Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | Jul. 16, 2018 | Nov. 26, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Lamb Weston Holdings, Inc. | ||
Entity Central Index Key | 1,679,273 | ||
Document Type | 10-K | ||
Document Period End Date | May 27, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --05-27 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 7,960 | ||
Entity Common Stock, Shares Outstanding | 146,332,332 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY |
Combined and Consolidated State
Combined and Consolidated Statements of Earnings - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Condensed Combined and Consolidated Statements of Earnings | |||
Net sales | $ 3,423.7 | $ 3,168 | $ 2,993.8 |
Cost of sales | 2,544.2 | 2,389.2 | 2,332 |
Gross profit | 879.5 | 778.8 | 661.8 |
Selling, general and administrative expenses | 299.4 | 260.5 | 288.5 |
Income from operations | 580.1 | 518.3 | 373.3 |
Interest expense, net | 108.8 | 61.2 | 5.9 |
Income before income taxes and equity method earnings | 471.3 | 457.1 | 367.4 |
Income tax expense | 121.2 | 170.2 | 144.5 |
Equity method investment earnings | 83.6 | 53.3 | 71.7 |
Net income | 433.7 | 340.2 | 294.6 |
Less: Income attributable to noncontrolling interests | 16.9 | 13.3 | 9.3 |
Net income attributable to Lamb Weston Holdings, Inc. | $ 416.8 | $ 326.9 | $ 285.3 |
Earnings per share | |||
Basic (in dollars per share) | $ 2.83 | $ 2.22 | $ 1.92 |
Diluted (in dollars per share) | 2.82 | 2.22 | 1.92 |
Dividends declared per common share (in dollars per share) | $ 0.75750 | $ 0.37500 | $ 0 |
Combined and Consolidated Stat3
Combined and Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Other comprehensive income (loss) Pre-Tax Amount: | |||
Net income | $ 554.9 | $ 510.4 | $ 439.1 |
Reclassification of pension and post-retirement benefits out of accumulated other comprehensive income (loss) | 0.3 | (5.3) | |
Unrealized pension and post-employment benefit obligations | (6) | 1.6 | 7.2 |
Unrealized currency translation gains (losses) | 9.1 | (1.1) | (5.5) |
Comprehensive income (loss) | 558.3 | 510.9 | 435.5 |
Less: Comprehensive income attributable to noncontrolling interests | 16.9 | 13.3 | 9.3 |
Comprehensive income (loss) attributable to Lamb Weston | 541.4 | 497.6 | 426.2 |
Other comprehensive income (loss) Tax (Expense) Benefit: | |||
Net income | (121.2) | (170.2) | (144.5) |
Reclassification of pension and post-retirement benefits out of accumulated other comprehensive income (loss) | (0.1) | 1.3 | |
Unrealized pension and post-employment benefit obligations | 1.7 | (0.6) | (1.8) |
Comprehensive income (loss) | (119.6) | (170.8) | (145) |
Comprehensive income (loss) attributable to Lamb Weston | (119.6) | (170.8) | (145) |
Other comprehensive income (loss) After Tax Amount: | |||
Net income | 433.7 | 340.2 | 294.6 |
Reclassification of pension and post-retirement benefits out of accumulated other comprehensive income (loss) | 0.2 | (4) | |
Unrealized pension and post-employment benefit obligations | (4.3) | 1 | 5.4 |
Unrealized currency translation gains (losses) | 9.1 | (1.1) | (5.5) |
Comprehensive income (loss) | 438.7 | 340.1 | 290.5 |
Less: Comprehensive income attributable to noncontrolling interests | 16.9 | 13.3 | 9.3 |
Comprehensive income (loss) attributable to Lamb Weston | $ 421.8 | $ 326.8 | $ 281.2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 55.6 | $ 57.1 |
Receivables, less allowance for doubtful accounts of $0.6 and $0.5 | 225.9 | 185.2 |
Inventories | 549.7 | 525 |
Prepaid expenses and other current assets | 99.2 | 90.9 |
Total current assets | 930.4 | 858.2 |
Property, plant and equipment, net | 1,420.8 | 1,271.2 |
Goodwill | 135.1 | 133 |
Intangible assets, net | 35.4 | 37.2 |
Equity method investments | 219.8 | 178.6 |
Other assets | 11.1 | 7.4 |
Total assets | 2,752.6 | 2,485.6 |
Current liabilities: | ||
Short-term borrowings | 9.6 | 22 |
Current portion of long-term debt and financing obligations | 38.7 | 37.9 |
Accounts payable | 254.4 | 295 |
Accrued liabilities | 216 | 200.5 |
Total current liabilities | 518.7 | 555.4 |
Long-term liabilities: | ||
Long-term debt, excluding current portion | 2,336.7 | 2,365 |
Deferred income taxes | 92.1 | 90.5 |
Other noncurrent liabilities | 84.3 | 71.2 |
Total long-term liabilities | 2,513.1 | 2,526.7 |
Commitments and contingencies | ||
Redeemable noncontrolling interest | 55.6 | 50.7 |
Stockholders' equity: | ||
Common stock of $1.00 par value, 600,000,000 shares authorized; 146,395,866 and 146,087,044 shares issued | 146.4 | 146.1 |
Additional distributed capital | (900.4) | (904.8) |
Retained earnings | 426.4 | 121 |
Accumulated other comprehensive loss | (4.3) | (9.3) |
Treasury stock, at cost, 63,534 and 6,143 common shares | (2.9) | (0.2) |
Total stockholders' deficit | (334.8) | (647.2) |
Total liabilities and stockholders’ equity | $ 2,752.6 | $ 2,485.6 |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Receivables | ||
Allowance for doubtful accounts | $ 0.6 | $ 0.5 |
Common stock | ||
Common stock, par value | $ 1 | $ 1 |
Common stock, authorized shares | 600,000,000 | 600,000,000 |
Common stock, issued issued | 146,395,866 | 146,087,044 |
Treasury stock | ||
Treasury stock, common shares | 63,534 | 6,143 |
Combined and Consolidated Stat6
Combined and Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions | Common Stock | Treasury Stock | Parent Company's Equity Investment | Additional Paid-in (Distributed) Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total |
Balance at the beginning of the period at May. 31, 2015 | $ 1,362.6 | $ (5.1) | $ 1,357.5 | ||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net transactions with parent | (233.3) | (233.3) | |||||
Increase in redemption value of noncontrolling interests in excess of earnings allocated | (4.8) | (4.8) | |||||
Comprehensive income (loss) | 285.3 | (4.1) | 281.2 | ||||
Balance at the end of the period at May. 29, 2016 | 1,409.8 | (9.2) | 1,400.6 | ||||
Increase (Decrease) in Stockholders' Equity | |||||||
Issuance of common stock at separation | $ 146 | $ (146) | |||||
Issuance of common stock at separation (in shares) | 146,046,395 | ||||||
Non-cash debt exchange | (1,542.9) | (1,542.9) | |||||
Cash distribution to Conagra at Separation | (823.5) | (823.5) | |||||
Net transactions with parent | 806 | (762) | 44 | ||||
Increase in redemption value of noncontrolling interests in excess of earnings allocated | (0.5) | (1.6) | (2.1) | ||||
Common stock dividends declared | $ (54.8) | (54.8) | |||||
Exercise of stock options, issuance of other stock awards | $ 0.1 | 0.5 | 0.6 | ||||
Exercise of stock options, issuance of other stock awards (in shares) | 40,649 | ||||||
Common stock withheld to cover taxes on vested stock awards | $ (0.2) | (0.2) | |||||
Common stock withheld to cover taxes on vested stock awards (in shares) | (6,143) | ||||||
Stock-settled, stock-based compensation expense after Separation | 4.1 | 4.1 | |||||
Other | 0.2 | 0.2 | |||||
Comprehensive income (loss) | $ 151.1 | 175.8 | (0.1) | 326.8 | |||
Balance at the end of the period at May. 28, 2017 | $ 146.1 | (0.2) | (904.8) | 121 | (9.3) | (647.2) | |
Balance at the end of the period (in shares) at May. 28, 2017 | 146,080,901 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Increase in redemption value of noncontrolling interests in excess of earnings allocated | (2.7) | (2.7) | |||||
Common stock dividends declared | (110.8) | (110.8) | |||||
Exercise of stock options, issuance of other stock awards | $ 0.3 | 1.8 | 2.1 | ||||
Exercise of stock options, issuance of other stock awards (in shares) | 308,822 | ||||||
Common stock withheld to cover taxes on vested stock awards | (2.7) | (2.7) | |||||
Common stock withheld to cover taxes on vested stock awards (in shares) | (57,391) | ||||||
Stock-settled, stock-based compensation expense | 13.5 | 13.5 | |||||
Other | (8.2) | (0.6) | (8.8) | ||||
Comprehensive income (loss) | 416.8 | 5 | 421.8 | ||||
Balance at the end of the period at May. 27, 2018 | $ 146.4 | $ (2.9) | $ (900.4) | $ 426.4 | $ (4.3) | $ (334.8) | |
Balance at the end of the period (in shares) at May. 27, 2018 | 146,332,332 | 146,395,866 |
Combined and Consolidated Stat7
Combined and Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Cash flows from operating activities | |||
Net income | $ 433.7 | $ 340.2 | $ 294.6 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization of intangibles and debt issuance costs | 143.3 | 109.1 | 95.9 |
Stock-settled, stock-based compensation expense | 13.5 | 5.7 | 3.2 |
Earnings of joint ventures in excess of distributions | (35.1) | (22.3) | (33.8) |
Deferred income taxes | (3.6) | 14.8 | 20.7 |
Pension expense, net of contributions | (5.9) | 0.1 | |
Other | (2.1) | 4.8 | (6.5) |
Changes in operating assets and liabilities: | |||
Receivables | (40.4) | 1.2 | (15.1) |
Inventories | (23.6) | (26.1) | (10.7) |
Income taxes payable/receivable, net | 13.7 | (16.1) | |
Prepaid expenses and other current assets | (15.5) | (11.9) | 3.5 |
Accounts payable | (8.3) | 12.1 | 7.5 |
Accrued liabilities | 11.5 | 35.3 | 23 |
Net cash provided by operating activities | 481.2 | 446.9 | 382.3 |
Cash flows from investing activities | |||
Additions to property, plant and equipment | (306.8) | (287.4) | (152.3) |
Proceeds from sale of assets | 2.2 | 2.1 | 8 |
Other | (2.2) | ||
Net cash used for investing activities | (306.8) | (285.3) | (144.3) |
Cash flows from financing activities | |||
Proceeds (repayments) of short-term borrowings, net | (14.4) | (2.8) | 21.4 |
Proceeds from issuance of debt | 798.1 | 30 | |
Debt repayments | (39.2) | (23.8) | (39.1) |
Net transfers to Conagra | (38.8) | (236.8) | |
Dividends paid | (110.2) | (27.4) | |
Cash distributions paid to Conagra at Separation | (823.5) | ||
Payments of debt issuance costs | (12.3) | ||
Cash distributions paid to noncontrolling interest | (14.6) | (12.2) | (8.3) |
Other | (0.5) | 0.7 | |
Net cash used for financing activities | (178.9) | (142) | (232.8) |
Effect of exchange rate changes on cash and cash equivalents | 3 | 1.1 | 0.6 |
Net increase (decrease) in cash and cash equivalents | (1.5) | 20.7 | 5.8 |
Cash and cash equivalents, beginning of the period | 57.1 | 36.4 | 30.6 |
Cash and cash equivalents, end of period | $ 55.6 | $ 57.1 | $ 36.4 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
May 27, 2018 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Lamb Weston Holdings, Inc. (“we,” “us,” “our,” the “Company,” or “Lamb Weston”), along with its joint venture partners, is a leading global producer, distributor, and marketer of value-added frozen potato products and is headquartered in Eagle, Idaho. We have four reportable segments: Global, Foodservice, Retail, and Other. See Note 13, Segments, for additional information on our reportable segments. On November 9, 2016, Lamb Weston separated from Conagra Brands, Inc. (formerly, ConAgra Foods, Inc., “Conagra”) and became an independent publicly traded company through the pro rata distribution by Conagra of 100% of the outstanding common stock of Lamb Weston to Conagra stockholders (“Separation” or “Spinoff”). Each Conagra stockholder of record on November 1, 2016 (“record date”) received one share of Lamb Weston common stock for every three shares of Conagra common stock held on the record date. As a result, approximately 146 million shares of Lamb Weston common stock were distributed on November 9, 2016, to Conagra stockholders. Information related to the Separation and its effect on our financial statements are discussed throughout these Notes to Combined and Consolidated Financial Statements. Basis of Presentation These Combined and Consolidated Financial Statements present the financial results of Lamb Weston for the fiscal years ended May 27, 2018, May 28, 2017, and May 29, 2016 (“fiscal 2018, 2017, and 2016”), and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America. The fiscal year end of Lamb Weston ends the last Sunday in May. The fiscal years for the Combined and Consolidated Financial Statements presented consist of 52-week periods for fiscal 2018, 2017, and 2016. The financial statements include all adjustments (consisting only of normal recurring adjustments) that management considers necessary for a fair presentation of such financial statements. The preparation of financial statements involves the use of estimates and accruals. Actual results may vary from those estimates. In addition, the financial statements for periods prior to the Separation may not reflect what our results of operations would have been had we operated as a separate stand-alone company and may not be indicative of our future results of operations. Our combined and consolidated financial statements include the accounts of Lamb Weston and all of its majority-owned subsidiaries. In addition, the accounts of all variable interest entities for which we are the primary beneficiary are included in our combined and consolidated financial statements from the date such determination was made. Intercompany investments, accounts, and transactions have been eliminated. Certain amounts in the prior period combined financial statements have been reclassified to conform with the current period presentation. Prior to Separation Prior to the Separation from Conagra on November 9, 2016 (the “Separation Date”), the combined financial statements were prepared using the specific accounting records of the entities which comprise the business of Lamb Weston. In some cases, principally foreign locations, those business activities were contained within entities that were engaged in other business activities of Conagra. Because a direct ownership relationship did not exist among the various units comprising Lamb Weston, Conagra and its subsidiaries’ equity investment is shown in lieu of stockholders’ equity in the combined financial statements. Intercompany investments, accounts, and transactions between the various legal entities comprising Lamb Weston have been eliminated in the combined and consolidated financial statements. Prior to the Separation Date, Lamb Weston’s combined and consolidated financial statements included accounts specifically attributed to Lamb Weston and a portion of Conagra’s shared corporate general and administrative expenses. These shared services included, but were not limited to, legal, finance, internal audit, financial reporting, income tax accounting and advisory, insurance, information technology, treasury, and human resources functions. Shared corporate general and administrative expenses not specifically identifiable to Lamb Weston were allocated to Lamb Weston. The allocations were determined on a basis which we consider being reasonable reflections of the utilization of services provided by Conagra. However, these allocations may not reflect the costs and expenses that Lamb Weston would have incurred as a stand-alone public company. A more detailed discussion of the relationship with Conagra, including a description of the costs which have been allocated to Lamb Weston and the methods of cost allocation, is included in Note 3, Related Party Transactions. As further described in Note 3, prior to the Separation Date, Lamb Weston engaged in various intercompany transactions with Conagra and its affiliates, including the sale and purchase of certain products, the procurement of certain materials and services, cash transfers related to Conagra’s centralized cash management process and expense allocations. Changes in parent companies’ equity investment arising from these cash transactions are presented as “Net transfers to Conagra” in financing activities in the Combined and Consolidated Statements of Cash Flows, notwithstanding that advances from parent companies were utilized to fund Lamb Weston’s working capital requirements. Use of Estimates The preparation of the combined and consolidated financial statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the amounts reported in our combined and consolidated financial statements and the accompanying notes. On an ongoing basis, we evaluate our estimates, including but not limited to those related to provisions for income taxes, estimates of sales incentives and trade promotion allowances, and the valuation of goodwill and intangible assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the consolidated financial statements in future periods. Revenue Recognition Revenue is recognized when title and risk of loss are transferred to customers upon delivery based on terms of sale and collectibility is reasonably assured. Revenue is recognized as the net amount to be received after deducting estimated amounts for discounts, trade allowances, and returns of damaged and out-of-date products. Shipping and Handling Shipping and handling costs, such as freight to our customers’ destinations, are included in “Cost of sales” in the Combined and Consolidated Statements of Earnings. When shipping and handling costs are included in the sales price charged for our products, they are recognized in “Net sales.” Sales Incentives and Trade Promotion Allowances We promote our products with advertising, consumer incentives, and trade promotions. Sales promotions include, but are not limited to, discounts, coupons, rebates, and volume-based incentives. The estimates for sales incentives are based principally on historical sales and coupon utilization and redemption rates, influenced by judgments about current market conditions such as competitive activity in specific product categories. Trade promotion programs include introductory marketing funds such as slotting fees, cooperative marketing programs, temporary price reductions, and other activities conducted by our customers to promote our products. The cost of these programs are recognized as a reduction to revenue with a corresponding accrued liability based on estimates made at the time of shipment or coupon release. Estimates of trade promotion liabilities for promotional program costs incurred, but unpaid, are generally based on estimates of the quantity of customer sales, timing of promotional activities, current and past trade-promotion spending patterns, the interpretation of historical spending trends by customer and category, and forecasted costs for activities within the promotional programs. Estimates made by management in accounting for these costs are based primarily on our historical experience with marketing programs, with consideration given to current circumstances and industry trends. The determination of sales incentive and trade promotion costs requires judgment and may change in the future as a result of changes in customer promotion participation, particularly for new programs related to the introduction of new products. Final determination of the total cost of promotion is dependent upon customers providing information about proof of performance and other information related to the promotional event. Advertising and Promotion Advertising and promotion expenses totaled $31.6 million, $22.6 million, and $25.6 million in fiscal 2018, 2017, and 2016, respectively, and are included in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. Research and Development Research and development costs are expensed as incurred and totaled $13.5 million, $10.6 million, and $6.7 million in fiscal 2018, 2017, and 2016, respectively, and are included in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. Stock-Based Compensation Compensation expense resulting from all stock-based compensation transactions are measured and recorded in the combined and consolidated financial statements based on the grant date fair value of the equity or liability instruments issued. Compensation expense is recognized over the period the employee provides service in exchange for the award. See Note 10, Stock-Based Compensation, for additional information. Cash and Cash Equivalents Cash and all highly liquid investments with an original maturity of three months or less at the date of acquisition, including short-term time deposits and government agency and corporate obligations, are classified as cash and cash equivalents. Book overdraft balances, if any, are classified in “Accounts payable” in our Consolidated Balance Sheets and are reported as a component of operating cash flows for accounts payable in our Combined and Consolidated Statements of Cash Flows as they do not represent bank overdrafts. Cash equivalents are stated at cost, which approximates market. Cash and cash equivalents totaled $55.6 million and $57.1 million at May 27, 2018 and May 28, 2017, respectively. Trade Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are stated at the amount we expect to collect based on our past experience, as well as reliance on the Perishable Agricultural Commodities Act, which was enacted to help promote fair trade in the fruit and vegetable industry by establishing a code of fair business practices. The collectability of our accounts receivable is based upon a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations (e.g., bankruptcy filings, substantial downgrading of credit sources), a specific reserve for bad debts is recorded against amounts due to the Company to reduce the net recorded receivable to the amount that we reasonably believe will be collected. For all other customers, reserves for bad debts are recognized based on historical collection experience. If collection experience deteriorates, the estimate of the recoverability of amounts due could be reduced. We periodically review our allowance for doubtful accounts and adjustments to the valuation allowance are recorded as income or expense. Trade accounts receivable balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. At May 27, 2018 and May 28, 2017, the allowance for doubtful accounts was $0.6 million and $0.5 million, respectively 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 (dollars in millions): May 27, May 28, 2018 2017 Raw materials and packaging $ 87.2 $ 84.5 Finished goods 430.5 409.7 Supplies and other 32.0 30.8 Inventories $ 549.7 $ 525.0 Property, Plant and Equipment Property, plant and equipment are recorded at cost. Cost includes expenditures for major improvements and replacements and the amount of interest cost associated with significant capital additions. The amount of interest capitalized from construction in progress was $4.2 million, $5.2 million, and $2.7 million in fiscal 2018, 2017, and 2016, respectively. Repairs and maintenance costs are expensed as incurred. The components of property, plant and equipment were as follows (dollars in millions): May 27, May 28, 2018 2017 Land and land improvements $ 139.8 $ 139.8 Buildings, machinery, and equipment 2,212.6 1,917.7 Furniture, fixtures, office equipment, and other 101.0 62.6 Construction in progress 127.9 229.4 Property, plant and equipment, at cost 2,581.3 2,349.5 Less accumulated depreciation (1,160.5) (1,078.3) Property, plant and equipment, net $ 1,420.8 $ 1,271.2 Depreciation is computed on the straight-line method over the estimated useful lives of the respective classes of assets as follows: Land improvements 1-40 years Buildings 10-40 years Machinery and equipment 5-20 years Furniture, fixtures, office equipment, and other 3-15 years We recorded $136.3 million, $104.3 million, and $93.9 million of depreciation expense in fiscal 2018, 2017, and 2016, respectively. At May 27, 2018 and May 28, 2017, purchases of property, plant and equipment included in accounts payable were $27.9 million and $60.4 million, respectively. Long-Lived Asset Impairment We review long-lived assets for impairment upon the occurrence of events or changes in circumstances which indicate that the carrying amount of the assets may not be fully recoverable, measured by comparing their net book value to the undiscounted projected future cash flows generated by their use. Impaired assets are recorded at their estimated fair value. Goodwill and Other Identifiable Intangible Assets We perform an annual impairment assessment of goodwill at the reporting unit level in the fourth quarter of each year, or more frequently if indicators of potential impairment exist. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment. The reporting unit’s carrying value used in an impairment test represents the assignment of various assets and liabilities, excluding certain corporate assets and liabilities, such as cash, and debt. Qualitative factors include industry and market considerations, overall financial performance, and other relevant events and factors affecting the reporting unit. Additionally, as part of this assessment, we may perform a quantitative analysis to support the qualitative factors above by applying sensitivities to assumptions and inputs used in measuring a reporting unit’s fair value. Our quantitative impairment test considers both the income approach and the market approach to estimate a reporting unit’s fair value. Significant estimates include market segment growth rates, our assumed market segment share, estimated costs, and discount rates based on weighted average cost of capital. We test the reasonableness of the inputs and outcomes of our discounted cash flow analysis against available market data. During the annual goodwill impairment test performed in the fourth quarter of 2018, we assessed qualitative factors to determine whether it was more likely than not that the fair value of each reporting unit was less than its carrying value. Based on the results of the qualitative impairment test, we determined that it was not more likely than not that the carrying value was less than the fair value of the our Global, Foodservice, Retail, and Other segments. We amortize acquisition-related intangible assets with finite lives over their estimated useful life. We perform a fourth quarter, or sooner depending on circumstances, review of significant finite-lived identified intangible assets to determine whether facts and circumstances indicate that the carrying amount may not be recoverable. These reviews can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for our products lines. See Note 5, Goodwill and Other Identifiable Intangible Assets, for additional information. Fair Values of Financial Instruments Unless otherwise specified, Lamb Weston believes the carrying value of financial instruments approximates their fair value. See Note 11, Fair Value Measurements, for additional information. Foreign Currency Most of our foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets and liabilities are translated at exchange rates prevailing at the balance sheet dates. Revenues, costs, and expenses are translated into U.S. dollars using daily exchange rates. Gains and losses resulting from the translation of Consolidated Balance Sheets are recorded as a component of accumulated other comprehensive income (loss). Foreign currency transactions resulted in a gain of $4.7 million in fiscal 2018 and losses of $2.7 million and $2.6 million in fiscal 2017 and 2016, respectively. These amounts were recorded in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. Derivative Financial Instruments We use derivatives and other financial instruments to hedge a portion of our commodity risks. We do not hold or issue derivatives and other financial instruments for trading purposes. Derivative instruments are reported in our Consolidated Balance Sheets at their fair values, unless the derivative instruments qualify for the normal purchase normal sale exception (“NPNS”) under GAAP and such exception has been elected. If the NPNS exception is elected, the fair values of such contracts are not recognized. We do not designate commodity derivatives to achieve hedge accounting treatment. Income Taxes We recognize current tax liabilities and assets based on an estimate of taxes payable or refundable in the current year for each of the jurisdictions in which we transact business. As part of the determination of our current tax liability, management exercises considerable judgment in evaluating positions taken in the tax returns. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We also recognize deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences (e.g., the difference in book basis versus tax basis of fixed assets resulting from differing depreciation methods). If appropriate, we recognize valuation allowances to reduce deferred tax assets to amounts that are more likely than not to be ultimately realized, based on our assessment of estimated future taxable income, including the consideration of available tax planning strategies. We have recorded provisional estimates associated with the December 22, 2017 enactment of the U.S. Tax Cuts and Jobs Act (“Tax Act”), including the accrual for the transition tax and the remeasurement of deferred income taxes. The SEC has provided accounting and reporting guidance that allows us to report provisional amounts within a measurement period up to one year of enactment, due to the complexities inherent in adopting the changes. New guidance from regulators, interpretation of the law, and refinement of our estimates from ongoing analysis of data and tax positions may change the provisional amounts. New and Recently Issued Accounting Standards Accounting Standards Adopted In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . This ASU is intended to simplify the accounting for goodwill impairment by removing the requirement to perform a hypothetical purchase price allocation. With the elimination of this step, a goodwill impairment test is performed by comparing the fair value of a reporting unit to its carrying value. An impairment charge is recognized for the amount by which the reporting unit’s carrying value exceeds its fair value. All other goodwill impairment guidance will remain largely unchanged. This new standard will be applied prospectively and is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted after January 1, 2017. We elected to adopt this guidance in the fourth quarter of fiscal 2018 on a prospective basis. The adoption did not have a material impact on our financial statements. Accounting Standards Not Yet Adopted In June 2018, the Emerging Issues Task Force (“EITF”) reached a final consensus on EITF Issue No. 17-A: Customer’s Accounting for Implementation, Setup, and Other Upfront Costs (Implementation Costs) Incurred in a Cloud Computing Arrangement That is Considered a Service Contract . This guidance provides that implementation costs should be capitalized using the same model as if the cloud computing arrangement included a software license (ASC 350-40) and should be expensed over the term of the hosting arrangement, including periods covered by renewal options that are reasonably certain to be exercised. This guidance is effective for our fiscal 2020 and early adoption is permitted. We do not expect the adoption of this standard to have material impact on our financial statements. In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU requires employers to disaggregate the service cost component from the other components of net benefit cost and report it in the same line item(s) as other employee compensation costs arising from services rendered during the period. All other non-service components are required to be separate from the service cost component and outside a subtotal of income from operations. These non-service components are not eligible for capitalization. Changes to the presentation of benefit costs are required to be adopted retrospectively, while changes to the capitalization of service costs into inventories are required to be adopted prospectively. The standard permits, as a practical expedient, use of the amounts disclosed in Note 7, Employee Benefit Plans and Other Post-Retirement Benefits, for the prior comparative periods as the estimation basis for applying the retrospective presentation requirement. We will adopt the provisions of this guidance in fiscal 2019 (beginning May 28, 2018). The adoption of the amended standard will not have a significant impact on our financial statements. In February 2016, the FASB issued Accounting Standard Codification (“ASC”) Topic 842, Leases, which requires lessees to reflect most leases on their balance sheet as assets and obligations. We will adopt this standard on May 27, 2019, the beginning of our fiscal year 2020. The standard is to be applied under the modified retrospective method, unless the FASB ratifies its proposal to allow a practical expedient to change the date of initial application to the effective date, without adjusting comparative periods presented. The primary impact upon adoption will be the recognition, on a discounted basis, of our minimum commitments under noncancelable operating leases as right of use assets and obligations on our Consolidated Balance Sheet. This will result in a significant increase in assets and liabilities on our Consolidated Balance Sheet. We are currently implementing process changes in order to comply with the measurement and disclosure requirements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , which was issued to achieve a consistent application of revenue recognition within the United States, resulting in a single revenue model to be applied by reporting companies under U.S. GAAP. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We have completed our assessment and implemented policies, processes, and controls to support the standards measurement and disclosure requirements. We will continue to recognize revenue for Lamb Weston branded potato products at the point in time when title and risk of loss transfers to the customer which is also the point in time when control transfers. The new standard, however, does accelerate the timing of when revenue is recognized for customer-specific branded (“private label”) potato products. We will adopt the standard using the modified transition approach by recording the cumulative effect at the date of adoption. Accordingly, approximately $93 million of revenue and approximately $15 million of net income will be accelerated into years ended prior to May 28, 2018. This will result in a cumulative adjustment to increase retained earnings by approximately $15 million effective May 28, 2018. We expect to accelerate about the same amount of revenues and expenses, that would have been recorded in fiscal 2020 using our historical revenue recognition practices, into fiscal 2019, resulting in a relatively small impact on our fiscal 2019 Consolidated Statement of Earnings. Our estimates of private label revenues and expenses that will be accelerated into fiscal 2019 under the new standard are subject to management’s estimates of future private label sales and could change significantly. Accordingly, we will not know the final net impact of adopting this standard on our fiscal 2019 results until the end of fiscal 2019. There were no other accounting standards recently issued that had or are expected to have a material impact on our financial statements. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
May 27, 2018 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 2. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per common share for the periods presented (dollars and shares in millions): For the Fiscal Years Ended May 2018 2017 2016 Numerator: Net income attributable to Lamb Weston Holdings, Inc. $ 416.8 $ 326.9 $ 285.3 Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated 2.7 2.1 4.8 Net income available to Lamb Weston common stockholders $ 414.1 $ 324.8 $ 280.5 Denominator (a): Basic weighted average common shares outstanding 146.3 146.1 146.0 Add: Dilutive effect of employee incentive plans (b) 0.7 0.5 — Diluted weighted average common shares outstanding 147.0 146.6 146.0 Earnings per share Basic $ 2.83 $ 2.22 $ 1.92 Diluted $ 2.82 $ 2.22 $ 1.92 (a) For the periods prior to the Separation, earnings per share was calculated based on approximately 146 million shares of Lamb Weston common stock that were distributed to Conagra stockholders on November 9, 2016. (b) Potentially dilutive shares of common stock from 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 May 27, 2018 and May 28, 2017, we did not have any stock-based awards that were antidilutive. Lamb Weston had no share-based awards outstanding prior to the Separation. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
May 27, 2018 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 3. RELATED PARTY TRANSACTIONS Prior to the Separation, our business was included in the Commercial Foods segment of Conagra. As a result, our transactions with Conagra were considered related party transactions. In connection with the Separation, we entered into a separation and distribution agreement, as well as various other agreements that governed our relationships with Conagra following the Separation, including a transition services agreement, tax matters agreement, employee matters agreement, and trademark license agreement. Under the transition services agreement, Conagra provided a number of corporate staff services to us based on direct and indirect costs associated with rendering those services. These services included information technology, accounting, and human resource services. The fiscal year ended May 27, 2018 and May 28, 2017, included $2.4 million and $4.2 million, respectively, of expenses related to the transition services agreement. In April 2018, we concluded our transition services agreement with Conagra. Prior to the Separation Date, Conagra allocated certain selling, general and administrative costs to Lamb Weston based on specific metrics correlated with the cost of services it provided or costs incurred on behalf of the Company (e.g., employee headcount, net sales, and square footage of office space). Allocations based upon these metrics resulted in $7.7 million and $53.9 million of selling, general and administrative costs allocated to Lamb Weston in fiscal 2017 and 2016, respectively. Beginning in fiscal 2017, certain departmental charges, which were previously allocated, were directly absorbed by Lamb Weston. The above allocations were consistent with historical allocations for Lamb Weston; however, Conagra did not historically allocate certain other corporate costs to its various segments. For any remaining indirect corporate costs that supported Lamb Weston, Conagra allocated additional selling, general and administrative costs using an equal weighting between Lamb Weston product contribution margin (net sales less cost of sales and advertising and promotion expenses) and Lamb Weston total assets relative to consolidated Conagra product contribution margin and total assets. Allocations of indirect corporate costs were $17.3 million and $107.6 million in fiscal 2017 and 2016, respectively, of selling, general and administrative costs. The fiscal 2016 amount includes a $59.5 million charge reflecting an allocation to Lamb Weston of a portion of the actuarial losses in excess of 10% of Conagra’s pension liability for Conagra’s company sponsored plans. Although it is not practicable to estimate what such costs would have been if Lamb Weston had operated as a separate public company, Lamb Weston considers such allocations to have been made on a reasonable basis. The allocations discussed above ceased after the Separation Date. The Consolidated Balance Sheet as of May 27, 2018 and May 28, 2017 and the fiscal 2018, 2017, and 2016 Combined and Consolidated Statements of Earnings for the periods up to the Separation Date, include only the specific debt and interest expense of the legal entities that comprise Lamb Weston, and do not include any allocated interest expense or third-party debt of Conagra. Included in net sales are sales to Conagra of $8.4 million and $25.7 million for fiscal 2017 and 2016, respectively. The related cost of sales were $3.4 million and $21.4 million, respectively. Lamb Weston also made purchases from Conagra of $7.9 million and $18.5 million in fiscal 2017 and 2016, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
May 27, 2018 | |
INCOME TAXES | |
INCOME TAXES | 4. INCOME TAXES For periods ended on or prior to the Separation Date, we were a member of Conagra’s consolidated group and our U.S. taxable income was included in the consolidated U.S. federal income tax return of Conagra as well as in returns filed by Conagra with certain state and local taxing jurisdictions. Our foreign income tax returns were filed on a separate company basis. For periods prior to the Separation Date, our income tax liability was computed and presented herein under the “separate return method” as if we were a separate tax paying entity. In connection with the Separation, we entered into a tax matters agreement. Under the tax matters agreement, Conagra is generally responsible for all taxes associated with consolidated federal and state filings (and will be entitled to all related refunds of taxes) imposed on Conagra and its subsidiaries (including subsidiaries that were transferred to Lamb Weston at Separation) with respect to the taxable periods (or portions thereof) ended on or prior to November 9, 2016. Also, pursuant to this agreement, Lamb Weston is generally responsible for all taxes associated with separately filed foreign, state, and local tax filings (and will be entitled to all related refunds of taxes) imposed on Lamb Weston and its subsidiaries ended on or prior to November 9, 2016. Pre-tax income consisted of the following (dollars in millions): For the Fiscal Years Ended May 2018 2017 2016 United States $ 478.2 $ 467.5 $ 384.7 Foreign 76.7 42.9 54.4 Total pre-tax income $ 554.9 $ 510.4 $ 439.1 The provision for income taxes included the following (dollars in millions): For the Fiscal Years Ended May 2018 2017 2016 Current U.S. federal $ 94.3 $ 132.0 $ 100.0 State and local 14.7 13.9 12.0 Foreign 15.0 9.5 11.8 Total current provision for taxes 124.0 155.4 123.8 Deferred U.S. federal (4.4) 9.7 17.6 State and local 0.1 3.2 (1.3) Foreign 1.5 1.9 4.4 Total deferred provision for taxes $ (2.8) $ 14.8 $ 20.7 Total provision for taxes $ 121.2 $ 170.2 $ 144.5 Income tax expense decreased in fiscal year 2018 predominantly due to the Tax Act enacted in December 2017. Notably, the Tax Act reduced the U.S. federal corporate tax rate from 35% to 21%, assessed a one-time transition tax on earnings of non-U.S. subsidiaries that have not been taxed previously in the U.S., limited the tax deductibility of interest, provided for immediate deductions for certain new investments instead of deductions for depreciation expense over time, modified or repealed many business deductions and credits, and created new taxes on certain future foreign sourced earnings. Income taxes computed by applying the U.S. federal statutory rates to income from operations, including equity method earnings, and before income taxes are reconciled to the provision for income taxes set forth in the Combined and Consolidated Statements of Earnings as follows (dollars in millions): For the Fiscal Years Ended May 2018 2017 2016 Provision computed at U.S. federal statutory rate (a) $ 162.6 $ 178.6 $ 153.7 Increase (reduction) in rate resulting from: State and local taxes, net of federal benefit 12.6 11.4 7.1 Tax credits and domestic manufacturers deduction (8.1) (11.0) (9.5) Effect of taxes on foreign operations (7.0) (7.8) (2.8) Deferred impact of rate change (b) (45.4) — — Transition tax liability (b) 11.5 — — Other (5.0) (1.0) (4.0) Total provision for taxes $ 121.2 $ 170.2 $ 144.5 Effective income tax rate (c) (a) Since our fiscal year-end is the last Sunday in May, the impact of the lower U.S. federal corporate income tax rate from the Tax Act is phased in, resulting in a U.S. federal statutory tax rate of 29.3% for fiscal 2018. The U.S. federal statutory tax rate was 35% for both fiscal 2017 and 2016. (b) In connection with the Tax Act, we recorded a $45.4 million net provisional tax benefit from the estimated impact of remeasuring our net U.S. deferred tax liabilities, including deferred tax benefits originating during the year, with the new lower statutory tax rate. Excluding the deferred tax benefits originating during fiscal 2018, the net provisional tax benefit was $39.9 million. We also recorded an $11.5 million transition tax on our previously untaxed foreign earnings that is primarily payable over eight years. As allowed by Staff Accounting Bulletin (“SAB”) No. 118, our provisional estimates will be refined during fiscal 2019 from our ongoing analysis of data and tax positions along with new guidance from regulators and interpretation of the law which will not exceed one year from the enactment date of the Tax Act. (c) The effective income tax rate is calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings. Income Taxes Paid Income taxes paid, net of refunds, were $106.9 million, $170.0 million, and $124.7 million in fiscal 2018, 2017, and 2016, respectively. Deferred Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Deferred income tax assets and liabilities were calculated using the U.S. federal statutory rate of 21% at May 27, 2018 and 35% at May 28, 2017 as follows (dollars in millions): May 27, 2018 May 28, 2017 Assets Liabilities Assets Liabilities Property, plant and equipment $ — $ 127.7 $ — $ 159.8 Goodwill and other intangible assets 68.0 — 125.0 — Compensation and benefit related liabilities 15.3 — 20.3 — Accrued expenses and other liabilities 16.7 — 22.5 — Deferred revenue previously recognized for tax 7.2 — 8.2 — Net operating loss carryforwards (a) 15.8 — 17.0 — Debt issuance cost — 4.6 — 8.3 Investment in joint ventures — 9.1 — 12.3 Other 0.7 12.0 0.9 5.1 123.7 153.4 193.9 185.5 Less: Valuation allowance (b) (62.0) — (98.4) — Net deferred taxes (c) $ 61.7 $ 153.4 $ 95.5 $ 185.5 (a) Lamb Weston has approximately $37.2 million of gross ($8.7 million after-tax) foreign net operating loss carryforwards, of which the majority expire by fiscal 2021. Lamb Weston also has approximately $102.2 million of gross ($7.1 million after-tax) state capital loss carryovers that will expire in fiscal 2021. (b) The valuation allowance includes the portion of the net operating loss carryforwards that we are not more likely than not to realize. The net impact on income tax expense related to changes in the valuation allowance, including net operating loss carryforwards were zero in fiscal 2018 and $2.8 million of expense in fiscal 2017. (c) Deferred tax assets of $0.4 million and $0.5 million, as of May 27, 2018 and May 28, 2017, respectively, were presented in “Other assets.” Deferred tax liabilities of $92.1 million and $90.5 million, as of May 27, 2018 and May 28, 2017, respectively, were presented in “Deferred income taxes” as a long-term liability. The deferred tax asset and liability net position is determined by tax jurisdiction. We have previously asserted an intent to indefinitely reinvest our earnings and other basis differences in operations outside the U.S., and we have not recognized U.S. deferred income taxes. The Tax Act imposed a transition tax on all of the Company’s accumulated untaxed non-U.S. earnings. We have not provided additional income taxes for any additional outside basis differences inherent in our investments in foreign subsidiaries because the investments are essentially permanent in duration. Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these entities (i.e., basis difference in excess of that subject to the one-time transition tax) is not practicable. We are analyzing the impact of the Tax Act on our indefinite reinvestment assertion. . Uncertain Tax Positions The aggregate changes in the gross amount of unrecognized tax benefits, excluding interest and penalties consisted of the following (dollars in millions): For the Fiscal Years Ended May 2018 2017 2016 Beginning balance $ 6.9 $ 3.8 $ 4.3 Decreases from positions established during prior fiscal years — — (0.5) Increases from positions established during current and prior fiscal years 7.9 2.2 0.6 Decreases relating to settlements with taxing authorities — — (0.2) Reductions resulting from lapse of applicable statute of limitations (1.6) (0.9) (0.3) Adjustments resulting from the Separation — 1.8 (0.1) Ending balance (a) $ 13.2 $ 6.9 $ 3.8 (a) If the $13.2 million and $6.9 million of unrecognized tax benefits as of May 27, 2018 and May 28, 2017, were recognized in a future period, it would result in a tax benefit of $11.1 million and $6.2 million, respectively, and a reduction in the effective tax rate. The ending balance excludes $2.9 million and $2.8 million of gross interest and penalties at May 27, 2018 and May 28, 2017, respectively. Lamb Weston accrues interest and penalties associated with uncertain tax positions as part of income tax expense. Lamb Weston conducts business and files tax returns in numerous countries, states, and local jurisdictions. While Lamb Weston has little history of audits on a standalone basis, Conagra has completed its U.S. federal income tax audit for tax years through fiscal 2015 and all resulting significant items for fiscal 2015 and prior years have been settled with the U.S. Internal Revenue Service. Other major jurisdictions where we conduct business generally have statutes of limitations ranging from three to five years. Although the timing of the resolutions and/or closures of audits is highly uncertain, it is reasonably possible that certain U.S. federal and non-U.S. tax audits may be concluded within the next 12 months, which could increase or decrease the balance of our gross unrecognized tax benefits. The estimated impact on income tax expense and net income is not expected to be significant. |
GOODWILL AND OTHER IDENTIFIABLE
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | 12 Months Ended |
May 27, 2018 | |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | 5. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS The following table presents changes in goodwill balances as allocated to each segment for fiscal years 2018 and 2017 (dollars in millions): Global Foodservice Retail Other Total Balance at May 29, 2016 $ $ $ $ $ 133.9 Foreign currency translation adjustment (0.9) — — — (0.9) Balance at May 28, 2017 74.8 42.8 10.9 4.5 133.0 Foreign currency translation adjustment 2.1 — — — 2.1 Balance at May 27, 2018 $ 76.9 $ 42.8 $ 10.9 $ 4.5 $ 135.1 Other identifiable intangible assets were as follows (dollars in millions): May 27, 2018 May 28, 2017 Weighted Weighted Average Gross Average Gross Useful Life Carrying Accumulated Useful Life Carrying Accumulated (in years) Amount Amortization (in years) Amount Amortization Non-amortizing intangible assets (a) n/a $ 18.0 $ — n/a $ 18.0 $ — Amortizing intangible assets (b) 14 35.2 17.8 14 34.9 15.7 $ 53.2 $ 17.8 $ 52.9 $ 15.7 (a) Non-amortizing intangible assets are comprised of brands and trademarks. (b) Amortizing intangible assets are principally composed of customer relationships, licensing arrangements, and intellectual property. Amortization expense was $2.4 million, $2.3 million, and $1.9 million in fiscal 2018, 2017, and 2016, respectively. Total intangible assets, net of amortization, excluding goodwill, as of May 27, 2018 and May 28, 2017, were $35.4 million and $37.2 million, respectively. Foreign intangible assets are affected by foreign currency translation. Estimated intangible asset amortization expense is $1.8 million in each year in fiscal 2019 – 2023, with $8.5 million of amortization recognized thereafter. Impairment Testing We test goodwill and non-amortizing intangible assets for impairment annually in the fourth quarter or sooner if events or changes in circumstances indicate that the carrying value of the asset may exceed fair value. Additionally, when we experience changes to our business or operating environment, we evaluate the remaining useful lives of our finite-lived purchased intangible assets to determine whether any adjustments to the useful lives are necessary. During the annual goodwill impairment test performed in the fourth quarter of 2018, we assessed qualitative factors to determine whether it was more likely than not that the fair value of each reporting unit was less than its carrying value. Based on the results of the qualitative impairment test, we determined that it was not more likely than not that the carrying value was less than the fair value of the our Global, Foodservice, Retail, and Other segments. Additionally, we completed our tests of our non-amortizing intangibles in the fourth quarter and there was no indication of intangible asset impairment. |
INVESTMENTS IN JOINT VENTURES
INVESTMENTS IN JOINT VENTURES | 12 Months Ended |
May 27, 2018 | |
INVESTMENTS IN JOINT VENTURES | |
INVESTMENTS IN JOINT VENTURES | 6. INVESTMENTS IN JOINT VENTURES Variable Interest Entity - Consolidated We hold a 49.99% interest in Lamb Weston BSW, LLC (“Lamb Weston BSW”), a potato processing venture with Ochoa Ag Unlimited Foods, Inc. (“Ochoa”). We provide all sales and marketing services to Lamb Weston BSW. Under certain circumstances, we could be required to compensate Ochoa for lost profits resulting from significant production shortfalls. Commencing on June 1, 2018, or on an earlier date under certain circumstances, we have a contractual right to purchase the remaining equity interest in Lamb Weston BSW from Ochoa (the “call option”). We are also currently subject to a contractual obligation to purchase all of Ochoa’s equity investment in Lamb Weston BSW at the option of Ochoa (the “put option”). The purchase prices under the call option and the put option (collectively, the “options”) are based on the book value of Ochoa’s equity interest at the date of exercise, as modified by an agreed-upon rate of return for the holding period of the investment balance. The agreed-upon rate of return varies depending on the circumstances under which the options are exercised. In June 2018, we provided notice to Ochoa to exercise a call option to purchase Ochoa’s interest in Lamb Weston BSW. We expect to consummate the transaction as soon as practicable. Our variable interests in Lamb Weston BSW include an equity investment in the venture, the options, certain fees paid to Lamb Weston by Lamb Weston BSW for sales and marketing services, the contingent obligation related to production shortfalls and the contingent obligation to fund additional equity contributions or purchase the underlying notes associated with certain Lamb Weston BSW financings. Our maximum exposure to loss as a result of our involvement with this venture is equal to our equity investment in the venture, the balance of any promissory notes extended to the venture which are subject to our purchase obligation, and the amount, if any, by which the put option exercise price exceeds the fair value of the non-controlling interest in Lamb Weston BSW upon its exercise. Also, in the event of a production shortfall, we could be required to compensate Ochoa for lost profits. It is not possible to determine the maximum exposure to losses from the potential exercise of the put option or from potential production shortfalls. However, we do not currently expect to incur material losses resulting from these potential exposures. Lamb Weston and Lamb Weston BSW purchase potatoes from a shareholder of Ochoa. The aggregate amounts of such purchases were $58.7 million, $62.9 million, and $58.6 million in fiscal 2018, 2017, and 2016, respectively. Additionally, Lamb Weston and Lamb Weston BSW utilize storage facilities and water treatment services from a shareholder of Ochoa. The aggregate amount of such costs were $5.1 million in each of fiscal 2018, 2017, and 2016. Lamb Weston BSW is a variable interest entity, and we have determined that we are the primary beneficiary of the entity. We consolidate the financial statements of Lamb Weston BSW. The amounts presented for Lamb Weston BSW in the table below exclude intercompany balances eliminated in consolidation and include the non-controlling interest at redemption value as reported in our Consolidated Balance Sheets (dollars in millions): May 27, May 28, 2018 2017 Cash and equivalents $ 20.5 $ 10.9 Receivables, less allowance for doubtful accounts (a) 0.2 0.1 Inventories 1.7 1.9 Prepaid expenses and other current assets 0.4 0.4 Property, plant and equipment, net 47.9 49.4 Goodwill 18.8 18.8 Intangible assets, net 3.7 4.5 Other noncurrent assets 1.0 — Total assets $ 94.2 $ 86.0 Current portion of long-term debt $ 1.6 $ 1.5 Accounts payable 17.0 11.6 Accrued liabilities 2.0 2.0 Long-term debt, excluding current portion 26.4 28.0 Total liabilities $ 47.0 $ 43.1 Redeemable noncontrolling interest (b) $ 55.6 $ 50.7 (a) As of May 27, 2018 and May 28, 2017, the affiliate receivables both were $24.0 million and are not included above as they are eliminated in consolidation. (b) Represents the amount that our joint venture partner, Ochoa, had the right to put its equity interest to Lamb Weston on May 27, 2018 and May 28, 2017. The liabilities recognized as a result of consolidating the Lamb Weston BSW entity do not represent additional claims on Lamb Weston’s general assets. In connection with the Lamb Weston BSW long-term debt, we have entered into an agreement with the financial institution which provides that in the event that Lamb Weston BSW fails to comply with certain financial covenants or repayment terms, we are required to either make certain additional equity contributions to Lamb Weston BSW or to purchase the underlying notes. The assets recognized as a result of consolidating Lamb Weston BSW are the property of the venture and are not available to Lamb Weston for any other purpose. Variable Interest Entity - Not Consolidated We hold a 50% interest in Lamb-Weston/RDO Frozen (“Lamb Weston RDO”), a potato processing venture based in the United States. We provide all sales and marketing services to Lamb Weston RDO, and we receive a fee for these services based on a percentage of the net sales of the venture. The fees received were $14.4 million, $13.9 million, and $13.2 million in fiscal 2018, 2017, and 2016, respectively. These fees are recorded as a reduction to selling, general and administrative expense. Our ownership interest in this venture is included in “Equity method investments” in our Consolidated Balance Sheets. The balance of Lamb Weston’s investment was $18.0 million and $17.2 million at May 27, 2018 and May 28, 2017, respectively, representing our maximum exposure to loss as a result of our involvement with this venture. The capital structure of Lamb Weston RDO includes owners’ equity of $36.0 million and $34.4 million as of May 27, 2018 and May 28, 2017, respectively; and term borrowings from banks of $57.2 million and $59.3 million as of May 27, 2018 and May 28, 2017, respectively. We have determined that Lamb Weston RDO is a variable interest entity, but Lamb Weston is not the primary beneficiary. Lamb Weston does not have the power to direct the activities that most significantly impact the economic performance of the joint venture. Accordingly, we do not consolidate the financial statements of this entity. We use equity method accounting to account for our ownership in Lamb Weston RDO. Other Investments We hold a 50% ownership interest in Lamb-Weston/Meijer v.o.f. (“Lamb-Weston/Meijer”), a joint venture with Meijer Frozen Foods B.V., which is headquartered in the Netherlands, and manufactures and sells frozen potato products principally in Europe. We account for this investment using equity method accounting. Transactions with Joint Ventures The carrying value of our equity method investments, which include Lamb Weston RDO and Lamb-Weston/Meijer, at May 27, 2018 and May 28, 2017, was $219.8 million and $178.6 million, respectively. These amounts are included in “Equity method investments” in our Consolidated Balance Sheets. Summarized combined financial information for our equity method investments based on 100% of their operations is as follows: For the Fiscal Years Ended May 2018 2017 2016 Net sales $ 1,142.7 $ 992.6 $ 917.3 Gross margin 246.3 190.9 167.0 Earnings before income taxes (a) 167.2 106.6 143.3 May 27, May 28, 2018 2017 Current assets $ 376.9 $ 325.2 Noncurrent assets 362.7 312.5 Current liabilities 247.5 209.0 Noncurrent liabilities 63.4 71.7 (a) Fiscal 2016 includes a $35.4 million non-cash gain related to the settlement of a pension plan of the Company’s Lamb-Weston/Meijer joint venture. Our Combined and Consolidated Statements of Earnings reflect our potion of this gain, or $17.7 million. |
EMPLOYEE BENEFIT PLANS AND OTHE
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | 12 Months Ended |
May 27, 2018 | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | 7. EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS Lamb Weston has defined pension benefit plans for certain hourly employees. The plans covering these hourly employees are open to new participants. We also have a plan for retiree health care benefits that is closed to new entrants with only certain current active participants being eligible for benefits upon retirement and completion of a specified number of years of creditable service. We also have a nonqualified defined benefit pension plan that provides unfunded supplemental retirement benefits to certain executives. This plan is closed to new participants and pension benefit accruals are frozen for active participants. Other Plans Eligible U.S. employees participate in a contributory defined contribution plan (“the Plan”). The Plan permits participants to make contributions by salary reduction pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended. We generally match 100% of the first 6% of the employee’s contribution election and provide an additional 3% contribution to eligible participants, regardless of employee participation level. The Plan’s matching contributions have a five-year graded vesting with 20% vesting each year. We made $13.9 million of employer-matching contributions in fiscal 2018 and $6.0 million in fiscal 2017 after the Separation. Prior to Separation and during fiscal 2016, matching contributions were paid by Conagra. We sponsor a deferred compensation savings plan, which is an unfunded nonqualified defined contribution plan. The plan permits eligible employees to continue to make deferrals and receive company matching contributions when their contributions to the defined contribution plan are stopped due to limitations under U.S. tax law. With the exception of a $0.5 million Rabbi Trust, participant deferrals and company matching contributions are not invested in separate trusts, but are paid directly from our general assets at the time benefits become due and payable. At May 27, 2018 and May 28, 2017, we had $12.4 million and $8.8 million, respectively, of liabilities attributable to participation in our deferred compensation plan recorded on our Consolidated Balance Sheets. Obligations and Funded Status of Defined Benefit Pension and Other Post-retirement Benefits Plans The funded status of our plans is based on company contributions, benefit payments, the plan asset investment return, the discount rate used to measure the liability, and expected participant longevity. The following table, which includes only company-sponsored defined benefit and other post-retirement benefit plans, reconciles the beginning and ending balances of the projected benefit obligation and the fair value of plan assets. We recognize the unfunded status of these plans on the Consolidated Balance Sheets, and we recognize changes in funded status in the year changes occur through the Consolidated Statements of Comprehensive Income (Loss) (dollars in millions): For the Fiscal Years Ended May 2018 2017 Pension Plans Post-Retirement Plan Pension Plans Post-Retirement Plan Change in Benefit Obligation Benefit obligation at beginning of year $ 10.1 $ 2.5 $ — $ — Net transfer from Conagra — — 7.4 3.2 Service cost 7.8 — 4.4 — Interest cost 0.4 0.2 0.1 0.1 Participant contributions — 0.1 — — Benefits paid (0.1) (0.1) — — Actuarial (gain) loss 0.7 4.3 (1.8) (0.8) Benefit obligation at fiscal year-end $ 18.9 $ 7.0 $ 10.1 $ 2.5 Accumulated benefit obligation portion of above $ 18.9 $ 10.1 Change in Fair Value of Plan Assets Fair value of plan assets at beginning of year $ 4.5 $ — $ — $ — Actual return on plan assets (0.7) — — — Company contributions 13.6 — 4.5 — Plan participants contributions — 0.1 — — Benefits paid (0.1) (0.1) — — Fair value of plan assets at end of year $ 17.3 $ — $ 4.5 $ — Underfunded status $ (1.6) $ (7.0) $ (5.6) $ (2.5) Amounts Recognized on Consolidated Balance Sheets Other noncurrent liabilities $ (1.6) $ (7.0) $ (5.6) $ (2.5) Amounts Recognized in Accumulated Other Comprehensive Income Loss (Pre-tax) Actuarial (gain) loss $ 0.7 $ 3.4 $ (1.0) $ (0.4) Prior service benefit — — — (0.2) Total $ 0.7 $ 3.4 $ (1.0) $ (0.6) Components of Net Periodic Benefit Cost and Other Comprehensive (Income) Loss For the period after the Separation Date, the components of net periodic benefit cost were as follows (dollars in millions): For the Fiscal Years Ended May 2018 2017 Post-Retirement Post-Retirement Pension Plans Plan Pension Plans Plan Service cost $ 7.8 $ — $ 4.4 $ — Interest cost 0.4 0.2 0.1 0.1 Expected return on plan assets (0.4) — — — Net amortization of unrecognized amounts Prior service benefit — (0.2) — — Actuarial gain — 0.5 — — Net periodic benefit cost $ 7.8 $ 0.5 $ 4.5 $ 0.1 Changes in plan assets and benefit obligations recognized in other comprehensive (income) loss Prior service benefit $ — $ — $ — $ (0.2) Actuarial (gain) loss 1.7 4.3 (1.0) (0.4) Amortization of prior service cost — 0.2 — — Amortization of actuarial gain (a) — (0.5) — — Total recognized in other comprehensive loss (income) $ 1.7 $ 4.0 $ (1.0) $ (0.6) Total recognized in net periodic benefit cost and other comprehensive loss (income) (pre-tax) $ 9.5 $ 4.5 $ 3.5 $ (0.5) (a) Accumulated losses in excess of 10% of the greater of the projected benefit obligation or the market-related value of assets will be recognized on a straight-line basis over the average remaining service period of active employees in our plans (which is between eight to 11 for our pension plans and approximately four years for our post-retirement benefit plan), to the extent that losses are not offset by gains in subsequent years. The estimated net loss and prior service cost that will be amortized from “Accumulated other comprehensive loss” into net periodic benefit cost in 2019 is $0.7 million ($0.5 million after tax). Assumptions The actuarial assumptions used in determining the benefit obligations and net periodic pension cost for our defined benefit and post-retirement plans are as follows: For the Fiscal Years Ended May 2018 2017 Pension Plans Post-Retirement Plan Pension Plans Post-Retirement Plan Weighted-Average Assumptions Used to Determine Benefit Obligations: Discount rate 4.25% 4.18% 4.33% 3.50% Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost: Discount rate 4.33% 3.60% 3.81% 3.18% Expected return on plan assets 7.50% N/A 7.50% N/A Discount Rate Assumption. The discount rate reflects the current rate at which the pension obligations could be settled on the measurement date: May 27, 2018. The discount rate assumption used to calculate the present value of pension and post-retirement benefit obligations reflects the rates available on high-quality bonds on May 27, 2018. The bonds included in the models reflect anticipated investments that would be made to match the expected monthly benefit payments over time. The plans’ projected cash flows were duration-matched to these models to develop an appropriate discount rate. The discount rate we will use in fiscal 2019 to calculate the net periodic pension benefit and post-retirement benefit cost is 4.25% and 4.18%, respectively. Asset Return Assumption: Our investment strategies are governed by our Employee Benefit Investments Council. The expected return on plan assets reflects the expected long-term rates of return for the categories of investments currently held in the plan as well as anticipated returns for additional contributions made in the future. The expected long-term rate of return is adjusted when there are fundamental changes in expected returns on the plan investments. The weighted-average expected return on plan assets we will use in our calculation of fiscal 2019 net period pension benefit cost is 5.3%. Health Care Cost Trend Rate Assumptions. We review external data and historical trends for health care costs to determine our healthcare cost trend rate assumptions . We assumed health care cost trend rates for our post-retirement benefit plan as follows: 2018 2017 Health care cost trend rate (Pre65/Post65) 8.4/6.3% 9.0/6.5% Ultimate health care cost trend rate 4.5% 4.5% Year that the rate reaches the ultimate trend rate 2024 2024 A one-percentage point increase in the assumed health care cost trend rate would have an insignificant effect on the fiscal 2018 and 2017 postretirement benefit obligation. Investment Policies and Strategies and Fair Value Measurements of Plan Assets We utilize professional advisors to oversee pension investments and provide recommendations regarding investment strategy. Our overall strategy and related apportionments between equity and debt securities may change from time to time based on market conditions, external economic factors, timing of contributions and the funded status of the plans. The general investment objective for all of our plan assets is to optimize growth of the pension plan trust assets, while minimizing the risk of significant losses to enable the plans to satisfy their benefit payment obligations over time. The objectives consider the long-term nature of the benefit obligations, the liquidity needs of the plans, and the expected risk/return trade-offs of the asset classes in which the plans may choose to invest. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility risk, all of which are subject to change. Due to the level of risk associated with some investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term, and such changes could materially affect the reported amounts. May 27, 2018 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Cash and cash equivalents $ 11.8 $ — $ — $ 11.8 Equity securities: U.S. equity securities (a) — 1.0 — 1.0 International equity securities (a) — 1.5 — 1.5 Fixed income securities: Government bonds (b) 3.0 — — 3.0 Total assets $ 14.8 $ 2.5 $ — $ 17.3 (c) (a) Includes investments in common/collective trust funds that are valued using net asset values (“NAV”) provided by the administrator of the funds. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of units outstanding. While the underlying assets are actively traded on an exchange, the funds are not. There are currently no redemption restrictions on these investments. There are certain funds with one-day redeemable notice. (b) Includes investments in U.S. Treasury securities based on quoted prices in active markets. (c) At May 27, 2018, the fair value of our plan assets was $17.3 million, which includes $12.0 million we contributed to the Plan in the fourth quarter of fiscal 2018, net of benefit payments. The fourth quarter contribution was invested in cash and cash equivalents at May 27, 2018, and invested per the target investment allocation policy after fiscal year-end. The remaining $5.5 million was At May 28, 2017, we had $4.5 million of plan assets invested in cash and cash equivalents (Level 1). Funding and Cash Flows We make pension plan contributions that are sufficient to fund our actuarially determined costs, generally equal to the minimum amounts required by the Employee Retirement Income Security Act of 1974, as amended. From time to time, we may make discretionary contributions based on the funded status of the plans, tax deductibility, income from operations, and other factors. In fiscal 2018, we made $13.6 million of contributions to our qualified plan, which exceeded our minimum contribution requirements of $1.7 million. In fiscal 2019, our minimum contribution requirements are $0.4 million. The following are estimated benefit payments to be paid to current plan participants by year (dollars in millions). Qualified pension benefit payments are paid from plan assets, while nonqualified pension benefit payments are paid by the Company. Pension Plans Post-Retirement Plan 2019 $ 0.1 $ 0.3 2020 0.3 0.3 2021 0.5 0.3 2022 0.7 0.4 2023 0.9 0.4 Succeeding 5 years 9.2 2.5 Pension Cost Financial Statement Presentation Allocated pension costs (benefits) incurred by Conagra prior to the Separation Date and pension costs recognized after the Separation Date are included in the Combined and Consolidated Statements of Earnings as follows (dollars in millions): For the Fiscal Years Ended May 2018 2017 2016 Cost of sales (a) $ 7.8 $ 9.6 $ 12.0 Selling, general and administrative expenses (a) — (5.5) 53.9 Total $ 7.8 $ 4.1 $ 65.9 (a) Pension service costs are allocated to operations as reflected in cost of sales above. Expected returns on pension assets and interest costs are reflected in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. Fiscal 2016 includes $59.5 million of charges reflecting Lamb Weston’s portion of the actuarial losses in excess of 10% of Conagra’s pension liability for Conagra sponsored plans. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 12 Months Ended |
May 27, 2018 | |
ACCRUED LIABILITIES | |
ACCRUED LIABILITIES | 8. ACCRUED LIABILITIES The components of accrued liabilities were as follows (dollars in millions): May 27, May 28, 2018 2017 Compensation and benefits $ 91.7 $ 80.1 Accrued trade promotions 45.4 40.5 Dividends payable 28.0 27.4 Accrued interest 10.8 10.2 Franchise, property, and sales and use taxes 9.6 9.8 Income taxes payable 3.1 4.7 Other 27.4 27.8 Accrued liabilities $ 216.0 $ 200.5 |
DEBT AND FINANCING OBLIGATIONS
DEBT AND FINANCING OBLIGATIONS | 12 Months Ended |
May 27, 2018 | |
DEBT AND FINANCING OBLIGATIONS | |
DEBT AND FINANCING OBLIGATIONS | 9. DEBT AND FINANCING OBLIGATIONS At May 27, 2018 and May 28, 2017, our debt, including financing obligations, was as follows (dollars in millions): May 27, May 28, 2018 2017 Short-term borrowings: Revolving credit facility $ — $ 4.5 Other credit facilities 9.6 17.5 9.6 22.0 Long-term debt: Term loan facility, due 2021 632.8 666.6 4.625% senior notes, due 2024 833.0 833.0 4.875% senior notes, due 2026 833.0 833.0 Lamb Weston BSW Installment Notes 28.0 29.5 2,326.8 2,362.1 Financing obligations: 4.35% lease financing obligation due May 2030 66.8 68.2 Lease financing obligations due on various dates through 2040 (a) 12.2 7.7 79.0 75.9 Total debt and financing obligations 2,415.4 2,460.0 Debt issuance costs (30.4) (35.1) Short-term borrowings (9.6) (22.0) Current portion of long-term debt and financing obligations (38.7) (37.9) Long-term debt, excluding current portion $ 2,336.7 $ 2,365.0 (a) The interest rates on our lease financing obligations are due on various dates through 2040 ranging from 2.39% to 5.00% as of May 27, 2018 and 2.00% to 3.32% as of May 28, 2017. In November 2016, as part of the Separation, Lamb Weston issued $2,341.0 million of debt, which included $1,666.0 million of aggregate principal amount of 4.625% and 4.875% senior notes (together, “Senior Notes”) and $675.0 million of borrowings under a five-year senior secured credit agreement (“Credit Agreement”) with a syndicate of lenders. The Credit Agreement consists of a five-year amortizing $675.0 million term loan facility (“Term Loan Facility”) and a five-year non-amortizing $500.0 million revolving credit facility (“Revolving Credit Facility” and, together with the Term Loan Facility, “Credit Facilities”). The Credit Agreement is secured by security interests and liens on substantially all of our and each guarantor’s assets, as long as Lamb Weston remains below investment grade by both Moody’s and Standard & Poor’s. Of the $1,666.0 million of Senior Notes, $1,542.9 million aggregate principal amount from the Senior Notes were distributed directly to Conagra, and we used the proceeds of $123.1 million of Senior Notes, together with $700.4 million of borrowings under the Credit Facilities, to fund an $823.5 million cash payment to Conagra at the time of the Separation. The $1,542.9 million of Senior Notes distributed directly to Conagra was considered a non-cash financing activity for Lamb Weston. We currently have the following debt obligations: · Revolving Credit Facility : A five-year nonamortizing $500.0 million revolving credit facility with variable annual interest, under which no borrowings were outstanding on May 27, 2018. In addition to paying interest, we pay an annual commitment fee for undrawn amounts at a rate of 0.25% to 0.40% depending on our consolidated net leverage ratio. · Term Loan Facility : A five-year $675.0 million term loan amortizing in equal quarterly installments for a total of 5% annually, commencing in March 2017, with the balance payable in November 2021. · 4.625% Senior Notes : An eight-year $833.0 million senior debt obligation with fixed annual interest, due November 1, 2024. · 4.875% Senior Notes : A ten-year $833.0 million senior debt obligation with fixed annual interest, due November 1, 2026. · Lamb Weston BSW Installment Notes : Includes a $23.0 million fixed rate loan with interest at 4.34% and a $7.0 million variable rate loan with interest at LIBOR plus an applicable margin ranging from 1.90% to 2.30%, payable in semi-annual installments through June 2031. Credit Facilities Borrowings under the Credit Facilities bear interest at a floating rate per annum based upon the Base Rate or the Eurocurrency rate, in each case, plus an applicable margin which varies based upon our consolidated net leverage ratio. Margins range from 0.500% to 1.250% for Base Rate loans and from 1.500% to 2.250% for Eurocurrency rate loans. The Base Rate is defined as the highest of (a) Bank of America’s prime rate, (b) the federal funds rate plus 0.500%, and (c) the Eurocurrency rate with a term of one month plus 1.0%. Upon the occurrence of an event of default, among other things, amounts outstanding under the Credit Agreement may be accelerated and the commitments may be terminated. Our obligations under the Credit Agreement are guaranteed by certain of our direct and indirect domestic subsidiaries on the terms set forth in the Credit Agreement. The Credit Agreement has a maturity date of November 9, 2021. At May 27, 2018, we had no borrowings outstanding under our Revolving Credit Facility. At May 27, 2018, we had $496.6 million of availability on our Revolving Credit Facility, which is net of outstanding letters of credit of $3.4 million. For the period from May 28, 2017 through May 27, 2018, borrowings under our Revolving Credit Facility ranged from a low of zero dollars to a high of $152.8 million. For the period from May 28, 2017 through May 27, 2018, the weighted average interest rate for our outstanding borrowings under the Revolving Credit Facility was 3.31%. We are required to maintain the following financial covenant ratios under the Credit Agreement: · Total net leverage ratio of 5.50 to 1.00, decreasing ratably to 4.50 to 1.00 on August 25, 2019 through maturity; and · Interest coverage ratio of 2.75 to 1.00. Our obligations under the Credit Facilities are guaranteed jointly and severally on a senior secured basis by each of our existing and future direct or indirect wholly owned domestic restricted subsidiaries, subject to an exclusion of immaterial subsidiaries. The Credit Agreement and the indentures governing the Senior Notes contain covenants that, subject to exceptions, limit our ability and the ability of our subsidiaries to, among other things, incur, assume or guarantee additional indebtedness, pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt, make loans and investments, incur or suffer to exist liens, sell, transfer or otherwise dispose of assets, enter into agreements that restrict distributions or other payments from restricted subsidiaries to us, engage in transactions with affiliates, designate subsidiaries as unrestricted or restricted, and consolidate, merge, amalgamate or transfer all or substantially all of our assets. 4.625% and 4.875% Senior Notes The Senior Notes are senior unsecured obligations and rank equally with all of our present and future senior indebtedness, senior to all our future subordinated indebtedness and effectively subordinated to all of our present and future senior secured indebtedness (including all borrowings with respect to the Credit Facilities to the extent of the value of the assets securing such indebtedness). Interest on the Senior Notes is due semiannually. Upon a change of control (as defined in the indentures governing the Senior Notes), we must offer to repurchase the Senior Notes at 101% of the principal amount, plus accrued and unpaid interest. We may redeem all or a portion of the 4.625% Senior Notes at any time on or after November 1, 2021, at declining prices starting at 102.313%, plus accrued and unpaid interest. We may redeem all or a portion of the 4.875% Senior Notes at any time on or after November 1, 2021, at declining prices starting at 102.438%, plus accrued and unpaid interest. Prior to November 1, 2021, we may redeem Senior Notes of either series, in whole at any time or in part, from time to time, at a price equal to 100% of the principal amount thereof, plus a make-whole premium, plus accrued and unpaid interest. We may also redeem up to 35% of the aggregate principal amount of either series of Senior Notes on or prior to November 1, 2019 in an aggregate amount equal to the net proceeds from certain equity offerings at redemption prices equal to 104.625% for the 4.625% Senior Notes and 104.875% for the 4.875% Senior Notes, plus, in each case, accrued and unpaid interest. The Senior Notes are jointly and severally guaranteed on a senior unsecured basis by our domestic subsidiaries that guarantee our obligations under the Credit Agreement. Other The aggregate minimum principal maturities of our long-term debt, including current portion, for the next five fiscal years and thereafter, are as follows (dollars in millions): Financing Debt (a) Obligations Total 2019 $ 44.9 $ 3.4 $ 48.3 2020 35.3 3.3 38.6 2021 35.5 3.0 38.5 2022 533.4 3.1 536.5 2023 1.8 3.2 5.0 Thereafter 1,685.5 63.0 1,748.5 $ 2,336.4 $ 79.0 $ 2,415.4 (a) Debt includes $9.6 million of expected payments on our other credit facilities in 2019. Conagra paid $25.4 million of costs in connection with the debt issuances described above and we paid $12.3 million. We amortize the costs in interest expense using the effective interest method over the life of the loans. In fiscal 2018 and fiscal 2017, we recorded $4.6 million and $2.5 million, respectively, of amortization expense in “Interest expense” in our Combined and Consolidated Statements of Earnings. During fiscal 2018, we paid $104.0 million of interest on debt. During fiscal 2017, we paid $48.8 million of interest on debt, after the Separation. Other Credit Facilities We have $58.0 million of other credit facilities, under which $9.6 million and $17.5 million were outstanding at May 27, 2018 and May 28, 2017, respectively. These facilities consist of an overdraft line, a fixed asset commitment, and a working capital facility. Borrowings under the facilities bear interest at a percentage of the stated rate, 4.35% at May 27, 2018, and may be prepaid without penalty. We guarantee the full amount of our subsidiary’s obligations to the financial institution up to the maximum amount of the credit facility. Financing Obligations During fiscal 2010, we completed the sale of approximately 17,600 acres of farmland to an unrelated buyer and immediately entered into an agreement with an affiliate of the buyer to lease back the farmland. Lamb Weston’s performance under the lease was guaranteed by Conagra. Conagra’s guarantee precluded accounting for this transaction as a sale and leaseback and, accordingly, the $75.0 million of proceeds received were treated as a financing obligation and the land and related equipment remain on our Consolidated Balance Sheets. At May 27, 2018 and May 28, 2017, the remaining balance of the financing obligation was $66.8 million and $68.2 million, respectively, and the net carrying value of the related property was $39.3 million and $39.9 million, respectively. The lease agreement has a remaining initial term of two years and two five-year renewal options. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
May 27, 2018 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 10. STOCK-BASED COMPENSATION On October 29, 2016, our Board of Directors adopted the Lamb Weston Holdings, Inc. 2016 Stock Plan, which was amended in July 2017 (“Stock Plan”). Under the Stock Plan, we may grant eligible employees and non-employee directors awards of stock options, cash, and stock-settled restricted stock units (“RSUs”), restricted stock awards, other awards based on our common stock, and performance-based long-term incentive awards (“Performance Shares”). At May 27, 2018, we had 10.0 million shares authorized under the Stock Plan, and 7.9 million were available for future grant. Prior to the Separation Date, Conagra maintained equity incentive plans in which our employees and certain of our non-employee directors participated. Under these plans, Conagra could grant eligible employees awards of stock options, RSUs, restricted stock, and other awards based on its common stock, as well as Performance Shares. In addition, certain Lamb Weston employees participated in Conagra’s employee stock purchase plan, which allowed employees to purchase shares of Conagra common stock. In connection with the Separation, outstanding Conagra stock options, RSUs and Performance Shares granted to Lamb Weston employees and non-employee directors under Conagra’s equity incentive plans were adjusted and converted into Lamb Weston stock awards under the Stock Plan. The awards were adjusted and converted in a manner intended to preserve the aggregate intrinsic value of the original Conagra equity award and are subject to substantially the same terms and conditions after the Separation as the terms and conditions applicable to the original Conagra award prior to the Separation Date. Stock Options We grant options to employees for the purchase of stock at exercise prices equal to the fair market value of the underlying stock on the date of grant. Options generally become exercisable in three annual installments beginning on the first anniversary of the grant date and have a maximum term of ten years. The weighted average Black-Scholes assumptions for stock options granted during fiscal year 2018 were: Expected volatility (%) (a) 23.27 Dividend yield (%) 1.71 Risk-free interest rate (%) 1.51 Expected life of stock option (years) 4.4 (a) Because our equity shares had been traded for a relatively short period of time when the options were granted, we based our expected volatility assumptions on the volatility of related industry stocks. The following table summarizes stock option activity for fiscal 2018 and 2017: Weighted- Weighted- Average Average Aggregate Exercise Remaining Intrinsic Price Contractual Value (a) Shares (per share) Term (Years) (in millions) Outstanding at May 29, 2016 — — Converted on November 9, 2016 607,420 $ 23.60 Granted 146,514 35.15 Exercised (22,896) 21.90 Forfeited/cancelled (10,211) 30.68 Outstanding at May 28, 2017 720,827 $ 25.90 7.4 $ 14.2 Granted 56,496 43.82 Exercised (125,717) 17.47 Forfeited/cancelled — — Outstanding at May 27, 2018 651,606 $ 29.08 7.3 $ 23.7 Exercisable at May 27, 2018 424,746 $ 26.29 6.7 $ 16.6 (a) The aggregate intrinsic values represent the total pre-tax intrinsic value (the difference between our closing stock price on the last trading day of our fiscal 2018 fourth quarter, or May 25, 2018, and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options at the end of the fiscal year. The amount changes based on the fair market value of our common stock. RSUs and Performance Shares 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 at the date of grant. Certain RSU grants do not provide for the payment of dividend equivalents to the participant during the vesting period. For those grants, the value of the grants is reduced by the net present value of the foregone dividend equivalent payments. 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, will be paid in shares of our common stock. Subject to limited exceptions set forth in the Stock Plan, any shares earned will be distributed at the end of the three-year performance period. The value of the Performance Shares is adjusted based upon the market price of our common stock at the end of each reporting period and amortized as compensation expense over the vesting period. The following table summarizes RSU and Performance Share activity for fiscal 2018 and 2017: Stock-Settled Cash-Settled Performance Shares Weighted- Weighted- Weighted- Average Average Average Grant- Grant- Grant- Date Fair Date Fair Date Fair Shares Value Shares Value Shares Value Outstanding at May 29, 2016 — — — — — — Converted on November 9, 2016 459,466 $ 25.05 469,837 $ 25.33 56,050 $ 25.84 Granted (a) 86,642 33.96 — — 1,640 25.84 Vested (b) (17,753) 18.68 (1,503) 23.70 — — Forfeited/expired/cancelled (38,751) 24.24 (5,722) 26.73 — — Outstanding at May 28, 2017 489,604 26.92 462,612 25.33 57,690 25.84 Granted (a) 293,209 45.22 — — 125,524 43.90 Performance condition adjustment (c) — — — — (818) 19.70 Vested (b) (172,772) 23.82 (173,762) 20.00 (15,228) 19.70 Forfeited/expired/cancelled (28,166) 31.52 (3,198) 27.75 (6,898) 43.87 Outstanding at May 27, 2018 581,875 $ 36.84 285,652 $ 28.54 160,270 $ 39.82 (a) Granted represents new grants and dividend equivalents accrued. (b) The aggregate fair value of awards that vested in fiscal 2018 and 2017 was $16.6 million and $0.7 million, respectively, which represents the market value of our common stock on the date that the RSUs and Performance Shares vested. The number of RSUs and Performance Shares vested includes shares of common stock that we withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements. RSUs that are expected to vest are net of estimated future forfeitures. (c) Amount represents adjustment for performance results attained on Performance Shares during fiscal 2018 Compensation Expense Prior to the Separation Date, Conagra charged us for the costs related to the portion of Conagra’s incentive plans in which Lamb Weston employees participated and an allocation of stock-based compensation costs of certain Conagra employees who provided general and administrative services on our behalf (see Note 3, Related Party Transactions). Our share-based compensation expense is recorded in “Selling, general and administrative expenses.” Compensation expense for share-based awards recognized in the Combined and Consolidated Statements of Earnings, net of forfeitures, was as follows (dollars in millions): For the Fiscal Years Ended May 2018 2017 2016 Stock options $ 1.2 $ 0.6 $ 0.4 Stock-settled RSUs 7.9 4.0 2.4 Performance Shares 4.4 1.1 0.4 Stock-settled compensation expense 13.5 5.7 3.2 Cash-settled RSUs (a) 8.8 9.7 5.7 Total compensation expense 22.3 15.4 8.9 Income tax benefit (b) (6.9) (5.7) (3.3) Total compensation expense, net of tax benefit $ 15.4 $ 9.7 $ 5.6 (a) All cash-settled RSUs are marked-to-market and presented within “Accrued liabilities” and “Other noncurrent liabilities” in our Consolidated Balance Sheets. (b) Income tax benefit represents the marginal tax rate. Based on estimates at May 27, 2018, total unrecognized compensation expense related to stock-based payments was as follows (dollars in millions): Remaining Weighted Unrecognized Average Compensation Recognition Expense Period (in years) Stock options $ 0.4 1.1 Stock-settled RSUs 11.4 2.0 Cash-settled RSUs 3.7 1.0 Performance shares 9.9 2.1 Total unrecognized compensation expense $ 25.4 1.9 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
May 27, 2018 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 11. FAIR VALUE MEASUREMENTS FASB guidance establishes a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The three levels of inputs used to measure fair value are as follows: Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities, Level 2—Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, and Level 3—Unobservable inputs reflecting our own assumptions and best estimate of what inputs market participants would use in pricing the asset or liability. 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 May 27, 2018 and May 28, 2017 (dollars in millions): As of May 27, 2018 Level 1 Level 2 Level 3 Total Assets: Pension plan assets $ 14.8 $ 2.5 $ — $ 17.3 Deferred compensation assets 0.5 — — 0.5 Derivative assets (a) — 0.8 — 0.8 Total assets $ 15.3 $ 3.3 $ — $ 18.6 Liabilities: Derivative liabilities (a) $ — $ 1.4 $ — $ 1.4 Deferred compensation liabilities (b) — 12.4 — 12.4 Total liabilities $ — $ 13.8 $ — $ 13.8 As of May 28, 2017 Level 1 Level 2 Level 3 Total Assets: Pension plan assets $ 4.5 $ — $ — $ 4.5 Deferred compensation assets 0.6 — — 0.6 Total assets $ 5.1 $ — $ — $ 5.1 Liabilities: Derivative liabilities (a) $ — $ 2.4 $ — $ 2.4 Deferred compensation liabilities (b) — 8.8 — 8.8 Total liabilities $ — $ 11.2 $ — $ 11.2 (a) The fair values of our Level 2 derivative assets and liabilities were determined using valuation models that use market observable inputs including interest rate curves and both forward and spot prices for currencies and commodities. Derivative assets and liabilities included in Level 2 primarily represent commodity swap and option contracts. (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. Non-financial assets such as intangible assets, property, plant and equipment are recorded at fair value only if an impairment is recognized. Cost and equity investments are measured at fair value on a non-recurring basis. At May 27, 2018, we had $1,687.5 million of fixed-rate and $648.9 million of variable-rate debt outstanding. Based on current market rates, the fair value of our fixed-rate debt at May 27, 2018 was estimated to be $1,658.4 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. We estimated the fair value of our fixed-rate debt using quoted market prices (Level 2 inputs) within the fair value hierarchy that is described above. 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. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
May 27, 2018 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 12. STOCKHOLDERS’ EQUITY In connection with the Separation, we amended and restated our certificate of incorporation to authorize 600,000,000 shares of common stock and 60,000,000 shares of preferred stock. We had 146,395,866 shares of common stock issued and outstanding as of May 27, 2018. Each share of common stock entitles the holder to one vote on matters to be voted on by our stockholders. No preferred stock was issued or outstanding on May 27, 2018. Dividends During fiscal 2018 and fiscal 2017, we paid $110.2 million and $27.4 million, respectively, of dividends to common stockholders. On July 19, 2018, our Board of Directors declared a dividend of $0.19125 per share of common stock. The dividend will be paid on August 31, 2018, to stockholders of record as of the close of business on August 3, 2018. Accumulated Other Comprehensive Income (Loss) (“AOCI”) Comprehensive income includes net income, currency translation adjustments, and changes in prior service cost and net actuarial gains (losses) from pension and post-retirement plans. We generally deem our foreign investments to be indefinite in nature and we do not provide for taxes on currency translation adjustments arising from converting the investment denominated in a foreign currency to the U.S. dollar. If we determine that a foreign investment, as well as undistributed earnings, are no longer indefinite in nature, estimated taxes are provided for the related deferred tax liability (asset), if any, resulting from currency translation adjustments. Changes in AOCI, net of taxes, by component follows (dollars in millions). Amounts in parentheses indicate losses. Foreign Accumulated Currency Pension and Other Translation Post-Retirement Comprehensive Gains (Losses) Benefits Loss Balance as of May 28, 2017 $ (10.3) $ 1.0 $ (9.3) Other comprehensive income before reclassifications, net of tax 9.1 (4.3) 4.8 Amounts reclassified out of AOCI, net of tax — 0.2 (a) 0.2 Net current-period other comprehensive income (loss) 9.1 (4.1) 5.0 Balance as of May 27, 2018 $ (1.2) $ (3.1) $ (4.3) (a) These AOCI components are included in the computation of net pension and postretirement benefit costs. See Note 7, Employee Benefit Plans and Other Post-Retirement Benefits, for additional information. |
SEGMENTS
SEGMENTS | 12 Months Ended |
May 27, 2018 | |
SEGMENTS | |
SEGMENTS | 13. SEGMENTS We have four 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. We measure our segments’ product contribution margin, which is defined as net sales, less cost of sales and advertising and promotion expenses and excludes general corporate expenses, interest, and taxes. See “Part I, Item 1. Business” of this Form 10-K for more information on our segments. For the Fiscal Years Ended May (in millions) 2018 2017 2016 Net sales: Global $ 1,744.2 $ 1,624.8 $ 1,549.4 Foodservice 1,099.1 1,030.0 946.0 Retail 449.2 384.9 372.1 Other 131.2 128.3 126.3 Total net sales 3,423.7 3,168.0 2,993.8 Product contribution margin (a): Global 375.7 338.6 293.2 Foodservice 365.9 330.7 253.0 Retail 87.3 77.6 69.1 Other 19.0 9.3 20.9 Total product contribution margin 847.9 756.2 636.2 Other selling, general and administrative expenses (a) (b) 267.8 237.9 262.9 Income from operations 580.1 518.3 373.3 Interest expense, net 108.8 61.2 5.9 Income tax expense (c) 121.2 170.2 144.5 Equity method investment earnings (d) 83.6 53.3 71.7 Net income 433.7 340.2 294.6 Less: Income attributable to noncontrolling interests 16.9 13.3 9.3 Net income attributable to Lamb Weston Holdings, Inc. $ 416.8 $ 326.9 $ 285.3 (a) Product contribution margin is defined as net sales, less cost of sales and advertising and promotion expenses. Other selling, general and administrative expenses include all selling, general and administrative expenses other than advertising and promotion expenses. (b) Fiscal 2018 includes $8.7 million of pre-tax expenses related to the Separation, primarily related to professional fees and employee-related costs. Fiscal 2017 includes $26.5 million of pre-tax expenses related to the Separation, primarily related to professional fees, and a $3.1 million non-cash pre-tax gain on assets received during the period. Fiscal 2016 includes the following pre-tax charges: $5.3 million of expenses related to the Separation and $59.5 million of non-cash charges reflecting Lamb Weston’s portion of the actuarial losses in excess of 10% of Conagra’s pension liability for Conagra sponsored plans. (c) The Tax Act decreased income tax expense by $64.7 million. This decrease includes a provisional $28.4 million net benefit comprised of a $39.9 million benefit from the re-measurement of our net U.S. deferred tax liabilities using the new lower U.S. federal statutory tax rate, partially offset by a $11.5 million transition tax on our previously untaxed foreign earnings, which is primarily payable over eight years. In addition, the decrease in income tax expense includes a $36.3 million tax benefit related to the lower U.S. corporate tax rate. We will continue to refine these amounts within the measurement period allowed by SAB No.118, which will not exceed one year from the enactment date of the Tax Act. (d) Fiscal 2016 includes a $17.7 million non-cash gain related to the settlement of a pension plan of our Lamb-Weston/Meijer joint venture. Assets by Segment The manufacturing assets of Lamb Weston are shared across all reporting segments. Output from these facilities used by each reporting segment can change from fiscal year to fiscal year. Therefore, it is impracticable to allocate those assets to the reporting segments, as well as disclose total assets by segment. Concentrations Lamb Weston’s largest customer, McDonald’s Corporation, accounted for approximately 11% of consolidated “Net sales” in each of fiscal 2018, 2017 and 2016. Accounts receivable from another customer accounted for 12% of our consolidated accounts receivable at May 27, 2018. Accounts receivable from an additional customer accounted for 10% of our consolidated accounts receivable at May 28, 2017. Other Information The net sales of each of our Global, Foodservice, and Retail reporting segments are comprised of sales of frozen potato and frozen sweet potato products. The net sales of our Other reporting segment included vegetable sales of $81.7 million, $81.6 million, and $70.4 million, various byproduct sales of $38.1 million, $35.4 million, and $46.4 million, and dairy product sales of $11.5 million, $11.3 million, and $9.5 million in fiscal 2018, 2017, and 2016, respectively. Our operations are principally in the United States. With respect to operations outside of the United States, no single foreign country or geographic region was significant with respect to consolidated operations in fiscal 2018, 2017, and 2016. Foreign net sales, including sales by domestic segments to customers located outside of the United States and Canada, were $665.8 million, $663.5 million, and $615.9 million in fiscal 2018, 2017, and 2016, respectively. Lamb Weston’s long-lived assets of our China operations accounted for less than 4% of our total assets. Labor At May 27, 2018, we had approximately 7,200 employees, excluding our joint ventures. Approximately 700 of these employees work outside of the United States. Approximately 26% of our hourly employees are parties to collective bargaining agreements on terms that we believe are typical for the industry in which we operate. Most of the union workers at our facilities are represented under contracts that expire at various times throughout the next several years. Approximately 44% expire in fiscal 2019. As these agreements expire, we believe they will be renegotiated on terms satisfactory to us. |
COMMITMENTS, CONTINGENCIES, GUA
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS | 12 Months Ended |
May 27, 2018 | |
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS | |
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS | 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 (discussed in Note 9, Debt and Financing Obligations), lease obligations, purchase commitments for goods and services, and legal proceedings (discussed below). Capital Commitments We had capital commitments of approximately $158.7 million and $81.7 million as of May 27, 2018 and May 28, 2017, respectively, in connection with the expansion and replacement of existing facilities and equipment. Lease Obligations We lease certain facilities, land, and transportation equipment under agreements that expire at various dates. Rent expense for operating leases was $62.8 million, $63.0 million, and $69.2 million in fiscal 2018, 2017, and 2016, respectively. The minimum lease payments under non-cancellable operating leases with lease terms in excess of one year are as follows (dollars in millions): 2019 $ 20.7 2020 19.2 2021 15.0 2022 11.6 2023 6.2 Thereafter 16.6 Total $ 89.3 Guarantees and Indemnifications We provide guarantees, indemnifications, and other assurances to third parties in the normal course of our business. These include tort indemnifications, environmental assurances, and representations and warranties in commercial agreements. At May 27, 2018 , we were not aware of any material liabilities arising from any guarantee, indemnification, or financial assurance we have provided. If the fair value of such liability becomes material, we will accrue for it at that time. Lamb Weston is a party to various potato purchase supply agreements with partner growers, under which they deliver their potato crop from the contracted acres to Lamb Weston during the harvest season, and pursuant to the potato supply agreements, pricing for this inventory is determined after delivery, taking into account crop size and quality, among other factors. Lamb Weston paid $132.8 million, $150.8 million, and $142.4 million in fiscal 2018, 2017, and 2016, respectively, under the terms of the potato supply agreements. Amounts paid are initially recorded in inventory and charged to cost of sales as related inventories are produced and subsequently sold. Under the terms of these potato supply agreements, Lamb Weston has guaranteed repayment of short-term bank loans of the potato suppliers, under certain conditions. At May 27, 2018, Lamb Weston has effectively guaranteed $31.6 million of supplier loans. Lamb Weston has not established a liability for these guarantees, as Lamb Weston has determined that the likelihood of Lamb Weston’s required performance under the guarantees is remote. Under certain other potato supply agreements, Lamb Weston makes advances to growers prior to the delivery of potatoes. The aggregate amounts of these advances were $24.6 million and $24.4 million at May 27, 2018 and May 28, 2017, respectively. Lamb-Weston/Meijer, a joint venture (see Note 6, Investments in Joint Ventures, for further information) headquartered in the Netherlands, manufactures and sells frozen potato products principally in Europe. Lamb Weston and Lamb Weston’s partner are jointly and severally liable for all legal liabilities of Lamb-Weston/Meijer. As of May 27, 2018 and May 28, 2017, the total liabilities of Lamb-Weston/Meijer were $242.2 million and $210.0 million, respectively. Lamb-Weston/Meijer is well capitalized, with partners’ equity of $390.5 million and $320.2 million as of May 27, 2018 and May 28, 2017, respectively. Lamb Weston does not guarantee these obligations and therefore, has not established a liability on its balance sheets for the obligations of Lamb-Weston/Meijer. After taking into account liabilities recognized for all of the foregoing matters, management believes the ultimate resolution of such matters would not have a material adverse effect on Lamb Weston’s financial condition, results of operations, or cash flows. It is reasonably possible that a change to an estimate of the foregoing matters may occur in the future. Legal Proceedings We are a party to legal actions arising in the ordinary course of our business. These legal actions include commercial liability claims, premises liability claims, and employment-related claims, among others. As of the date of this filing, we do not believe that any of the legal actions against us would, either individually or in the aggregate, have a material adverse effect on our financial condition, results of operations, or cash flows. Costs of legal services associated with the foregoing matters are recognized in earnings as services are provided. |
QUARTERLY FINANCIAL DATA (unaud
QUARTERLY FINANCIAL DATA (unaudited) | 12 Months Ended |
May 27, 2018 | |
QUARTERLY FINANCIAL DATA (unaudited) | |
QUARTERLY FINANCIAL DATA (Unaudited) | 15. QUARTERLY FINANCIAL DATA (unaudited; dollars in millions, except per-share amounts and stock price information) 2018 (a) First Second Third Fourth Quarter Quarter Quarter Quarter Net sales $ 817.5 $ 824.6 $ 863.4 $ 918.2 Gross profit 196.3 208.2 242.3 232.7 Income before income taxes and equity method earnings 112.4 112.4 140.7 105.8 Income tax expense 44.1 41.5 7.5 28.1 Net income attributable to Lamb Weston Holdings, Inc. 83.4 76.6 156.8 100.0 Earnings per share Basic 0.56 0.52 1.07 0.68 Diluted 0.56 0.52 1.06 0.68 Dividends declared 0.1875 0.1875 0.19125 0.19125 Stock price - high (b) 47.38 54.44 60.32 68.03 Stock price - low (b) 42.74 44.88 53.51 54.05 2017 (a) First Second Third Fourth Quarter Quarter Quarter Quarter Net sales $ 776.3 $ 790.7 $ 768.5 $ 832.5 Gross profit 179.7 196.5 204.9 197.7 Income before income taxes and equity method earnings 123.5 118.7 118.9 95.9 Income tax expense 51.0 33.9 44.0 41.2 Net income attributable to Lamb Weston Holdings, Inc. 79.6 87.2 84.2 75.9 Earnings per share Basic 0.54 0.59 0.57 0.52 Diluted 0.54 0.59 0.57 0.51 Dividends declared N/A N/A 0.1875 0.1875 Stock price - high (b) N/A 33.02 39.90 45.66 Stock price - low (b) N/A 29.89 32.51 39.19 (a) The sum of quarterly amounts may not agree to our annual results due to rounding. The first, second, third, and fourth quarters of fiscal 2018 included $2.2 million ($1.4 million net of taxes), $4.0 million ($2.5 million net taxes), $1.7 million ($1.2 million net of taxes), and $0.8 million ($0.6 million net of taxes), respectively, of expenses related to the Separation. The third and fourth quarters of fiscal 2018 include a $47.0 million and $17.7 million benefit, respectively, related to the Tax Act; approximately $23.0 million and $13.3 million, respectively, relates to a lower U.S. corporate tax rate and $24.0 million and $4.4 million, respectively, relate to the provisional impacts of the Tax Act. The first, second, third, and fourth quarters of fiscal 2017 included $9.7 million ($6.1 million net of taxes), $9.0 million ($5.7 million net of taxes), $5.1 million ($3.2 million net of taxes), and $2.8 million ($1.8 million net of taxes), respectively, of expenses related to the Separation. The fourth quarter of fiscal 2017 includes a $3.1 million ($2.0 million net of taxes) non-cash gain on assets. (b) Our common stock is listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “LW.” All stock prices are closing prices as reported by the NYSE. |
SCHEDULE II Valuation and Quali
SCHEDULE II Valuation and Qualifying Accounts | 12 Months Ended |
May 27, 2018 | |
SCHEDULE II Valuation and Qualifying Accounts | |
SCHEDULE II Valuation and Qualifying Accounts | Schedule II – Lamb Weston - Valuation and Qualifying Accounts (dollars in millions). Additions Charged Balance to Costs, Deductions Balance Beginning of Expenses from End of Year and Equity Reserves Year Year ended May 27, 2018 Deferred tax asset valuation allowance $ 98.4 $ — $ 36.4 (a) $ 62.0 Year ended May 28, 2017 Deferred tax asset valuation allowance $ 12.3 $ 86.1 (b) $ — $ 98.4 Year ended May 29, 2016 Deferred tax asset valuation allowance $ 8.9 $ 3.4 $ — $ 12.3 (a) Includes $31.2 million reduction resulting from the revaluation of U.S. deferred tax assets to the new 21% federal statutory tax rate as a result of the Tax Act. (b) Includes $83.3 million of additions charged to equity; primarily due to the step-up in tax basis of certain assets in connection with our Separation from Conagra. See Note 4, Income Taxes, of the Notes to Combined Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10 K. |
NATURE OF OPERATIONS AND SUMM24
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
May 27, 2018 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation These Combined and Consolidated Financial Statements present the financial results of Lamb Weston for the fiscal years ended May 27, 2018, May 28, 2017, and May 29, 2016 (“fiscal 2018, 2017, and 2016”), and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America. The fiscal year end of Lamb Weston ends the last Sunday in May. The fiscal years for the Combined and Consolidated Financial Statements presented consist of 52-week periods for fiscal 2018, 2017, and 2016. The financial statements include all adjustments (consisting only of normal recurring adjustments) that management considers necessary for a fair presentation of such financial statements. The preparation of financial statements involves the use of estimates and accruals. Actual results may vary from those estimates. In addition, the financial statements for periods prior to the Separation may not reflect what our results of operations would have been had we operated as a separate stand-alone company and may not be indicative of our future results of operations. Our combined and consolidated financial statements include the accounts of Lamb Weston and all of its majority-owned subsidiaries. In addition, the accounts of all variable interest entities for which we are the primary beneficiary are included in our combined and consolidated financial statements from the date such determination was made. Intercompany investments, accounts, and transactions have been eliminated. Certain amounts in the prior period combined financial statements have been reclassified to conform with the current period presentation. Prior to Separation Prior to the Separation from Conagra on November 9, 2016 (the “Separation Date”), the combined financial statements were prepared using the specific accounting records of the entities which comprise the business of Lamb Weston. In some cases, principally foreign locations, those business activities were contained within entities that were engaged in other business activities of Conagra. Because a direct ownership relationship did not exist among the various units comprising Lamb Weston, Conagra and its subsidiaries’ equity investment is shown in lieu of stockholders’ equity in the combined financial statements. Intercompany investments, accounts, and transactions between the various legal entities comprising Lamb Weston have been eliminated in the combined and consolidated financial statements. Prior to the Separation Date, Lamb Weston’s combined and consolidated financial statements included accounts specifically attributed to Lamb Weston and a portion of Conagra’s shared corporate general and administrative expenses. These shared services included, but were not limited to, legal, finance, internal audit, financial reporting, income tax accounting and advisory, insurance, information technology, treasury, and human resources functions. Shared corporate general and administrative expenses not specifically identifiable to Lamb Weston were allocated to Lamb Weston. The allocations were determined on a basis which we consider being reasonable reflections of the utilization of services provided by Conagra. However, these allocations may not reflect the costs and expenses that Lamb Weston would have incurred as a stand-alone public company. A more detailed discussion of the relationship with Conagra, including a description of the costs which have been allocated to Lamb Weston and the methods of cost allocation, is included in Note 3, Related Party Transactions. As further described in Note 3, prior to the Separation Date, Lamb Weston engaged in various intercompany transactions with Conagra and its affiliates, including the sale and purchase of certain products, the procurement of certain materials and services, cash transfers related to Conagra’s centralized cash management process and expense allocations. Changes in parent companies’ equity investment arising from these cash transactions are presented as “Net transfers to Conagra” in financing activities in the Combined and Consolidated Statements of Cash Flows, notwithstanding that advances from parent companies were utilized to fund Lamb Weston’s working capital requirements. |
Use of Estimates | Use of Estimates The preparation of the combined and consolidated financial statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the amounts reported in our combined and consolidated financial statements and the accompanying notes. On an ongoing basis, we evaluate our estimates, including but not limited to those related to provisions for income taxes, estimates of sales incentives and trade promotion allowances, and the valuation of goodwill and intangible assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the consolidated financial statements in future periods. |
Revenue Recognition | Revenue Recognition Revenue is recognized when title and risk of loss are transferred to customers upon delivery based on terms of sale and collectibility is reasonably assured. Revenue is recognized as the net amount to be received after deducting estimated amounts for discounts, trade allowances, and returns of damaged and out-of-date products. |
Shipping and Handling | Shipping and Handling Shipping and handling costs, such as freight to our customers’ destinations, are included in “Cost of sales” in the Combined and Consolidated Statements of Earnings. When shipping and handling costs are included in the sales price charged for our products, they are recognized in “Net sales.” |
Sales Incentives and Trade Promotion Allowances | Sales Incentives and Trade Promotion Allowances We promote our products with advertising, consumer incentives, and trade promotions. Sales promotions include, but are not limited to, discounts, coupons, rebates, and volume-based incentives. The estimates for sales incentives are based principally on historical sales and coupon utilization and redemption rates, influenced by judgments about current market conditions such as competitive activity in specific product categories. Trade promotion programs include introductory marketing funds such as slotting fees, cooperative marketing programs, temporary price reductions, and other activities conducted by our customers to promote our products. The cost of these programs are recognized as a reduction to revenue with a corresponding accrued liability based on estimates made at the time of shipment or coupon release. Estimates of trade promotion liabilities for promotional program costs incurred, but unpaid, are generally based on estimates of the quantity of customer sales, timing of promotional activities, current and past trade-promotion spending patterns, the interpretation of historical spending trends by customer and category, and forecasted costs for activities within the promotional programs. Estimates made by management in accounting for these costs are based primarily on our historical experience with marketing programs, with consideration given to current circumstances and industry trends. The determination of sales incentive and trade promotion costs requires judgment and may change in the future as a result of changes in customer promotion participation, particularly for new programs related to the introduction of new products. Final determination of the total cost of promotion is dependent upon customers providing information about proof of performance and other information related to the promotional event. |
Advertising and Promotion | Advertising and Promotion Advertising and promotion expenses totaled $31.6 million, $22.6 million, and $25.6 million in fiscal 2018, 2017, and 2016, respectively, and are included in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. |
Research and Development | Research and Development Research and development costs are expensed as incurred and totaled $13.5 million, $10.6 million, and $6.7 million in fiscal 2018, 2017, and 2016, respectively, and are included in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. |
Stock-Based Compensation | Stock-Based Compensation Compensation expense resulting from all stock-based compensation transactions are measured and recorded in the combined and consolidated financial statements based on the grant date fair value of the equity or liability instruments issued. Compensation expense is recognized over the period the employee provides service in exchange for the award. See Note 10, Stock-Based Compensation, for additional information. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and all highly liquid investments with an original maturity of three months or less at the date of acquisition, including short-term time deposits and government agency and corporate obligations, are classified as cash and cash equivalents. Book overdraft balances, if any, are classified in “Accounts payable” in our Consolidated Balance Sheets and are reported as a component of operating cash flows for accounts payable in our Combined and Consolidated Statements of Cash Flows as they do not represent bank overdrafts. Cash equivalents are stated at cost, which approximates market. Cash and cash equivalents totaled $55.6 million and $57.1 million at May 27, 2018 and May 28, 2017, respectively. |
Trade Accounts Receivable and Allowance for Doubtful Accounts | Trade Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are stated at the amount we expect to collect based on our past experience, as well as reliance on the Perishable Agricultural Commodities Act, which was enacted to help promote fair trade in the fruit and vegetable industry by establishing a code of fair business practices. The collectability of our accounts receivable is based upon a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations (e.g., bankruptcy filings, substantial downgrading of credit sources), a specific reserve for bad debts is recorded against amounts due to the Company to reduce the net recorded receivable to the amount that we reasonably believe will be collected. For all other customers, reserves for bad debts are recognized based on historical collection experience. If collection experience deteriorates, the estimate of the recoverability of amounts due could be reduced. We periodically review our allowance for doubtful accounts and adjustments to the valuation allowance are recorded as income or expense. Trade accounts receivable balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. At May 27, 2018 and May 28, 2017, the allowance for doubtful accounts was $0.6 million and $0.5 million, respectively |
Inventories | 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 (dollars in millions): May 27, May 28, 2018 2017 Raw materials and packaging $ 87.2 $ 84.5 Finished goods 430.5 409.7 Supplies and other 32.0 30.8 Inventories $ 549.7 $ 525.0 |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are recorded at cost. Cost includes expenditures for major improvements and replacements and the amount of interest cost associated with significant capital additions. The amount of interest capitalized from construction in progress was $4.2 million, $5.2 million, and $2.7 million in fiscal 2018, 2017, and 2016, respectively. Repairs and maintenance costs are expensed as incurred. The components of property, plant and equipment were as follows (dollars in millions): May 27, May 28, 2018 2017 Land and land improvements $ 139.8 $ 139.8 Buildings, machinery, and equipment 2,212.6 1,917.7 Furniture, fixtures, office equipment, and other 101.0 62.6 Construction in progress 127.9 229.4 Property, plant and equipment, at cost 2,581.3 2,349.5 Less accumulated depreciation (1,160.5) (1,078.3) Property, plant and equipment, net $ 1,420.8 $ 1,271.2 Depreciation is computed on the straight-line method over the estimated useful lives of the respective classes of assets as follows: Land improvements 1-40 years Buildings 10-40 years Machinery and equipment 5-20 years Furniture, fixtures, office equipment, and other 3-15 years We recorded $136.3 million, $104.3 million, and $93.9 million of depreciation expense in fiscal 2018, 2017, and 2016, respectively. At May 27, 2018 and May 28, 2017, purchases of property, plant and equipment included in accounts payable were $27.9 million and $60.4 million, respectively. |
Long-Lived Asset Impairment | Long-Lived Asset Impairment We review long-lived assets for impairment upon the occurrence of events or changes in circumstances which indicate that the carrying amount of the assets may not be fully recoverable, measured by comparing their net book value to the undiscounted projected future cash flows generated by their use. Impaired assets are recorded at their estimated fair value. |
Goodwill and Other Identifiable Intangible Assets | Goodwill and Other Identifiable Intangible Assets We perform an annual impairment assessment of goodwill at the reporting unit level in the fourth quarter of each year, or more frequently if indicators of potential impairment exist. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment. The reporting unit’s carrying value used in an impairment test represents the assignment of various assets and liabilities, excluding certain corporate assets and liabilities, such as cash, and debt. Qualitative factors include industry and market considerations, overall financial performance, and other relevant events and factors affecting the reporting unit. Additionally, as part of this assessment, we may perform a quantitative analysis to support the qualitative factors above by applying sensitivities to assumptions and inputs used in measuring a reporting unit’s fair value. Our quantitative impairment test considers both the income approach and the market approach to estimate a reporting unit’s fair value. Significant estimates include market segment growth rates, our assumed market segment share, estimated costs, and discount rates based on weighted average cost of capital. We test the reasonableness of the inputs and outcomes of our discounted cash flow analysis against available market data. During the annual goodwill impairment test performed in the fourth quarter of 2018, we assessed qualitative factors to determine whether it was more likely than not that the fair value of each reporting unit was less than its carrying value. Based on the results of the qualitative impairment test, we determined that it was not more likely than not that the carrying value was less than the fair value of the our Global, Foodservice, Retail, and Other segments. We amortize acquisition-related intangible assets with finite lives over their estimated useful life. We perform a fourth quarter, or sooner depending on circumstances, review of significant finite-lived identified intangible assets to determine whether facts and circumstances indicate that the carrying amount may not be recoverable. These reviews can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for our products lines. See Note 5, Goodwill and Other Identifiable Intangible Assets, for additional information. |
Fair Values of Financial Instruments | Fair Values of Financial Instruments Unless otherwise specified, Lamb Weston believes the carrying value of financial instruments approximates their fair value. See Note 11, Fair Value Measurements, for additional information. |
Foreign Currency | Foreign Currency Most of our foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets and liabilities are translated at exchange rates prevailing at the balance sheet dates. Revenues, costs, and expenses are translated into U.S. dollars using daily exchange rates. Gains and losses resulting from the translation of Consolidated Balance Sheets are recorded as a component of accumulated other comprehensive income (loss). Foreign currency transactions resulted in a gain of $4.7 million in fiscal 2018 and losses of $2.7 million and $2.6 million in fiscal 2017 and 2016, respectively. These amounts were recorded in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. |
Derivative Financial Instruments | Derivative Financial Instruments We use derivatives and other financial instruments to hedge a portion of our commodity risks. We do not hold or issue derivatives and other financial instruments for trading purposes. Derivative instruments are reported in our Consolidated Balance Sheets at their fair values, unless the derivative instruments qualify for the normal purchase normal sale exception (“NPNS”) under GAAP and such exception has been elected. If the NPNS exception is elected, the fair values of such contracts are not recognized. We do not designate commodity derivatives to achieve hedge accounting treatment. |
Income Taxes | Income Taxes We recognize current tax liabilities and assets based on an estimate of taxes payable or refundable in the current year for each of the jurisdictions in which we transact business. As part of the determination of our current tax liability, management exercises considerable judgment in evaluating positions taken in the tax returns. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We also recognize deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences (e.g., the difference in book basis versus tax basis of fixed assets resulting from differing depreciation methods). If appropriate, we recognize valuation allowances to reduce deferred tax assets to amounts that are more likely than not to be ultimately realized, based on our assessment of estimated future taxable income, including the consideration of available tax planning strategies. We have recorded provisional estimates associated with the December 22, 2017 enactment of the U.S. Tax Cuts and Jobs Act (“Tax Act”), including the accrual for the transition tax and the remeasurement of deferred income taxes. The SEC has provided accounting and reporting guidance that allows us to report provisional amounts within a measurement period up to one year of enactment, due to the complexities inherent in adopting the changes. New guidance from regulators, interpretation of the law, and refinement of our estimates from ongoing analysis of data and tax positions may change the provisional amounts. |
New and Recently Issued Accounting Standards | New and Recently Issued Accounting Standards Accounting Standards Adopted In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . This ASU is intended to simplify the accounting for goodwill impairment by removing the requirement to perform a hypothetical purchase price allocation. With the elimination of this step, a goodwill impairment test is performed by comparing the fair value of a reporting unit to its carrying value. An impairment charge is recognized for the amount by which the reporting unit’s carrying value exceeds its fair value. All other goodwill impairment guidance will remain largely unchanged. This new standard will be applied prospectively and is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted after January 1, 2017. We elected to adopt this guidance in the fourth quarter of fiscal 2018 on a prospective basis. The adoption did not have a material impact on our financial statements. Accounting Standards Not Yet Adopted In June 2018, the Emerging Issues Task Force (“EITF”) reached a final consensus on EITF Issue No. 17-A: Customer’s Accounting for Implementation, Setup, and Other Upfront Costs (Implementation Costs) Incurred in a Cloud Computing Arrangement That is Considered a Service Contract . This guidance provides that implementation costs should be capitalized using the same model as if the cloud computing arrangement included a software license (ASC 350-40) and should be expensed over the term of the hosting arrangement, including periods covered by renewal options that are reasonably certain to be exercised. This guidance is effective for our fiscal 2020 and early adoption is permitted. We do not expect the adoption of this standard to have material impact on our financial statements. In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU requires employers to disaggregate the service cost component from the other components of net benefit cost and report it in the same line item(s) as other employee compensation costs arising from services rendered during the period. All other non-service components are required to be separate from the service cost component and outside a subtotal of income from operations. These non-service components are not eligible for capitalization. Changes to the presentation of benefit costs are required to be adopted retrospectively, while changes to the capitalization of service costs into inventories are required to be adopted prospectively. The standard permits, as a practical expedient, use of the amounts disclosed in Note 7, Employee Benefit Plans and Other Post-Retirement Benefits, for the prior comparative periods as the estimation basis for applying the retrospective presentation requirement. We will adopt the provisions of this guidance in fiscal 2019 (beginning May 28, 2018). The adoption of the amended standard will not have a significant impact on our financial statements. In February 2016, the FASB issued Accounting Standard Codification (“ASC”) Topic 842, Leases, which requires lessees to reflect most leases on their balance sheet as assets and obligations. We will adopt this standard on May 27, 2019, the beginning of our fiscal year 2020. The standard is to be applied under the modified retrospective method, unless the FASB ratifies its proposal to allow a practical expedient to change the date of initial application to the effective date, without adjusting comparative periods presented. The primary impact upon adoption will be the recognition, on a discounted basis, of our minimum commitments under noncancelable operating leases as right of use assets and obligations on our Consolidated Balance Sheet. This will result in a significant increase in assets and liabilities on our Consolidated Balance Sheet. We are currently implementing process changes in order to comply with the measurement and disclosure requirements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , which was issued to achieve a consistent application of revenue recognition within the United States, resulting in a single revenue model to be applied by reporting companies under U.S. GAAP. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. We have completed our assessment and implemented policies, processes, and controls to support the standards measurement and disclosure requirements. We will continue to recognize revenue for Lamb Weston branded potato products at the point in time when title and risk of loss transfers to the customer which is also the point in time when control transfers. The new standard, however, does accelerate the timing of when revenue is recognized for customer-specific branded (“private label”) potato products. We will adopt the standard using the modified transition approach by recording the cumulative effect at the date of adoption. Accordingly, approximately $93 million of revenue and approximately $15 million of net income will be accelerated into years ended prior to May 28, 2018. This will result in a cumulative adjustment to increase retained earnings by approximately $15 million effective May 28, 2018. We expect to accelerate about the same amount of revenues and expenses, that would have been recorded in fiscal 2020 using our historical revenue recognition practices, into fiscal 2019, resulting in a relatively small impact on our fiscal 2019 Consolidated Statement of Earnings. Our estimates of private label revenues and expenses that will be accelerated into fiscal 2019 under the new standard are subject to management’s estimates of future private label sales and could change significantly. Accordingly, we will not know the final net impact of adopting this standard on our fiscal 2019 results until the end of fiscal 2019. There were no other accounting standards recently issued that had or are expected to have a material impact on our financial statements. |
NATURE OF OPERATIONS AND SUMM25
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
May 27, 2018 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of major classes of inventories | The components of inventories were as follows (dollars in millions): May 27, May 28, 2018 2017 Raw materials and packaging $ 87.2 $ 84.5 Finished goods 430.5 409.7 Supplies and other 32.0 30.8 Inventories $ 549.7 $ 525.0 |
Schedule of components of property, plant and equipment | The components of property, plant and equipment were as follows (dollars in millions): May 27, May 28, 2018 2017 Land and land improvements $ 139.8 $ 139.8 Buildings, machinery, and equipment 2,212.6 1,917.7 Furniture, fixtures, office equipment, and other 101.0 62.6 Construction in progress 127.9 229.4 Property, plant and equipment, at cost 2,581.3 2,349.5 Less accumulated depreciation (1,160.5) (1,078.3) Property, plant and equipment, net $ 1,420.8 $ 1,271.2 |
Schedule of estimated useful lives | Land improvements 1-40 years Buildings 10-40 years Machinery and equipment 5-20 years Furniture, fixtures, office equipment, and other 3-15 years |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
May 27, 2018 | |
EARNINGS PER SHARE | |
Schedule of computation of basic and diluted earnings per common | The following table sets forth the computation of basic and diluted earnings per common share for the periods presented (dollars and shares in millions): For the Fiscal Years Ended May 2018 2017 2016 Numerator: Net income attributable to Lamb Weston Holdings, Inc. $ 416.8 $ 326.9 $ 285.3 Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated 2.7 2.1 4.8 Net income available to Lamb Weston common stockholders $ 414.1 $ 324.8 $ 280.5 Denominator (a): Basic weighted average common shares outstanding 146.3 146.1 146.0 Add: Dilutive effect of employee incentive plans (b) 0.7 0.5 — Diluted weighted average common shares outstanding 147.0 146.6 146.0 Earnings per share Basic $ 2.83 $ 2.22 $ 1.92 Diluted $ 2.82 $ 2.22 $ 1.92 (a) For the periods prior to the Separation, earnings per share was calculated based on approximately 146 million shares of Lamb Weston common stock that were distributed to Conagra stockholders on November 9, 2016. (b) Potentially dilutive shares of common stock from 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 May 27, 2018 and May 28, 2017, we did not have any stock-based awards that were antidilutive. Lamb Weston had no share-based awards outstanding prior to the Separation. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
May 27, 2018 | |
INCOME TAXES | |
Schedule of Pre-tax income (loss) | Pre-tax income consisted of the following (dollars in millions): For the Fiscal Years Ended May 2018 2017 2016 United States $ 478.2 $ 467.5 $ 384.7 Foreign 76.7 42.9 54.4 Total pre-tax income $ 554.9 $ 510.4 $ 439.1 |
Schedule of analysis of the components of the consolidated income tax provision | The provision for income taxes included the following (dollars in millions): For the Fiscal Years Ended May 2018 2017 2016 Current U.S. federal $ 94.3 $ 132.0 $ 100.0 State and local 14.7 13.9 12.0 Foreign 15.0 9.5 11.8 Total current provision for taxes 124.0 155.4 123.8 Deferred U.S. federal (4.4) 9.7 17.6 State and local 0.1 3.2 (1.3) Foreign 1.5 1.9 4.4 Total deferred provision for taxes $ (2.8) $ 14.8 $ 20.7 Total provision for taxes $ 121.2 $ 170.2 $ 144.5 |
Schedule of reconciliation of income tax expense using the statutory U.S. income tax rate compared with the actual income tax provision | Income taxes computed by applying the U.S. federal statutory rates to income from operations, including equity method earnings, and before income taxes are reconciled to the provision for income taxes set forth in the Combined and Consolidated Statements of Earnings as follows (dollars in millions): For the Fiscal Years Ended May 2018 2017 2016 Provision computed at U.S. federal statutory rate (a) $ 162.6 $ 178.6 $ 153.7 Increase (reduction) in rate resulting from: State and local taxes, net of federal benefit 12.6 11.4 7.1 Tax credits and domestic manufacturers deduction (8.1) (11.0) (9.5) Effect of taxes on foreign operations (7.0) (7.8) (2.8) Deferred impact of rate change (b) (45.4) — — Transition tax liability (b) 11.5 — — Other (5.0) (1.0) (4.0) Total provision for taxes $ 121.2 $ 170.2 $ 144.5 Effective income tax rate (c) (a) Since our fiscal year-end is the last Sunday in May, the impact of the lower U.S. federal corporate income tax rate from the Tax Act is phased in, resulting in a U.S. federal statutory tax rate of 29.3% for fiscal 2018. The U.S. federal statutory tax rate was 35% for both fiscal 2017 and 2016. (b) In connection with the Tax Act, we recorded a $45.4 million net provisional tax benefit from the estimated impact of remeasuring our net U.S. deferred tax liabilities, including deferred tax benefits originating during the year, with the new lower statutory tax rate. Excluding the deferred tax benefits originating during fiscal 2018, the net provisional tax benefit was $39.9 million. We also recorded an $11.5 million transition tax on our previously untaxed foreign earnings that is primarily payable over eight years. As allowed by Staff Accounting Bulletin (“SAB”) No. 118, our provisional estimates will be refined during fiscal 2019 from our ongoing analysis of data and tax positions along with new guidance from regulators and interpretation of the law which will not exceed one year from the enactment date of the Tax Act. (c) The effective income tax rate is calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings. |
Schedule of deferred income tax assets and liabilities | Deferred income tax assets and liabilities were calculated using the U.S. federal statutory rate of 21% at May 27, 2018 and 35% at May 28, 2017 as follows (dollars in millions): May 27, 2018 May 28, 2017 Assets Liabilities Assets Liabilities Property, plant and equipment $ — $ 127.7 $ — $ 159.8 Goodwill and other intangible assets 68.0 — 125.0 — Compensation and benefit related liabilities 15.3 — 20.3 — Accrued expenses and other liabilities 16.7 — 22.5 — Deferred revenue previously recognized for tax 7.2 — 8.2 — Net operating loss carryforwards (a) 15.8 — 17.0 — Debt issuance cost — 4.6 — 8.3 Investment in joint ventures — 9.1 — 12.3 Other 0.7 12.0 0.9 5.1 123.7 153.4 193.9 185.5 Less: Valuation allowance (b) (62.0) — (98.4) — Net deferred taxes (c) $ 61.7 $ 153.4 $ 95.5 $ 185.5 (a) Lamb Weston has approximately $37.2 million of gross ($8.7 million after-tax) foreign net operating loss carryforwards, of which the majority expire by fiscal 2021. Lamb Weston also has approximately $102.2 million of gross ($7.1 million after-tax) state capital loss carryovers that will expire in fiscal 2021. (b) The valuation allowance includes the portion of the net operating loss carryforwards that we are not more likely than not to realize. The net impact on income tax expense related to changes in the valuation allowance, including net operating loss carryforwards were zero in fiscal 2018 and $2.8 million of expense in fiscal 2017. (c) Deferred tax assets of $0.4 million and $0.5 million, as of May 27, 2018 and May 28, 2017, respectively, were presented in “Other assets.” Deferred tax liabilities of $92.1 million and $90.5 million, as of May 27, 2018 and May 28, 2017, respectively, were presented in “Deferred income taxes” as a long-term liability. The deferred tax asset and liability net position is determined by tax jurisdiction. |
Schedule of change in the unrecognized tax benefits | The aggregate changes in the gross amount of unrecognized tax benefits, excluding interest and penalties consisted of the following (dollars in millions): For the Fiscal Years Ended May 2018 2017 2016 Beginning balance $ 6.9 $ 3.8 $ 4.3 Decreases from positions established during prior fiscal years — — (0.5) Increases from positions established during current and prior fiscal years 7.9 2.2 0.6 Decreases relating to settlements with taxing authorities — — (0.2) Reductions resulting from lapse of applicable statute of limitations (1.6) (0.9) (0.3) Adjustments resulting from the Separation — 1.8 (0.1) Ending balance (a) $ 13.2 $ 6.9 $ 3.8 (a) If the $13.2 million and $6.9 million of unrecognized tax benefits as of May 27, 2018 and May 28, 2017, were recognized in a future period, it would result in a tax benefit of $11.1 million and $6.2 million, respectively, and a reduction in the effective tax rate. The ending balance excludes $2.9 million and $2.8 million of gross interest and penalties at May 27, 2018 and May 28, 2017, respectively. Lamb Weston accrues interest and penalties associated with uncertain tax positions as part of income tax expense. |
GOODWILL AND OTHER IDENTIFIAB28
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS (Tables) | 12 Months Ended |
May 27, 2018 | |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | |
Schedule of changes in the carrying amount of goodwill | The following table presents changes in goodwill balances as allocated to each segment for fiscal years 2018 and 2017 (dollars in millions): Global Foodservice Retail Other Total Balance at May 29, 2016 $ $ $ $ $ 133.9 Foreign currency translation adjustment (0.9) — — — (0.9) Balance at May 28, 2017 74.8 42.8 10.9 4.5 133.0 Foreign currency translation adjustment 2.1 — — — 2.1 Balance at May 27, 2018 $ 76.9 $ 42.8 $ 10.9 $ 4.5 $ 135.1 |
Schedule of other identifiable intangible assets | May 27, 2018 May 28, 2017 Weighted Weighted Average Gross Average Gross Useful Life Carrying Accumulated Useful Life Carrying Accumulated (in years) Amount Amortization (in years) Amount Amortization Non-amortizing intangible assets (a) n/a $ 18.0 $ — n/a $ 18.0 $ — Amortizing intangible assets (b) 14 35.2 17.8 14 34.9 15.7 $ 53.2 $ 17.8 $ 52.9 $ 15.7 (a) Non-amortizing intangible assets are comprised of brands and trademarks. (b) Amortizing intangible assets are principally composed of customer relationships, licensing arrangements, and intellectual property. Amortization expense was $2.4 million, $2.3 million, and $1.9 million in fiscal 2018, 2017, and 2016, respectively. |
INVESTMENTS IN JOINT VENTURES (
INVESTMENTS IN JOINT VENTURES (Tables) | 12 Months Ended |
May 27, 2018 | |
INVESTMENTS IN JOINT VENTURES | |
Schedule of condensed combined and consolidated balance sheets | The amounts presented for Lamb Weston BSW in the table below exclude intercompany balances eliminated in consolidation and include the non-controlling interest at redemption value as reported in our Consolidated Balance Sheets (dollars in millions): May 27, May 28, 2018 2017 Cash and equivalents $ 20.5 $ 10.9 Receivables, less allowance for doubtful accounts (a) 0.2 0.1 Inventories 1.7 1.9 Prepaid expenses and other current assets 0.4 0.4 Property, plant and equipment, net 47.9 49.4 Goodwill 18.8 18.8 Intangible assets, net 3.7 4.5 Other noncurrent assets 1.0 — Total assets $ 94.2 $ 86.0 Current portion of long-term debt $ 1.6 $ 1.5 Accounts payable 17.0 11.6 Accrued liabilities 2.0 2.0 Long-term debt, excluding current portion 26.4 28.0 Total liabilities $ 47.0 $ 43.1 Redeemable noncontrolling interest (b) $ 55.6 $ 50.7 (a) As of May 27, 2018 and May 28, 2017, the affiliate receivables both were $24.0 million and are not included above as they are eliminated in consolidation. (b) Represents the amount that our joint venture partner, Ochoa, had the right to put its equity interest to Lamb Weston on May 27, 2018 and May 28, 2017. |
Summarized combined financial information for our equity method investments | For the Fiscal Years Ended May 2018 2017 2016 Net sales $ 1,142.7 $ 992.6 $ 917.3 Gross margin 246.3 190.9 167.0 Earnings before income taxes (a) 167.2 106.6 143.3 May 27, May 28, 2018 2017 Current assets $ 376.9 $ 325.2 Noncurrent assets 362.7 312.5 Current liabilities 247.5 209.0 Noncurrent liabilities 63.4 71.7 |
EMPLOYEE BENEFIT PLANS AND OT30
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS (Tables) | 12 Months Ended |
May 27, 2018 | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |
Schedule of funded status and amounts recognized in our Condensed Combined and Consolidated Balance Sheets | We recognize the unfunded status of these plans on the Consolidated Balance Sheets, and we recognize changes in funded status in the year changes occur through the Consolidated Statements of Comprehensive Income (Loss) (dollars in millions): For the Fiscal Years Ended May 2018 2017 Pension Plans Post-Retirement Plan Pension Plans Post-Retirement Plan Change in Benefit Obligation Benefit obligation at beginning of year $ 10.1 $ 2.5 $ — $ — Net transfer from Conagra — — 7.4 3.2 Service cost 7.8 — 4.4 — Interest cost 0.4 0.2 0.1 0.1 Participant contributions — 0.1 — — Benefits paid (0.1) (0.1) — — Actuarial (gain) loss 0.7 4.3 (1.8) (0.8) Benefit obligation at fiscal year-end $ 18.9 $ 7.0 $ 10.1 $ 2.5 Accumulated benefit obligation portion of above $ 18.9 $ 10.1 Change in Fair Value of Plan Assets Fair value of plan assets at beginning of year $ 4.5 $ — $ — $ — Actual return on plan assets (0.7) — — — Company contributions 13.6 — 4.5 — Plan participants contributions — 0.1 — — Benefits paid (0.1) (0.1) — — Fair value of plan assets at end of year $ 17.3 $ — $ 4.5 $ — Underfunded status $ (1.6) $ (7.0) $ (5.6) $ (2.5) Amounts Recognized on Consolidated Balance Sheets Other noncurrent liabilities $ (1.6) $ (7.0) $ (5.6) $ (2.5) Amounts Recognized in Accumulated Other Comprehensive Income Loss (Pre-tax) Actuarial (gain) loss $ 0.7 $ 3.4 $ (1.0) $ (0.4) Prior service benefit — — — (0.2) Total $ 0.7 $ 3.4 $ (1.0) $ (0.6) |
Schedule of components of net periodic benefit cost for our pension and postretirement benefit plans | For the period after the Separation Date, the components of net periodic benefit cost were as follows (dollars in millions): For the Fiscal Years Ended May 2018 2017 Post-Retirement Post-Retirement Pension Plans Plan Pension Plans Plan Service cost $ 7.8 $ — $ 4.4 $ — Interest cost 0.4 0.2 0.1 0.1 Expected return on plan assets (0.4) — — — Net amortization of unrecognized amounts Prior service benefit — (0.2) — — Actuarial gain — 0.5 — — Net periodic benefit cost $ 7.8 $ 0.5 $ 4.5 $ 0.1 Changes in plan assets and benefit obligations recognized in other comprehensive (income) loss Prior service benefit $ — $ — $ — $ (0.2) Actuarial (gain) loss 1.7 4.3 (1.0) (0.4) Amortization of prior service cost — 0.2 — — Amortization of actuarial gain (a) — (0.5) — — Total recognized in other comprehensive loss (income) $ 1.7 $ 4.0 $ (1.0) $ (0.6) Total recognized in net periodic benefit cost and other comprehensive loss (income) (pre-tax) $ 9.5 $ 4.5 $ 3.5 $ (0.5) (a) Accumulated losses in excess of 10% of the greater of the projected benefit obligation or the market-related value of assets will be recognized on a straight-line basis over the average remaining service period of active employees in our plans (which is between eight to 11 for our pension plans and approximately four years for our post-retirement benefit plan), to the extent that losses are not offset by gains in subsequent years. The estimated net loss and prior service cost that will be amortized from “Accumulated other comprehensive loss” into net periodic benefit cost in 2019 is $0.7 million ($0.5 million after tax). |
Schedule of actuarial assumptions used in determining the benefit obligations and net periodic pension cost for our defined benefit and postretirement plans | For the Fiscal Years Ended May 2018 2017 Pension Plans Post-Retirement Plan Pension Plans Post-Retirement Plan Weighted-Average Assumptions Used to Determine Benefit Obligations: Discount rate 4.25% 4.18% 4.33% 3.50% Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost: Discount rate 4.33% 3.60% 3.81% 3.18% Expected return on plan assets 7.50% N/A 7.50% N/A |
Schedule of health care cost trend rate assumption | 2018 2017 Health care cost trend rate (Pre65/Post65) 8.4/6.3% 9.0/6.5% Ultimate health care cost trend rate 4.5% 4.5% Year that the rate reaches the ultimate trend rate 2024 2024 |
Schedule of fair Value measurements of plan assets | May 27, 2018 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Cash and cash equivalents $ 11.8 $ — $ — $ 11.8 Equity securities: U.S. equity securities (a) — 1.0 — 1.0 International equity securities (a) — 1.5 — 1.5 Fixed income securities: Government bonds (b) 3.0 — — 3.0 Total assets $ 14.8 $ 2.5 $ — $ 17.3 (c) |
Schedule of Expected Benefit Payments | The following are estimated benefit payments to be paid to current plan participants by year (dollars in millions). Qualified pension benefit payments are paid from plan assets, while nonqualified pension benefit payments are paid by the Company. Pension Plans Post-Retirement Plan 2019 $ 0.1 $ 0.3 2020 0.3 0.3 2021 0.5 0.3 2022 0.7 0.4 2023 0.9 0.4 Succeeding 5 years 9.2 2.5 |
Schedule of Pension costs incurred included in the Condensed Combined and Consolidated statements of earnings | For the Fiscal Years Ended May 2018 2017 2016 Cost of sales (a) $ 7.8 $ 9.6 $ 12.0 Selling, general and administrative expenses (a) — (5.5) 53.9 Total $ 7.8 $ 4.1 $ 65.9 (a) Pension service costs are allocated to operations as reflected in cost of sales above. Expected returns on pension assets and interest costs are reflected in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. Fiscal 2016 includes $59.5 million of charges reflecting Lamb Weston’s portion of the actuarial losses in excess of 10% of Conagra’s pension liability for Conagra sponsored plans. |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 12 Months Ended |
May 27, 2018 | |
ACCRUED LIABILITIES | |
Schedule of components of accrued liabilities | The components of accrued liabilities were as follows (dollars in millions): May 27, May 28, 2018 2017 Compensation and benefits $ 91.7 $ 80.1 Accrued trade promotions 45.4 40.5 Dividends payable 28.0 27.4 Accrued interest 10.8 10.2 Franchise, property, and sales and use taxes 9.6 9.8 Income taxes payable 3.1 4.7 Other 27.4 27.8 Accrued liabilities $ 216.0 $ 200.5 |
DEBT AND FINANCING OBLIGATIONS
DEBT AND FINANCING OBLIGATIONS (Tables) | 12 Months Ended |
May 27, 2018 | |
DEBT AND FINANCING OBLIGATIONS | |
Schedule of debt, including financing obligations | At May 27, 2018 and May 28, 2017, our debt, including financing obligations, was as follows (dollars in millions): May 27, May 28, 2018 2017 Short-term borrowings: Revolving credit facility $ — $ 4.5 Other credit facilities 9.6 17.5 9.6 22.0 Long-term debt: Term loan facility, due 2021 632.8 666.6 4.625% senior notes, due 2024 833.0 833.0 4.875% senior notes, due 2026 833.0 833.0 Lamb Weston BSW Installment Notes 28.0 29.5 2,326.8 2,362.1 Financing obligations: 4.35% lease financing obligation due May 2030 66.8 68.2 Lease financing obligations due on various dates through 2040 (a) 12.2 7.7 79.0 75.9 Total debt and financing obligations 2,415.4 2,460.0 Debt issuance costs (30.4) (35.1) Short-term borrowings (9.6) (22.0) Current portion of long-term debt and financing obligations (38.7) (37.9) Long-term debt, excluding current portion $ 2,336.7 $ 2,365.0 (a) The interest rates on our lease financing obligations are due on various dates through 2040 ranging from 2.39% to 5.00% as of May 27, 2018 and 2.00% to 3.32% as of May 28, 2017. |
Schedule of aggregate minimum principal maturities of long term debt | The aggregate minimum principal maturities of our long-term debt, including current portion, for the next five fiscal years and thereafter, are as follows (dollars in millions): Financing Debt (a) Obligations Total 2019 $ 44.9 $ 3.4 $ 48.3 2020 35.3 3.3 38.6 2021 35.5 3.0 38.5 2022 533.4 3.1 536.5 2023 1.8 3.2 5.0 Thereafter 1,685.5 63.0 1,748.5 $ 2,336.4 $ 79.0 $ 2,415.4 (a) Debt includes $9.6 million of expected payments on our other credit facilities in 2019. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
May 27, 2018 | |
STOCK-BASED COMPENSATION | |
Schedule of weighted average Black-Scholes assumptions for stock options | Expected volatility (%) (a) 23.27 Dividend yield (%) 1.71 Risk-free interest rate (%) 1.51 Expected life of stock option (years) 4.4 (a) Because our equity shares had been traded for a relatively short period of time when the options were granted, we based our expected volatility assumptions on the volatility of related industry stocks. |
The Schedule of stock option activity | Weighted- Weighted- Average Average Aggregate Exercise Remaining Intrinsic Price Contractual Value (a) Shares (per share) Term (Years) (in millions) Outstanding at May 29, 2016 — — Converted on November 9, 2016 607,420 $ 23.60 Granted 146,514 35.15 Exercised (22,896) 21.90 Forfeited/cancelled (10,211) 30.68 Outstanding at May 28, 2017 720,827 $ 25.90 7.4 $ 14.2 Granted 56,496 43.82 Exercised (125,717) 17.47 Forfeited/cancelled — — Outstanding at May 27, 2018 651,606 $ 29.08 7.3 $ 23.7 Exercisable at May 27, 2018 424,746 $ 26.29 6.7 $ 16.6 (a) The aggregate intrinsic values represent the total pre-tax intrinsic value (the difference between our closing stock price on the last trading day of our fiscal 2018 fourth quarter, or May 25, 2018, and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options at the end of the fiscal year. The amount changes based on the fair market value of our common stock. |
The schedule of RSU and Performance Share activity | Stock-Settled Cash-Settled Performance Shares Weighted- Weighted- Weighted- Average Average Average Grant- Grant- Grant- Date Fair Date Fair Date Fair Shares Value Shares Value Shares Value Outstanding at May 29, 2016 — — — — — — Converted on November 9, 2016 459,466 $ 25.05 469,837 $ 25.33 56,050 $ 25.84 Granted (a) 86,642 33.96 — — 1,640 25.84 Vested (b) (17,753) 18.68 (1,503) 23.70 — — Forfeited/expired/cancelled (38,751) 24.24 (5,722) 26.73 — — Outstanding at May 28, 2017 489,604 26.92 462,612 25.33 57,690 25.84 Granted (a) 293,209 45.22 — — 125,524 43.90 Performance condition adjustment (c) — — — — (818) 19.70 Vested (b) (172,772) 23.82 (173,762) 20.00 (15,228) 19.70 Forfeited/expired/cancelled (28,166) 31.52 (3,198) 27.75 (6,898) 43.87 Outstanding at May 27, 2018 581,875 $ 36.84 285,652 $ 28.54 160,270 $ 39.82 (a) Granted represents new grants and dividend equivalents accrued. (b) The aggregate fair value of awards that vested in fiscal 2018 and 2017 was $16.6 million and $0.7 million, respectively, which represents the market value of our common stock on the date that the RSUs and Performance Shares vested. The number of RSUs and Performance Shares vested includes shares of common stock that we withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements. RSUs that are expected to vest are net of estimated future forfeitures. (c) Amount represents adjustment for performance results attained on Performance Shares during fiscal 2018 |
Schedule of compensation expenses for stock-based awards recognized, net of forfeitures | Compensation expense for share-based awards recognized in the Combined and Consolidated Statements of Earnings, net of forfeitures, was as follows (dollars in millions): For the Fiscal Years Ended May 2018 2017 2016 Stock options $ 1.2 $ 0.6 $ 0.4 Stock-settled RSUs 7.9 4.0 2.4 Performance Shares 4.4 1.1 0.4 Stock-settled compensation expense 13.5 5.7 3.2 Cash-settled RSUs (a) 8.8 9.7 5.7 Total compensation expense 22.3 15.4 8.9 Income tax benefit (b) (6.9) (5.7) (3.3) Total compensation expense, net of tax benefit $ 15.4 $ 9.7 $ 5.6 (a) All cash-settled RSUs are marked-to-market and presented within “Accrued liabilities” and “Other noncurrent liabilities” in our Consolidated Balance Sheets. (b) Income tax benefit represents the marginal tax rate. |
Schedule of total unrecognized compensation expense, net of estimated forfeitures, related to stock-based payments | Based on estimates at May 27, 2018, total unrecognized compensation expense related to stock-based payments was as follows (dollars in millions): Remaining Weighted Unrecognized Average Compensation Recognition Expense Period (in years) Stock options $ 0.4 1.1 Stock-settled RSUs 11.4 2.0 Cash-settled RSUs 3.7 1.0 Performance shares 9.9 2.1 Total unrecognized compensation expense $ 25.4 1.9 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
May 27, 2018 | |
FAIR VALUE MEASUREMENTS | |
Schedule of financial assets and liabilities measured at fair value on recurring basis | 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 May 27, 2018 and May 28, 2017 (dollars in millions): As of May 27, 2018 Level 1 Level 2 Level 3 Total Assets: Pension plan assets $ 14.8 $ 2.5 $ — $ 17.3 Deferred compensation assets 0.5 — — 0.5 Derivative assets (a) — 0.8 — 0.8 Total assets $ 15.3 $ 3.3 $ — $ 18.6 Liabilities: Derivative liabilities (a) $ — $ 1.4 $ — $ 1.4 Deferred compensation liabilities (b) — 12.4 — 12.4 Total liabilities $ — $ 13.8 $ — $ 13.8 As of May 28, 2017 Level 1 Level 2 Level 3 Total Assets: Pension plan assets $ 4.5 $ — $ — $ 4.5 Deferred compensation assets 0.6 — — 0.6 Total assets $ 5.1 $ — $ — $ 5.1 Liabilities: Derivative liabilities (a) $ — $ 2.4 $ — $ 2.4 Deferred compensation liabilities (b) — 8.8 — 8.8 Total liabilities $ — $ 11.2 $ — $ 11.2 (a) The fair values of our Level 2 derivative assets and liabilities were determined using valuation models that use market observable inputs including interest rate curves and both forward and spot prices for currencies and commodities. Derivative assets and liabilities included in Level 2 primarily represent commodity swap and option contracts. (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. |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 12 Months Ended |
May 27, 2018 | |
STOCKHOLDERS' EQUITY | |
Changes in AOCI, net of tax | Changes in AOCI, net of taxes, by component follows (dollars in millions). Amounts in parentheses indicate losses. Foreign Accumulated Currency Pension and Other Translation Post-Retirement Comprehensive Gains (Losses) Benefits Loss Balance as of May 28, 2017 $ (10.3) $ 1.0 $ (9.3) Other comprehensive income before reclassifications, net of tax 9.1 (4.3) 4.8 Amounts reclassified out of AOCI, net of tax — 0.2 (a) 0.2 Net current-period other comprehensive income (loss) 9.1 (4.1) 5.0 Balance as of May 27, 2018 $ (1.2) $ (3.1) $ (4.3) (a) These AOCI components are included in the computation of net pension and postretirement benefit costs. See Note 7, Employee Benefit Plans and Other Post-Retirement Benefits, for additional information. |
SEGMENTS (Tables)
SEGMENTS (Tables) | 12 Months Ended |
May 27, 2018 | |
SEGMENTS | |
Schedule of segment information | For the Fiscal Years Ended May (in millions) 2018 2017 2016 Net sales: Global $ 1,744.2 $ 1,624.8 $ 1,549.4 Foodservice 1,099.1 1,030.0 946.0 Retail 449.2 384.9 372.1 Other 131.2 128.3 126.3 Total net sales 3,423.7 3,168.0 2,993.8 Product contribution margin (a): Global 375.7 338.6 293.2 Foodservice 365.9 330.7 253.0 Retail 87.3 77.6 69.1 Other 19.0 9.3 20.9 Total product contribution margin 847.9 756.2 636.2 Other selling, general and administrative expenses (a) (b) 267.8 237.9 262.9 Income from operations 580.1 518.3 373.3 Interest expense, net 108.8 61.2 5.9 Income tax expense (c) 121.2 170.2 144.5 Equity method investment earnings (d) 83.6 53.3 71.7 Net income 433.7 340.2 294.6 Less: Income attributable to noncontrolling interests 16.9 13.3 9.3 Net income attributable to Lamb Weston Holdings, Inc. $ 416.8 $ 326.9 $ 285.3 (a) Product contribution margin is defined as net sales, less cost of sales and advertising and promotion expenses. Other selling, general and administrative expenses include all selling, general and administrative expenses other than advertising and promotion expenses. (b) Fiscal 2018 includes $8.7 million of pre-tax expenses related to the Separation, primarily related to professional fees and employee-related costs. Fiscal 2017 includes $26.5 million of pre-tax expenses related to the Separation, primarily related to professional fees, and a $3.1 million non-cash pre-tax gain on assets received during the period. Fiscal 2016 includes the following pre-tax charges: $5.3 million of expenses related to the Separation and $59.5 million of non-cash charges reflecting Lamb Weston’s portion of the actuarial losses in excess of 10% of Conagra’s pension liability for Conagra sponsored plans. (c) The Tax Act decreased income tax expense by $64.7 million. This decrease includes a provisional $28.4 million net benefit comprised of a $39.9 million benefit from the re-measurement of our net U.S. deferred tax liabilities using the new lower U.S. federal statutory tax rate, partially offset by a $11.5 million transition tax on our previously untaxed foreign earnings, which is primarily payable over eight years. In addition, the decrease in income tax expense includes a $36.3 million tax benefit related to the lower U.S. corporate tax rate. We will continue to refine these amounts within the measurement period allowed by SAB No.118, which will not exceed one year from the enactment date of the Tax Act. (d) Fiscal 2016 includes a $17.7 million non-cash gain related to the settlement of a pension plan of our Lamb-Weston/Meijer joint venture. |
COMMITMENTS, CONTINGENCIES, G37
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS (Tables) | 12 Months Ended |
May 27, 2018 | |
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS | |
Summary of non-cancellable operating lease commitments | The minimum lease payments under non-cancellable operating leases with lease terms in excess of one year are as follows (dollars in millions): 2019 $ 20.7 2020 19.2 2021 15.0 2022 11.6 2023 6.2 Thereafter 16.6 Total $ 89.3 |
QUARTERLY FINANCIAL DATA (una38
QUARTERLY FINANCIAL DATA (unaudited) (Tables) | 12 Months Ended |
May 27, 2018 | |
QUARTERLY FINANCIAL DATA (unaudited) | |
Schedule of Quarterly Financial Information | 2018 (a) First Second Third Fourth Quarter Quarter Quarter Quarter Net sales $ 817.5 $ 824.6 $ 863.4 $ 918.2 Gross profit 196.3 208.2 242.3 232.7 Income before income taxes and equity method earnings 112.4 112.4 140.7 105.8 Income tax expense 44.1 41.5 7.5 28.1 Net income attributable to Lamb Weston Holdings, Inc. 83.4 76.6 156.8 100.0 Earnings per share Basic 0.56 0.52 1.07 0.68 Diluted 0.56 0.52 1.06 0.68 Dividends declared 0.1875 0.1875 0.19125 0.19125 Stock price - high (b) 47.38 54.44 60.32 68.03 Stock price - low (b) 42.74 44.88 53.51 54.05 2017 (a) First Second Third Fourth Quarter Quarter Quarter Quarter Net sales $ 776.3 $ 790.7 $ 768.5 $ 832.5 Gross profit 179.7 196.5 204.9 197.7 Income before income taxes and equity method earnings 123.5 118.7 118.9 95.9 Income tax expense 51.0 33.9 44.0 41.2 Net income attributable to Lamb Weston Holdings, Inc. 79.6 87.2 84.2 75.9 Earnings per share Basic 0.54 0.59 0.57 0.52 Diluted 0.54 0.59 0.57 0.51 Dividends declared N/A N/A 0.1875 0.1875 Stock price - high (b) N/A 33.02 39.90 45.66 Stock price - low (b) N/A 29.89 32.51 39.19 (a) The sum of quarterly amounts may not agree to our annual results due to rounding. The first, second, third, and fourth quarters of fiscal 2018 included $2.2 million ($1.4 million net of taxes), $4.0 million ($2.5 million net taxes), $1.7 million ($1.2 million net of taxes), and $0.8 million ($0.6 million net of taxes), respectively, of expenses related to the Separation. The third and fourth quarters of fiscal 2018 include a $47.0 million and $17.7 million benefit, respectively, related to the Tax Act; approximately $23.0 million and $13.3 million, respectively, relates to a lower U.S. corporate tax rate and $24.0 million and $4.4 million, respectively, relate to the provisional impacts of the Tax Act. The first, second, third, and fourth quarters of fiscal 2017 included $9.7 million ($6.1 million net of taxes), $9.0 million ($5.7 million net of taxes), $5.1 million ($3.2 million net of taxes), and $2.8 million ($1.8 million net of taxes), respectively, of expenses related to the Separation. The fourth quarter of fiscal 2017 includes a $3.1 million ($2.0 million net of taxes) non-cash gain on assets. Our common stock is listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “LW.” All stock prices are closing prices as reported by the NYSE. |
NATURE OF OPERATIONS AND SUMM39
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reportable Segments (Details) - segment | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Number of reportable segments | 4 | 4 | 4 |
NATURE OF OPERATIONS AND SUMM40
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - General Information (Details) shares in Millions | Nov. 09, 2016shares |
Related Party Transactions | |
Divestiture of stock pro rata distribution (as a percent) | 100.00% |
Conagra | |
Related Party Transactions | |
Stock issuance ratio on divestiture of business | 0.3333 |
Issuance of common stock at separation (in shares) | 146 |
NATURE OF OPERATIONS AND SUMM41
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Basis of Presentation (Details) | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Fiscal year duration (weeks converted to days) | 364 days | 364 days | 364 days |
NATURE OF OPERATIONS AND SUMM42
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising and Promotion (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Advertising and Promotion | |||
Advertising and promotion expenses | $ 31.6 | $ 22.6 | $ 25.6 |
NATURE OF OPERATIONS AND SUMM43
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Research and Development (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Research and Development | |||
Research and development costs | $ 13.5 | $ 10.6 | $ 6.7 |
NATURE OF OPERATIONS AND SUMM44
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and Cash Equivalents (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 |
Cash and Cash Equivalents | ||||
Cash and cash equivalents | $ 55.6 | $ 57.1 | $ 36.4 | $ 30.6 |
NATURE OF OPERATIONS AND SUMM45
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Trade Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Trade Accounts Receivable and Allowance for Doubtful Accounts | ||
Allowance for doubtful accounts | $ 0.6 | $ 0.5 |
NATURE OF OPERATIONS AND SUMM46
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventories (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Major classes of inventories | ||
Raw materials and packaging | $ 87.2 | $ 84.5 |
Finished goods | 430.5 | 409.7 |
Supplies and other | 32 | 30.8 |
Inventories | $ 549.7 | $ 525 |
NATURE OF OPERATIONS AND SUMM47
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment - Interest Capitalized (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Construction in progress | |||
Property, Plant and Equipment | |||
Interest capitalized | $ 4.2 | $ 5.2 | $ 2.7 |
NATURE OF OPERATIONS AND SUMM48
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment - Components (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | $ 2,581.3 | $ 2,349.5 |
Less accumulated depreciation | (1,160.5) | (1,078.3) |
Property, plant, and equipment, net | 1,420.8 | 1,271.2 |
Land and land improvements | ||
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | 139.8 | 139.8 |
Buildings, machinery, and equipment | ||
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | 2,212.6 | 1,917.7 |
Furniture, fixtures, office equipment, and other | ||
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | 101 | 62.6 |
Construction in progress | ||
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | $ 127.9 | $ 229.4 |
NATURE OF OPERATIONS AND SUMM49
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment - Useful Lives (Details) | 12 Months Ended |
May 27, 2018 | |
Land improvements | Minimum | |
Property, Plant and Equipment | |
Estimated useful lives | 1 year |
Land improvements | Maximum | |
Property, Plant and Equipment | |
Estimated useful lives | 40 years |
Buildings | Minimum | |
Property, Plant and Equipment | |
Estimated useful lives | 10 years |
Buildings | Maximum | |
Property, Plant and Equipment | |
Estimated useful lives | 40 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment | |
Estimated useful lives | 5 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment | |
Estimated useful lives | 20 years |
Furniture, fixtures, office equipment, and other | Minimum | |
Property, Plant and Equipment | |
Estimated useful lives | 3 years |
Furniture, fixtures, office equipment, and other | Maximum | |
Property, Plant and Equipment | |
Estimated useful lives | 15 years |
NATURE OF OPERATIONS AND SUMM50
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment - Depreciation Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Property, Plant and Equipment | |||
Depreciation expense | $ 136.3 | $ 104.3 | $ 93.9 |
NATURE OF OPERATIONS AND SUMM51
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment - Purchases in Accounts Payable (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 27, 2018 | May 28, 2017 | |
Property, Plant and Equipment | ||
Purchases of property, plant and equipment included in accounts payable | $ 27.9 | $ 60.4 |
NATURE OF OPERATIONS AND SUMM52
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Foreign Currency (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Selling, general and administrative | |||
Foreign Currency | |||
Gains and losses from foreign currency transactions | $ 4.7 | $ (2.7) | $ (2.6) |
NATURE OF OPERATIONS AND SUMM53
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ASU (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Net income | $ 433.7 | $ 340.2 | $ 294.6 |
Accounting Standards Update 2014-09 | Calculated under Revenue Guidance in Effect before Topic 606 | Pro Forma Adjustment | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Net sales | 93 | ||
Net income | 15 | ||
Cumulative adjustment to increase retained earnings | $ 15 |
EARNINGS PER SHARE - Computatio
EARNINGS PER SHARE - Computation of Basic and Diluted Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 28, 2017 | Feb. 26, 2017 | Nov. 27, 2016 | Aug. 28, 2016 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Numerator: | |||||||||||
Net income attributable to Lamb Weston Holdings, Inc. | $ 100 | $ 156.8 | $ 76.6 | $ 83.4 | $ 75.9 | $ 84.2 | $ 87.2 | $ 79.6 | $ 416.8 | $ 326.9 | $ 285.3 |
Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated | 2.7 | 2.1 | 4.8 | ||||||||
Net income available to Lamb Weston common stockholders | $ 414.1 | $ 324.8 | $ 280.5 | ||||||||
Denominator: | |||||||||||
Basic weighted average common shares outstanding | 146.3 | 146.1 | 146 | ||||||||
Add: Dilutive effect of employee incentive plans | 0.7 | 0.5 | |||||||||
Diluted weighted average common shares outstanding | 147 | 146.6 | 146 | ||||||||
Earnings per share | |||||||||||
Basic (in dollars per share) | $ 0.68 | $ 1.07 | $ 0.52 | $ 0.56 | $ 0.52 | $ 0.57 | $ 0.59 | $ 0.54 | $ 2.83 | $ 2.22 | $ 1.92 |
Diluted (in dollars per share) | $ 0.68 | $ 1.06 | $ 0.52 | $ 0.56 | $ 0.51 | $ 0.57 | $ 0.59 | $ 0.54 | $ 2.82 | $ 2.22 | $ 1.92 |
EARNINGS PER SHARE - Additional
EARNINGS PER SHARE - Additional Information (Details) shares in Millions | Nov. 09, 2016shares |
Conagra | |
Related Party Transactions | |
Issuance of common stock at separation (in shares) | 146 |
EARNINGS PER SHARE - Share-base
EARNINGS PER SHARE - Share-based Awards Outstanding (Details) - shares | May 27, 2018 | May 28, 2017 | Nov. 08, 2016 |
Stock options | |||
Stock-based Compensation | |||
Options outstanding (in shares) | 651,606 | 720,827 | 0 |
Stock-settled restricted stock units | |||
Stock-based Compensation | |||
RSUs and performance shares (in shares) | 581,875 | 489,604 | 0 |
Cash-settled RSUs | |||
Stock-based Compensation | |||
RSUs and performance shares (in shares) | 285,652 | 462,612 | 0 |
Performance shares | |||
Stock-based Compensation | |||
RSUs and performance shares (in shares) | 160,270 | 57,690 | 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Related Party Transactions | |||
Accumulated losses (as a percent) | 10.00% | ||
Conagra | |||
Related Party Transactions | |||
Net sales | $ 8.4 | $ 25.7 | |
Cost of sales | 3.4 | 21.4 | |
Purchases | 7.9 | 18.5 | |
Charge for write-off of actuarial losses | $ 59.5 | ||
Accumulated losses (as a percent) | 10.00% | ||
Conagra | Transition services agreement | |||
Related Party Transactions | |||
Related party transaction expenses | $ 2.4 | 4.2 | |
Conagra | Allocations based upon certain metrics | |||
Related Party Transactions | |||
Selling, general and administrative costs | 7.7 | $ 53.9 | |
Conagra | Allocations based upon indirect corporate costs | |||
Related Party Transactions | |||
Selling, general and administrative costs | $ 17.3 | $ 107.6 |
INCOME TAXES - Pre-tax Income (
INCOME TAXES - Pre-tax Income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Pre-tax income | |||
United States | $ 478.2 | $ 467.5 | $ 384.7 |
Foreign | 76.7 | 42.9 | 54.4 |
Total pre-tax income | $ 554.9 | $ 510.4 | $ 439.1 |
INCOME TAXES - Provision for In
INCOME TAXES - Provision for Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 28, 2017 | Feb. 26, 2017 | Nov. 27, 2016 | Aug. 28, 2016 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Current | |||||||||||
U.S. federal | $ 94.3 | $ 132 | $ 100 | ||||||||
State and local | 14.7 | 13.9 | 12 | ||||||||
Foreign | 15 | 9.5 | 11.8 | ||||||||
Total current provision for taxes | 124 | 155.4 | 123.8 | ||||||||
Deferred | |||||||||||
U.S. federal | (4.4) | 9.7 | 17.6 | ||||||||
State and local | 0.1 | 3.2 | (1.3) | ||||||||
Foreign | 1.5 | 1.9 | 4.4 | ||||||||
Total deferred provision for taxes | (2.8) | 14.8 | 20.7 | ||||||||
Total provision for taxes | $ 28.1 | $ 7.5 | $ 41.5 | $ 44.1 | $ 41.2 | $ 44 | $ 33.9 | $ 51 | $ 121.2 | $ 170.2 | $ 144.5 |
INCOME TAXES - Tax Act - Statut
INCOME TAXES - Tax Act - Statutory Rates (Details) | 5 Months Ended | 7 Months Ended | 12 Months Ended | ||
May 27, 2018 | Dec. 31, 2017 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
INCOME TAXES | |||||
Federal statutory tax rate (as a percent) | 21.00% | 35.00% | 29.30% | 35.00% | 35.00% |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Income Tax Expenses - Tabular Disclosure (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 28, 2017 | Feb. 26, 2017 | Nov. 27, 2016 | Aug. 28, 2016 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Reconciliation of income tax expense | |||||||||||
Provision computed at U.S. federal statutory rate | $ 162.6 | $ 178.6 | $ 153.7 | ||||||||
State and local taxes, net of federal benefit | 12.6 | 11.4 | 7.1 | ||||||||
Tax credits and domestic manufacturers deduction | (8.1) | (11) | (9.5) | ||||||||
Effect of taxes booked on foreign operations | (7) | (7.8) | (2.8) | ||||||||
Deferred impact of rate change | (45.4) | ||||||||||
Transition tax liability | 11.5 | ||||||||||
Other | (5) | (1) | (4) | ||||||||
Total provision for taxes | $ 28.1 | $ 7.5 | $ 41.5 | $ 44.1 | $ 41.2 | $ 44 | $ 33.9 | $ 51 | $ 121.2 | $ 170.2 | $ 144.5 |
Effective tax rate (as a percent) | 21.80% | 33.30% | 32.90% |
INCOME TAXES - Reconciliation62
INCOME TAXES - Reconciliation of Income Tax Expenses - Statutory Rates (Details) | 5 Months Ended | 7 Months Ended | 12 Months Ended | ||
May 27, 2018 | Dec. 31, 2017 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
INCOME TAXES | |||||
Federal statutory tax rate (as a percent) | 21.00% | 35.00% | 29.30% | 35.00% | 35.00% |
INCOME TAXES - Reconciliation63
INCOME TAXES - Reconciliation of Income Tax Expenses - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
May 27, 2018 | Feb. 25, 2018 | May 27, 2018 | |
INCOME TAXES | |||
Deferred impact of rate change | $ 45.4 | ||
Benefit from the estimated impact of remeasuring net U.S. deferred tax liabilities at a lower tax rate | $ 13.3 | $ 23 | 39.9 |
Transition tax liability | $ 11.5 | ||
Transition tax period for payment | 8 years |
INCOME TAXES - Income Taxes Pai
INCOME TAXES - Income Taxes Paid (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
INCOME TAXES | |||
Income taxes paid, net of refunds | $ 106.9 | $ 170 | $ 124.7 |
INCOME TAXES - Deferred Income
INCOME TAXES - Deferred Income Taxes - Statutory Rates (Details) | 5 Months Ended | 7 Months Ended | 12 Months Ended | ||
May 27, 2018 | Dec. 31, 2017 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
INCOME TAXES | |||||
Federal statutory tax rate (as a percent) | 21.00% | 35.00% | 29.30% | 35.00% | 35.00% |
INCOME TAXES - Deferred Incom66
INCOME TAXES - Deferred Income Taxes - Deferred Tax Assets (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Deferred Tax Assets | ||
Goodwill and other intangible assets, deferred tax assets | $ 68 | $ 125 |
Compensation and benefit related liabilities | 15.3 | 20.3 |
Accrued expenses and other liabilities | 16.7 | 22.5 |
Deferred revenue previously recognized for tax | 7.2 | 8.2 |
Net operating loss carryforwards | 15.8 | 17 |
Other | 0.7 | 0.9 |
Deferred Tax Assets, Gross, Total | 123.7 | 193.9 |
Less: Valuation allowance | (62) | (98.4) |
Net deferred tax assets | $ 61.7 | $ 95.5 |
INCOME TAXES - Deferred Incom67
INCOME TAXES - Deferred Income Taxes - Deferred Tax Liabilities (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Deferred Tax Liabilities | ||
Property, plant and equipment | $ 127.7 | $ 159.8 |
Debt issuance cost | 4.6 | 8.3 |
Investment in joint ventures | 9.1 | 12.3 |
Other | 12 | 5.1 |
Deferred Tax Liabilities, Gross, Total | $ 153.4 | $ 185.5 |
INCOME TAXES - Deferred Incom68
INCOME TAXES - Deferred Income Taxes - Net Operating Loss Carryforwards (Details) - Foreign $ in Millions | May 27, 2018USD ($) |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 37.2 |
Net operating loss carryforwards, after tax | $ 8.7 |
INCOME TAXES - Deferred Incom69
INCOME TAXES - Deferred Income Taxes - Tax Credit Carryforwards (Details) - State $ in Millions | May 27, 2018USD ($) |
Tax Credit Carryforward [Line Items] | |
Gross state capital loss carryovers | $ 102.2 |
Gross state capital loss carryovers, after tax | $ 7.1 |
INCOME TAXES - Deferred Incom70
INCOME TAXES - Deferred Income Taxes - Valuation Allowance (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 28, 2017 | Feb. 26, 2017 | Nov. 27, 2016 | Aug. 28, 2016 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Valuation Allowance [Line Items] | |||||||||||
Income tax expense | $ 28.1 | $ 7.5 | $ 41.5 | $ 44.1 | $ 41.2 | $ 44 | $ 33.9 | $ 51 | $ 121.2 | $ 170.2 | $ 144.5 |
Net Operating Loss Carryforwards | |||||||||||
Valuation Allowance [Line Items] | |||||||||||
Income tax expense | $ 0 | $ 2.8 |
INCOME TAXES - Deferred Incom71
INCOME TAXES - Deferred Income Taxes - Consolidated Balance Sheets (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Other assets | ||
Deferred tax assets | $ 0.4 | $ 0.5 |
Deferred income taxes | ||
Deferred tax liabilities | $ 92.1 | $ 90.5 |
INCOME TAXES - Uncertain Tax Po
INCOME TAXES - Uncertain Tax Positions - Changes in Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Uncertain Tax Positions | |||
Beginning balance | $ 6.9 | $ 3.8 | $ 4.3 |
Decreases from positions established during prior fiscal years | (0.5) | ||
Increases from positions established during current and prior fiscal years | 7.9 | 2.2 | 0.6 |
Decreases relating to settlements with taxing authorities | (0.2) | ||
Reductions resulting from lapse of applicable statute of limitations | (1.6) | (0.9) | (0.3) |
Adjustments resulting from the Separation | 1.8 | (0.1) | |
Ending balance | $ 13.2 | $ 6.9 | $ 3.8 |
INCOME TAXES - Uncertain Tax 73
INCOME TAXES - Uncertain Tax Positions - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |||
May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 | |
INCOME TAXES | ||||
Unrecognized tax benefits | $ 13.2 | $ 6.9 | $ 3.8 | $ 4.3 |
Tax benefit if unrecognized tax benefits are recognized | 11.1 | 6.2 | ||
Gross interest and penalties | 2.9 | 2.8 | ||
Accrued estimated interest and penalties | $ 2.9 | $ 2.8 | ||
Statutes of limitations, minimum | 3 years | |||
Statutes of limitations, maximum | 5 years |
GOODWILL AND OTHER IDENTIFIAB74
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Carrying Amount of Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 27, 2018 | May 28, 2017 | |
Goodwill | ||
Balance at the beginning period | $ 133 | $ 133.9 |
Foreign currency translation adjustment | 2.1 | (0.9) |
Balance at the end of the period | 135.1 | 133 |
Global | ||
Goodwill | ||
Balance at the beginning period | 74.8 | 75.7 |
Foreign currency translation adjustment | 2.1 | (0.9) |
Balance at the end of the period | 76.9 | 74.8 |
Foodservice | ||
Goodwill | ||
Balance at the beginning period | 42.8 | 42.8 |
Balance at the end of the period | 42.8 | 42.8 |
Retail | ||
Goodwill | ||
Balance at the beginning period | 10.9 | 10.9 |
Balance at the end of the period | 10.9 | 10.9 |
Other | ||
Goodwill | ||
Balance at the beginning period | 4.5 | 4.5 |
Balance at the end of the period | $ 4.5 | $ 4.5 |
GOODWILL AND OTHER IDENTIFIAB75
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Weighted Average Useful Life (Details) | 12 Months Ended | |
May 27, 2018 | May 28, 2017 | |
Weighted Average | ||
Amortizing Intangible Assets | ||
Weighted Average Useful Life, amortizing intangible assets (in years) | 14 years | 14 years |
GOODWILL AND OTHER IDENTIFIAB76
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Other Identifiable Intangible Assets (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | ||
Gross Carrying Amount, non-amortizing intangible assets | $ 18 | $ 18 |
Gross Carrying Amount, amortizing intangible assets | 35.2 | 34.9 |
Accumulated Amortization, amortizing intangible assets | 17.8 | 15.7 |
Total intangible assets, excluding goodwill | $ 53.2 | $ 52.9 |
GOODWILL AND OTHER IDENTIFIAB77
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Amortization Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | |||
Amortization expense | $ 2.4 | $ 2.3 | $ 1.9 |
GOODWILL AND OTHER IDENTIFIAB78
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Total Intangible Assets, Net (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | ||
Total intangible assets, excluding goodwill | $ 53.2 | $ 52.9 |
Accumulated Amortization, amortizing intangible assets | 17.8 | 15.7 |
Total intangible assets, net of amortization, excluding goodwill | $ 35.4 | $ 37.2 |
GOODWILL AND OTHER IDENTIFIAB79
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Estimated Intangible Assets Amortization Expense (Details) $ in Millions | May 27, 2018USD ($) |
Estimated intangible asset amortization expense | |
2,019 | $ 1.8 |
2,020 | 1.8 |
2,021 | 1.8 |
2,022 | 1.8 |
2,023 | 1.8 |
Thereafter | $ 8.5 |
INVESTMENTS IN JOINT VENTURES -
INVESTMENTS IN JOINT VENTURES - Variable Interest Entity - Consolidated - General Information (Details) | 12 Months Ended |
May 27, 2018 | |
Lamb Weston BSW | |
Investments in Joint Ventures | |
Ownership interest (as a percent) | 49.99% |
INVESTMENTS IN JOINT VENTURES81
INVESTMENTS IN JOINT VENTURES - Variable Interest Entity - Consolidated - Transactions (Details) - Co-venturer - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Related Party Transactions | |||
Purchases | $ 58.7 | $ 62.9 | $ 58.6 |
Costs | $ 5.1 | $ 5.1 | $ 5.1 |
INVESTMENTS IN JOINT VENTURES82
INVESTMENTS IN JOINT VENTURES - Variable Interest Entity - Consolidated - Reported in Condensed Combined and Consolidated Balance Sheets (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 |
Condensed Consolidated Balance Sheets | ||||
Cash and equivalents | $ 55.6 | $ 57.1 | $ 36.4 | $ 30.6 |
Receivables, less allowance for doubtful accounts | 225.9 | 185.2 | ||
Inventories | 549.7 | 525 | ||
Prepaid expenses and other current assets | 99.2 | 90.9 | ||
Property, plant and equipment, net | 1,420.8 | 1,271.2 | ||
Goodwill | 135.1 | 133 | $ 133.9 | |
Intangible assets, net | 35.4 | 37.2 | ||
Other noncurrent assets | 11.1 | 7.4 | ||
Accounts payable | 254.4 | 295 | ||
Accrued liabilities | 216 | 200.5 | ||
Redeemable noncontrolling interest | 55.6 | 50.7 | ||
Lamb Weston BSW | ||||
Condensed Consolidated Balance Sheets | ||||
Cash and equivalents | 20.5 | 10.9 | ||
Receivables, less allowance for doubtful accounts | 0.2 | 0.1 | ||
Inventories | 1.7 | 1.9 | ||
Prepaid expenses and other current assets | 0.4 | 0.4 | ||
Property, plant and equipment, net | 47.9 | 49.4 | ||
Goodwill | 18.8 | 18.8 | ||
Intangible assets, net | 3.7 | 4.5 | ||
Other noncurrent assets | 1 | |||
Total assets | 94.2 | 86 | ||
Current portion of long-term debt | 1.6 | 1.5 | ||
Accounts payable | 17 | 11.6 | ||
Accrued liabilities | 2 | 2 | ||
Long-term debt, excluding current portion | 26.4 | 28 | ||
Total liabilities | 47 | 43.1 | ||
Redeemable noncontrolling interest | 55.6 | $ 50.7 | ||
Lamb Weston BSW | Eliminated in consolidation | ||||
Condensed Consolidated Balance Sheets | ||||
Receivables, less allowance for doubtful accounts | $ 24 |
INVESTMENTS IN JOINT VENTURES83
INVESTMENTS IN JOINT VENTURES - Variable Interest Entity - Not Consolidated (Details) - USD ($) $ in Millions | 12 Months Ended | |||
May 27, 2018 | May 28, 2017 | May 29, 2016 | May 31, 2015 | |
Investments in Joint Ventures | ||||
Equity method investments | $ 219.8 | $ 178.6 | ||
Stockholders' equity | $ (334.8) | (647.2) | $ 1,400.6 | $ 1,357.5 |
Lamb Weston RDO | ||||
Investments in Joint Ventures | ||||
Ownership interest (as a percent) | 50.00% | |||
Equity method investments | $ 18 | 17.2 | ||
Selling, general and administrative | Lamb Weston RDO | ||||
Investments in Joint Ventures | ||||
Fees received | 14.4 | 13.9 | $ 13.2 | |
Lamb Weston RDO | ||||
Investments in Joint Ventures | ||||
Stockholders' equity | 36 | 34.4 | ||
Term borrowings from banks | $ 57.2 | $ 59.3 |
INVESTMENTS IN JOINT VENTURES84
INVESTMENTS IN JOINT VENTURES - Other Investments (Details) | May 27, 2018 |
Lamb-Weston Meijer | |
Schedule of Equity Method Investments [Line Items] | |
Ownership interest (as a percent) | 50.00% |
INVESTMENTS IN JOINT VENTURES85
INVESTMENTS IN JOINT VENTURES - Transactions with Ventures - Carrying Value (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
INVESTMENTS IN JOINT VENTURES | ||
Carrying value of equity method investments | $ 219.8 | $ 178.6 |
INVESTMENTS IN JOINT VENTURES86
INVESTMENTS IN JOINT VENTURES - Transactions with Ventures - Sales and Payments (Details) - Joint Ventures - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Related Party Transactions | |||
Net sales | $ 29.3 | $ 15 | |
Receivables | 12.4 | $ 8.4 | |
Payments | |||
Related Party Transactions | |||
Net sales | 30.1 | ||
Payments | $ 10.7 | $ 11.7 | $ 11.9 |
INVESTMENTS IN JOINT VENTURES87
INVESTMENTS IN JOINT VENTURES - Transactions with Ventures - Dividends Received (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
INVESTMENTS IN JOINT VENTURES | |||
Dividends received from equity method investments | $ 48.7 | $ 31 | $ 37.9 |
INVESTMENTS IN JOINT VENTURES88
INVESTMENTS IN JOINT VENTURES - Combined Financial Information for Equity Method Investments - General Information (Details) | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Summarized combined financial information for equity method investments | |||
Summarized financial information of equity method investments, percentage of operations presented (as a percent) | 100.00% | 100.00% | 100.00% |
INVESTMENTS IN JOINT VENTURES89
INVESTMENTS IN JOINT VENTURES - Combined Financial Information for Equity Method Investments - Income Statement (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Income Statement | |||
Net sales | $ 1,142.7 | $ 992.6 | $ 917.3 |
Gross margin | 246.3 | 190.9 | 167 |
Earnings before income taxes | $ 167.2 | $ 106.6 | $ 143.3 |
INVESTMENTS IN JOINT VENTURES90
INVESTMENTS IN JOINT VENTURES - Combined Financial Information for Equity Method Investments - Balance Sheet (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Assets | ||
Current assets | $ 376.9 | $ 325.2 |
Noncurrent assets | 362.7 | 312.5 |
Liabilities | ||
Current liabilities | 247.5 | 209 |
Noncurrent liabilities | $ 63.4 | $ 71.7 |
INVESTMENTS IN JOINT VENTURES91
INVESTMENTS IN JOINT VENTURES - Combined Financial Information for Equity Method Investments - Additional Information (Details) $ in Millions | 12 Months Ended |
May 29, 2016USD ($) | |
Income Statement | |
Non-cash gain related to settlement of pension plan | $ 35.4 |
Non-cash gain related to settlement of pension plan in earnings | $ 17.7 |
EMPLOYEE BENEFIT PLANS AND OT92
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Other Plans - Conagra's Defined Contribution Plan (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 27, 2018 | May 28, 2017 | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | ||
Matching percentage (as a percent) | 100.00% | |
Employee’s contribution election (as a percent) | 6.00% | |
Employee compensation (as a percent) | 3.00% | |
Plan matching contribution, vesting period | 5 years | |
Plan matching contribution, vesting percentage (as a percent) | 20.00% | |
Plan matching contribution | $ 13.9 | $ 6 |
EMPLOYEE BENEFIT PLANS AND OT93
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Other Plans - Deferred Compensation Savings Plan (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | ||
Rabbi trust amount | $ 0.5 | |
Liabilities under deferred compensation plan | $ 12.4 | $ 8.8 |
EMPLOYEE BENEFIT PLANS AND OT94
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Change in Benefit Obligation (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 27, 2018 | May 28, 2017 | |
Pension Plans | ||
Change in Benefit Obligation | ||
Benefit obligation at beginning of year | $ 10.1 | |
Net transfer from Conagra | $ 7.4 | |
Service cost | 7.8 | 4.4 |
Interest cost | 0.4 | 0.1 |
Benefits paid | (0.1) | |
Actuarial (gain) loss | 0.7 | (1.8) |
Benefit obligation at fiscal year-end | 18.9 | 10.1 |
Accumulated benefit obligation portion of above | 18.9 | 10.1 |
Post-Retirement Plan | ||
Change in Benefit Obligation | ||
Benefit obligation at beginning of year | 2.5 | |
Net transfer from Conagra | 3.2 | |
Interest cost | 0.2 | 0.1 |
Participant contributions | 0.1 | |
Benefits paid | (0.1) | |
Actuarial (gain) loss | 4.3 | (0.8) |
Benefit obligation at fiscal year-end | $ 7 | $ 2.5 |
EMPLOYEE BENEFIT PLANS AND OT95
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Changes in Plan Assets (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
May 27, 2018 | May 27, 2018 | May 28, 2017 | |
Pension Plans | |||
Change in Plan Assets | |||
Fair value of plan assets at beginning of year | $ 4.5 | ||
Actual return on plan assets | (0.7) | ||
Company contributions | $ 12 | 13.6 | $ 4.5 |
Benefits paid | (0.1) | ||
Fair value of plan assets at end of year | $ 17.3 | 17.3 | $ 4.5 |
Post-Retirement Plan | |||
Change in Plan Assets | |||
Plan participants contributions | 0.1 | ||
Benefits paid | $ (0.1) |
EMPLOYEE BENEFIT PLANS AND OT96
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Unfunded Status (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Pension Plans | ||
Funded Status | ||
Unfunded status | $ (1.6) | $ (5.6) |
Post-Retirement Plan | ||
Funded Status | ||
Unfunded status | $ (7) | $ (2.5) |
EMPLOYEE BENEFIT PLANS AND OT97
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Condensed Combined and Consolidated Balance Sheets (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Pension Plans | ||
Amounts Recognized in Consolidated Balance Sheets | ||
Other noncurrent liabilities | $ (1.6) | $ (5.6) |
Amounts Recognized in Accumulated Other Comprehensive Loss (Pre-tax) | ||
Actuarial (gain) loss | 0.7 | (1) |
Total | 0.7 | (1) |
Post-Retirement Plan | ||
Amounts Recognized in Consolidated Balance Sheets | ||
Other noncurrent liabilities | (7) | (2.5) |
Amounts Recognized in Accumulated Other Comprehensive Loss (Pre-tax) | ||
Actuarial (gain) loss | 3.4 | (0.4) |
Prior service benefit | (0.2) | |
Total | $ 3.4 | $ (0.6) |
EMPLOYEE BENEFIT PLANS AND OT98
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 27, 2018 | May 28, 2017 | |
Pension Plans | ||
Components of net periodic benefit cost for our pension and postretirement benefit plans | ||
Service cost | $ 7.8 | $ 4.4 |
Interest cost | 0.4 | 0.1 |
Expected return on plan assets | (0.4) | |
Net periodic benefit cost | 7.8 | 4.5 |
Post-Retirement Plan | ||
Components of net periodic benefit cost for our pension and postretirement benefit plans | ||
Interest cost | 0.2 | 0.1 |
Prior service cost | (0.2) | |
Actuarial gain | 0.5 | |
Net periodic benefit cost | $ 0.5 | $ 0.1 |
EMPLOYEE BENEFIT PLANS AND OT99
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Changes in Plan Assets and Benefit Obligations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Components of other comprehensive income (loss) | |||
Total recognized in other comprehensive loss (income) | $ 6 | $ (1.6) | $ (7.2) |
Pension Plans | |||
Components of other comprehensive income (loss) | |||
Actuarial (gain) loss | 1.7 | (1) | |
Total recognized in other comprehensive loss (income) | 1.7 | (1) | |
Post-Retirement Plan | |||
Components of other comprehensive income (loss) | |||
Prior service benefit | (0.2) | ||
Actuarial (gain) loss | 4.3 | (0.4) | |
Amortization of prior service cost | 0.2 | ||
Amortization of actuarial gain | (0.5) | ||
Total recognized in other comprehensive loss (income) | $ 4 | $ (0.6) |
EMPLOYEE BENEFIT PLANS AND O100
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Components of Net Periodic Benefit Cost and Other Comprehensive (Income) Loss - Tabular Disclosure (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Total recognized in other comprehensive loss (income) | $ 6 | $ (1.6) | $ (7.2) |
Pension Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net periodic benefit cost | 7.8 | 4.5 | |
Total recognized in other comprehensive loss (income) | 1.7 | (1) | |
Total recognized in net periodic benefit cost and other comprehensive loss (income) (pre-tax) | 9.5 | 3.5 | |
Post-Retirement Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net periodic benefit cost | 0.5 | 0.1 | |
Total recognized in other comprehensive loss (income) | 4 | (0.6) | |
Total recognized in net periodic benefit cost and other comprehensive loss (income) (pre-tax) | $ 4.5 | $ (0.5) |
EMPLOYEE BENEFIT PLANS AND O101
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Components of Net Periodic Benefit Cost and Other Comprehensive (Income) Loss - Additional Information (Details) $ in Millions | 12 Months Ended |
May 27, 2018USD ($) | |
Defined Benefit Plan Disclosure [Line Items] | |
Accumulated losses (as a percent) | 10.00% |
Estimated net loss amortized from AOCI into net periodic benefit cost | $ 0.7 |
Estimated prior service cost amortized from AOCI into net periodic benefit cost | $ 0.5 |
Pension Plans | Minimum | |
Defined Benefit Plan Disclosure [Line Items] | |
Average remaining service period | 8 years |
Pension Plans | Maximum | |
Defined Benefit Plan Disclosure [Line Items] | |
Average remaining service period | 11 years |
Post-Retirement Plan | |
Defined Benefit Plan Disclosure [Line Items] | |
Average remaining service period | 4 years |
EMPLOYEE BENEFIT PLANS AND O102
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Actuarial Assumptions (Details) | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Pension Plans | |||
Weighted-Average Assumptions Used to Determine Benefit Obligations: | |||
Discount rate (as percent) | 4.25% | 4.33% | |
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost: | |||
Discount rate (as percent) | 4.33% | 3.81% | |
Long-term rate of return on plan assets (as percent) | 7.50% | 7.50% | |
Pension Plans | Forecast | |||
Weighted-Average Assumptions Used to Determine Benefit Obligations: | |||
Discount rate (as percent) | 4.25% | ||
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost: | |||
Long-term rate of return on plan assets (as percent) | 5.30% | ||
Post-Retirement Plan | |||
Weighted-Average Assumptions Used to Determine Benefit Obligations: | |||
Discount rate (as percent) | 4.18% | 3.50% | |
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost: | |||
Discount rate (as percent) | 3.60% | 3.18% | |
Post-Retirement Plan | Forecast | |||
Weighted-Average Assumptions Used to Determine Benefit Obligations: | |||
Discount rate (as percent) | 4.18% |
EMPLOYEE BENEFIT PLANS AND O103
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Health Care Cost Trend Rate Assumptions (Details) | 12 Months Ended | |
May 27, 2018 | May 28, 2017 | |
Health Care Cost Trend Rate Assumptions | ||
Ultimate health care cost trend rate (as a percent) | 4.50% | 4.50% |
Year that the rate reaches the ultimate trend rate | 2,024 | 2,024 |
Age pre-65 | ||
Health Care Cost Trend Rate Assumptions | ||
Health care cost trend rate (as a percent) | 8.40% | 9.00% |
Age 65 and over | ||
Health Care Cost Trend Rate Assumptions | ||
Health care cost trend rate (as a percent) | 6.30% | 6.50% |
EMPLOYEE BENEFIT PLANS AND O104
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Fair Value Measurements of Plan Assets - Tabular Disclosure (Details) - Pension Plans - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | $ 17.3 | $ 4.5 |
Level 1 | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | 14.8 | |
Level 2 | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | 2.5 | |
Cash and cash equivalents | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | 11.8 | |
Cash and cash equivalents | Level 1 | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | 11.8 | $ 4.5 |
U.S. equity securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | 1 | |
U.S. equity securities | Level 2 | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | 1 | |
International equity securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | 1.5 | |
International equity securities | Level 2 | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | 1.5 | |
US treasury securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | 3 | |
US treasury securities | Level 1 | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | $ 3 |
EMPLOYEE BENEFIT PLANS AND O105
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Fair Value Measurements of Plan Assets - Redeemable Notice (Details) | 12 Months Ended |
May 27, 2018 | |
Pension Plans | Equity securities | |
Defined Benefit Plan Disclosure [Line Items] | |
Redeemable notice period for certain funds | 1 day |
EMPLOYEE BENEFIT PLANS AND O106
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Fair Value Measurements of Plan Assets - Investment Policy (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
May 27, 2018 | May 27, 2018 | May 28, 2017 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Employer contributions, invested per investment policy | $ 5.5 | ||
Pension Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 17.3 | $ 17.3 | $ 4.5 |
Employer contributions | $ 12 | $ 13.6 | $ 4.5 |
Pension Plans | Equity securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Target investment allocation (as a percent) | 30.00% | 30.00% | |
Pension Plans | Debt securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Target investment allocation (as a percent) | 70.00% | 70.00% |
EMPLOYEE BENEFIT PLANS AND O107
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Fair Value Measurements of Plan Assets - Cash and Cash Equivalents (Details) - Pension Plans - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | $ 17.3 | $ 4.5 |
Level 1 | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | 14.8 | |
Cash and cash equivalents | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | 11.8 | |
Cash and cash equivalents | Level 1 | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Fair value of plan assets | $ 11.8 | $ 4.5 |
EMPLOYEE BENEFIT PLANS AND O108
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Funding and Cash Flows - Contributions (Details) - Pension Plans - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
May 27, 2018 | May 27, 2018 | May 28, 2017 | |
Contributions | |||
Employer contributions | $ 12 | $ 13.6 | $ 4.5 |
Minimum contribution requirements | 1.7 | 1.7 | |
Required minimum qualified pension contribution in fiscal 2019 | $ 0.4 | $ 0.4 |
EMPLOYEE BENEFIT PLANS AND O109
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Funding and Cash Flows - Estimated Benefit Payments (Details) $ in Millions | May 27, 2018USD ($) |
Pension Plans | |
Estimated benefit payments | |
2,019 | $ 0.1 |
2,020 | 0.3 |
2,021 | 0.5 |
2,022 | 0.7 |
2,023 | 0.9 |
Succeeding 5 years | 9.2 |
Post-Retirement Plan | |
Estimated benefit payments | |
2,019 | 0.3 |
2,020 | 0.3 |
2,021 | 0.3 |
2,022 | 0.4 |
2,023 | 0.4 |
Succeeding 5 years | $ 2.5 |
EMPLOYEE BENEFIT PLANS AND O110
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Pension Cost Financial Statement Presentation - Tabular Disclosure (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 31, 2015 | |
Employee Benefit Plans and Other Post-retirement Benefits | |||
Pension cost incurred | $ 7.8 | $ 4.1 | $ 65.9 |
Cost of sales | |||
Employee Benefit Plans and Other Post-retirement Benefits | |||
Pension cost incurred | $ 7.8 | 9.6 | 12 |
Selling, general and administrative | |||
Employee Benefit Plans and Other Post-retirement Benefits | |||
Pension cost incurred | $ (5.5) | $ 53.9 |
EMPLOYEE BENEFIT PLANS AND O111
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Pension Cost Financial Statement Presentation - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 27, 2018 | May 29, 2016 | |
Employee Benefit Plans and Other Post-retirement Benefits | ||
Accumulated losses (as a percent) | 10.00% | |
Conagra | ||
Employee Benefit Plans and Other Post-retirement Benefits | ||
Charge for write-off of actuarial losses | $ 59.5 | |
Accumulated losses (as a percent) | 10.00% |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
ACCRUED LIABILITIES | ||
Compensation and benefits | $ 91.7 | $ 80.1 |
Accrued trade promotions | 45.4 | 40.5 |
Dividends payable | 28 | 27.4 |
Accrued interest | 10.8 | 10.2 |
Franchise, property, and sales and use taxes | 9.6 | 9.8 |
Income taxes payable | 3.1 | 4.7 |
Other | 27.4 | 27.8 |
Accrued liabilities | $ 216 | $ 200.5 |
DEBT AND FINANCING OBLIGATIO113
DEBT AND FINANCING OBLIGATIONS - Tabular Disclosure - Components (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 | Nov. 30, 2016 |
Debt Instrument [Line Items] | |||
Short-term borrowings | $ 9.6 | $ 22 | |
Long-term debt | 2,326.8 | 2,362.1 | |
Financing obligations: | 79 | 75.9 | |
Total debt and financing obligations | 2,415.4 | 2,460 | |
Other credit facilities | |||
Debt Instrument [Line Items] | |||
Short-term borrowings | $ 9.6 | $ 17.5 | |
Interest rate (as a percent) | 4.35% | 4.35% | |
4.625% Senior Notes, due 2024 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 833 | $ 833 | |
Interest rate (as a percent) | 4.625% | 4.625% | 4.625% |
4.875% Senior Notes, due 2026 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 833 | $ 833 | |
Interest rate (as a percent) | 4.875% | 4.875% | 4.875% |
Revolving Credit Facility, November 2016 | Secured Debt | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Short-term borrowings | $ 0 | $ 4.5 | |
Term Loan Facility, due 2021 | Secured Debt | |||
Debt Instrument [Line Items] | |||
Long-term debt | 632.8 | 666.6 | |
Lamb Weston BSW Installment Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt | 28 | 29.5 | |
4.35% lease financing obligation due May 2030 | |||
Debt Instrument [Line Items] | |||
Financing obligations: | $ 66.8 | $ 68.2 | |
Interest rate (as a percent) | 4.35% | 4.35% | |
Lease financing obligations due on various dates through 2040 | |||
Debt Instrument [Line Items] | |||
Financing obligations: | $ 12.2 | $ 7.7 | |
Lease financing obligations due on various dates through 2040 | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate (as a percent) | 2.39% | 2.00% | |
Lease financing obligations due on various dates through 2040 | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate (as a percent) | 5.00% | 3.32% |
DEBT AND FINANCING OBLIGATIO114
DEBT AND FINANCING OBLIGATIONS - Tabular Disclosure - Current and Noncurrent (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Debt and Financing Obligations, Current and Noncurrent | ||
Total debt and financing obligations | $ 2,415.4 | $ 2,460 |
Debt issuance costs | (30.4) | (35.1) |
Short-term borrowings | (9.6) | (22) |
Current portion of long-term debt and financing obligations | (38.7) | (37.9) |
Long-term debt, excluding current portion | $ 2,336.7 | $ 2,365 |
DEBT AND FINANCING OBLIGATIO115
DEBT AND FINANCING OBLIGATIONS - Senior Notes and Credit Agreement (Details) $ in Millions | Aug. 25, 2019 | Nov. 30, 2016USD ($) | May 27, 2018USD ($) | May 28, 2017USD ($) |
Debt Instrument [Line Items] | ||||
Short-term borrowings | $ 9.6 | $ 22 | ||
Conagra | ||||
Debt Instrument [Line Items] | ||||
Cash payment to Conagra | $ 823.5 | |||
Senior Notes and Credit Agreement, November 2016 | ||||
Debt Instrument [Line Items] | ||||
Face amount | 2,341 | |||
Senior Notes, November 2016 | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Face amount | 1,666 | |||
Change of control, redemption price (as a percent) | 101.00% | |||
Senior Notes, November 2016 | Senior Notes | Prior to November 1, 2021 | ||||
Debt Instrument [Line Items] | ||||
Percentage of principal amount redeemed (as a percent) | 100.00% | |||
Senior Notes, November 2016 | Senior Notes | On or prior to November 1, 2019 | ||||
Debt Instrument [Line Items] | ||||
Redemption, aggregate principal (as a percent) | 35.00% | |||
Senior Notes, November 2016 | Senior Notes | Conagra | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount distributed directly to Conagra | 1,542.9 | |||
Proceeds from Senior Notes to fund cash payment to Conagra | 123.1 | |||
Related party noncash financing activity | 1,542.9 | |||
4.625% Senior Notes, due 2024 | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 833 | $ 833 | $ 833 | |
Interest rate (as a percent) | 4.625% | 4.625% | 4.625% | |
Debt term (in years) | 8 years | 8 years | 8 years | |
4.625% Senior Notes, due 2024 | Senior Notes | On or after November 1, 2021 | ||||
Debt Instrument [Line Items] | ||||
Redemption prices (as a percent) | 102.313% | |||
4.625% Senior Notes, due 2024 | Senior Notes | On or prior to November 1, 2019 | ||||
Debt Instrument [Line Items] | ||||
Redemption prices (as a percent) | 104.625% | |||
4.875% Senior Notes, due 2026 | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 833 | $ 833 | $ 833 | |
Interest rate (as a percent) | 4.875% | 4.875% | 4.875% | |
Debt term (in years) | 10 years | 10 years | 10 years | |
4.875% Senior Notes, due 2026 | Senior Notes | On or after November 1, 2021 | ||||
Debt Instrument [Line Items] | ||||
Redemption prices (as a percent) | 102.438% | |||
4.875% Senior Notes, due 2026 | Senior Notes | On or prior to November 1, 2019 | ||||
Debt Instrument [Line Items] | ||||
Redemption prices (as a percent) | 104.875% | |||
Credit Agreement, November 2016 | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 675 | |||
Debt term (in years) | 5 years | |||
Credit Facilities, November 2016 | ||||
Debt Instrument [Line Items] | ||||
Total net leverage ratio | 5.50 | |||
Interest coverage rate | 2.75 | |||
Credit Facilities, November 2016 | Forecast | ||||
Debt Instrument [Line Items] | ||||
Total net leverage ratio | 4.50 | |||
Credit Facilities, November 2016 | Federal Fund Rate | ||||
Debt Instrument [Line Items] | ||||
Variable interest rate spread (as a percent) | 0.50% | |||
Credit Facilities, November 2016 | One month Eurocurrency Rate | ||||
Debt Instrument [Line Items] | ||||
Variable interest rate spread (as a percent) | 1.00% | |||
Credit Facilities, November 2016 | Minimum | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Variable interest rate spread (as a percent) | 0.50% | |||
Credit Facilities, November 2016 | Minimum | Eurocurrency rate | ||||
Debt Instrument [Line Items] | ||||
Variable interest rate spread (as a percent) | 1.50% | |||
Credit Facilities, November 2016 | Maximum | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Variable interest rate spread (as a percent) | 1.25% | |||
Credit Facilities, November 2016 | Maximum | Eurocurrency rate | ||||
Debt Instrument [Line Items] | ||||
Variable interest rate spread (as a percent) | 2.25% | |||
Credit Facilities, November 2016 | Conagra | ||||
Debt Instrument [Line Items] | ||||
Borrowings under Credit Facilities to fund payment to Conagra | $ 700.4 | |||
Revolving Credit Facility, November 2016 | Secured Debt | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 500 | $ 500 | $ 500 | |
Debt term (in years) | 5 years | 5 years | 5 years | |
Short-term borrowings | $ 0 | $ 4.5 | ||
Minimum borrowings during the period | 0 | |||
Maximum borrowings during the period | 152.8 | |||
Available amount | 496.6 | |||
Letter of credit outstanding | $ 3.4 | |||
Average interest rate (as a percent) | 3.31% | |||
Revolving Credit Facility, November 2016 | Secured Debt | Revolving Credit Facility | Minimum | ||||
Debt Instrument [Line Items] | ||||
Commitment fee for undrawn amount (as a percent) | 0.25% | |||
Revolving Credit Facility, November 2016 | Secured Debt | Revolving Credit Facility | Maximum | ||||
Debt Instrument [Line Items] | ||||
Commitment fee for undrawn amount (as a percent) | 0.40% | |||
Term Loan Facility, due 2021 | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 675 | $ 675 | $ 675 | |
Debt term (in years) | 5 years | 5 years | 5 years | |
Periodic amortization rate (as a percent) | 5.00% | |||
Lamb Weston BSW Installment Notes, 4.34% installment notes due on various dates through June 2031 | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 23 | $ 23 | ||
Lamb Weston BSW Installment Notes, 4.34% installment notes due on various dates through June 2031 | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 4.34% | 4.34% | ||
Lamb Weston BSW Installment Notes, 1.90% to 2.30% installment notes due on various dates through June 2031 | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 7 | $ 7 | ||
Lamb Weston BSW Installment Notes, 1.90% to 2.30% installment notes due on various dates through June 2031 | Minimum | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Variable interest rate spread (as a percent) | 1.90% | 1.90% | ||
Lamb Weston BSW Installment Notes, 1.90% to 2.30% installment notes due on various dates through June 2031 | Maximum | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Variable interest rate spread (as a percent) | 2.30% | 2.30% |
DEBT AND FINANCING OBLIGATIO116
DEBT AND FINANCING OBLIGATIONS - Aggregate Minimum Principal Maturities - Tabular Disclosure (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Debt | ||
2,019 | $ 44.9 | |
2,020 | 35.3 | |
2,021 | 35.5 | |
2,022 | 533.4 | |
2,023 | 1.8 | |
Thereafter | 1,685.5 | |
Total | 2,336.4 | |
Financing Obligations | ||
2,019 | 3.4 | |
2,020 | 3.3 | |
2,021 | 3 | |
2,022 | 3.1 | |
2,023 | 3.2 | |
Thereafter | 63 | |
Total | 79 | |
Total | ||
2,019 | 48.3 | |
2,020 | 38.6 | |
2,021 | 38.5 | |
2,022 | 536.5 | |
2,023 | 5 | |
Thereafter | 1,748.5 | |
Total debt and financing obligations | $ 2,415.4 | $ 2,460 |
DEBT AND FINANCING OBLIGATIO117
DEBT AND FINANCING OBLIGATIONS - Aggregate Minimum Principal Maturities - Additional Information (Details) $ in Millions | May 27, 2018USD ($) |
Debt | |
2,019 | $ 44.9 |
Other credit facilities | |
Debt | |
2,019 | $ 9.6 |
DEBT AND FINANCING OBLIGATIO118
DEBT AND FINANCING OBLIGATIONS - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 27, 2018 | May 28, 2017 | |
Debt Instrument [Line Items] | ||
Payments of debt issuance costs | $ 12.3 | |
Amortization expense | $ 4.6 | 2.5 |
Interest paid | $ 104 | 48.8 |
Conagra | ||
Debt Instrument [Line Items] | ||
Payments of debt issuance costs | $ 25.4 |
DEBT AND FINANCING OBLIGATIO119
DEBT AND FINANCING OBLIGATIONS - Other Credit Facilities (Details) - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Short-term Debt [Line Items] | ||
Short-term borrowings | $ 9.6 | $ 22 |
Other credit facilities | ||
Short-term Debt [Line Items] | ||
Face amount | 58 | 58 |
Short-term borrowings | $ 9.6 | $ 17.5 |
Interest rate (as a percent) | 4.35% | 4.35% |
DEBT AND FINANCING OBLIGATIO120
DEBT AND FINANCING OBLIGATIONS - Financing Obligation (Details) - Farmland $ in Millions | 12 Months Ended | ||
May 27, 2018USD ($)item | Dec. 31, 2010USD ($)a | May 28, 2017USD ($) | |
Financing obligation | |||
Acres of farmland in sale-leaseback transaction | a | 17,600 | ||
Proceeds received as a financing obligation | $ 75 | ||
Remaining balance of the financing obligation | $ 66.8 | $ 68.2 | |
Net carrying value of the related property | $ 39.3 | $ 39.9 | |
Remaining initial term | 2 years | ||
Number of renewal options | item | 2 | ||
Renewal term | 5 years |
STOCK-BASED COMPENSATION - Gene
STOCK-BASED COMPENSATION - General Information (Details) shares in Millions | May 27, 2018shares |
Stock-based Compensation | |
Shares authorized under our equity incentive plans (in shares) | 10 |
Available for future grant (in shares) | 7.9 |
STOCK-BASED COMPENSATION - Gran
STOCK-BASED COMPENSATION - Grants (Details) - Stock options | 12 Months Ended |
May 27, 2018installment | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of annual installments | 3 |
Vesting period | 10 years |
STOCK-BASED COMPENSATION - Assu
STOCK-BASED COMPENSATION - Assumptions (Details) - Stock options | 12 Months Ended |
May 27, 2018 | |
Weighted average Black-Scholes assumptions: | |
Expected volatility (%) (as a percent) | 23.27% |
Dividend yield (%) (as a percent) | 1.71% |
Risk-free interest rate (%) (as a percent) | 1.51% |
Expected life of stock option (years) | 4 years 4 months 24 days |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Option Activity (Details) - Stock options - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
May 27, 2018 | May 28, 2017 | |
Shares | ||
Outstanding at beginning of the period (in shares) | 720,827 | |
Converted (in shares) | 607,420 | |
Granted (in shares) | 56,496 | 146,514 |
Exercised (in shares) | (125,717) | (22,896) |
Forfeited/cancelled (in shares) | (10,211) | |
Outstanding at end of the period (in shares) | 651,606 | 720,827 |
Weighted-Average Exercise Price (per share) | ||
Outstanding at beginning of the period (in dollars per share) | $ 25.90 | |
Converted (in dollars per share) | $ 23.60 | |
Granted (in dollars per share) | 43.82 | 35.15 |
Exercised (in dollars per share) | 17.47 | 21.90 |
Forfeited/cancelled (in dollars per share) | 30.68 | |
Outstanding at end of the period (in dollars per share) | $ 29.08 | $ 25.90 |
Additional information | ||
Weighted-Average Remaining Contractual Term - Outstanding (in years) | 7 years 3 months 18 days | 7 years 4 months 24 days |
Aggregate Intrinsic Value - Outstanding | $ 23.7 | $ 14.2 |
Shares - Exercisable at end of year (in shares) | 424,746 | |
Weighted-Average Exercise Price - Exercisable (in dollars per share) | $ 26.29 | |
Weighted-Average Remaining Contractual Term - Exercisable (in years) | 6 years 8 months 12 days | |
Aggregate Intrinsic Value - Exercisable | $ 16.6 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Unit and Performance-based Restricted Stock Unit - General Information (Details) | 12 Months Ended |
May 27, 2018 | |
Stock-based Compensation | |
Performance period | 3 years |
Restricted Stock Units (RSUs) [Member] | Employees | |
Stock-based Compensation | |
Vesting period | 3 years |
Restricted Stock Units (RSUs) [Member] | Non-employee | |
Stock-based Compensation | |
Vesting period | 1 year |
Performance shares | |
Stock-based Compensation | |
Awards earned rate, low end of range (as a percent) | 0.00% |
Awards earned rate, high end of range (as a percent) | 200.00% |
STOCK-BASED COMPENSATION - R126
STOCK-BASED COMPENSATION - Restricted Stock Unit and Performance-based Restricted Stock Unit - Tabular Disclosure (Details) - $ / shares | 12 Months Ended | |
May 27, 2018 | May 28, 2017 | |
Stock-settled restricted stock units | ||
Shares | ||
Outstanding at beginning of the period (in shares) | 489,604 | |
Converted (in shares) | 459,466 | |
Granted (in shares) | 293,209 | 86,642 |
Vested (in shares) | (172,772) | (17,753) |
Forfeited/expired/cancelled (in shares) | (28,166) | (38,751) |
Outstanding at end of the period (in shares) | 581,875 | 489,604 |
Weighted-Average Grant-Date Fair Value | ||
Outstanding at beginning of the period (in dollars per share) | $ 26.92 | |
Converted (in shares) | $ 25.05 | |
Granted (in dollars per share) | 45.22 | 33.96 |
Vested (in dollars per share) | 23.82 | 18.68 |
Forfeited/expired/cancelled (in dollars per share) | 31.52 | 24.24 |
Outstanding at end of the period (in dollars per share) | $ 36.84 | $ 26.92 |
Cash-settled RSUs | ||
Shares | ||
Outstanding at beginning of the period (in shares) | 462,612 | |
Converted (in shares) | 469,837 | |
Vested (in shares) | (173,762) | (1,503) |
Forfeited/expired/cancelled (in shares) | (3,198) | (5,722) |
Outstanding at end of the period (in shares) | 285,652 | 462,612 |
Weighted-Average Grant-Date Fair Value | ||
Outstanding at beginning of the period (in dollars per share) | $ 25.33 | |
Converted (in shares) | $ 25.33 | |
Vested (in dollars per share) | 20 | 23.70 |
Forfeited/expired/cancelled (in dollars per share) | 27.75 | 26.73 |
Outstanding at end of the period (in dollars per share) | $ 28.54 | $ 25.33 |
Performance shares | ||
Shares | ||
Outstanding at beginning of the period (in shares) | 57,690 | |
Converted (in shares) | 56,050 | |
Granted (in shares) | 125,524 | 1,640 |
Performance condition adjustment | (818) | |
Vested (in shares) | (15,228) | |
Forfeited/expired/cancelled (in shares) | (6,898) | |
Outstanding at end of the period (in shares) | 160,270 | 57,690 |
Weighted-Average Grant-Date Fair Value | ||
Outstanding at beginning of the period (in dollars per share) | $ 25.84 | |
Converted (in shares) | $ 25.84 | |
Granted (in dollars per share) | 43.90 | 25.84 |
Performance condition adjustment (in dollars per share) | 19.70 | |
Vested (in dollars per share) | 19.70 | |
Forfeited/expired/cancelled (in dollars per share) | 43.87 | |
Outstanding at end of the period (in dollars per share) | $ 39.82 | $ 25.84 |
STOCK-BASED COMPENSATION - R127
STOCK-BASED COMPENSATION - Restricted Stock Unit and Performance-based Restricted Stock Unit - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 27, 2018 | May 28, 2017 | |
Stock-based Compensation | ||
Aggregate fair value of awards vested | $ 16.6 | $ 0.7 |
STOCK-BASED COMPENSATION - Comp
STOCK-BASED COMPENSATION - Compensation Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Compensation expense | |||
Stock-settled compensation expense | $ 13.5 | $ 5.7 | $ 3.2 |
Cash-settled RSUs | 8.8 | 9.7 | 5.7 |
Share-based compensation expense | 22.3 | 15.4 | 8.9 |
Income tax benefit | (6.9) | (5.7) | (3.3) |
Total compensation expense, net of tax benefit | 15.4 | 9.7 | 5.6 |
Stock options | |||
Compensation expense | |||
Stock-settled compensation expense | 1.2 | 0.6 | 0.4 |
Stock-settled restricted stock units | |||
Compensation expense | |||
Stock-settled compensation expense | 7.9 | 4 | 2.4 |
Performance shares | |||
Compensation expense | |||
Stock-settled compensation expense | $ 4.4 | $ 1.1 | $ 0.4 |
STOCK-BASED COMPENSATION - Unre
STOCK-BASED COMPENSATION - Unrecognized Compensation Expense, Net of Estimated Forfeitures (Details) $ in Millions | 12 Months Ended |
May 27, 2018USD ($) | |
Unrecognized compensation expense, net of estimated forfeitures | |
Unrecognized Compensation Expense | $ 25.4 |
Remaining Weighted Average Recognition Period (in years) | 1 year 10 months 24 days |
Stock options | |
Unrecognized compensation expense, net of estimated forfeitures | |
Unrecognized Compensation Expense | $ 0.4 |
Remaining Weighted Average Recognition Period (in years) | 1 year 1 month 6 days |
Stock-settled restricted stock units | |
Unrecognized compensation expense, net of estimated forfeitures | |
Unrecognized Compensation Expense | $ 11.4 |
Remaining Weighted Average Recognition Period (in years) | 2 years |
Cash-settled RSUs | |
Unrecognized compensation expense, net of estimated forfeitures | |
Unrecognized Compensation Expense | $ 3.7 |
Remaining Weighted Average Recognition Period (in years) | 1 year |
Performance shares | |
Unrecognized compensation expense, net of estimated forfeitures | |
Unrecognized Compensation Expense | $ 9.9 |
Remaining Weighted Average Recognition Period (in years) | 2 years 1 month 6 days |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value Hierarchy (Details) - Recurring - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Assets: | ||
Pension plan assets | $ 17.3 | $ 4.5 |
Deferred compensation assets | 0.5 | 0.6 |
Derivative assets | 0.8 | |
Total assets | 18.6 | 5.1 |
Liabilities: | ||
Derivative liabilities | 1.4 | 2.4 |
Deferred compensation liabilities | 12.4 | 8.8 |
Total liabilities | 13.8 | 11.2 |
Level 1 | ||
Assets: | ||
Pension plan assets | 14.8 | 4.5 |
Deferred compensation assets | 0.5 | 0.6 |
Total assets | 15.3 | 5.1 |
Level 2 | ||
Assets: | ||
Pension plan assets | 2.5 | |
Derivative assets | 0.8 | |
Total assets | 3.3 | |
Liabilities: | ||
Derivative liabilities | 1.4 | 2.4 |
Deferred compensation liabilities | 12.4 | 8.8 |
Total liabilities | $ 13.8 | $ 11.2 |
FAIR VALUE MEASUREMENTS - Debt
FAIR VALUE MEASUREMENTS - Debt Outstanding (Details) $ in Millions | May 27, 2018USD ($) |
Fixed rate debt | Carrying Value | |
Fair Value Measurements | |
Debt | $ 1,687.5 |
Variable rate debt | Carrying Value | |
Fair Value Measurements | |
Debt | 648.9 |
Level 2 | Fixed rate debt | Fair Value | |
Fair Value Measurements | |
Debt | $ 1,658.4 |
STOCKHOLDERS' EQUITY - Common a
STOCKHOLDERS' EQUITY - Common and Preferred Stock (Details) | May 27, 2018Voteshares | May 28, 2017shares |
STOCKHOLDERS' EQUITY | ||
Common stock, authorized shares | 600,000,000 | 600,000,000 |
Preferred stock, authorized shares | 60,000,000 | 60,000,000 |
Common stock, issued shares | 146,395,866 | 146,087,044 |
Common stock, outstanding shares | 146,395,866 | |
Number of votes that each share holder is entitled | Vote | 1 | |
Preferred stock, issued shares | 0 | |
Preferred stock, outstanding shares | 0 |
STOCKHOLDERS' EQUITY - Dividend
STOCKHOLDERS' EQUITY - Dividends (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 19, 2018 | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 28, 2017 | Feb. 26, 2017 | May 27, 2018 | May 28, 2017 | May 29, 2016 |
STOCKHOLDERS' EQUITY | ||||||||||
Dividends paid | $ 110.2 | $ 27.4 | ||||||||
Dividends declared per common share (in dollars per share) | $ 0.19125 | $ 0.19125 | $ 0.19125 | $ 0.1875 | $ 0.1875 | $ 0.1875 | $ 0.1875 | $ 0.75750 | $ 0.37500 | $ 0 |
STOCKHOLDERS' EQUITY - Changes
STOCKHOLDERS' EQUITY - Changes in AOCI (Details) $ in Millions | 12 Months Ended |
May 27, 2018USD ($) | |
Changes in AOCI: | |
Balance at the beginning of the period | $ (647.2) |
Balance at the end of the period | (334.8) |
Accumulated Other Comprehensive Loss | |
Changes in AOCI: | |
Balance at the beginning of the period | (9.3) |
Other comprehensive income before reclassifications, net of tax | 4.8 |
Amounts reclassified out of AOCI, net of tax | 0.2 |
Net current-period other comprehensive income (loss) | 5 |
Balance at the end of the period | (4.3) |
Foreign Currency Translation Gains (Losses) | |
Changes in AOCI: | |
Balance at the beginning of the period | (10.3) |
Other comprehensive income before reclassifications, net of tax | 9.1 |
Net current-period other comprehensive income (loss) | 9.1 |
Balance at the end of the period | (1.2) |
Pension and Other Post-employment Benefits | |
Changes in AOCI: | |
Balance at the beginning of the period | 1 |
Other comprehensive income before reclassifications, net of tax | (4.3) |
Amounts reclassified out of AOCI, net of tax | 0.2 |
Net current-period other comprehensive income (loss) | (4.1) |
Balance at the end of the period | $ (3.1) |
SEGMENTS - General Information
SEGMENTS - General Information (Details) - segment | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
SEGMENTS | |||
Number of operating segments | 4 | 4 | 4 |
SEGMENTS - General Financial In
SEGMENTS - General Financial Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 28, 2017 | Feb. 26, 2017 | Nov. 27, 2016 | Aug. 28, 2016 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Segment information | |||||||||||
Net sales | $ 918.2 | $ 863.4 | $ 824.6 | $ 817.5 | $ 832.5 | $ 768.5 | $ 790.7 | $ 776.3 | $ 3,423.7 | $ 3,168 | $ 2,993.8 |
Product contribution margin | 847.9 | 756.2 | 636.2 | ||||||||
Other selling, general and administrative expenses | 267.8 | 237.9 | 262.9 | ||||||||
Income from operations | 580.1 | 518.3 | 373.3 | ||||||||
Interest expense, net | 108.8 | 61.2 | 5.9 | ||||||||
Income tax expense | 28.1 | 7.5 | 41.5 | 44.1 | 41.2 | 44 | 33.9 | 51 | 121.2 | 170.2 | 144.5 |
Equity method investment earnings | 83.6 | 53.3 | 71.7 | ||||||||
Net income | 433.7 | 340.2 | 294.6 | ||||||||
Less: Income attributable to noncontrolling interests | 16.9 | 13.3 | 9.3 | ||||||||
Net income attributable to Lamb Weston Holdings, Inc. | $ 100 | $ 156.8 | $ 76.6 | $ 83.4 | $ 75.9 | $ 84.2 | $ 87.2 | $ 79.6 | 416.8 | 326.9 | 285.3 |
Global | |||||||||||
Segment information | |||||||||||
Net sales | 1,744.2 | 1,624.8 | 1,549.4 | ||||||||
Product contribution margin | 375.7 | 338.6 | 293.2 | ||||||||
Foodservice | |||||||||||
Segment information | |||||||||||
Net sales | 1,099.1 | 1,030 | 946 | ||||||||
Product contribution margin | 365.9 | 330.7 | 253 | ||||||||
Retail | |||||||||||
Segment information | |||||||||||
Net sales | 449.2 | 384.9 | 372.1 | ||||||||
Product contribution margin | 87.3 | 77.6 | 69.1 | ||||||||
Other | |||||||||||
Segment information | |||||||||||
Net sales | 131.2 | 128.3 | 126.3 | ||||||||
Product contribution margin | $ 19 | $ 9.3 | $ 20.9 |
SEGMENTS - Separation-related E
SEGMENTS - Separation-related Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 28, 2017 | Feb. 26, 2017 | Nov. 27, 2016 | Aug. 28, 2016 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
SEGMENTS | |||||||||||
Pre tax expense related to separation | $ 0.8 | $ 1.7 | $ 4 | $ 2.2 | $ 2.8 | $ 5.1 | $ 9 | $ 9.7 | $ 8.7 | $ 26.5 | $ 5.3 |
Non-cash pre-tax gain on assets | $ 3.1 |
SEGMENTS - Conagra Sponsored Pl
SEGMENTS - Conagra Sponsored Plans (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 27, 2018 | May 29, 2016 | |
Segment Reporting Information [Line Items] | ||
Accumulated losses (as a percent) | 10.00% | |
Conagra | ||
Segment Reporting Information [Line Items] | ||
Charge for write-off of actuarial losses | $ 59.5 | |
Accumulated losses (as a percent) | 10.00% |
SEGMENTS - Tax Act (Details)
SEGMENTS - Tax Act (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
May 27, 2018 | Feb. 25, 2018 | May 27, 2018 | |
SEGMENTS | |||
Impact of Tax Act | $ 4.4 | $ 24 | $ 64.7 |
Discrete items, net | 28.4 | ||
Benefit from the estimated impact of remeasuring net U.S. deferred tax liabilities at a lower tax rate | 13.3 | 23 | 39.9 |
Transition tax | $ 11.5 | ||
Transition tax payable (in years) | 8 years | ||
Benefit from lower tax rate | $ 17.7 | $ 47 | $ 36.3 |
SEGMENTS - Pension Plan of Join
SEGMENTS - Pension Plan of Joint Venture (Details) $ in Millions | 12 Months Ended |
May 29, 2016USD ($) | |
SEGMENTS | |
Total provision on income tax expense (benefit) | $ 17.7 |
SEGMENTS - Concentrations (Deta
SEGMENTS - Concentrations (Details) - Customer Concentration Risk | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Sales Revenue, Goods, Net | McDonald's Corporation | |||
Other information | |||
Concentration risk (as a percent) | 11.00% | 11.00% | 11.00% |
Accounts Receivable | Customer one | |||
Other information | |||
Concentration risk (as a percent) | 12.00% | ||
Accounts Receivable | Additional customer | |||
Other information | |||
Concentration risk (as a percent) | 10.00% |
SEGMENTS - Other Information -
SEGMENTS - Other Information - Net Sales by Product (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 28, 2017 | Feb. 26, 2017 | Nov. 27, 2016 | Aug. 28, 2016 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Revenue from External Customer [Line Items] | |||||||||||
Net sales | $ 918.2 | $ 863.4 | $ 824.6 | $ 817.5 | $ 832.5 | $ 768.5 | $ 790.7 | $ 776.3 | $ 3,423.7 | $ 3,168 | $ 2,993.8 |
Other | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net sales | 131.2 | 128.3 | 126.3 | ||||||||
Vegetable product | Other | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net sales | 81.7 | 81.6 | 70.4 | ||||||||
Byproduct | Other | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net sales | 38.1 | 35.4 | 46.4 | ||||||||
Dairy product | Other | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net sales | $ 11.5 | $ 11.3 | $ 9.5 |
SEGMENTS - Other Information143
SEGMENTS - Other Information - Net Sales by Geographical Area (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 28, 2017 | Feb. 26, 2017 | Nov. 27, 2016 | Aug. 28, 2016 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net sales | $ 918.2 | $ 863.4 | $ 824.6 | $ 817.5 | $ 832.5 | $ 768.5 | $ 790.7 | $ 776.3 | $ 3,423.7 | $ 3,168 | $ 2,993.8 |
Foreign, excluding The United States of America and Canada | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net sales | $ 665.8 | $ 663.5 | $ 615.9 |
SEGMENTS - Other Information144
SEGMENTS - Other Information - Long-lived Assets (Details) | 12 Months Ended |
May 27, 2018 | |
China | Assets, Total | Geographic Concentration Risk | Maximum | |
Concentration Risk [Line Items] | |
Concentration risk (as a percent) | 4.00% |
SEGMENTS - Labor (Details)
SEGMENTS - Labor (Details) | 12 Months Ended |
May 27, 2018employee | |
Concentration Risk [Line Items] | |
Number of employees | 7,200 |
Workforce Subject to Collective Bargaining Arrangements | Labor Force Concentration Risk | |
Concentration Risk [Line Items] | |
Concentration risk (as a percent) | 26.00% |
Workforce Subject to Collective Bargaining Arrangements Expiring within One Year | Labor Force Concentration Risk | |
Concentration Risk [Line Items] | |
Concentration risk (as a percent) | 44.00% |
Non-US | |
Concentration Risk [Line Items] | |
Number of employees | 700 |
COMMITMENTS, CONTINGENCIES, 146
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS - Capital Commitments (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 27, 2018 | May 28, 2017 | |
Capital Addition Purchase Commitments | ||
Long-term Purchase Commitment [Line Items] | ||
Purchase commitment amount | $ 158.7 | $ 81.7 |
COMMITMENTS, CONTINGENCIES, 147
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS - Lease Obligations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Lease Obligations | |||
Rent expense for operating leases | $ 62.8 | $ 63 | $ 69.2 |
COMMITMENTS, CONTINGENCIES, 148
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS - Minimum Lease Payments (Details) $ in Millions | May 27, 2018USD ($) |
Summary of non-cancellable operating lease commitments | |
2,019 | $ 20.7 |
2,020 | 19.2 |
2,021 | 15 |
2,022 | 11.6 |
2,023 | 6.2 |
Thereafter | 16.6 |
Total | $ 89.3 |
COMMITMENTS, CONTINGENCIES, 149
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS - Purchase Supply Agreements (Details) - Inventories - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Long-term Purchase Commitment [Line Items] | |||
Purchase supply agreement amount | $ 132.8 | $ 150.8 | $ 142.4 |
Advances | $ 24.6 | $ 24.4 |
COMMITMENTS, CONTINGENCIES, 150
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS - Guarantees (Details) $ in Millions | May 27, 2018USD ($) |
Guarantee of Indebtedness of Others | |
Loss Contingencies [Line Items] | |
Guarantee amount | $ 31.6 |
COMMITMENTS, CONTINGENCIES, 151
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS - Joint Venture (Details) - Lamb-Weston Meijer - USD ($) $ in Millions | May 27, 2018 | May 28, 2017 |
Schedule of Equity Method Investments [Line Items] | ||
Total liabilities | $ 242.2 | $ 210 |
Partners' equity | $ 390.5 | $ 320.2 |
QUARTERLY FINANCIAL DATA (un152
QUARTERLY FINANCIAL DATA (unaudited) - Financial Information (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 19, 2018 | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 28, 2017 | Feb. 26, 2017 | Nov. 27, 2016 | Aug. 28, 2016 | May 27, 2018 | May 28, 2017 | May 29, 2016 |
QUARTERLY FINANCIAL DATA (unaudited) | ||||||||||||
Net sales | $ 918.2 | $ 863.4 | $ 824.6 | $ 817.5 | $ 832.5 | $ 768.5 | $ 790.7 | $ 776.3 | $ 3,423.7 | $ 3,168 | $ 2,993.8 | |
Gross profit | 232.7 | 242.3 | 208.2 | 196.3 | 197.7 | 204.9 | 196.5 | 179.7 | 879.5 | 778.8 | 661.8 | |
Income before income taxes and equity method earnings | 105.8 | 140.7 | 112.4 | 112.4 | 95.9 | 118.9 | 118.7 | 123.5 | 471.3 | 457.1 | 367.4 | |
Income tax expense | 28.1 | 7.5 | 41.5 | 44.1 | 41.2 | 44 | 33.9 | 51 | 121.2 | 170.2 | 144.5 | |
Net income attributable to Lamb Weston Holdings, Inc. | $ 100 | $ 156.8 | $ 76.6 | $ 83.4 | $ 75.9 | $ 84.2 | $ 87.2 | $ 79.6 | $ 416.8 | $ 326.9 | $ 285.3 | |
Earnings per share | ||||||||||||
Basic (in dollars per share) | $ 0.68 | $ 1.07 | $ 0.52 | $ 0.56 | $ 0.52 | $ 0.57 | $ 0.59 | $ 0.54 | $ 2.83 | $ 2.22 | $ 1.92 | |
Diluted (in dollars per share) | 0.68 | 1.06 | 0.52 | 0.56 | 0.51 | 0.57 | $ 0.59 | $ 0.54 | 2.82 | 2.22 | 1.92 | |
Dividends declared per common share (in dollars per share) | $ 0.19125 | $ 0.19125 | $ 0.19125 | $ 0.1875 | $ 0.1875 | $ 0.1875 | $ 0.1875 | $ 0.75750 | $ 0.37500 | $ 0 |
QUARTERLY FINANCIAL DATA (un153
QUARTERLY FINANCIAL DATA (unaudited) - Stock Price (Details) - $ / shares | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 28, 2017 | Feb. 26, 2017 | Nov. 27, 2016 |
Maximum | |||||||
Class of Stock [Line Items] | |||||||
Stock price | $ 68.03 | $ 60.32 | $ 54.44 | $ 47.38 | $ 45.66 | $ 39.90 | $ 33.02 |
Minimum | |||||||
Class of Stock [Line Items] | |||||||
Stock price | $ 54.05 | $ 53.51 | $ 44.88 | $ 42.74 | $ 39.19 | $ 32.51 | $ 29.89 |
QUARTERLY FINANCIAL DATA (un154
QUARTERLY FINANCIAL DATA (unaudited) - Separation Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 28, 2017 | Feb. 26, 2017 | Nov. 27, 2016 | Aug. 28, 2016 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
QUARTERLY FINANCIAL DATA (unaudited) | |||||||||||
Pre tax expense related to separation | $ 0.8 | $ 1.7 | $ 4 | $ 2.2 | $ 2.8 | $ 5.1 | $ 9 | $ 9.7 | $ 8.7 | $ 26.5 | $ 5.3 |
Post tax expense related to separation | $ 0.6 | $ 1.2 | $ 2.5 | $ 1.4 | $ 1.8 | $ 3.2 | $ 5.7 | $ 6.1 |
QUARTERLY FINANCIAL DATA (un155
QUARTERLY FINANCIAL DATA (unaudited) - Tax Act (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
May 27, 2018 | Feb. 25, 2018 | May 27, 2018 | |
QUARTERLY FINANCIAL DATA (unaudited) | |||
Benefit from lower tax rate | $ 17.7 | $ 47 | $ 36.3 |
Benefit from the estimated impact of remeasuring net U.S. deferred tax liabilities at a lower tax rate | 13.3 | 23 | 39.9 |
Impact of Tax Act | $ 4.4 | $ 24 | $ 64.7 |
QUARTERLY FINANCIAL DATA (un156
QUARTERLY FINANCIAL DATA (unaudited) - Non-cash Gain on Assets (Details) $ in Millions | 3 Months Ended |
May 28, 2017USD ($) | |
QUARTERLY FINANCIAL DATA (unaudited) | |
Non-cash gain on the sale of assets | $ 3.1 |
Non-cash gain on the sale of assets, net of tax | $ 2 |
SCHEDULE II Valuation and Qu157
SCHEDULE II Valuation and Qualifying Accounts - Tabular Disclosure (Details) - Valuation Allowance of Deferred Tax Assets - USD ($) $ in Millions | 12 Months Ended | ||
May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Valuation Allowances and Reserves, Balance, Beginning Balance | $ 98.4 | $ 12.3 | $ 8.9 |
Additions Charged to Costs, Expenses and Equity | 86.1 | 3.4 | |
Deductions from Reserves | 36.4 | ||
Valuation Allowances and Reserves, Balance, Ending Balance | $ 62 | $ 98.4 | $ 12.3 |
SCHEDULE II Valuation and Qu158
SCHEDULE II Valuation and Qualifying Accounts - Additional Information (Details) - USD ($) $ in Millions | 5 Months Ended | 7 Months Ended | 12 Months Ended | ||
May 27, 2018 | Dec. 31, 2017 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Valuation and Qualifying Accounts Disclosure [Line Items] | |||||
Reduction in revaluation of deferred tax assets | $ 31.2 | ||||
Federal statutory tax rate (as a percent) | 21.00% | 35.00% | 29.30% | 35.00% | 35.00% |
Valuation Allowance of Deferred Tax Assets | |||||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||||
Additions charged to equity | $ 83.3 |