Document and Entity Information
Document and Entity Information - $ / shares | 9 Months Ended | |
Feb. 24, 2019 | Mar. 28, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Lamb Weston Holdings, Inc. | |
Entity Central Index Key | 0001679273 | |
Document Type | 10-Q | |
Document Period End Date | Feb. 24, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-26 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 146,273,906 | |
Entity Listing, Par Value Per Share | $ 1 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 |
Combined and Consolidated State
Combined and Consolidated Statements of Earnings - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Condensed Combined and Consolidated Statements of Earnings | ||||
Net sales | $ 926.8 | $ 863.4 | $ 2,753.1 | $ 2,505.5 |
Net sales, type | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Cost of sales | $ 653.4 | $ 621.1 | $ 2,000.1 | $ 1,858.7 |
Cost of sales, type | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Gross profit | $ 273.4 | $ 242.3 | $ 753 | $ 646.8 |
Selling, general and administrative expenses | 79.6 | 73.1 | 232.6 | 200.2 |
Income from operations | 193.8 | 169.2 | 520.4 | 446.6 |
Interest expense, net | 27 | 28.5 | 80 | 81.1 |
Income before income taxes and equity method earnings | 166.8 | 140.7 | 440.4 | 365.5 |
Income tax expense | 39.6 | 7.5 | 107.9 | 93.1 |
Equity method investment earnings | 14.2 | 26.4 | 44.3 | 58.5 |
Net income | 141.4 | 159.6 | 376.8 | 330.9 |
Less: Income attributable to noncontrolling interests | 2.8 | 8.6 | 14.1 | |
Net income attributable to Lamb Weston Holdings, Inc. | $ 141.4 | $ 156.8 | $ 368.2 | $ 316.8 |
Earnings per share | ||||
Basic (in dollars per share) | $ 0.96 | $ 1.07 | $ 2.44 | $ 2.15 |
Diluted (in dollars per share) | $ 0.95 | $ 1.06 | $ 2.42 | $ 2.14 |
Combined and Consolidated Sta_2
Combined and Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Other comprehensive income (loss) Pre-Tax Amount: | ||||
Net income | $ 181 | $ 167.1 | $ 484.7 | $ 424 |
Reclassification of pension and post-retirement benefits out of accumulated other comprehensive income (loss) | 0.2 | 0.6 | (0.1) | |
Unrealized currency translation gains (losses) | 2.4 | 8 | (9.5) | 22.8 |
Comprehensive income (loss) | 183.6 | 175.1 | 475.8 | 446.7 |
Less: Comprehensive income attributable to noncontrolling interests | 2.8 | 8.6 | 14.1 | |
Comprehensive income (loss) attributable to Lamb Weston Holdings, Inc. | 183.6 | 172.3 | 467.2 | 432.6 |
Other comprehensive income (loss) Tax (Expense) Benefit: | ||||
Net income | (39.6) | (7.5) | (107.9) | (93.1) |
Reclassification of post-retirement benefits out of accumulated other comprehensive income (loss) | (0.1) | |||
Comprehensive income (loss) | (39.6) | (7.5) | (108) | (93.1) |
Comprehensive income (loss) attributable to Lamb Weston Holdings, Inc. | (39.6) | (7.5) | (108) | (93.1) |
Other comprehensive income (loss) After Tax Amount: | ||||
Net income | 141.4 | 159.6 | 376.8 | 330.9 |
Reclassification of post-retirement benefits out of accumulated other comprehensive income (loss) | 0.2 | 0.5 | (0.1) | |
Unrealized currency translation gains (losses) | 2.4 | 8 | (9.5) | 22.8 |
Comprehensive income (loss) | 144 | 167.6 | 367.8 | 353.6 |
Less: Comprehensive income attributable to noncontrolling interests | 2.8 | 8.6 | 14.1 | |
Comprehensive income (loss) attributable to Lamb Weston Holdings, Inc. | $ 144 | $ 164.8 | $ 359.2 | $ 339.5 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Feb. 24, 2019 | May 27, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 17.2 | $ 55.6 |
Receivables, less allowance for doubtful accounts of $0.7 and $0.6 | 359.3 | 225.9 |
Inventories | 588.2 | 549.7 |
Prepaid expenses and other current assets | 103.3 | 99.2 |
Total current assets | 1,068 | 930.4 |
Property, plant and equipment, net | 1,557 | 1,420.8 |
Goodwill | 208.8 | 135.1 |
Intangible assets, net | 38.3 | 35.4 |
Equity method investments | 222.8 | 219.8 |
Other assets | 16.3 | 11.1 |
Total assets | 3,111.2 | 2,752.6 |
Current liabilities: | ||
Short-term borrowings | 98.7 | 9.6 |
Current portion of long-term debt and financing obligations | 37.4 | 38.7 |
Accounts payable | 308.8 | 254.4 |
Accrued liabilities | 221.7 | 216 |
Total current liabilities | 666.6 | 518.7 |
Long-term liabilities: | ||
Long-term debt, excluding current portion | 2,288.6 | 2,336.7 |
Deferred income taxes | 126.6 | 92.1 |
Other noncurrent liabilities | 85.6 | 84.3 |
Total long-term liabilities | 2,500.8 | 2,513.1 |
Commitments and contingencies | ||
Redeemable noncontrolling interest | 55.6 | |
Stockholders' equity: | ||
Common stock of $1.00 par value, 600,000,000 shares authorized; 146,620,264 and 146,395,866 shares issued | 146.6 | 146.4 |
Additional distributed capital | (896.8) | (900.4) |
Retained earnings | 722.5 | 426.4 |
Accumulated other comprehensive loss | (13.3) | (4.3) |
Treasury stock, at cost, 236,774 and 63,534 common shares | (15.2) | (2.9) |
Total stockholders' deficit | (56.2) | (334.8) |
Total liabilities and stockholders’ equity | $ 3,111.2 | $ 2,752.6 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Feb. 24, 2019 | May 27, 2018 |
Receivables | ||
Allowance for doubtful accounts | $ 0.7 | $ 0.6 |
Common stock | ||
Common stock, par value | $ 1 | $ 1 |
Common stock, authorized shares | 600,000,000 | 600,000,000 |
Common stock, issued shares | 146,620,264 | 146,395,866 |
Treasury stock | ||
Treasury stock, common shares | 236,774 | 63,534 |
Combined and Consolidated Sta_3
Combined and Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions | Common Stock | Treasury Stock | Additional Paid-in (Distributed) Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balance at the beginning of the period at May. 28, 2017 | $ 146.1 | $ (0.2) | $ (904.8) | $ 121 | $ (9.3) | $ (647.2) |
Balance at the beginning 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 | (2.2) | (2.2) | ||||
Common stock dividends declared | (82.8) | (82.8) | ||||
Exercise of stock options, issuance of other stock awards | $ 0.2 | 0.6 | 0.8 | |||
Exercise of stock options, issuance of other stock awards (in shares) | 195,204 | |||||
Stock-settled, stock-based compensation expense | 10.1 | 10.1 | ||||
Common stock withheld to cover taxes | (2.1) | (2.1) | ||||
Common stock withheld to cover taxes (in shares) | (45,949) | |||||
Other | (7.8) | (0.5) | (8.3) | |||
Comprehensive income (loss) | 316.8 | 22.7 | 339.5 | |||
Balance at the end of the period at Feb. 25, 2018 | $ 146.3 | (2.3) | (904.1) | 354.5 | 13.4 | (392.2) |
Balance at the end of the period (in shares) at Feb. 25, 2018 | 146,230,156 | |||||
Balance at the beginning of the period at Nov. 26, 2017 | $ 146.3 | (2.2) | (906.7) | 225.8 | 5.4 | (531.4) |
Balance at the beginning of the period (in shares) at Nov. 26, 2017 | 146,207,439 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Increase in redemption value of noncontrolling interests in excess of earnings allocated | (0.9) | (0.9) | ||||
Common stock dividends declared | (28) | (28) | ||||
Exercise of stock options, issuance of other stock awards | 0.1 | 0.1 | ||||
Exercise of stock options, issuance of other stock awards (in shares) | 25,118 | |||||
Stock-settled, stock-based compensation expense | 3.6 | 3.6 | ||||
Common stock withheld to cover taxes | (0.1) | (0.1) | ||||
Common stock withheld to cover taxes (in shares) | (2,401) | |||||
Other | (0.2) | (0.1) | (0.3) | |||
Comprehensive income (loss) | 156.8 | 8 | 164.8 | |||
Balance at the end of the period at Feb. 25, 2018 | $ 146.3 | (2.3) | (904.1) | 354.5 | 13.4 | (392.2) |
Balance at the end of the period (in shares) at Feb. 25, 2018 | 146,230,156 | |||||
Balance at the beginning of the period at May. 27, 2018 | $ 146.4 | (2.9) | (900.4) | 426.4 | (4.3) | (334.8) |
Balance at the beginning of the period (in shares) at May. 27, 2018 | 146,332,332 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Adoption of ASC 606 revenue from contracts with customers | 13.7 | 13.7 | ||||
Increase in redemption value of noncontrolling interests in excess of earnings allocated | (11.4) | (11.4) | ||||
Common stock dividends declared | (85.3) | (85.3) | ||||
Exercise of stock options, issuance of other stock awards | $ 0.2 | 0.9 | 1.1 | |||
Exercise of stock options, issuance of other stock awards (in shares) | 224,398 | |||||
Stock-settled, stock-based compensation expense | 13.7 | 13.7 | ||||
Repurchase of common stock and common stock withheld to cover taxes | (12.3) | (12.3) | ||||
Repurchase of common stock and common stock withheld to cover taxes (in shares) | (173,240) | |||||
Other | 0.4 | (0.5) | (0.1) | |||
Comprehensive income (loss) | 368.2 | (9) | 359.2 | |||
Balance at the end of the period at Feb. 24, 2019 | $ 146.6 | (15.2) | (896.8) | 722.5 | (13.3) | (56.2) |
Balance at the end of the period (in shares) at Feb. 24, 2019 | 146,383,490 | |||||
Balance at the beginning of the period at Nov. 25, 2018 | $ 146.6 | (7.3) | (900.9) | 610.4 | (15.9) | (167.1) |
Balance at the beginning of the period (in shares) at Nov. 25, 2018 | 146,491,903 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Increase in redemption value of noncontrolling interests in excess of earnings allocated | (0.5) | (0.5) | ||||
Common stock dividends declared | (29.3) | (29.3) | ||||
Exercise of stock options, issuance of other stock awards (in shares) | 3,867 | |||||
Stock-settled, stock-based compensation expense | 4.5 | 4.5 | ||||
Repurchase of common stock and common stock withheld to cover taxes | (7.9) | (7.9) | ||||
Repurchase of common stock and common stock withheld to cover taxes (in shares) | (112,280) | |||||
Other | 0.1 | 0.1 | ||||
Comprehensive income (loss) | 141.4 | 2.6 | 144 | |||
Balance at the end of the period at Feb. 24, 2019 | $ 146.6 | $ (15.2) | $ (896.8) | $ 722.5 | $ (13.3) | $ (56.2) |
Balance at the end of the period (in shares) at Feb. 24, 2019 | 146,383,490 |
Combined and Consolidated Sta_4
Combined and Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | |||
May 26, 2019 | Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Dividends | |||||
Dividends declared per common share (in dollars per share) | $ 0.20 | $ 0.20000 | $ 0.19125 | $ 0.58250 | $ 0.56625 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Feb. 24, 2019 | Feb. 25, 2018 | |
Cash flows from operating activities | ||
Net income | $ 376.8 | $ 330.9 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization of intangibles and debt issuance costs | 117.5 | 104.1 |
Stock-settled, stock-based compensation expense | 13.7 | 10.1 |
Earnings of joint ventures in excess of distributions | (9) | (22) |
Deferred income taxes | 38.5 | (16) |
Pension expense, net of contributions | 5.6 | 4.2 |
Other | (1.5) | (6.7) |
Changes in operating assets and liabilities, net of acquisition: | ||
Receivables | (43.3) | (51.4) |
Inventories | (104.7) | (105.4) |
Income taxes payable/receivable, net | 14.1 | 38 |
Prepaid expenses and other current assets | (7) | (11.5) |
Accounts payable | 51.6 | 31.6 |
Accrued liabilities | (7.9) | 4.3 |
Net cash provided by operating activities | 444.4 | 310.2 |
Cash flows from investing activities | ||
Additions to property, plant and equipment | (244.2) | (204.4) |
Acquisition of business, net of cash acquired | (88.6) | |
Other | (1.1) | (2.4) |
Net cash used for investing activities | (333.9) | (206.8) |
Cash flows from financing activities | ||
Proceeds from short-term borrowings, net | 89.3 | 9.4 |
Debt repayments | (57.1) | (29.9) |
Dividends paid | (84) | (82.2) |
Acquisition of noncontrolling interest | (78.2) | |
Repurchase of common stock and common stock withheld to cover taxes | (12.3) | (2.1) |
Cash distributions paid to noncontrolling interest | (6.1) | (12.4) |
Other | 1.1 | 0.8 |
Net cash used for financing activities | (147.3) | (116.4) |
Effect of exchange rate changes on cash and cash equivalents | (1.6) | 5.3 |
Net decrease in cash and cash equivalents | (38.4) | (7.7) |
Cash and cash equivalents, beginning of the period | 55.6 | 57.1 |
Cash and cash equivalents, end of period | $ 17.2 | $ 49.4 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Feb. 24, 2019 | |
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 17, Segments, for additional information on our reportable segments. Our common stock is listed under the ticker symbol “LW” on the New York Stock Exchange. 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”). Approximately 146 million shares of Lamb Weston common stock were distributed on November 9, 2016, to Conagra stockholders. Basis of Presentation The unaudited quarterly Consolidated Financial Statements present the financial results of Lamb Weston for the thirteen and thirty-nine weeks ended February 24, 2019 and February 25, 2018, and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America. The financial statements are unaudited but 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. Results for interim periods should not be considered indicative of results for our full fiscal year, which ends the last Sunday in May. These quarterly financial statements and condensed notes should be read together with the combined and consolidated financial statements and notes in our Annual Report on Form 10-K for the fiscal year ended May 27, 2018 (the “Form 10-K”), which we filed with the Securities and Exchange Commission on July 26, 2018. Our 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 consolidated financial statements from the date such determination was made. Intercompany investments, accounts, and transactions have been eliminated. We acquired the remaining 50.01% interest in Lamb Weston BSW, LLC (“Lamb Weston BSW”) and the Consolidated Statements of Earnings include 100% of Lamb Weston BSW’s earnings beginning November 2, 2018. See Note 10, Investments in Joint Ventures, for more information. Certain amounts in the prior period consolidated financial statements have been reclassified to conform with the current period presentation. New and Recently Issued Accounting Standards Accounting Standards Adopted In December 2018, SEC Release No. 33-10532, Disclosure Update and Simplification , became effective, amending certain disclosure requirements that were redundant or outdated. The amendments include removing the requirement to disclose the historical and pro forma ratio of earnings to fixed charges and the related exhibit, as well as replacing the requirement to disclose the high and low trading prices of our common stock with a requirement to disclose the ticker symbol of our common stock. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, the changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The final rule regarding stockholders’ equity was effective in the third quarter of fiscal 2019, and is included in this Form 10-Q; the other changes will apply to our fiscal 2019 Form 10-K. In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) . This update provides guidance on when implementation costs may be capitalized as an asset related to service contracts and which costs should be expensed using the same model as if the cloud computing arrangement included a software license. The amendments in this update also require companies to expense capitalized implementation costs over the term of the hosting arrangement, including periods covered by renewal options that are reasonably certain to be exercised. We have elected to early adopt this standard on a prospective basis. The adoption of this standard did not have a significant 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. We adopted the provisions of this guidance in fiscal 2019 (beginning May 28, 2018). The adoption of this standard did not have a significant impact on our financial statements. See Note 11, Employee Benefit Plans and Other Post-Retirement Benefits, for the amount of each component of net periodic pension and other post-retirement benefit costs we reported historically. Effective May 28, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers , and its related amendments, collectively known as Accounting Standards Codification (“ASC”) 606 using the modified retrospective method. See Note 2, Revenue from Contracts with Customers, for more information. Accounting Standards Not Yet Adopted In August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans . This update amends ASC 715 to remove disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant to defined benefit pension and other postretirement plans. The ASU’s changes related to disclosures are part of the FASB’s disclosure framework project. This guidance is effective for our fiscal 2022 (beginning May 31, 2021) with early adoption permitted. The adoption of this standard is not expected to have a significant impact on our financial statements. In February 2016, the FASB issued ASC Topic 842, Leases , which requires lessees to reflect both the right-of-use assets and lease liabilities on the balance sheet for leases with lease terms of more than 12 months, whereas under current GAAP only capital lease liabilities (referred to as finance leases under ASC 842) are recognized on the balance sheet. ASC 842 also requires disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. We will adopt the standard on May 27, 2019, the beginning of our 2020 fiscal year, using the optional adoption method provided in ASU 2018-11, Leases (Topic 842): Targeted Improvements , which allows us to recognize a cumulative-effect adjustment at the beginning of the period of adoption. As allowed, we will not adjust comparative period financial statements and disclosures for the impact of the new standard. The right of use assets and lease liabilities that we recognize on our balance sheet, as of the adoption date, will depend on our lease portfolio and discount rates on the date of adoption. While we continue to evaluate the impact that the adoption of this standard will have on our financial statements, we currently believe it is likely we will elect to adopt certain of the optional practical expedients, including the package of practical expedients under the transition guidance that permits us not to reassess under the new standard our prior conclusions for lease identification and lease classification on expired or existing contracts and whether initial direct costs previously capitalized would qualify for capitalization under ASC 842. We also expect to elect the practical expedient not to separate lease and non-lease components for all our leases and the expedient related to land easements, allowing us to not reassess our current accounting treatment for existing agreements on land easements, which are not accounted for as leases. We do not expect to elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. We have substantially completed aggregating and evaluating our worldwide lease contracts and are in the process of implementing a new lease accounting system to support the accounting and disclosure requirements of the standard. We expect ASC 842 will have a material impact on our Consolidated Balance Sheet. However, our bank covenants will not be affected. We are still evaluating the impact of the adoption of ASC 842 on our Consolidated Statements of Operations and Statements of Cash Flows. There were no other accounting standards recently issued that had or are expected to have a material impact on our financial statements. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 9 Months Ended |
Feb. 24, 2019 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | 2. REVENUE FROM CONTRACTS WITH CUSTOMERS On May 28, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers (“new revenue standard”) and all related amendments , using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to opening r etained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. We recorded a net increase to opening r etained earnings of $13.7 million as of May 28, 2018, due to the cumulative impact of adopting the new revenue standard, with the impact related to our customized products. The impacts of the adoption of the new revenue standard on our consolidated financial statements were as follows (in millions, except per share amounts): Consolidated Statements of Earnings Thirteen Weeks Ended February 24, 2019 As Reported Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Net sales $ 926.8 $ 908.3 $ 18.5 Cost of sales 653.4 640.6 12.8 Income from operations 193.8 188.1 5.7 Income tax expense 39.6 38.3 1.3 Net income attributable to Lamb Weston Holdings, Inc. 141.4 137.0 4.4 Earnings per share Basic $ 0.96 $ 0.93 $ 0.03 Diluted $ 0.95 $ 0.93 $ 0.02 Thirty-Nine Weeks Ended February 24, 2019 As Reported Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Net sales $ 2,753.1 $ 2,732.0 $ 21.1 Cost of sales 2,000.1 1,985.6 14.5 Income from operations 520.4 513.8 6.6 Income tax expense 107.9 106.4 1.5 Net income attributable to Lamb Weston Holdings, Inc. 368.2 363.1 5.1 Earnings per share Basic $ 2.44 $ 2.40 $ 0.04 Diluted $ 2.42 $ 2.39 $ 0.03 Consolidated Balance Sheets As of February 24, 2019 As Reported Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Receivables, less allowance for doubtful accounts $ 359.3 $ 251.6 $ 107.7 Inventories 588.2 671.5 (83.3) Accrued liabilities 221.7 219.4 2.3 Deferred income taxes 126.6 123.3 3.3 Retained earnings 722.5 703.7 18.8 Consolidated Statements of Cash Flows Thirty-Nine Weeks Ended February 24, 2019 As Reported Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Cash flows from operating activities Net income $ 376.8 $ 371.7 $ 5.1 Deferred income taxes 38.5 39.2 (0.7) Receivables (43.3) (22.2) (21.1) Inventories (104.7) (119.1) 14.4 Income taxes payable/receivable, net 14.1 11.8 2.3 Historically, we recognized revenue on a point-in-time basis in all of our segments. The trigger for point-in-time recognition is when the customer takes title to the goods and assumes the risks and rewards for the goods. The adoption of ASC 606 did not have a material impact on our revenue recognition for point-in-time product sales. However, there are certain products that we manufacture to customers’ unique recipes (customized products). Due to costs associated with reworking, transporting, and repackaging these products, we concluded that these products do not have an alternative future use at a reasonable profit margin under the new revenue standard. The customized product sales are covered by purchase orders. Once the customized product is manufactured per the purchase order, we have an enforceable right to payment for the products. As such, the adoption of ASC 606 resulted in the acceleration of revenue for customized products at the time we have a legally enforceable right to payment since these products do not have an alternative use at a reasonable profit margin. Segment Information 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 to our consolidated operations in the first three quarters of fiscal 2019, or in fiscal 2018, 2017, and 2016. While the nature of our contracts can vary based on the business, customer type, and region, in all instances it is our customary business practice to receive a valid order from the customer, in which each party’s rights and related payment terms are clearly identifiable. The adoption of the new revenue standard had the following impact on segment net sales (in millions): Thirteen Weeks Ended February 24, 2019 As Reported Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Net sales: Global $ 498.2 $ 481.6 $ 16.6 Foodservice 265.5 265.7 (0.2) Retail 129.0 128.5 0.5 Other 34.1 32.5 1.6 Total net sales $ 926.8 $ 908.3 $ 18.5 Thirty-Nine Weeks Ended February 24, 2019 As Reported Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Net sales: Global $ 1,434.9 $ 1,414.6 $ 20.3 Foodservice 843.0 844.1 (1.1) Retail 369.1 368.3 0.8 Other 106.1 105.0 1.1 Total net sales $ 2,753.1 $ 2,732.0 $ 21.1 Performance Obligations and Significant Judgments Our principal business is to manufacture and sell frozen potato products. We also sell frozen vegetables and appetizers. As a general rule, none of our businesses provide equipment installation or other ancillary services outside producing, packaging, and shipping products to customers. Our revenue is primarily derived from fixed consideration; however, we do have contract terms that give rise to variable consideration, primarily cash discounts, coupons, and rebates, as well as other sales incentives and trade promotion allowances described in Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the Notes to Combined and Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of the Form 10-K. We estimate sales incentives and trade promotions based on historical experience to record reductions in revenue Contracts or purchase orders with customers could include a single type of product or multiple types or grades of products. Regardless, the contracted price with the customer is agreed to at the individual product level outlined in the customer contracts or purchase orders. We do not bundle prices; however, we do negotiate with customers on pricing and rebates for the same products based on a variety of factors (e.g. level of contractual volume). We’ve concluded that the prices negotiated with each individual customer are representative of the stand-alone selling price of the product. Generally, we recognize revenue on a point in time basis when the customer takes title to the goods and assumes the risks, rewards, or control of the goods. However, we recognize revenue over time for customized products as they are produced and we have a purchase order providing a legally enforceable right to payment for the goods. Practical Expedients and Exemptions As part of our adoption of the new revenue standard, we elected to account for shipping and handling activities as fulfillment activities and recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset we would recognize is one year or less. The election of these practical expedients results in accounting treatments consistent with our historical accounting policies and therefore, these elections and expedients do not have a material impact on the comparability of our financial statements. |
ACQUISITION
ACQUISITION | 9 Months Ended |
Feb. 24, 2019 | |
ACQUISITION | |
ACQUISITION | 3. ACQUISITION On December 21, 2018, we acquired 100% of the outstanding shares of a frozen potato processor in Australia for $88.6 million, net of cash acquired. This acquisition added approximately 50 million pounds of production capacity to our manufacturing network and expands our geographic reach. Net sales, income from operations, and total assets of the acquired company are not material to our overall net sales and total assets. Operating results of the acquired company subsequent to December 21, 2018 have been included in our Global segment. We allocated the purchase price to the assets acquired and liabilities assumed based on estimates of the fair value at the date of the acquisition, of which $75.1 million was allocated to goodwill (which is not deductible for tax purposes) and $4.4 million to intangible assets (to be amortized on a straight-line basis over a weighted average life of 15 years), primarily a brand name, all of which are included in the Global segment. The purchase price allocation continues to be preliminary, as estimates and assumptions are subject to change as more information becomes available upon the completion of our third-party valuation report. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Feb. 24, 2019 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 4. 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, except per share amounts): Thirteen Weeks Ended Thirty-Nine Weeks Ended February 24, February 25, February 24, February 25, 2019 2018 2019 2018 Numerator: Net income attributable to Lamb Weston Holdings, Inc. $ 141.4 $ 156.8 $ 368.2 $ 316.8 Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated, net of tax benefits (a) 0.5 0.9 11.4 2.2 Net income available to Lamb Weston common stockholders $ 140.9 $ 155.9 $ 356.8 $ 314.6 Denominator: Basic weighted average common shares outstanding 146.6 146.3 146.5 146.3 Add: Dilutive effect of employee incentive plans (b) 0.8 0.8 0.8 0.6 Diluted weighted average common shares outstanding 147.4 147.1 147.3 146.9 Earnings per share (a) Basic $ 0.96 $ 1.07 $ 2.44 $ 2.15 Diluted $ 0.95 $ 1.06 $ 2.42 $ 2.14 (a) The thirty-nine weeks ended February 24, 2019, included accretion, net of tax benefits, of $10.0 million, or $0.07 per share, which we recorded to increase the redeemable noncontrolling interest to the amount we paid to acquire the remaining 50.01% interest in Lamb Weston BSW. While the accretion, net of tax benefits, reduced net income available to Lamb Weston common stockholders and earnings per share, it did not impact net income in the Consolidated Statements of Earnings. Net income includes 100% of Lamb Weston BSW’s earnings beginning November 2, 2018, the date we entered into the definitive agreement to acquire the remaining interest in Lamb Weston BSW. See Note 10, Investments in Joint Ventures, for more information. The thirteen weeks ended February 24, 2019, included a $0.5 million, or $0.01 per share, decrease in tax benefits related to the purchase of Lamb Weston BSW. (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 February 24, 2019, we did not have any stock-based awards that were antidilutive. As of February 25, 2018, an insignificant number of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Feb. 24, 2019 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 5. 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 resources. The thirteen and thirty-nine weeks ended February 25, 2018 include $0.2 million and $2.4 million, respectively, of expenses related to the transition services agreement. In April 2018, we concluded our transition services agreement with Conagra. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Feb. 24, 2019 | |
INCOME TAXES | |
INCOME TAXES | 6. INCOME TAXES Income tax expense for the thirteen weeks ended February 24, 2019 and February 25, 2018, was $39.6 million and $7.5 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 21.9% and 4.5% for the thirteen weeks ended February 24, 2019 and February 25, 2018, respectively. The lower rate during the thirteen weeks ended February 25, 2018, was primarily attributable to the effects of the U.S. Tax Cuts and Jobs Act (the “Tax Act”) as follows: Discrete Tax Benefit. We recorded an approximate $24 million net discrete benefit, comprised of a $38.7 million benefit from the estimated impact of remeasuring our net U.S. deferred tax liabilities on our balance sheet at a lower tax rate, partially offset by a $14.7 million transition tax on our previously untaxed foreign earnings. Timing of Tax Act. The Tax Act was enacted in December 2017 and it reduced the U.S. statutory tax rate from 35% to 21%. We are required to record the effect of changes in enacted tax laws or rates in the interim period in which the change occurs. Accordingly, in the third quarter of fiscal 2018, we recorded an approximate $14 million benefit from a lower U.S. statutory tax rate, on earnings reported in the first half of fiscal 2018. Excluding the approximate $38 million of tax benefits discussed above, the effective tax rate for the thirteen weeks ended February 25, 2018, was 27.2%, which is higher than the 21.9% effective tax rate in the thirteen weeks ended February 24, 2019. Since our fiscal year ends the last Sunday in May, the impact of lower U.S. statutory income tax rate was phased in, which resulted in an approximate 29% U.S. statutory rate in fiscal 2018, compared with a 21% U.S. statutory rate in fiscal 2019. Income tax expense for the thirty-nine weeks ended February 24, 2019 and February 25, 2018, was $107.9 million and $93.1 million, respectively. The effective tax rate was 22.3% and 21.9%, respectively, in our Consolidated Statements of Earnings. Excluding the $24.0 million of discrete items, our effective tax rate was 27.6% for the thirty-nine weeks ended February 25, 2018, which is higher than the 22.3% effective tax rate during the same period in the prior year, primarily because the timing of our fiscal year-end resulted in an approximate 29% U.S. statutory rate in fiscal 2018, compared with a 21% U.S. statutory rate in fiscal 2019. Income Taxes Paid Income taxes paid, net of refunds, were $54.7 million and $72.4 million in the thirty-nine weeks ended February 24, 2019 and February 25, 2018 , respectively. Income taxes paid decreased in the thirty-nine weeks ended February 24, 2019, as a result of timing of payments for state taxes and the Tax Act. Unrecognized Tax Benefits There have been no material changes to the unrecognized tax benefits disclosed in Note 4, Income Taxes, of the Notes to Combined and Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of the Form 10-K, and we do not expect any significant changes to unrecognized tax benefits in the next 12 months. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Feb. 24, 2019 | |
INVENTORIES | |
INVENTORIES | 7. 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): February 24, May 27, 2019 2018 Raw materials and packaging $ 156.0 $ 87.2 Finished goods 398.8 430.5 Supplies and other 33.4 32.0 Inventories (a) $ 588.2 $ 549.7 (a) See Note 2, Revenue from Contracts with Customers, for more information on the impact the adoption of the new revenue standard had on inventories. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 9 Months Ended |
Feb. 24, 2019 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | 8. PROPERTY, PLANT AND EQUIPMENT The components of property, plant and equipment were as follows (dollars in millions): February 24, May 27, 2019 2018 Land and land improvements $ 142.1 $ 139.8 Buildings, machinery, and equipment 2,374.6 2,212.6 Furniture, fixtures, office equipment, and other 101.1 101.0 Construction in progress 190.8 127.9 Property, plant and equipment, at cost 2,808.6 2,581.3 Less accumulated depreciation (1,251.6) (1,160.5) Property, plant and equipment, net $ 1,557.0 $ 1,420.8 Depreciation expense was $38.7 million and $35.8 million for the thirteen weeks ended February 24, 2019 and February 25, 2018, respectively; and $112.4 million and $98.9 million for the thirty-nine weeks ended February 24, 2019 and February 25, 2018, respectively. At February 24, 2019 and May 27, 2018, purchases of property, plant and equipment included in accounts payable were $30.7 million and $27.9 million, respectively. The amounts of interest capitalized in construction in progress for the thirteen weeks ended February 24, 2019 and February 25, 2018, were $2.5 million and $0.5 million, respectively; and $6.0 million and $3.4 million for the thirty-nine weeks ended February 24, 2019 and February 25, 2018, respectively. |
GOODWILL AND OTHER IDENTIFIABLE
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | 9 Months Ended |
Feb. 24, 2019 | |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | 9. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS Changes in the carrying amount of goodwill as allocated to each segment were as follows (dollars in millions): Global Foodservice Retail Other Total Balance at May 27, 2018 $ 76.9 $ 42.8 $ 10.9 $ 4.5 $ 135.1 Acquisition (a) 75.1 — — — 75.1 Foreign currency translation adjustment (1.4) — — — (1.4) Balance at February 24, 2019 $ 150.6 $ 42.8 $ 10.9 $ 4.5 $ 208.8 (a) In December 2018, we acquired a frozen potato processor in Australia and recorded $75.1 million of goodwill in our Global Segment. See Note 3, Acquisition, for more information. Other identifiable intangible assets were as follows (dollars in millions): February 24, 2019 May 27, 2018 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 39.3 19.0 14 35.2 17.8 $ 57.3 $ 19.0 $ 53.2 $ 17.8 (a) Non-amortizing intangible assets are comprised of brand names and trademarks. (b) Amortizing intangible assets are principally composed of customer relationships, licensing arrangements, a brand name, and intellectual property. During the thirteen weeks ended February 24, 2019 and February 25, 2018, amortization expense was $0.5 million and $0.6 million, respectively. During the thirty-nine weeks ended February 24, 2019 and February 25, 2018, amortization expense was $1.6 million and $1.8 million, respectively. Foreign intangible assets are affected by foreign currency translation. |
INVESTMENTS IN JOINT VENTURES
INVESTMENTS IN JOINT VENTURES | 9 Months Ended |
Feb. 24, 2019 | |
INVESTMENTS IN JOINT VENTURES | |
INVESTMENTS IN JOINT VENTURES | 10. INVESTMENTS IN JOINT VENTURES Variable Interest Entity - Consolidated On November 2, 2018, we entered into a Membership Interest Purchase Agreement (the “BSW Agreement”) with Ochoa Ag Unlimited Foods, Inc. (“Ochoa”) to acquire the remaining 50.01% interest in Lamb Weston BSW, a potato processing joint venture. We paid Ochoa approximately $65 million in cash attributable to our contractual right to purchase the remaining equity interest in Lamb Weston BSW from Ochoa plus $13.2 million attributable to Ochoa’s interest in expected earnings of the joint venture through our fiscal year ending May 26, 2019. We paid $50.0 million of the purchase price to Ochoa in December 2018 and the remaining $28.2 million in January 2019. Prior to entering into the BSW Agreement, Lamb Weston BSW was considered a variable interest entity, and we determined that we were the primary beneficiary of the entity. Accordingly, we consolidated the financial statements of Lamb Weston BSW and deducted 50.01% of the operating results of the noncontrolling interests to arrive at “Net income attributable to Lamb Weston Holdings, Inc.” on our Consolidated Statements of Earnings. The Consolidated Statements of Earnings include 100% of Lamb Weston BSW’s earnings beginning November 2, 2018, the date we entered into the BSW Agreement. Prior to entering into the BSW Agreement, the value of the redeemable noncontrolling interest was recorded on our Consolidated Balance Sheet based on the value of Ochoa’s put option. In connection with our purchase of the remaining 50.01% interest in the joint venture, we recorded $10.0 million of accretion, net of tax benefits, to increase the redeemable noncontrolling interest to the amount we agreed to pay. The purchase created $8.7 million of deferred tax assets related to the step-up in tax basis of the acquired assets. We recorded both the accretion of the noncontrolling interest and the related tax benefits in “Additional distributed capital” on our Consolidated Balance Sheet and they did not impact net income. While the accretion, net of tax benefits, had no impact on net income in the Consolidated Statements of Earnings, it reduced net income available to common stockholders by $10.0 million, net of tax, and both basic and diluted earnings per share by $0.07, during the thirty-nine weeks ended February 24, 2019. During the thirteen weeks ended February 24, 2019, we recorded a $0.5 million, or $0.01 per share, decrease in tax benefits related to the purchase of Lamb Weston BSW. Prior to November 2, 2018, Lamb Weston and Lamb Weston BSW purchased potatoes and utilized storage facilities and water treatment services from a shareholder of Ochoa. While we continue to purchase such goods and services, subsequent to November 2, 2018, the shareholder of Ochoa is no longer considered a related party. The aggregate amounts of potato purchases were $12.1 million for the thirteen weeks ended February 25, 2018; and $24.6 million and $41.4 million for the thirty-nine weeks ended February 24, 2019 and February 25, 2018, respectively. The aggregate amount of storage facilities and water treatment services were $1.2 million for the thirteen weeks ended February 25, 2018; and $2.5 million and $3.8 million for the thirty-nine weeks ended February 24, 2019 and February 25, 2018, respectively. Other Investments and Variable Interest Entity - Not Consolidated 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. We also hold a 50% interest in Lamb-Weston/RDO Frozen (“Lamb Weston RDO”), a potato processing venture based in the United States. 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 this joint venture. Accordingly, we do not consolidate the financial statements of this entity and account for this investment using equity method accounting. The carrying value of our equity method investments, which include Lamb-Weston/Meijer and Lamb Weston RDO, at February 24, 2019 and May 27, 2018, was $222.8 million and $219.8 million, respectively. These amounts are included in “Equity method investments” on our Consolidated Balance Sheets. For the thirteen weeks ended February 24, 2019 and February 25, 2018, we had sales to our equity method investments of $5.8 million and $7.9 million, respectively, and payments to our equity method investments of $1.5 million and $2.6 million, respectively; and for the thirty-nine weeks ended February 24, 2019 and February 25, 2018, we had sales to our equity method investments of $19.9 million and $19.0 million, respectively, and payments to our equity method investments of $7.4 million and $8.2 million, respectively. Total dividends from our equity method investments were $9.8 million and $13.7 million for the thirteen weeks ended February 24, 2019 and February 25, 2018, respectively; and $35.4 million and $36.5 million for the thirty-nine weeks ended February 24, 2019 and February 25, 2018, respectively. For more information about our investments in joint ventures, see Note 6, Investments in Joint Ventures, of the Notes to Combined and Consolidated Financial statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K. |
EMPLOYEE BENEFIT PLANS AND OTHE
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | 9 Months Ended |
Feb. 24, 2019 | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | 11. EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS In November 2018, we amended the Lamb Weston, Inc. Pension Plan for Plant Hourly Employees for employees who are not covered by a collective bargaining agreement, so that no future benefits accrue after December 31, 2018. We did not recognize a curtailment gain or loss in connection with the amendment. These participants are eligible to participate in defined contribution savings plans with employer matching provisions consistent with other employees without pension benefits. Only hourly employees covered by collective bargaining agreements continue to accrue pension benefits after December 31, 2018. 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. The components of net periodic benefit cost were as follows (dollars in millions): Thirteen Weeks Ended Pension Plans Post-Retirement Plan February 24, February 25, February 24, February 25, 2019 2018 2019 2018 Service cost $ 1.1 $ 1.9 $ — $ — Interest cost 0.2 0.1 0.1 — Expected return on plan assets (0.2) (0.1) — — Net amortization of unrecognized amounts Actuarial loss — — 0.2 — Net periodic benefit cost (a) $ 1.1 $ 1.9 $ 0.3 $ — Thirty-Nine Weeks Ended Pension Plans Post-Retirement Plan February 24, February 25, February 24, February 25, 2019 2018 2019 2018 Service cost $ 5.3 $ 5.8 $ — $ — Interest cost 0.6 0.3 0.2 — Expected return on plan assets (0.7) (0.3) — — Net amortization of unrecognized amounts Prior service benefit — — — (0.1) Actuarial loss — — 0.6 — Net periodic benefit cost (a) $ 5.2 $ 5.8 $ 0.8 $ (0.1) (a) Service costs are reflected in “Cost of sales” in the Consolidated Statements of Earnings. Interest costs and expected return on plan assets are reflected in “Selling, general and administrative expenses” in the Consolidated Statements of Earnings. We make pension plan contributions sufficient to fund our actuarially determined requirements, generally equal to the minimum amounts required by the Employee Retirement Income Security Act. We may also elect to make additional voluntary contributions. During the thirteen and thirty-nine weeks ended February 24, 2019, we made $0.1 million and $0.4 million, respectively, of contributions to our qualified plan. We are not required to make any additional minimum qualified contributions during the remainder of fiscal 2019. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 9 Months Ended |
Feb. 24, 2019 | |
ACCRUED LIABILITIES | |
ACCRUED LIABILITIES | 12. ACCRUED LIABILITIES The components of accrued liabilities were as follows (dollars in millions): February 24, May 27, 2019 2018 Compensation and benefits $ 73.3 $ 91.7 Accrued trade promotions 45.8 45.4 Accrued interest 29.9 10.8 Dividends payable 29.3 28.0 Income taxes payable 14.5 3.1 Franchise, property, and sales and use taxes 9.8 9.6 Other 19.1 27.4 Accrued liabilities $ 221.7 $ 216.0 |
DEBT AND FINANCING OBLIGATIONS
DEBT AND FINANCING OBLIGATIONS | 9 Months Ended |
Feb. 24, 2019 | |
DEBT AND FINANCING OBLIGATIONS | |
DEBT AND FINANCING OBLIGATIONS | 13. DEBT AND FINANCING OBLIGATIONS At February 24, 2019 and May 27, 2018, our debt, including financing obligations was as follows (dollars in millions): February 24, May 27, 2019 2018 Short-term borrowings: Revolving credit facility $ 84.9 $ — Other credit facilities 13.8 9.6 98.7 9.6 Long-term debt: Term loan facility, due 2021 607.5 632.8 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 (a) — 28.0 2,273.5 2,326.8 Financing obligations: 4.35% lease financing obligation due May 2030 65.7 66.8 Lease financing obligations due on various dates through 2040 (b) 13.8 12.2 79.5 79.0 Total debt and financing obligations 2,451.7 2,415.4 Debt issuance costs (27.0) (30.4) Short-term borrowings (98.7) (9.6) Current portion of long-term debt and financing obligations (37.4) (38.7) Long-term debt, excluding current portion $ 2,288.6 $ 2,336.7 (a) In January 2019, we repaid the Lamb Weston BSW installment notes. (b) The interest rates on our lease financing obligations range from 2.79% to 5.00% as of February 24, 2019 and 2.39% to 5.00% as of May 27, 2018. At February 24, 2019, we had $84.9 million of borrowings outstanding under our Revolving Credit Facility (the “Facility”) and $411.7 million of availability under the Facility, which is net of outstanding letters of credit of $3.4 million. For the thirty-nine weeks ended February 24, 2019, borrowings under the Facility ranged from zero to $128.1 million and the weighted average interest rate for our outstanding borrowings under the Facility was 4.0%. For the thirty-nine weeks ended February 24, 2019 and February 25, 2018, we paid $60.7 million and $58.2 million of interest on debt, respectively. For more information on our debt and financing obligations, interest rates, and debt covenants, see Note 9, Debt and Financing Obligations, of the Notes to Combined and Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of the Form 10-K. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Feb. 24, 2019 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 14. STOCK-BASED COMPENSATION On October 29, 2016, our Board of Directors adopted the Lamb Weston Holdings, Inc. 2016 Stock Plan (“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 February 24, 2019, we had 10.0 million shares authorized under the Stock Plan, and 7.8 million shares were available for future grant. The following table summarizes RSU and Performance Share activity for the thirty-nine weeks ended February 24, 2019: 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 27, 2018 581,875 $ 36.84 285,652 $ 28.54 160,270 $ 39.82 Granted (a) 211,994 70.19 — — 87,462 69.81 Performance condition adjustment (b) — — — — 97,803 40.35 Vested (c) (141,149) 29.93 (157,167) 28.61 (42,206) 27.32 Forfeited/expired/cancelled (11,532) 53.45 (5,933) 30.52 — — Outstanding at February 24, 2019 641,188 $ 49.09 122,552 $ 28.36 303,329 $ 50.38 (a) Granted represents new grants and dividend equivalents accrued. (b) Amount represents adjustment for performance results attained on Performance Shares during the thirty-nine weeks ended February 24, 2019. (c) The aggregate fair value of awards that vested during the thirty-nine weeks ended February 24, 2019 was $24.7 million, 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. The following table summarizes stock option activity for the thirty-nine weeks ended February 24, 2019: Weighted- Weighted- Average Average Aggregate Exercise Remaining Intrinsic Price Contractual Value (a) Shares (per share) Term (Years) (in millions) Outstanding at May 27, 2018 651,606 $ 29.08 Granted — — Exercised (41,000) 26.64 Forfeited/cancelled (1,428) 30.67 Outstanding at February 24, 2019 609,178 $ 29.24 6.6 $ 25.1 Exercisable at February 24, 2019 510,703 $ 27.78 6.2 $ 21.8 (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 2019 third quarter, or February 22, 2019, 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 quarter. The amount changes based on the fair market value of our stock. Compensation Expense Our share-based compensation expense is recorded in “Selling, general and administrative expenses.” Compensation expense for share-based awards recognized in the Consolidated Statements of Earnings, net of forfeitures, was as follows (dollars in millions): Thirteen Weeks Ended Thirty-Nine Weeks Ended February 24, February 25, February 24, February 25, 2019 2018 2019 2018 Stock-settled RSUs $ 2.5 $ 2.0 $ 7.4 $ 6.4 Performance Shares 2.0 1.5 6.1 2.6 Stock options — 0.1 0.2 1.1 Stock-settled compensation expense 4.5 3.6 13.7 10.1 Cash-settled RSUs (a) — 1.3 3.7 5.0 Total compensation expense 4.5 4.9 17.4 15.1 Income tax benefit (b) (1.0) (1.4) (4.0) (5.2) Total compensation expense, net of tax benefit $ 3.5 $ 3.5 $ 13.4 $ 9.9 (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 February 24, 2019, total unrecognized compensation expense related to share-based payments was as follows (dollars in millions): Remaining Weighted Unrecognized Average Compensation Recognition Expense Period (in years) Stock-settled RSUs $ 18.0 2.0 Cash-settled RSUs 1.1 0.4 Performance shares 13.4 1.9 Stock options 0.2 0.7 Total unrecognized compensation expense $ 32.7 1.9 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Feb. 24, 2019 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 15. FAIR VALUE MEASUREMENTS For information about our fair value policies, methods and assumptions used in estimating the fair value of our financial assets and liabilities, see Note 1, Nature of Operations and Summary of Significant Accounting Policies and Note 11, Fair Value Measurements, of the Notes to Combined and Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of the Form 10-K. 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 February 24, 2019 and May 27, 2018 (dollars in millions): As of February 24, 2019 Level 1 Level 2 Level 3 Total Assets: Deferred compensation assets $ 0.5 $ — $ — $ 0.5 Derivative assets (a) — 2.1 — 2.1 Total assets $ 0.5 $ 2.1 $ — $ 2.6 Liabilities: Derivative liabilities (a) $ — $ — $ — $ — Deferred compensation liabilities (b) — 15.0 — 15.0 Total liabilities $ — $ 15.0 $ — $ 15.0 As of May 27, 2018 Level 1 Level 2 Level 3 Total Assets: Deferred compensation assets $ 0.5 $ — $ — $ 0.5 Derivative assets (a) — 0.8 — 0.8 Total assets $ 0.5 $ 0.8 $ — $ 1.3 Liabilities: Derivative liabilities (a) $ — $ 1.4 $ — $ 1.4 Deferred compensation liabilities (b) — 12.4 — 12.4 Total liabilities $ — $ 13.8 $ — $ 13.8 (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. Certain assets and liabilities, including long-lived assets, intangible assets, goodwill, asset retirement obligations, pensions, and cost and equity investments are measured at fair value on a non-recurring basis. At February 24, 2019, we had $1,666.0 million of fixed-rate and $706.2 million of variable-rate debt outstanding. Based on current market rates, the fair value of our fixed-rate debt at February 24, 2019, was estimated to be $1,677.8 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. The fair value of our variable-rate term debt approximates the carrying amount as our cost of borrowing is variable and approximates current market pricing. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Feb. 24, 2019 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 16. STOCKHOLDERS’ EQUITY Share Repurchase Program On December 20, 2018, the Board of Directors authorized a program, with no expiration date, to repurchase shares of our common stock in an amount not to exceed $250.0 million in the aggregate, on an opportunistic basis. During the thirteen and thirty-nine weeks ended February 24, 2019, we purchased 109,900 shares for $7.8 million, or a weighted-average price of $70.93 per share. Dividends During the thirty-nine weeks ended February 24, 2019, we paid $84.0 million of dividends to stockholders. On March 21, 2019, our Board of Directors declared a dividend of $0.20 per share of common stock. The dividend will be paid on May 31, 2019 to stockholders of record as of the close of business on May 3, 2019. 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. The following table details the accumulated balances for each component of other comprehensive income (loss), net of tax (except for currency translation adjustments) (dollars in millions). Amounts in parenthesis indicate losses. Foreign Accumulated Currency Pension and Other Translation Post-Retirement Comprehensive Gains (Losses) Benefits Loss Balance as of May 27, 2018 $ (1.2) $ (3.1) $ (4.3) Other comprehensive income before reclassifications, net of tax (9.5) — (9.5) Amounts reclassified out of AOCI, net of tax — 0.5 0.5 Net current-period other comprehensive income (loss) (9.5) 0.5 (9.0) Balance as of February 24, 2019 $ (10.7) $ (2.6) $ (13.3) The net amount of actuarial losses on pension and post-retirement benefits included in AOCI to be amortized over the next 12 months is a net loss of $0.7 million ($0.5 million after-tax). |
SEGMENTS
SEGMENTS | 9 Months Ended |
Feb. 24, 2019 | |
SEGMENTS | |
SEGMENTS | 17. 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 Note 13, Segments, of the Notes to Combined and Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of the Form 10-K for more information. Additionally, see Note 2, Revenue from Contracts with Customers, for more information on the impact the adoption of the new revenue standard had on segment net sales. Thirteen Weeks Ended Thirty-Nine Weeks Ended February 24, February 25, February 24, February 25, (in millions) 2019 2018 2019 2018 Net sales: Global $ 498.2 $ 448.7 $ 1,434.9 $ 1,279.5 Foodservice 265.5 253.5 843.0 805.8 Retail 129.0 130.2 369.1 324.2 Other 34.1 31.0 106.1 96.0 Total net sales 926.8 863.4 2,753.1 2,505.5 Product contribution margin (a): Global 128.8 113.9 335.6 275.9 Foodservice 94.8 89.5 294.2 272.2 Retail 29.1 30.3 77.8 66.1 Other 11.8 0.9 24.0 16.0 Total product contribution margin 264.5 234.6 731.6 630.2 Other selling, general and administrative expenses (a) (b) 70.7 65.4 211.2 183.6 Income from operations 193.8 169.2 520.4 446.6 Interest expense, net 27.0 28.5 80.0 81.1 Income tax expense (c) 39.6 7.5 107.9 93.1 Equity method investment earnings 14.2 26.4 44.3 58.5 Net income 141.4 159.6 376.8 330.9 Less: Income attributable to noncontrolling interests (d) — 2.8 8.6 14.1 Net income attributable to Lamb Weston Holdings, Inc. $ 141.4 $ 156.8 $ 368.2 $ 316.8 (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) The thirteen and thirty-nine weeks ended February 25, 2018, include $1.7 million and $7.9 million, respectively, of pre-tax expenses related to the Separation. (c) The lower rate in the thirteen weeks ended February 25, 2018, is primarily attributable to a $24.0 million net discrete benefit and a $14 million benefit from a lower U.S. statutory tax rate on earnings reported in the first half of fiscal 2018. Both were recorded for the effect of the Tax Act that was enacted in December 2017. See Note 6, Income Taxes, for more information. (d) On November 2, 2018, we entered into the BSW Agreement to acquire the remaining 50.01% interest in our Lamb Weston BSW joint venture. The Consolidated Statements of Earnings include 100% of Lamb Weston BSW’s earnings beginning November 2, 2018. See Note 10, Investments in Joint Ventures, for more information. Lamb Weston’s largest customer, McDonald’s Corporation, accounted for approximately 10% of consolidated “Net sales” for both the thirteen weeks ended February 24, 2019 and February 25, 2018; and 10% and 11% for the thirty-nine weeks ended February 24, 2019 and February 25, 2018, respectively. Accounts receivable from another customer accounted for 12% of our consolidated accounts receivable as of May 27, 2018. No customer accounted for more than 10% of our consolidated accounts receivable as of February 24, 2019. |
COMMITMENTS, CONTINGENCIES, GUA
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS | 9 Months Ended |
Feb. 24, 2019 | |
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS | |
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS | 18. 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 13, Debt and Financing Obligations), lease obligations, purchase commitments for goods and services, and legal proceedings. There have been no material changes to the guarantees and indemnifications disclosed in Note 14, Commitments, Contingencies, Guarantees, and Legal Proceedings, of the Notes to Combined and Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K. We are a party to legal actions arising in the ordinary course of our business. These 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. |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Feb. 24, 2019 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The unaudited quarterly Consolidated Financial Statements present the financial results of Lamb Weston for the thirteen and thirty-nine weeks ended February 24, 2019 and February 25, 2018, and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America. The financial statements are unaudited but 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. Results for interim periods should not be considered indicative of results for our full fiscal year, which ends the last Sunday in May. These quarterly financial statements and condensed notes should be read together with the combined and consolidated financial statements and notes in our Annual Report on Form 10-K for the fiscal year ended May 27, 2018 (the “Form 10-K”), which we filed with the Securities and Exchange Commission on July 26, 2018. Our 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 consolidated financial statements from the date such determination was made. Intercompany investments, accounts, and transactions have been eliminated. We acquired the remaining 50.01% interest in Lamb Weston BSW, LLC (“Lamb Weston BSW”) and the Consolidated Statements of Earnings include 100% of Lamb Weston BSW’s earnings beginning November 2, 2018. See Note 10, Investments in Joint Ventures, for more information. Certain amounts in the prior period consolidated financial statements have been reclassified to conform with the current period presentation. |
New and Recently Issued Accounting Standards | New and Recently Issued Accounting Standards Accounting Standards Adopted In December 2018, SEC Release No. 33-10532, Disclosure Update and Simplification , became effective, amending certain disclosure requirements that were redundant or outdated. The amendments include removing the requirement to disclose the historical and pro forma ratio of earnings to fixed charges and the related exhibit, as well as replacing the requirement to disclose the high and low trading prices of our common stock with a requirement to disclose the ticker symbol of our common stock. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, the changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The final rule regarding stockholders’ equity was effective in the third quarter of fiscal 2019, and is included in this Form 10-Q; the other changes will apply to our fiscal 2019 Form 10-K. In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) . This update provides guidance on when implementation costs may be capitalized as an asset related to service contracts and which costs should be expensed using the same model as if the cloud computing arrangement included a software license. The amendments in this update also require companies to expense capitalized implementation costs over the term of the hosting arrangement, including periods covered by renewal options that are reasonably certain to be exercised. We have elected to early adopt this standard on a prospective basis. The adoption of this standard did not have a significant 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. We adopted the provisions of this guidance in fiscal 2019 (beginning May 28, 2018). The adoption of this standard did not have a significant impact on our financial statements. See Note 11, Employee Benefit Plans and Other Post-Retirement Benefits, for the amount of each component of net periodic pension and other post-retirement benefit costs we reported historically. Effective May 28, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers , and its related amendments, collectively known as Accounting Standards Codification (“ASC”) 606 using the modified retrospective method. See Note 2, Revenue from Contracts with Customers, for more information. Accounting Standards Not Yet Adopted In August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans . This update amends ASC 715 to remove disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant to defined benefit pension and other postretirement plans. The ASU’s changes related to disclosures are part of the FASB’s disclosure framework project. This guidance is effective for our fiscal 2022 (beginning May 31, 2021) with early adoption permitted. The adoption of this standard is not expected to have a significant impact on our financial statements. In February 2016, the FASB issued ASC Topic 842, Leases , which requires lessees to reflect both the right-of-use assets and lease liabilities on the balance sheet for leases with lease terms of more than 12 months, whereas under current GAAP only capital lease liabilities (referred to as finance leases under ASC 842) are recognized on the balance sheet. ASC 842 also requires disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. We will adopt the standard on May 27, 2019, the beginning of our 2020 fiscal year, using the optional adoption method provided in ASU 2018-11, Leases (Topic 842): Targeted Improvements , which allows us to recognize a cumulative-effect adjustment at the beginning of the period of adoption. As allowed, we will not adjust comparative period financial statements and disclosures for the impact of the new standard. The right of use assets and lease liabilities that we recognize on our balance sheet, as of the adoption date, will depend on our lease portfolio and discount rates on the date of adoption. While we continue to evaluate the impact that the adoption of this standard will have on our financial statements, we currently believe it is likely we will elect to adopt certain of the optional practical expedients, including the package of practical expedients under the transition guidance that permits us not to reassess under the new standard our prior conclusions for lease identification and lease classification on expired or existing contracts and whether initial direct costs previously capitalized would qualify for capitalization under ASC 842. We also expect to elect the practical expedient not to separate lease and non-lease components for all our leases and the expedient related to land easements, allowing us to not reassess our current accounting treatment for existing agreements on land easements, which are not accounted for as leases. We do not expect to elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. We have substantially completed aggregating and evaluating our worldwide lease contracts and are in the process of implementing a new lease accounting system to support the accounting and disclosure requirements of the standard. We expect ASC 842 will have a material impact on our Consolidated Balance Sheet. However, our bank covenants will not be affected. We are still evaluating the impact of the adoption of ASC 842 on our Consolidated Statements of Operations and Statements of Cash Flows. There were no other accounting standards recently issued that had or are expected to have a material impact on our financial statements. |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 9 Months Ended |
Feb. 24, 2019 | |
Revenue from Contracts with Customers | |
Schedule of segment net sales and product contribution margin | The adoption of the new revenue standard had the following impact on segment net sales (in millions): Thirteen Weeks Ended February 24, 2019 As Reported Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Net sales: Global $ 498.2 $ 481.6 $ 16.6 Foodservice 265.5 265.7 (0.2) Retail 129.0 128.5 0.5 Other 34.1 32.5 1.6 Total net sales $ 926.8 $ 908.3 $ 18.5 Thirty-Nine Weeks Ended February 24, 2019 As Reported Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Net sales: Global $ 1,434.9 $ 1,414.6 $ 20.3 Foodservice 843.0 844.1 (1.1) Retail 369.1 368.3 0.8 Other 106.1 105.0 1.1 Total net sales $ 2,753.1 $ 2,732.0 $ 21.1 |
Accounting Standards Update 2014-09 | |
Revenue from Contracts with Customers | |
Schedule of impact of adoption of new revenue standard | The impacts of the adoption of the new revenue standard on our consolidated financial statements were as follows (in millions, except per share amounts): Consolidated Statements of Earnings Thirteen Weeks Ended February 24, 2019 As Reported Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Net sales $ 926.8 $ 908.3 $ 18.5 Cost of sales 653.4 640.6 12.8 Income from operations 193.8 188.1 5.7 Income tax expense 39.6 38.3 1.3 Net income attributable to Lamb Weston Holdings, Inc. 141.4 137.0 4.4 Earnings per share Basic $ 0.96 $ 0.93 $ 0.03 Diluted $ 0.95 $ 0.93 $ 0.02 Thirty-Nine Weeks Ended February 24, 2019 As Reported Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Net sales $ 2,753.1 $ 2,732.0 $ 21.1 Cost of sales 2,000.1 1,985.6 14.5 Income from operations 520.4 513.8 6.6 Income tax expense 107.9 106.4 1.5 Net income attributable to Lamb Weston Holdings, Inc. 368.2 363.1 5.1 Earnings per share Basic $ 2.44 $ 2.40 $ 0.04 Diluted $ 2.42 $ 2.39 $ 0.03 Consolidated Balance Sheets As of February 24, 2019 As Reported Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Receivables, less allowance for doubtful accounts $ 359.3 $ 251.6 $ 107.7 Inventories 588.2 671.5 (83.3) Accrued liabilities 221.7 219.4 2.3 Deferred income taxes 126.6 123.3 3.3 Retained earnings 722.5 703.7 18.8 Consolidated Statements of Cash Flows Thirty-Nine Weeks Ended February 24, 2019 As Reported Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Cash flows from operating activities Net income $ 376.8 $ 371.7 $ 5.1 Deferred income taxes 38.5 39.2 (0.7) Receivables (43.3) (22.2) (21.1) Inventories (104.7) (119.1) 14.4 Income taxes payable/receivable, net 14.1 11.8 2.3 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Feb. 24, 2019 | |
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, except per share amounts): Thirteen Weeks Ended Thirty-Nine Weeks Ended February 24, February 25, February 24, February 25, 2019 2018 2019 2018 Numerator: Net income attributable to Lamb Weston Holdings, Inc. $ 141.4 $ 156.8 $ 368.2 $ 316.8 Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated, net of tax benefits (a) 0.5 0.9 11.4 2.2 Net income available to Lamb Weston common stockholders $ 140.9 $ 155.9 $ 356.8 $ 314.6 Denominator: Basic weighted average common shares outstanding 146.6 146.3 146.5 146.3 Add: Dilutive effect of employee incentive plans (b) 0.8 0.8 0.8 0.6 Diluted weighted average common shares outstanding 147.4 147.1 147.3 146.9 Earnings per share (a) Basic $ 0.96 $ 1.07 $ 2.44 $ 2.15 Diluted $ 0.95 $ 1.06 $ 2.42 $ 2.14 (a) The thirty-nine weeks ended February 24, 2019, included accretion, net of tax benefits, of $10.0 million, or $0.07 per share, which we recorded to increase the redeemable noncontrolling interest to the amount we paid to acquire the remaining 50.01% interest in Lamb Weston BSW. While the accretion, net of tax benefits, reduced net income available to Lamb Weston common stockholders and earnings per share, it did not impact net income in the Consolidated Statements of Earnings. Net income includes 100% of Lamb Weston BSW’s earnings beginning November 2, 2018, the date we entered into the definitive agreement to acquire the remaining interest in Lamb Weston BSW. See Note 10, Investments in Joint Ventures, for more information. The thirteen weeks ended February 24, 2019, included a $0.5 million, or $0.01 per share, decrease in tax benefits related to the purchase of Lamb Weston BSW. (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 February 24, 2019, we did not have any stock-based awards that were antidilutive. As of February 25, 2018, an insignificant number of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Feb. 24, 2019 | |
INVENTORIES | |
Schedule of major classes of inventories | The components of inventories were as follows (dollars in millions): February 24, May 27, 2019 2018 Raw materials and packaging $ 156.0 $ 87.2 Finished goods 398.8 430.5 Supplies and other 33.4 32.0 Inventories (a) $ 588.2 $ 549.7 (a) See Note 2, Revenue from Contracts with Customers, for more information on the impact the adoption of the new revenue standard had on inventories. |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 9 Months Ended |
Feb. 24, 2019 | |
PROPERTY, PLANT AND EQUIPMENT | |
Schedule of components of property, plant and equipment | The components of property, plant and equipment were as follows (dollars in millions): February 24, May 27, 2019 2018 Land and land improvements $ 142.1 $ 139.8 Buildings, machinery, and equipment 2,374.6 2,212.6 Furniture, fixtures, office equipment, and other 101.1 101.0 Construction in progress 190.8 127.9 Property, plant and equipment, at cost 2,808.6 2,581.3 Less accumulated depreciation (1,251.6) (1,160.5) Property, plant and equipment, net $ 1,557.0 $ 1,420.8 |
GOODWILL AND OTHER IDENTIFIAB_2
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Feb. 24, 2019 | |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | |
Schedule of changes in the carrying amount of goodwill | Changes in the carrying amount of goodwill as allocated to each segment were as follows (dollars in millions): Global Foodservice Retail Other Total Balance at May 27, 2018 $ 76.9 $ 42.8 $ 10.9 $ 4.5 $ 135.1 Acquisition (a) 75.1 — — — 75.1 Foreign currency translation adjustment (1.4) — — — (1.4) Balance at February 24, 2019 $ 150.6 $ 42.8 $ 10.9 $ 4.5 $ 208.8 (a) In December 2018, we acquired a frozen potato processor in Australia and recorded $75.1 million of goodwill in our Global Segment. See Note 3, Acquisition, for more information. |
Schedule of other identifiable intangible assets | Other identifiable intangible assets were as follows (dollars in millions): February 24, 2019 May 27, 2018 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 39.3 19.0 14 35.2 17.8 $ 57.3 $ 19.0 $ 53.2 $ 17.8 (a) Non-amortizing intangible assets are comprised of brand names and trademarks. (b) Amortizing intangible assets are principally composed of customer relationships, licensing arrangements, a brand name, and intellectual property. During the thirteen weeks ended February 24, 2019 and February 25, 2018, amortization expense was $0.5 million and $0.6 million, respectively. During the thirty-nine weeks ended February 24, 2019 and February 25, 2018, amortization expense was $1.6 million and $1.8 million, respectively. Foreign intangible assets are affected by foreign currency translation. |
EMPLOYEE BENEFIT PLANS AND OT_2
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS (Tables) | 9 Months Ended |
Feb. 24, 2019 | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |
Schedule of components of net periodic benefit cost for our pension and postretirement benefit plans | The components of net periodic benefit cost were as follows (dollars in millions): Thirteen Weeks Ended Pension Plans Post-Retirement Plan February 24, February 25, February 24, February 25, 2019 2018 2019 2018 Service cost $ 1.1 $ 1.9 $ — $ — Interest cost 0.2 0.1 0.1 — Expected return on plan assets (0.2) (0.1) — — Net amortization of unrecognized amounts Actuarial loss — — 0.2 — Net periodic benefit cost (a) $ 1.1 $ 1.9 $ 0.3 $ — Thirty-Nine Weeks Ended Pension Plans Post-Retirement Plan February 24, February 25, February 24, February 25, 2019 2018 2019 2018 Service cost $ 5.3 $ 5.8 $ — $ — Interest cost 0.6 0.3 0.2 — Expected return on plan assets (0.7) (0.3) — — Net amortization of unrecognized amounts Prior service benefit — — — (0.1) Actuarial loss — — 0.6 — Net periodic benefit cost (a) $ 5.2 $ 5.8 $ 0.8 $ (0.1) (a) Service costs are reflected in “Cost of sales” in the Consolidated Statements of Earnings. Interest costs and expected return on plan assets are reflected in “Selling, general and administrative expenses” in the Consolidated Statements of Earnings. |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 9 Months Ended |
Feb. 24, 2019 | |
ACCRUED LIABILITIES | |
Schedule of components of accrued liabilities | The components of accrued liabilities were as follows (dollars in millions): February 24, May 27, 2019 2018 Compensation and benefits $ 73.3 $ 91.7 Accrued trade promotions 45.8 45.4 Accrued interest 29.9 10.8 Dividends payable 29.3 28.0 Income taxes payable 14.5 3.1 Franchise, property, and sales and use taxes 9.8 9.6 Other 19.1 27.4 Accrued liabilities $ 221.7 $ 216.0 |
DEBT AND FINANCING OBLIGATIONS
DEBT AND FINANCING OBLIGATIONS (Tables) | 9 Months Ended |
Feb. 24, 2019 | |
DEBT AND FINANCING OBLIGATIONS | |
Schedule of debt, including financing obligations | At February 24, 2019 and May 27, 2018, our debt, including financing obligations was as follows (dollars in millions): February 24, May 27, 2019 2018 Short-term borrowings: Revolving credit facility $ 84.9 $ — Other credit facilities 13.8 9.6 98.7 9.6 Long-term debt: Term loan facility, due 2021 607.5 632.8 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 (a) — 28.0 2,273.5 2,326.8 Financing obligations: 4.35% lease financing obligation due May 2030 65.7 66.8 Lease financing obligations due on various dates through 2040 (b) 13.8 12.2 79.5 79.0 Total debt and financing obligations 2,451.7 2,415.4 Debt issuance costs (27.0) (30.4) Short-term borrowings (98.7) (9.6) Current portion of long-term debt and financing obligations (37.4) (38.7) Long-term debt, excluding current portion $ 2,288.6 $ 2,336.7 (a) In January 2019, we repaid the Lamb Weston BSW installment notes. (b) The interest rates on our lease financing obligations range from 2.79% to 5.00% as of February 24, 2019 and 2.39% to 5.00% as of May 27, 2018. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Feb. 24, 2019 | |
STOCK-BASED COMPENSATION | |
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 27, 2018 581,875 $ 36.84 285,652 $ 28.54 160,270 $ 39.82 Granted (a) 211,994 70.19 — — 87,462 69.81 Performance condition adjustment (b) — — — — 97,803 40.35 Vested (c) (141,149) 29.93 (157,167) 28.61 (42,206) 27.32 Forfeited/expired/cancelled (11,532) 53.45 (5,933) 30.52 — — Outstanding at February 24, 2019 641,188 $ 49.09 122,552 $ 28.36 303,329 $ 50.38 (a) Granted represents new grants and dividend equivalents accrued. (b) Amount represents adjustment for performance results attained on Performance Shares during the thirty-nine weeks ended February 24, 2019. (c) The aggregate fair value of awards that vested during the thirty-nine weeks ended February 24, 2019 was $24.7 million, 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. |
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 27, 2018 651,606 $ 29.08 Granted — — Exercised (41,000) 26.64 Forfeited/cancelled (1,428) 30.67 Outstanding at February 24, 2019 609,178 $ 29.24 6.6 $ 25.1 Exercisable at February 24, 2019 510,703 $ 27.78 6.2 $ 21.8 (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 2019 third quarter, or February 22, 2019, 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 quarter. The amount changes based on the fair market value of our stock. |
Schedule of compensation expenses for stock-based awards recognized, net of forfeitures | Our share-based compensation expense is recorded in “Selling, general and administrative expenses.” Compensation expense for share-based awards recognized in the Consolidated Statements of Earnings, net of forfeitures, was as follows (dollars in millions): Thirteen Weeks Ended Thirty-Nine Weeks Ended February 24, February 25, February 24, February 25, 2019 2018 2019 2018 Stock-settled RSUs $ 2.5 $ 2.0 $ 7.4 $ 6.4 Performance Shares 2.0 1.5 6.1 2.6 Stock options — 0.1 0.2 1.1 Stock-settled compensation expense 4.5 3.6 13.7 10.1 Cash-settled RSUs (a) — 1.3 3.7 5.0 Total compensation expense 4.5 4.9 17.4 15.1 Income tax benefit (b) (1.0) (1.4) (4.0) (5.2) Total compensation expense, net of tax benefit $ 3.5 $ 3.5 $ 13.4 $ 9.9 (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 February 24, 2019, total unrecognized compensation expense related to share-based payments was as follows (dollars in millions): Remaining Weighted Unrecognized Average Compensation Recognition Expense Period (in years) Stock-settled RSUs $ 18.0 2.0 Cash-settled RSUs 1.1 0.4 Performance shares 13.4 1.9 Stock options 0.2 0.7 Total unrecognized compensation expense $ 32.7 1.9 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Feb. 24, 2019 | |
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 February 24, 2019 and May 27, 2018 (dollars in millions): As of February 24, 2019 Level 1 Level 2 Level 3 Total Assets: Deferred compensation assets $ 0.5 $ — $ — $ 0.5 Derivative assets (a) — 2.1 — 2.1 Total assets $ 0.5 $ 2.1 $ — $ 2.6 Liabilities: Derivative liabilities (a) $ — $ — $ — $ — Deferred compensation liabilities (b) — 15.0 — 15.0 Total liabilities $ — $ 15.0 $ — $ 15.0 As of May 27, 2018 Level 1 Level 2 Level 3 Total Assets: Deferred compensation assets $ 0.5 $ — $ — $ 0.5 Derivative assets (a) — 0.8 — 0.8 Total assets $ 0.5 $ 0.8 $ — $ 1.3 Liabilities: Derivative liabilities (a) $ — $ 1.4 $ — $ 1.4 Deferred compensation liabilities (b) — 12.4 — 12.4 Total liabilities $ — $ 13.8 $ — $ 13.8 (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) | 9 Months Ended |
Feb. 24, 2019 | |
STOCKHOLDERS' EQUITY | |
Changes in AOCI, net of tax | The following table details the accumulated balances for each component of other comprehensive income (loss), net of tax (except for currency translation adjustments) (dollars in millions). Amounts in parenthesis indicate losses. Foreign Accumulated Currency Pension and Other Translation Post-Retirement Comprehensive Gains (Losses) Benefits Loss Balance as of May 27, 2018 $ (1.2) $ (3.1) $ (4.3) Other comprehensive income before reclassifications, net of tax (9.5) — (9.5) Amounts reclassified out of AOCI, net of tax — 0.5 0.5 Net current-period other comprehensive income (loss) (9.5) 0.5 (9.0) Balance as of February 24, 2019 $ (10.7) $ (2.6) $ (13.3) |
SEGMENTS (Tables)
SEGMENTS (Tables) | 9 Months Ended |
Feb. 24, 2019 | |
SEGMENTS | |
Schedule of segment information | Thirteen Weeks Ended Thirty-Nine Weeks Ended February 24, February 25, February 24, February 25, (in millions) 2019 2018 2019 2018 Net sales: Global $ 498.2 $ 448.7 $ 1,434.9 $ 1,279.5 Foodservice 265.5 253.5 843.0 805.8 Retail 129.0 130.2 369.1 324.2 Other 34.1 31.0 106.1 96.0 Total net sales 926.8 863.4 2,753.1 2,505.5 Product contribution margin (a): Global 128.8 113.9 335.6 275.9 Foodservice 94.8 89.5 294.2 272.2 Retail 29.1 30.3 77.8 66.1 Other 11.8 0.9 24.0 16.0 Total product contribution margin 264.5 234.6 731.6 630.2 Other selling, general and administrative expenses (a) (b) 70.7 65.4 211.2 183.6 Income from operations 193.8 169.2 520.4 446.6 Interest expense, net 27.0 28.5 80.0 81.1 Income tax expense (c) 39.6 7.5 107.9 93.1 Equity method investment earnings 14.2 26.4 44.3 58.5 Net income 141.4 159.6 376.8 330.9 Less: Income attributable to noncontrolling interests (d) — 2.8 8.6 14.1 Net income attributable to Lamb Weston Holdings, Inc. $ 141.4 $ 156.8 $ 368.2 $ 316.8 (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) The thirteen and thirty-nine weeks ended February 25, 2018, include $1.7 million and $7.9 million, respectively, of pre-tax expenses related to the Separation. (c) The lower rate in the thirteen weeks ended February 25, 2018, is primarily attributable to a $24.0 million net discrete benefit and a $14 million benefit from a lower U.S. statutory tax rate on earnings reported in the first half of fiscal 2018. Both were recorded for the effect of the Tax Act that was enacted in December 2017. See Note 6, Income Taxes, for more information. (d) On November 2, 2018, we entered into the BSW Agreement to acquire the remaining 50.01% interest in our Lamb Weston BSW joint venture. The Consolidated Statements of Earnings include 100% of Lamb Weston BSW’s earnings beginning November 2, 2018. See Note 10, Investments in Joint Ventures, for more information. |
NATURE OF OPERATIONS AND SUMM_3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reportable Segments (Details) - segment | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Number of reportable segments | 4 | 4 | 4 | 4 |
NATURE OF OPERATIONS AND SUMM_4
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 | |
Issuance of common stock at separation (in shares) | 146 |
NATURE OF OPERATIONS AND SUMM_5
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Ownership Interest (Details) - Lamb Weston BSW, LLC | Nov. 02, 2018 |
Ownership interest acquired | |
Ownership interest acquired (as a percent) | 50.01% |
Ownership interest after completion of the acquisition | |
Ownership interest after completion of the acquisition (as a percent) | 100.00% |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS - Adoption of ASU 2014-09 (Details) $ in Millions | May 28, 2018USD ($) |
Accounting Standards Update 2014-09 | |
Revenue from Contracts with Customers | |
Cumulative effect of adoption of accounting standard | $ 13.7 |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS - Consolidated Statements of Earnings (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Revenue from Contracts with Customers | ||||
Net sales | $ 926.8 | $ 863.4 | $ 2,753.1 | $ 2,505.5 |
Cost of sales | 653.4 | 621.1 | 2,000.1 | 1,858.7 |
Income from operations | 193.8 | 169.2 | 520.4 | 446.6 |
Income tax expense | 39.6 | 7.5 | 107.9 | 93.1 |
Net income attributable to Lamb Weston Holdings, Inc. | $ 141.4 | $ 156.8 | $ 368.2 | $ 316.8 |
Earnings per share | ||||
Basic (in dollars per share) | $ 0.96 | $ 1.07 | $ 2.44 | $ 2.15 |
Diluted (in dollars per share) | $ 0.95 | $ 1.06 | $ 2.42 | $ 2.14 |
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | ||||
Revenue from Contracts with Customers | ||||
Net sales | $ 908.3 | $ 2,732 | ||
Cost of sales | 640.6 | 1,985.6 | ||
Income from operations | 188.1 | 513.8 | ||
Income tax expense | 38.3 | 106.4 | ||
Net income attributable to Lamb Weston Holdings, Inc. | $ 137 | $ 363.1 | ||
Earnings per share | ||||
Basic (in dollars per share) | $ 0.93 | $ 2.40 | ||
Diluted (in dollars per share) | $ 0.93 | $ 2.39 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||
Revenue from Contracts with Customers | ||||
Net sales | $ 18.5 | $ 21.1 | ||
Cost of sales | 12.8 | 14.5 | ||
Income from operations | 5.7 | 6.6 | ||
Income tax expense | 1.3 | 1.5 | ||
Net income attributable to Lamb Weston Holdings, Inc. | $ 4.4 | $ 5.1 | ||
Earnings per share | ||||
Basic (in dollars per share) | $ 0.03 | $ 0.04 | ||
Diluted (in dollars per share) | $ 0.02 | $ 0.03 |
REVENUE FROM CONTRACTS WITH C_5
REVENUE FROM CONTRACTS WITH CUSTOMERS - Consolidated Balance Sheets (Details) - USD ($) $ in Millions | Feb. 24, 2019 | May 27, 2018 |
Revenue from Contracts with Customers | ||
Receivables, less allowance for doubtful accounts | $ 359.3 | $ 225.9 |
Inventories | 588.2 | 549.7 |
Accrued liabilities | 221.7 | |
Deferred tax liabilities | 126.6 | 92.1 |
Retained earnings | 722.5 | $ 426.4 |
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | ||
Revenue from Contracts with Customers | ||
Receivables, less allowance for doubtful accounts | 251.6 | |
Inventories | 671.5 | |
Accrued liabilities | 219.4 | |
Deferred tax liabilities | 123.3 | |
Retained earnings | 703.7 | |
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||
Revenue from Contracts with Customers | ||
Receivables, less allowance for doubtful accounts | 107.7 | |
Inventories | (83.3) | |
Accrued liabilities | 2.3 | |
Deferred tax liabilities | 3.3 | |
Retained earnings | $ 18.8 |
REVENUE FROM CONTRACTS WITH C_6
REVENUE FROM CONTRACTS WITH CUSTOMERS - Consolidated Statements of Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Cash flows from operating activities | ||||
Net income | $ 141.4 | $ 159.6 | $ 376.8 | $ 330.9 |
Deferred income taxes | 38.5 | (16) | ||
Receivables | (43.3) | (51.4) | ||
Inventories | (104.7) | (105.4) | ||
Income taxes payable/receivable, net | 14.1 | $ 38 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | ||||
Cash flows from operating activities | ||||
Net income | 371.7 | |||
Deferred income taxes | 39.2 | |||
Receivables | (22.2) | |||
Inventories | (119.1) | |||
Income taxes payable/receivable, net | 11.8 | |||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||
Cash flows from operating activities | ||||
Net income | 5.1 | |||
Deferred income taxes | (0.7) | |||
Receivables | (21.1) | |||
Inventories | 14.4 | |||
Income taxes payable/receivable, net | $ 2.3 |
REVENUE FROM CONTRACTS WITH C_7
REVENUE FROM CONTRACTS WITH CUSTOMERS - Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Revenue from Contracts with Customers | ||||
Revenue | $ 926.8 | $ 863.4 | $ 2,753.1 | $ 2,505.5 |
Global | ||||
Revenue from Contracts with Customers | ||||
Revenue | 498.2 | 448.7 | 1,434.9 | 1,279.5 |
Foodservice | ||||
Revenue from Contracts with Customers | ||||
Revenue | 265.5 | 253.5 | 843 | 805.8 |
Retail | ||||
Revenue from Contracts with Customers | ||||
Revenue | 129 | 130.2 | 369.1 | 324.2 |
Other | ||||
Revenue from Contracts with Customers | ||||
Revenue | 34.1 | $ 31 | 106.1 | $ 96 |
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | ||||
Revenue from Contracts with Customers | ||||
Revenue | 908.3 | 2,732 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | Global | ||||
Revenue from Contracts with Customers | ||||
Revenue | 481.6 | 1,414.6 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | Foodservice | ||||
Revenue from Contracts with Customers | ||||
Revenue | 265.7 | 844.1 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | Retail | ||||
Revenue from Contracts with Customers | ||||
Revenue | 128.5 | 368.3 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | Other | ||||
Revenue from Contracts with Customers | ||||
Revenue | 32.5 | 105 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||
Revenue from Contracts with Customers | ||||
Revenue | 18.5 | 21.1 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Global | ||||
Revenue from Contracts with Customers | ||||
Revenue | 16.6 | 20.3 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Foodservice | ||||
Revenue from Contracts with Customers | ||||
Revenue | (0.2) | (1.1) | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Retail | ||||
Revenue from Contracts with Customers | ||||
Revenue | 0.5 | 0.8 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Other | ||||
Revenue from Contracts with Customers | ||||
Revenue | $ 1.6 | $ 1.1 |
REVENUE FROM CONTRACTS WITH C_8
REVENUE FROM CONTRACTS WITH CUSTOMERS - Practical Expedients and Exemptions (Details) | 9 Months Ended |
Feb. 24, 2019 | |
Practical Expedients and Exemptions | |
Incremental costs of obtaining a contract as expense when incurred if the amortization period of assets would recognize | true |
ACQUISITION (Details)
ACQUISITION (Details) lb in Millions, $ in Millions | Dec. 21, 2018USD ($)lb | Feb. 24, 2019USD ($) | May 27, 2018USD ($) |
Purchase price allocation | |||
Goodwill | $ 208.8 | $ 135.1 | |
Frozen Potato Processor in Australia | |||
Ownership interest acquired | |||
Ownership interest acquired (as a percent) | 100.00% | ||
Consideration transferred | |||
Consideration transferred | $ 88.6 | ||
Increase in production capacity | lb | 50 | ||
Purchase price allocation | |||
Goodwill | $ 75.1 | ||
Goodwill deductible for tax purposes | 0 | ||
Intangible assets | $ 4.4 | ||
Weighted average life | 15 years |
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 | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Numerator: | ||||
Net income attributable to Lamb Weston Holdings, Inc. | $ 141.4 | $ 156.8 | $ 368.2 | $ 316.8 |
Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated, net of tax benefits | 0.5 | 0.9 | 11.4 | 2.2 |
Net income available to Lamb Weston common stockholders | $ 140.9 | $ 155.9 | $ 356.8 | $ 314.6 |
Denominator: | ||||
Basic weighted average common shares outstanding | 146.6 | 146.3 | 146.5 | 146.3 |
Add: Dilutive effect of employee incentive plans | 0.8 | 0.8 | 0.8 | 0.6 |
Diluted weighted average common shares outstanding | 147.4 | 147.1 | 147.3 | 146.9 |
Earnings per share | ||||
Basic (in dollars per share) | $ 0.96 | $ 1.07 | $ 2.44 | $ 2.15 |
Diluted (in dollars per share) | $ 0.95 | $ 1.06 | $ 2.42 | $ 2.14 |
EARNINGS PER SHARE - Variable I
EARNINGS PER SHARE - Variable Interest Entity - Consolidated - Acquisition - Pro Forma (Details) - Lamb Weston BSW, LLC - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended |
Feb. 24, 2019 | Feb. 24, 2019 | |
Pro Forma Information | ||
Net income available to common stockholders | $ (0.5) | $ (10) |
Basic and diluted earning per share (in dollars per share) | $ (0.01) | $ (0.07) |
EARNINGS PER SHARE - Variable_2
EARNINGS PER SHARE - Variable Interest Entity - Consolidated - Noncontrolling Interest (Details) | Nov. 01, 2018 |
Lamb Weston BSW, LLC | |
Noncontrolling Interest | |
Noncontrolling interest (as a percent) | 50.01% |
EARNINGS PER SHARE - Variable_3
EARNINGS PER SHARE - Variable Interest Entity - Consolidated - Acquisition - Ownership Interest (Details) | Nov. 02, 2018 |
Lamb Weston BSW, LLC | |
Ownership interest after completion of the acquisition | |
Ownership interest after completion of the acquisition (as a percent) | 100.00% |
EARNINGS PER SHARE - Antidiluti
EARNINGS PER SHARE - Antidilutive Securities (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Stock options | ||||
EARNINGS PER SHARE | ||||
Antidilutive securities (in shares) | 0 | 0 | 0 | 0 |
Stock-settled restricted stock units | ||||
EARNINGS PER SHARE | ||||
Antidilutive securities (in shares) | 0 | 0 | 0 | 0 |
Cash-settled RSUs | ||||
EARNINGS PER SHARE | ||||
Antidilutive securities (in shares) | 0 | 0 | 0 | 0 |
Performance shares | ||||
EARNINGS PER SHARE | ||||
Antidilutive securities (in shares) | 0 | 0 | 0 | 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Feb. 25, 2018 | Feb. 25, 2018 | |
Conagra | Transition services agreement | ||
Related Party Transactions | ||
Related party transaction expenses | $ 0.2 | $ 2.4 |
INCOME TAXES - General Informat
INCOME TAXES - General Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | May 26, 2019 | Dec. 31, 2018 | May 27, 2018 | Dec. 31, 2017 | |
INCOME TAXES | ||||||||
Income tax expense | $ 39.6 | $ 7.5 | $ 107.9 | $ 93.1 | ||||
Effective tax rate (as a percent) | 21.90% | 4.50% | 22.30% | 21.90% | ||||
Federal statutory tax rate (as a percent) | 21.00% | 35.00% | 29.00% | 21.00% | ||||
Effective tax rate excluding discrete items | 27.20% | 27.60% | ||||||
Net discrete benefit | $ 24 | |||||||
Benefit from the estimated impact of remeasuring our net U.S. deferred tax liabilities | 38.7 | |||||||
Transition tax on our previously untaxed foreign earnings | 14.7 | |||||||
Benefit from a lower U.S. corporate tax rate | $ 14 |
INCOME TAXES - Income Taxes Pai
INCOME TAXES - Income Taxes Paid (Details) - USD ($) $ in Millions | 9 Months Ended | |
Feb. 24, 2019 | Feb. 25, 2018 | |
INCOME TAXES | ||
Income taxes paid, net of refunds | $ 54.7 | $ 72.4 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Millions | Feb. 24, 2019 | May 27, 2018 |
Major classes of inventories | ||
Raw materials and packaging | $ 156 | $ 87.2 |
Finished goods | 398.8 | 430.5 |
Supplies and other | 33.4 | 32 |
Inventories | $ 588.2 | $ 549.7 |
PROPERTY, PLANT AND EQUIPMENT -
PROPERTY, PLANT AND EQUIPMENT - Components (Details) - USD ($) $ in Millions | Feb. 24, 2019 | May 27, 2018 |
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | $ 2,808.6 | $ 2,581.3 |
Less accumulated depreciation | (1,251.6) | (1,160.5) |
Property, plant, and equipment, net | 1,557 | 1,420.8 |
Land and land improvements | ||
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | 142.1 | 139.8 |
Buildings, machinery, and equipment | ||
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | 2,374.6 | 2,212.6 |
Furniture, fixtures, office equipment, and other | ||
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | 101.1 | 101 |
Construction in progress | ||
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | $ 190.8 | $ 127.9 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT - Depreciation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Property, Plant and Equipment | ||||
Depreciation expense | $ 38.7 | $ 35.8 | $ 112.4 | $ 98.9 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT - Purchases in Accounts Payable (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Feb. 24, 2019 | May 27, 2018 | |
Property, Plant and Equipment | ||
Purchases of property, plant and equipment included in accounts payable | $ 30.7 | $ 27.9 |
PROPERTY, PLANT AND EQUIPMENT_4
PROPERTY, PLANT AND EQUIPMENT - Interest Capitalized (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Construction in progress | ||||
Property, Plant and Equipment | ||||
Interest capitalized | $ 2.5 | $ 0.5 | $ 6 | $ 3.4 |
GOODWILL AND OTHER IDENTIFIAB_3
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Carrying Amount of Goodwill (Details) $ in Millions | 9 Months Ended |
Feb. 24, 2019USD ($) | |
Goodwill | |
Balance at the beginning period | $ 135.1 |
Acquisition | 75.1 |
Foreign currency translation adjustment | (1.4) |
Balance at the end of the period | 208.8 |
Global | |
Goodwill | |
Balance at the beginning period | 76.9 |
Acquisition | 75.1 |
Foreign currency translation adjustment | (1.4) |
Balance at the end of the period | 150.6 |
Foodservice | |
Goodwill | |
Balance at the beginning period | 42.8 |
Balance at the end of the period | 42.8 |
Retail | |
Goodwill | |
Balance at the beginning period | 10.9 |
Balance at the end of the period | 10.9 |
Other | |
Goodwill | |
Balance at the beginning period | 4.5 |
Balance at the end of the period | $ 4.5 |
GOODWILL AND OTHER IDENTIFIAB_4
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Goodwill Acquired (Details) - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended |
Dec. 31, 2018 | Feb. 24, 2019 | |
Goddwill | ||
Acquisition | $ 75.1 | |
Global | ||
Goddwill | ||
Acquisition | $ 75.1 | |
Frozen Potato Processor in Australia | Global | ||
Goddwill | ||
Acquisition | $ 75.1 |
GOODWILL AND OTHER IDENTIFIAB_5
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Weighted Average Useful Life (Details) | 9 Months Ended | 12 Months Ended |
Feb. 24, 2019 | May 27, 2018 | |
Weighted Average | ||
Amortizing Intangible Assets | ||
Weighted Average Useful Life, amortizing intangible assets (in years) | 14 years | 14 years |
GOODWILL AND OTHER IDENTIFIAB_6
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Other Identifiable Intangible Assets (Details) - USD ($) $ in Millions | Feb. 24, 2019 | May 27, 2018 |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | ||
Gross Carrying Amount, non-amortizing intangible assets | $ 18 | $ 18 |
Gross Carrying Amount, amortizing intangible assets | 39.3 | 35.2 |
Total intangible assets, excluding goodwill | 57.3 | 53.2 |
Accumulated Amortization, amortizing intangible assets | 19 | 17.8 |
Total intangible assets, net of amortization, excluding goodwill | $ 38.3 | $ 35.4 |
GOODWILL AND OTHER IDENTIFIAB_7
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Amortization Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | ||||
Amortization expense | $ 0.5 | $ 0.6 | $ 1.6 | $ 1.8 |
INVESTMENTS IN JOINT VENTURES -
INVESTMENTS IN JOINT VENTURES - Variable Interest Entity - Consolidated - Acquisition - Ownership Interest (Details) - Lamb Weston BSW, LLC | Nov. 02, 2018 |
Ownership interest acquired | |
Ownership interest acquired (as a percent) | 50.01% |
Ownership interest after completion of the acquisition | |
Ownership interest after completion of the acquisition (as a percent) | 100.00% |
INVESTMENTS IN JOINT VENTURES_2
INVESTMENTS IN JOINT VENTURES - Variable Interest Entity - Consolidated - Acquisition - Consideration Transferred (Details) - Lamb Weston BSW, LLC - USD ($) $ in Millions | 1 Months Ended | ||
Jan. 31, 2019 | Dec. 31, 2018 | Nov. 02, 2018 | |
Consideration transferred | |||
Call option | $ 65 | ||
Additional payment | $ 13.2 | ||
Cash paid of purchase price | $ 50 | ||
Cash payable | $ 28.2 |
INVESTMENTS IN JOINT VENTURES_3
INVESTMENTS IN JOINT VENTURES - Variable Interest Entity - Consolidated - Acquisition - Deferred Tax Assets (Details) $ in Millions | Nov. 02, 2018USD ($) |
Lamb Weston BSW, LLC | |
Deferred Tax Assets | |
Deferred tax assets related to acquired assets | $ 8.7 |
INVESTMENTS IN JOINT VENTURES_4
INVESTMENTS IN JOINT VENTURES - Variable Interest Entity - Consolidated - Acquisition - Pro Forma (Details) - Lamb Weston BSW, LLC - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended |
Feb. 24, 2019 | Feb. 24, 2019 | |
Pro Forma Information | ||
Net income available to common stockholders | $ (0.5) | $ (10) |
Basic and diluted earning per share (in dollars per share) | $ (0.01) | $ (0.07) |
INVESTMENTS IN JOINT VENTURES_5
INVESTMENTS IN JOINT VENTURES - Variable Interest Entity - Consolidated - Transactions (Details) - Co-venturer - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Related Party Transactions | |||
Purchases | $ 12.1 | $ 24.6 | $ 41.4 |
Costs | $ 1.2 | $ 2.5 | $ 3.8 |
INVESTMENTS IN JOINT VENTURES_6
INVESTMENTS IN JOINT VENTURES - Other Investments and Variable Interest Entity - Not Consolidated (Details) - Variable Interest Entity, Not Primary Beneficiary | 9 Months Ended |
Feb. 24, 2019 | |
Lamb-Weston Meijer v.o.f. | |
Variable Interest Entity - Not Consolidated | |
Ownership interest (as a percent) | 50.00% |
Lamb-Weston RDO Frozen | |
Variable Interest Entity - Not Consolidated | |
Ownership interest (as a percent) | 50.00% |
INVESTMENTS IN JOINT VENTURES_7
INVESTMENTS IN JOINT VENTURES - Transactions with Ventures - Carrying Value (Details) - USD ($) $ in Millions | Feb. 24, 2019 | May 27, 2018 |
INVESTMENTS IN JOINT VENTURES | ||
Carrying value of equity method investments | $ 222.8 | $ 219.8 |
INVESTMENTS IN JOINT VENTURES_8
INVESTMENTS IN JOINT VENTURES - Transactions with Ventures - Sales and Payments (Details) - Corporate Joint Venture - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Related Party Transactions | ||||
Net sales | $ 5.8 | $ 7.9 | $ 19.9 | $ 19 |
Payments | $ 1.5 | $ 2.6 | $ 7.4 | $ 8.2 |
INVESTMENTS IN JOINT VENTURES_9
INVESTMENTS IN JOINT VENTURES - Transactions with Ventures - Dividends Received (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
INVESTMENTS IN JOINT VENTURES | ||||
Dividends received from equity method investments | $ 9.8 | $ 13.7 | $ 35.4 | $ 36.5 |
EMPLOYEE BENEFIT PLANS AND OT_3
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Pension Plans | ||||
Components of net periodic benefit cost for our pension and postretirement benefit plans | ||||
Service cost | $ 1.1 | $ 1.9 | $ 5.3 | $ 5.8 |
Interest cost | 0.2 | 0.1 | 0.6 | 0.3 |
Expected return on plan assets | (0.2) | (0.1) | (0.7) | (0.3) |
Net periodic benefit cost | 1.1 | $ 1.9 | 5.2 | 5.8 |
Post-Retirement Plan | ||||
Components of net periodic benefit cost for our pension and postretirement benefit plans | ||||
Interest cost | 0.1 | 0.2 | ||
Prior service benefit | (0.1) | |||
Actuarial loss | 0.2 | 0.6 | ||
Net periodic benefit cost | $ 0.3 | $ 0.8 | $ (0.1) |
EMPLOYEE BENEFIT PLANS AND OT_4
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Funding and Cash Flows - Contributions (Details) - Qualified Plan $ in Millions | 3 Months Ended | 9 Months Ended |
Feb. 24, 2019USD ($) | Feb. 24, 2019USD ($) | |
Contributions | ||
Employer contributions | $ 0.1 | $ 0.4 |
Defined benefit plan, type | us-gaap:PensionPlansDefinedBenefitMember | us-gaap:PensionPlansDefinedBenefitMember |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Millions | Feb. 24, 2019 | May 27, 2018 |
ACCRUED LIABILITIES | ||
Compensation and benefits | $ 73.3 | $ 91.7 |
Accrued trade promotions | 45.8 | 45.4 |
Accrued interest | 29.9 | 10.8 |
Dividends payable | 29.3 | 28 |
Income taxes payable | 14.5 | 3.1 |
Franchise, property, and sales and use taxes | 9.8 | 9.6 |
Other | 19.1 | 27.4 |
Accrued liabilities | $ 221.7 | $ 216 |
DEBT AND FINANCING OBLIGATION_2
DEBT AND FINANCING OBLIGATIONS - Tabular Disclosure - Components (Details) - USD ($) $ in Millions | Feb. 24, 2019 | May 27, 2018 |
Debt and Financing Obligations | ||
Short-term borrowings | $ 98.7 | $ 9.6 |
Long-term debt | 2,273.5 | 2,326.8 |
Financing obligations: | 79.5 | 79 |
Total debt and financing obligations | 2,451.7 | 2,415.4 |
4.625% Senior Notes, due 2024 | Senior Notes | ||
Debt and Financing Obligations | ||
Long-term debt | 833 | 833 |
4.875% Senior Notes, due 2026 | Senior Notes | ||
Debt and Financing Obligations | ||
Long-term debt | 833 | 833 |
Revolving Credit Facility, November 2016 | Secured Debt | Revolving Credit Facility | ||
Debt and Financing Obligations | ||
Short-term borrowings | 84.9 | 0 |
Term Loan Facility, due 2021 | Secured Debt | ||
Debt and Financing Obligations | ||
Long-term debt | 607.5 | 632.8 |
Other credit facilities | ||
Debt and Financing Obligations | ||
Short-term borrowings | 13.8 | 9.6 |
Lamb Weston BSW Installment Notes | ||
Debt and Financing Obligations | ||
Long-term debt | 28 | |
4.35% lease financing obligation due May 2030 | ||
Debt and Financing Obligations | ||
Financing obligations: | 65.7 | 66.8 |
Lease financing obligations due on various dates through 2040 | ||
Debt and Financing Obligations | ||
Financing obligations: | $ 13.8 | $ 12.2 |
DEBT AND FINANCING OBLIGATION_3
DEBT AND FINANCING OBLIGATIONS - Tabular Disclosure - Current and Noncurrent (Details) - USD ($) $ in Millions | Feb. 24, 2019 | May 27, 2018 |
Debt and Financing Obligations | ||
Total debt and financing obligations | $ 2,451.7 | $ 2,415.4 |
Debt issuance costs | (27) | (30.4) |
Short-term borrowings | (98.7) | (9.6) |
Current portion of long-term debt and financing obligations | (37.4) | (38.7) |
Long-term debt, excluding current portion | $ 2,288.6 | $ 2,336.7 |
DEBT AND FINANCING OBLIGATION_4
DEBT AND FINANCING OBLIGATIONS - Tabular Disclosure - Interest Rates (Details) | Feb. 24, 2019 | May 27, 2018 |
4.625% Senior Notes, due 2024 | Senior Notes | ||
Debt and Financing Obligations | ||
Interest rate (as a percent) | 4.625% | 4.625% |
4.875% Senior Notes, due 2026 | Senior Notes | ||
Debt and Financing Obligations | ||
Interest rate (as a percent) | 4.875% | 4.875% |
4.35% lease financing obligation due May 2030 | ||
Debt and Financing Obligations | ||
Interest rate (as a percent) | 4.35% | 4.35% |
Lease financing obligations due on various dates through 2040 | Minimum | ||
Debt and Financing Obligations | ||
Interest rate (as a percent) | 2.79% | 2.39% |
Lease financing obligations due on various dates through 2040 | Maximum | ||
Debt and Financing Obligations | ||
Interest rate (as a percent) | 5.00% | 5.00% |
DEBT AND FINANCING OBLIGATION_5
DEBT AND FINANCING OBLIGATIONS - Credit Agreement (Details) - USD ($) $ in Millions | 9 Months Ended | |
Feb. 24, 2019 | May 27, 2018 | |
Debt and Financing Obligations | ||
Short-term borrowings | $ 98.7 | $ 9.6 |
Revolving Credit Facility, November 2016 | Secured Debt | Revolving Credit Facility | ||
Debt and Financing Obligations | ||
Short-term borrowings | 84.9 | $ 0 |
Available amount | 411.7 | |
Letter of credit outstanding | 3.4 | |
Minimum borrowings during the period | 0 | |
Maximum borrowings during the period | $ 128.1 | |
Average interest rate (as a percent) | 4.00% |
DEBT AND FINANCING OBLIGATION_6
DEBT AND FINANCING OBLIGATIONS - Additional Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Feb. 24, 2019 | Feb. 25, 2018 | |
Debt and Financing Obligations | ||
Interest paid | $ 60.7 | $ 58.2 |
STOCK-BASED COMPENSATION - Gene
STOCK-BASED COMPENSATION - General Information (Details) shares in Millions | Feb. 24, 2019shares |
Stock-based Compensation | |
Shares authorized under our equity incentive plans (in shares) | 10 |
Available for future grant (in shares) | 7.8 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Unit and Performance-based Restricted Stock Unit - Tabular Disclosure (Details) | 9 Months Ended |
Feb. 24, 2019$ / sharesshares | |
Stock-settled restricted stock units | |
Shares | |
Outstanding at beginning of the period (in shares) | shares | 581,875 |
Granted (in shares) | shares | 211,994 |
Vested (in shares) | shares | (141,149) |
Forfeited/expired/cancelled (in shares) | shares | (11,532) |
Outstanding at end of the period (in shares) | shares | 641,188 |
Weighted-Average Grant-Date Fair Value | |
Outstanding at beginning of the period (in dollars per share) | $ / shares | $ 36.84 |
Granted (in dollars per share) | $ / shares | 70.19 |
Vested (in dollars per share) | $ / shares | 29.93 |
Forfeited/expired/cancelled (in dollars per share) | $ / shares | 53.45 |
Outstanding at end of the period (in dollars per share) | $ / shares | $ 49.09 |
Cash-settled RSUs | |
Shares | |
Outstanding at beginning of the period (in shares) | shares | 285,652 |
Vested (in shares) | shares | (157,167) |
Forfeited/expired/cancelled (in shares) | shares | (5,933) |
Outstanding at end of the period (in shares) | shares | 122,552 |
Weighted-Average Grant-Date Fair Value | |
Outstanding at beginning of the period (in dollars per share) | $ / shares | $ 28.54 |
Vested (in dollars per share) | $ / shares | 28.61 |
Forfeited/expired/cancelled (in dollars per share) | $ / shares | 30.52 |
Outstanding at end of the period (in dollars per share) | $ / shares | $ 28.36 |
Performance shares | |
Shares | |
Outstanding at beginning of the period (in shares) | shares | 160,270 |
Granted (in shares) | shares | 87,462 |
Performance condition adjustment | shares | 97,803 |
Vested (in shares) | shares | (42,206) |
Outstanding at end of the period (in shares) | shares | 303,329 |
Weighted-Average Grant-Date Fair Value | |
Outstanding at beginning of the period (in dollars per share) | $ / shares | $ 39.82 |
Granted (in dollars per share) | $ / shares | 69.81 |
Performance condition adjustment (in dollars per share) | $ / shares | 40.35 |
Vested (in dollars per share) | $ / shares | 27.32 |
Outstanding at end of the period (in dollars per share) | $ / shares | $ 50.38 |
STOCK-BASED COMPENSATION - Re_2
STOCK-BASED COMPENSATION - Restricted Stock Unit and Performance-based Restricted Stock Unit - Additional Information (Details) $ in Millions | 9 Months Ended |
Feb. 24, 2019USD ($) | |
Stock-based Compensation | |
Aggregate fair value of awards vested | $ 24.7 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Option Activity (Details) - Stock options - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended |
Feb. 24, 2019 | |
Shares | |
Outstanding at beginning of the period (in shares) | 651,606 |
Exercised (in shares) | (41,000) |
Forfeited/cancelled (in shares) | (1,428) |
Outstanding at end of the period (in shares) | 609,178 |
Weighted-Average Exercise Price (per share) | |
Outstanding at beginning of the period (in dollars per share) | $ 29.08 |
Exercised (in dollars per share) | 26.64 |
Forfeited/cancelled (in dollars per share) | 30.67 |
Outstanding at end of the period (in dollars per share) | $ 29.24 |
Additional information | |
Weighted-Average Remaining Contractual Term - Outstanding (in years) | 6 years 7 months 6 days |
Aggregate Intrinsic Value - Outstanding | $ 25.1 |
Shares - Exercisable at end of year (in shares) | 510,703 |
Weighted-Average Exercise Price - Exercisable (in dollars per share) | $ 27.78 |
Weighted-Average Remaining Contractual Term - Exercisable (in years) | 6 years 2 months 12 days |
Aggregate Intrinsic Value - Exercisable | $ 21.8 |
STOCK-BASED COMPENSATION - Comp
STOCK-BASED COMPENSATION - Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Compensation expense | ||||
Stock-settled compensation expense | $ 4.5 | $ 3.6 | $ 13.7 | $ 10.1 |
Cash-settled RSUs | 1.3 | 3.7 | 5 | |
Share-based compensation expense | 4.5 | 4.9 | 17.4 | 15.1 |
Income tax benefit | (1) | (1.4) | (4) | (5.2) |
Total compensation expense, net of tax benefit | 3.5 | 3.5 | 13.4 | 9.9 |
Stock-settled restricted stock units | ||||
Compensation expense | ||||
Stock-settled compensation expense | 2.5 | 2 | 7.4 | 6.4 |
Performance shares | ||||
Compensation expense | ||||
Stock-settled compensation expense | $ 2 | 1.5 | 6.1 | 2.6 |
Stock options | ||||
Compensation expense | ||||
Stock-settled compensation expense | $ 0.1 | $ 0.2 | $ 1.1 |
STOCK-BASED COMPENSATION - Unre
STOCK-BASED COMPENSATION - Unrecognized Compensation Expense, Net of Estimated Forfeitures (Details) $ in Millions | 9 Months Ended |
Feb. 24, 2019USD ($) | |
Unrecognized compensation expense, net of estimated forfeitures | |
Unrecognized Compensation Expense | $ 32.7 |
Remaining Weighted Average Recognition Period (in years) | 1 year 10 months 24 days |
Stock-settled restricted stock units | |
Unrecognized compensation expense, net of estimated forfeitures | |
Unrecognized Compensation Expense | $ 18 |
Remaining Weighted Average Recognition Period (in years) | 2 years |
Cash-settled RSUs | |
Unrecognized compensation expense, net of estimated forfeitures | |
Unrecognized Compensation Expense | $ 1.1 |
Remaining Weighted Average Recognition Period (in years) | 4 months 24 days |
Performance shares | |
Unrecognized compensation expense, net of estimated forfeitures | |
Unrecognized Compensation Expense | $ 13.4 |
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 | $ 0.2 |
Remaining Weighted Average Recognition Period (in years) | 8 months 12 days |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value Hierarchy (Details) - Recurring - USD ($) $ in Millions | Feb. 24, 2019 | May 27, 2018 |
Assets: | ||
Deferred compensation assets | $ 0.5 | $ 0.5 |
Derivative assets | 2.1 | 0.8 |
Total assets | 2.6 | 1.3 |
Liabilities: | ||
Derivative liabilities | 1.4 | |
Deferred compensation liabilities | 15 | 12.4 |
Total liabilities | 15 | 13.8 |
Level 1 | ||
Assets: | ||
Deferred compensation assets | 0.5 | 0.5 |
Total assets | 0.5 | 0.5 |
Level 2 | ||
Assets: | ||
Derivative assets | 2.1 | 0.8 |
Total assets | 2.1 | 0.8 |
Liabilities: | ||
Derivative liabilities | 1.4 | |
Deferred compensation liabilities | 15 | 12.4 |
Total liabilities | $ 15 | $ 13.8 |
FAIR VALUE MEASUREMENTS - Debt
FAIR VALUE MEASUREMENTS - Debt Outstanding (Details) $ in Millions | Feb. 24, 2019USD ($) |
Carrying Value | Fixed rate debt | |
Fair Value Measurements | |
Debt | $ 1,666 |
Carrying Value | Variable rate debt | |
Fair Value Measurements | |
Debt | 706.2 |
Level 2 | Fair Value | Fixed rate debt | |
Fair Value Measurements | |
Debt | $ 1,677.8 |
STOCKHOLDERS' EQUITY - Share Re
STOCKHOLDERS' EQUITY - Share Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |
Feb. 24, 2019 | Feb. 24, 2019 | Dec. 20, 2018 | |
Share Repurchase Program | |||
Authorization to repurchase common stock not to exceed | $ 250 | ||
Number of shares repurchased | 109,900 | 109,900 | |
Treasury stock value | $ 7.8 | $ 7.8 | |
Weighted Average | |||
Share Repurchase Program | |||
Share Price | $ 70.93 | $ 70.93 |
STOCKHOLDERS' EQUITY - Dividend
STOCKHOLDERS' EQUITY - Dividends Paid (Details) - USD ($) $ in Millions | 9 Months Ended | |
Feb. 24, 2019 | Feb. 25, 2018 | |
Dividends | ||
Dividends paid | $ 84 | $ 82.2 |
STOCKHOLDERS' EQUITY - Divide_2
STOCKHOLDERS' EQUITY - Dividends Declared (Details) - $ / shares | 3 Months Ended | 9 Months Ended | |||
May 26, 2019 | Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Dividends | |||||
Dividends declared per common share (in dollars per share) | $ 0.20 | $ 0.20000 | $ 0.19125 | $ 0.58250 | $ 0.56625 |
Dividends declared per common share, declared date | Mar. 21, 2019 | ||||
Dividends declared per common share, payable date | May 31, 2019 | ||||
Dividends declared per common share, record date | May 3, 2019 |
STOCKHOLDERS' EQUITY - Changes
STOCKHOLDERS' EQUITY - Changes in AOCI (Details) $ in Millions | 9 Months Ended |
Feb. 24, 2019USD ($) | |
Changes in AOCI: | |
Balance at the beginning of the period | $ (334.8) |
Balance at the end of the period | (56.2) |
Accumulated Other Comprehensive Income (Loss) | |
Changes in AOCI: | |
Balance at the beginning of the period | (4.3) |
Other comprehensive income before reclassifications, net of tax | (9.5) |
Amounts reclassified out of AOCI, net of tax | 0.5 |
Net current-period other comprehensive income (loss) | (9) |
Balance at the end of the period | (13.3) |
Foreign Currency Translation Gains (Losses) | |
Changes in AOCI: | |
Balance at the beginning of the period | (1.2) |
Other comprehensive income before reclassifications, net of tax | (9.5) |
Net current-period other comprehensive income (loss) | (9.5) |
Balance at the end of the period | (10.7) |
Pension and Post-Retirement Benefits | |
Changes in AOCI: | |
Balance at the beginning of the period | (3.1) |
Amounts reclassified out of AOCI, net of tax | 0.5 |
Net current-period other comprehensive income (loss) | 0.5 |
Balance at the end of the period | $ (2.6) |
STOCKHOLDERS' EQUITY - Settleme
STOCKHOLDERS' EQUITY - Settlement Gains on Pension and Post-retirement Benefits Included in AOCI (Details) $ in Millions | Feb. 24, 2019USD ($) |
STOCKHOLDERS' EQUITY | |
Net amount of settlement losses on pension and post-retirement benefits included in AOCI to be amortized over the next 12 months, before tax | $ (0.7) |
Net amount of settlement losses on pension and post-retirement benefits included in AOCI to be amortized over the next 12 months, after tax | $ (0.5) |
SEGMENTS - General Information
SEGMENTS - General Information (Details) - segment | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Segments | ||||
Number of operating segments | 4 | 4 | 4 | 4 |
SEGMENTS - General Financial In
SEGMENTS - General Financial Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Segment information | ||||
Revenue | $ 926.8 | $ 863.4 | $ 2,753.1 | $ 2,505.5 |
Product contribution margin | 264.5 | 234.6 | 731.6 | 630.2 |
Other selling, general and administrative expenses | 70.7 | 65.4 | 211.2 | 183.6 |
Income from operations | 193.8 | 169.2 | 520.4 | 446.6 |
Interest expense, net | 27 | 28.5 | 80 | 81.1 |
Income tax expense | 39.6 | 7.5 | 107.9 | 93.1 |
Equity method investment earnings | 14.2 | 26.4 | 44.3 | 58.5 |
Net income | 141.4 | 159.6 | 376.8 | 330.9 |
Less: Income attributable to noncontrolling interests | 2.8 | 8.6 | 14.1 | |
Net income attributable to Lamb Weston Holdings, Inc. | 141.4 | 156.8 | 368.2 | 316.8 |
Global | ||||
Segment information | ||||
Revenue | 498.2 | 448.7 | 1,434.9 | 1,279.5 |
Product contribution margin | 128.8 | 113.9 | 335.6 | 275.9 |
Foodservice | ||||
Segment information | ||||
Revenue | 265.5 | 253.5 | 843 | 805.8 |
Product contribution margin | 94.8 | 89.5 | 294.2 | 272.2 |
Retail | ||||
Segment information | ||||
Revenue | 129 | 130.2 | 369.1 | 324.2 |
Product contribution margin | 29.1 | 30.3 | 77.8 | 66.1 |
Other | ||||
Segment information | ||||
Revenue | 34.1 | 31 | 106.1 | 96 |
Product contribution margin | $ 11.8 | $ 0.9 | $ 24 | $ 16 |
SEGMENTS - Separation-related E
SEGMENTS - Separation-related Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Feb. 25, 2018 | Feb. 25, 2018 | |
SEGMENTS | ||
Pre-tax expense related to Separation | $ 1.7 | $ 7.9 |
SEGMENTS - Variable Interest En
SEGMENTS - Variable Interest Entity - Consolidated - Tax Cuts and Jobs Act (Details) $ in Millions | 3 Months Ended |
Feb. 25, 2018USD ($) | |
SEGMENTS | |
Net discrete benefit | $ 24 |
Benefit from a lower U.S. corporate tax rate | $ 14 |
SEGMENTS - Variable Interest _2
SEGMENTS - Variable Interest Entity - Consolidated - Acquisition - Ownership Interest (Details) - Lamb Weston BSW, LLC | Nov. 02, 2018 |
Ownership interest acquired | |
Ownership interest acquired (as a percent) | 50.01% |
Ownership interest after completion of the acquisition | |
Ownership interest after completion of the acquisition (as a percent) | 100.00% |
SEGMENTS - Concentrations - Net
SEGMENTS - Concentrations - Net Sales (Details) | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2019 | Feb. 25, 2018 | Feb. 24, 2019 | Feb. 25, 2018 | |
Net sales | Customer Concentration Risk | McDonald's Corporation | ||||
Other information | ||||
Concentration risk (as a percent) | 10.00% | 10.00% | 10.00% | 11.00% |
SEGMENTS - Concentrations - Acc
SEGMENTS - Concentrations - Accounts Receivable (Details) | 12 Months Ended |
May 27, 2018 | |
Accounts Receivable | Credit Concentration Risk | Customer One | |
Other information | |
Concentration risk (as a percent) | 12.00% |