period a year ago. During the first ~~half~~quarter of fiscal ~~2022,~~2023, financing activities primarily related to ~~issuing senior notes with~~additional borrowings under the RMB-denominated loan facility for net proceeds of ~~$1,655.4~~$13.8 million, offset by $8.0 million of debt and financing obligation repayments, ~~of $1,682.1 million, including the redemption of the 2024 Notes~~ and ~~2026 Notes,~~ the payment of ~~$68.7~~$35.3 million of cash dividends to common ~~stockholders, and the payment of an aggregate call premium of $39.6 million relating to the notes redemption.~~stockholders. In addition, ~~$83.5~~we used $28.4 million ~~relates~~of cash to ~~the~~ repurchase ~~of 1,264,114~~404,476 shares of our common stock at an average price of ~~$60.15~~$70.11 and ~~withholding 114,530~~withheld 77,756 shares from employees to cover income and payroll taxes on equity awards that vested during the period.

During the first ~~half~~quarter of fiscal ~~2021,~~2022, financing activities primarily related to the ~~repayment~~payment of ~~$498.8~~$34.4 million of ~~short-term borrowings, $289.6~~cash dividends to common stockholders, and $7.9 million of debt and financing obligations ~~repayments, which includes the repayment of the $271.9 million term loan facility due in November 2021, and the payment of $67.2~~repayments. We also used $26.0 million of cash ~~dividends~~ to repurchase 395,361 shares of our common ~~stockholders. In addition, $9.8 million relates to withholding 156,506 shares~~stock at an average price of $65.86 and withheld 111,488 shares from employees to cover income and payroll taxes on equity awards that vested during the period.

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We assess our financing alternatives periodically and expect to access credit or debt capital markets opportunistically, within targeted levels, as part of our plans to fund our capital programs, including capital expenditures and cash returns to stockholders through dividends and share repurchases. These transactions may include the incurrence of new debt, subject to financing options that may be available to us from time to time, as well as conditions in the credit and debt capital markets generally. In particular, one of our subsidiaries is pursuing a new credit facility of up to $180 million related to funding our previously announced capital expansion project in China. Borrowings under this facility would be guaranteed by Lamb Weston. The facility is subject to conditions in the global credit markets generally, as well as finalization of definitive documentation. If we do not complete this contemplated financing, we will pursue alternative options for funding the project.

For more information about our debt, interest rates, maturity dates, and covenants, see Note 9, Debt and Financing Obligations, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report and Note 8,7, Debt and Financing Obligations of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K. At ~~November~~August 28, ~~2021,~~2022, we were in compliance with the financial covenant ratios and other covenants contained in our credit agreements.

Obligations and Commitments

There have been no material changes to the contractual obligations disclosed in “Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Form 10-K.

Non-GAAP Financial Measures

To supplement the financial information included in this report, we have presented product contribution margin on a consolidated basis, Adjusted EBITDA, Adjusted EBITDA including unconsolidated joint ventures, Adjusted Net Income, and Adjusted Diluted EPS, each of which is considered a non-GAAP financial measure.

Product contribution margin is one of the primary measures reported to our chief operating decision maker for purposes of allocating resources to our segments and assessing their performance. Product contribution margin represents net sales less cost of sales and A&P expenses. Product contribution margin includes A&P expenses because those expenses are directly associated with the performance of our segments. Our management also uses Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures ~~and Adjusted Diluted EPS~~ to evaluate our performance excluding the impact of certain non-cash charges and other special items in order to have comparable financial results to analyze changes in our underlying business between reporting periods. We include these non-GAAP financial measures because management believes they provide useful information to investors in that they provide for greater transparency with respect to supplemental information used by management in its financial and operational decision making. We believe that the presentation of these non-GAAP financial measures, when used in conjunction with GAAP financial measures, is a useful financial analysis tool that can assist investors in assessing our operating performance and underlying prospects. These non-GAAP financial measures should be viewed in addition to, and not as alternatives for, financial measures prepared in accordance with GAAP. These measures are not a substitute for their comparable GAAP financial measures, such as gross profit, or net income (loss), or diluted earnings per share, and there are limitations to using non-GAAP financial measures. These non-GAAP financial measures may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures the same way.

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See “Results of Operations – Thirteen Weeks Ended ~~November~~August 28, ~~2021~~2022 compared to Thirteen Weeks Ended ~~November~~August 29, ~~2020 – Net Sales, Gross Profit, and Product Contribution Margin” and “Results of Operations – Twenty-Six Weeks Ended November 28,~~ 2021 ~~compared to Twenty-Six Weeks Ended November 29, 2020~~ – Net Sales, Gross Profit, and Product Contribution Margin” above for a reconciliation of product contribution margin on a consolidated basis to gross profit.

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The following table reconciles net income to Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures:


	Thirteen Weeks Ended				Twenty-Six Weeks Ended				Thirteen Weeks Ended
	November 28,		November 29,		November 28,		November 29,		August 28,		August 29,
(in millions)	2021		2020		2021		2020		2022		2021
Net income	$	32.5	$	96.9	$	62.3	$	186.2	$	231.9	$	29.8
Equity method investment earnings		(10.1)		(19.2)		(16.3)		(31.1)		(174.6)		(6.2)
Interest expense, net		82.4		30.0		110.3		60.3		26.0		27.9
Income tax expense		9.6		31.9		18.3		59.9		73.7		8.7
Income from operations		114.4		139.6		174.6		275.3		157.0		60.2
Depreciation and amortization		46.2		46.6		92.2		92.2		48.7		46.0
Adjusted EBITDA		160.6		186.2		266.8		367.5		205.7		106.2

Unconsolidated Joint Ventures
Equity method investment earnings		10.1		19.2		16.3		31.1		174.6		6.2
Interest expense, income tax expense, and depreciation and
amortization included in equity method investment earnings		10.2		7.8		21.2		16.4		8.9		11.0
Items impacting comparability
Impact of LWM natural gas and electricity derivatives (a)										(146.3)		(5.0)
Gain on acquisition of interest in joint venture (b)										(15.1)		—
Add: Adjusted EBITDA from unconsolidated joint ventures		20.3		27.0		37.5		47.5		22.1		12.2

Adjusted EBITDA including unconsolidated joint ventures	$	180.9	$	213.2	$	304.3	$	415.0	$	227.8	$	118.4

(a)

Equity method investment earnings for the thirteen weeks ended August 28, 2022 and August 29, 2021 included a $146.3 million ($108.6 million after-tax, or $0.75 per share) and $5.0 million ($3.7 million after-tax, or $0.02 per share) unrealized gain, respectively, related to mark-to-market adjustments associated with changes in natural gas and electricity derivatives as commodity markets in Europe have experienced significant volatility.

(b)

Equity method investment earnings for the thirteen weeks ended August 28, 2022 included a $15.1 million gain (before and after-tax, or $0.10 per share) recognized in connection with our acquisition of an additional 40% interest in our Argentina joint venture, increasing our ownership from 50% to 90%. The gain related to the remeasuring of our previously held 50% ownership interest to fair value.

The following table reconciles net income to Adjusted Net Income, and diluted ~~earnings per share~~EPS to Adjusted Diluted EPS:


	Thirteen Weeks Ended				Twenty-Six Weeks Ended				For the Thirteen Weeks Ended
	November 28,		November 29,		November 28,		November 29,		August 28,		August 29,		August 28,		August 29,
	2021 (a)		2020 (a)		2021 (a)		2020 (a)		2022		2021		2022 (a)		2021 (a)
(in millions, except per share amounts)									Net Income				Diluted EPS
As reported	$	0.22	$	0.66	$	0.42	$	1.27	$	231.9	$	29.8	$	1.60	$	0.20
Item impacting comparability:
Loss on extinguishment of debt (b)		0.28		—		0.28		—
Items impacting comparability:
Impact of LWM natural gas and electricity derivatives (b)										(108.6)		(3.7)		(0.75)		(0.02)
Gain on acquisition of interest in joint venture (c)										(15.1)		—		(0.10)		—
Total items impacting comparability										(123.7)		(3.7)		(0.85)		(0.02)
Adjusted	$	0.50	$	0.66	$	0.70	$	1.27	$	108.2	$	26.1	$	0.75	$	0.18

(a)

Diluted weighted average common shares were ~~146.3~~144.6 million and ~~147.1~~146.9 million for the thirteen weeks ended ~~November~~August 28, ~~2021~~2022 and ~~November~~August 29, ~~2020, respectively, and 146.6 million and 147.1 million for the twenty-six weeks ended November 28,~~ 2021, ~~and November 29, 2020,~~ respectively.

(b)

~~The thirteen~~See footnote (a) to the reconciliation of net income to Adjusted EBITDA and ~~twenty-six weeks ended November 28, 2021, include~~Adjusted EBITDA including unconsolidated joint ventures above for a ~~loss on~~discussion of the ~~extinguishment of debt of $53.3 million ($40.5 million after-tax), which consists~~item impacting comparability.

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(c)

There was no tax impact associated with the gain of an ~~aggregate call premium of $39.6 million related~~additional 40% interest in our Argentina joint venture. See footnote (b) to the ~~redemption~~reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures above for a discussion of the ~~2024 Notes and 2026 Notes and the write-off of $13.7 million of debt issuance costs associated with those notes.~~item impacting comparability.

Off-Balance Sheet Arrangements

There have been no material changes to the off-balance sheet arrangements disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Form 10-K.

Critical Accounting Policies and Estimates

A discussion of our critical accounting policies and estimates can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Form 10-K. There were no material changes to these critical accounting policies and estimates during the first ~~half~~quarter of fiscal ~~2022.~~2023.

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New and Recently Adopted Accounting Pronouncements

For a list of our new and recently adopted accounting pronouncements, see Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our operations are exposed to market risks from adverse changes in commodity prices affecting the cost of raw materials and energy, foreign currency exchange rates, and interest rates. In the normal course of business, we may periodically enter into derivatives to minimize these risks, but not for trading purposes. The ~~effects of~~disruptions in the ~~COVID-19 pandemic~~global economy caused by the war in Ukraine have resulted in volatility and uncertainty in the markets in which we operate. At the time of this filing, we are unable to predict or determine the impacts that ~~the COVID-19 pandemic~~these events may continue to have on our exposure to market risk from commodity prices, foreign currency exchange rates, and interest rates, among other factors.

Based on our open commodity contract hedge positions as of ~~November~~August 28, 2022 and August 29, 2021, a hypothetical 10 percent decline in market prices applied to the fair value of the instruments would result in a charge to “Cost of sales” of approximately ~~$4.9~~$5.1 million ($~~3.7~~4.0 million ~~net~~after-tax) and $5.7 million ($4.4 million after-tax), respectively. Additionally, based on our LWM joint venture’s open commodity contract hedge positions as of ~~income tax benefits).~~August 28, 2022 and August 29, 2021, a hypothetical 10 percent decline in market prices applied to the fair value of the instruments would result in a charge to “Equity method investment earnings” of approximately $26.3 million ($19.5 million after-tax) and $1.7 million ($1.3 million after-tax), respectively. It should be noted that any change in the fair value of ~~the~~these contracts, real or hypothetical, would be substantially offset by an inverse change in the value of the underlying hedged item.

We transact business in multiple currencies and are subject to currency exchange rate risk through investments and businesses owned and operated in foreign countries. At ~~November~~August 28, ~~2021,~~2022, we had no financial instruments to hedge foreign currency risk.

At ~~November~~August 28, ~~2021,~~2022, we had $2,170.0 million of fixed-rate and ~~$571.0~~$587.6 million of variable-rate debt outstanding. At August 29, 2021, we had $2,166.0 million of fixed-rate and $578.8 million of variable-rate debt outstanding. We have interest rate risk associated with our variable-rate debt. A one percent increase in interest rates related to variable-rate debt would have resulted in an increase in interest expense and a corresponding decrease in income before taxes of approximately ~~$5.8~~$6.0 million annually ($4.6 million after-tax) and $5.9 million annually ($4.5 million ~~net of income tax benefits).~~after-tax) at August 28, 2022 and August 29, 2021, respectively.

For more information about our market risks, see Note 9, Debt and Financing Obligations, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report.

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ITEM 4. CONTROLS AND PROCEDURES

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of ~~November~~August 28, ~~2021.~~2022. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer, concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated any change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter covered by this report and determined that there was no change in our internal control over financial reporting during the quarter ~~covered by this report~~ended August 28, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Part II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 14, Commitments, Contingencies, Guarantees and Legal Proceedings, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report for information regarding our legal proceedings.

ITEM 1A. RISK FACTORS

We are subject to various risks and uncertainties in the course of our business. The discussion of these risks and uncertainties may be found under “Part I, Item 1A. Risk Factors” in the Form 10-K. There have been no material changes to the risk ~~factors.~~factors discussed in the Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Total shares of Lamb Weston common stock purchased by the Company during the thirteen weeks ended ~~November~~August 28, ~~2021~~2022 were as follows:


							Approximate Dollar								Approximate Dollar
					Total Number of		Value of Maximum						Total Number of		Value of Maximum
	Total Number		Average		Shares (or Units)		Number of Shares that		Total Number		Average		Shares (or Units)		Number of Shares that
	of Shares (or		Price Paid		Purchased as Part of		May Yet be Purchased		of Shares (or		Price Paid		Purchased as Part of		May Yet be Purchased
	Units)		Per Share		Publicly Announced		Under Plans or Programs		Units)		Per Share		Publicly Announced		Under Plans or Programs
Period	Purchased (a)		(or Unit)		Plans or Programs (b)		(in millions) (b)		Purchased (a)		(or Unit)		Plans or Programs (b)		(in millions) (b)
August 30, 2021 through September 26, 2021		986	$	65.79		—	$	143.6
September 27, 2021 through October 24, 2021		128,484	$	56.69		128,484	$	136.3
October 25, 2021 through November 28, 2021		742,325	$	57.70		740,269	$	93.6
May 30, 2022 through June 26, 2022										195,225	$	66.59		194,753	$	255.9
June 27, 2022 through July 24, 2022										206,283	$	73.28		181,791	$	242.6
July 25, 2022 through August 28, 2022										80,724	$	78.15		27,932	$	240.6
Total		871,795								482,232

(a)	Represents repurchased shares of our common stock under our publicly announced share repurchase program, which were repurchased at a weighted average price of ~~$57.55,~~$70.11, and shares withheld from employees to cover income and payroll taxes on equity awards that vested during the period.

(b)

InOn December 20, 2018, we announced that our Board of Directors had authorized a $250.0 million share repurchase program, with no expiration date. On December 17, 2021, we announced that our Board of Directors had authorized the repurchase of an additional $250.0 million of our common stock under this program. Repurchases may be made at our discretion from time to time on the open market, subject to applicable laws, including pursuant to a repurchase plan administered in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, or through privately negotiated transactions. In December 2021, our Board of Directors authorized the repurchase of an additional $250.0 million of our common stock under the program. We have $343.6 million remaining under the updated share repurchase authorization.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit Number		Exhibit Description

10.1		2030 Notes Indenture, dated as of November 8, 2021, by and among Lamb Weston Holdings, Inc., the Guarantors (as defined therein) and Computershare Trust Company, N.A., as trustee (including form of note relating to the 2030 Notes) (incorporated herein by reference to Exhibit 4.1Form of Lamb Weston Holdings, Inc.~~’s Current Report on Form 8-K filed on November 8, 2021 (File No. 001-37830))~~ Restricted Stock Unit Agreement (Stock-settled) (post-July 20, 2022)

10.2		2032 Notes Indenture, dated as of November 8, 2021, by and among Lamb Weston Holdings, Inc., the Guarantors (as defined therein) and Computershare Trust Company, N.A., as trustee (including form of note relating to the 2032 Notes) (incorporated herein by reference to Exhibit 4.2Form of Lamb Weston Holdings, Inc.~~’s Current Report on Form 8-K filed on November 8, 2021 (File No. 001-37830))~~ Performance Share Agreement (post-July 20, 2022)

10.3		Form of Lamb Weston Holdings, Inc. ~~Voluntary Deferred Compensation Plan, amended and restated as~~Nonqualified Stock Option Agreement for Employees (post-July 20, 2022)

10.4		Form of ~~September 22, 2021~~Lamb Weston Holdings, Inc. Leveraged Performance Share Agreement

31.1		Section 302 Certificate of Chief Executive Officer

31.2		Section 302 Certificate of Chief Financial Officer

32.1		Section 906 Certificate of Chief Executive Officer

32.2		Section 906 Certificate of Chief Financial Officer

101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)

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~~SIGNATURES~~SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LAMB WESTON HOLDINGS, INC.

	By:	/s/ BERNADETTE M. MADARIETA
		BERNADETTE M. MADARIETA
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)



Dated this ~~6th~~5th day of ~~January,~~October, 2022.

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