Document and Entity Information
Document and Entity Information - USD ($) $ / shares in Units, $ in Billions | 12 Months Ended | ||
May 26, 2019 | Jul. 15, 2019 | Nov. 23, 2018 | |
Document and Entity Information [Abstract] | |||
Entity Central Index Key | 0001679273 | ||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | May 26, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 1-37830 | ||
Entity Registrant Name | Lamb Weston Holdings, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 61-1797411 | ||
Entity Address, Address Line One | 599 S. Rivershore Lane | ||
Entity Address, City or Town | Eagle | ||
Entity Address, State or Province | ID | ||
Entity Address, Postal Zip Code | 83616 | ||
City Area Code | 208 | ||
Local Phone Number | 938-1047 | ||
Title of 12(b) Security | Common Stock, $1.00 par value | ||
Trading Symbol | LW | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 11.9 | ||
Entity Common Stock, Shares Outstanding | 146,069,033 | ||
Entity Listing, Par Value Per Share | $ 1 | ||
Current Fiscal Year End Date | --05-26 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Combined and Consolidated State
Combined and Consolidated Statements of Earnings - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Condensed Combined and Consolidated Statements of Earnings | |||
Net sales | $ 3,756.5 | $ 3,423.7 | $ 3,168 |
Net sales, type | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Cost of sales | $ 2,753 | $ 2,544.2 | $ 2,389.2 |
Cost of sales, type | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Gross profit | $ 1,003.5 | $ 879.5 | $ 778.8 |
Selling, general and administrative expenses | 335.1 | 299.4 | 260.5 |
Income from operations | 668.4 | 580.1 | 518.3 |
Interest expense, net | 107.1 | 108.8 | 61.2 |
Income before income taxes and equity method earnings | 561.3 | 471.3 | 457.1 |
Income tax expense | 133.6 | 121.2 | 170.2 |
Equity method investment earnings | 59.5 | 83.6 | 53.3 |
Net income | 487.2 | 433.7 | 340.2 |
Less: Income attributable to noncontrolling interests | 8.6 | 16.9 | 13.3 |
Net income attributable to Lamb Weston Holdings, Inc. | $ 478.6 | $ 416.8 | $ 326.9 |
Earnings per share | |||
Basic (in dollars per share) | $ 3.19 | $ 2.83 | $ 2.22 |
Diluted (in dollars per share) | $ 3.18 | $ 2.82 | $ 2.22 |
Combined and Consolidated Sta_2
Combined and Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Other comprehensive income (loss) Pre-Tax Amount: | |||
Net income | $ 620.8 | $ 554.9 | $ 510.4 |
Reclassification of post-retirement benefits out of accumulated other comprehensive income (loss) | 0.7 | 0.3 | |
Unrealized pension and post-retirement benefit obligations | (3.3) | (6) | 1.6 |
Unrealized currency translation gains (losses) | (19.1) | 9.1 | (1.1) |
Comprehensive income (loss) | 599.1 | 558.3 | 510.9 |
Less: Comprehensive income attributable to noncontrolling interests | 8.6 | 16.9 | 13.3 |
Comprehensive income (loss) attributable to Lamb Weston Holdings, Inc. | 590.5 | 541.4 | 497.6 |
Other comprehensive income (loss) Tax (Expense) Benefit: | |||
Net income | (133.6) | (121.2) | (170.2) |
Reclassification of post-retirement benefits out of accumulated other comprehensive income (loss) | (0.1) | (0.1) | |
Unrealized pension and post-retirement benefit obligations | 0.8 | 1.7 | (0.6) |
Comprehensive income (loss) | (132.9) | (119.6) | (170.8) |
Comprehensive income (loss) attributable to Lamb Weston Holdings, Inc. | (132.9) | (119.6) | (170.8) |
Other comprehensive income (loss) After Tax Amount: | |||
Net income | 487.2 | 433.7 | 340.2 |
Reclassification of post-retirement benefits out of accumulated other comprehensive income (loss) | 0.6 | 0.2 | |
Unrealized pension and post-employment benefit obligations | (2.5) | (4.3) | 1 |
Unrealized currency translation gains (losses) | (19.1) | 9.1 | (1.1) |
Comprehensive income (loss) | 466.2 | 438.7 | 340.1 |
Less: Comprehensive income attributable to noncontrolling interests | 8.6 | 16.9 | 13.3 |
Comprehensive income (loss) attributable to Lamb Weston Holdings, Inc. | $ 457.6 | $ 421.8 | $ 326.8 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 12.2 | $ 55.6 |
Receivables, less allowance for doubtful accounts of $1.3 and $0.6 | 340.1 | 225.9 |
Inventories | 498.3 | 549.7 |
Prepaid expenses and other current assets | 110.9 | 99.2 |
Total current assets | 961.5 | 930.4 |
Property, plant and equipment, net | 1,597.8 | 1,420.8 |
Goodwill | 205.9 | 135.1 |
Intangible assets, net | 37.6 | 35.4 |
Equity method investments | 224.6 | 219.8 |
Other assets | 20.7 | 11.1 |
Total assets | 3,048.1 | 2,752.6 |
Current liabilities: | ||
Short-term borrowings | 8.4 | 9.6 |
Current portion of long-term debt and financing obligations | 38 | 38.7 |
Accounts payable | 289.2 | 254.4 |
Accrued liabilities | 217.2 | 216 |
Total current liabilities | 552.8 | 518.7 |
Long-term liabilities: | ||
Long-term debt, excluding current portion | 2,280.2 | 2,336.7 |
Deferred income taxes | 125.7 | 92.1 |
Other noncurrent liabilities | 94 | 84.3 |
Total long-term liabilities | 2,499.9 | 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; 146,654,827 and 146,395,866 shares issued | 146.7 | 146.4 |
Additional distributed capital | (890.3) | (900.4) |
Retained earnings | 803.6 | 426.4 |
Accumulated other comprehensive loss | (25.3) | (4.3) |
Treasury stock, at cost, 585,794 and 63,534 common shares | (39.3) | (2.9) |
Total stockholders' deficit | (4.6) | (334.8) |
Total liabilities and stockholders' equity | $ 3,048.1 | $ 2,752.6 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Receivables | ||
Allowance for doubtful accounts | $ 1.3 | $ 0.6 |
Common stock | ||
Common stock, par value | $ 1 | $ 1 |
Common stock, authorized shares | 600,000,000 | 600,000,000 |
Common stock, issued shares | 146,654,827 | 146,395,866 |
Treasury stock | ||
Treasury stock, common shares | 585,794 | 63,534 |
Combined and Consolidated Sta_3
Combined and Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions | Common Stock | Treasury Stock | Parent Company's Equity Investment | Additional Paid-in (Distributed) Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total |
Balance at the beginning of the period at May. 29, 2016 | $ 1,409.8 | $ (9.2) | $ 1,400.6 | ||||
Increase (Decrease) in Stockholders' Equity | |||||||
Issuance of common stock at separation | $ 146 | $ (146) | |||||
Issuance of common stock at Separation (in shares) | 146,046,395 | ||||||
Non-cash debt exchange | (1,542.9) | (1,542.9) | |||||
Cash distribution to Conagra at Separation | (823.5) | (823.5) | |||||
Net transactions with Conagra | 806 | (762) | 44 | ||||
Increase in redemption value of noncontrolling interests in excess of earnings allocated | (0.5) | (1.6) | (2.1) | ||||
Common stock dividends declared | $ (54.8) | (54.8) | |||||
Common stock issued | $ 0.1 | 0.5 | 0.6 | ||||
Common stock issued (in shares) | 40,649 | ||||||
Stock-settled, stock-based compensation expense after Separation | 4.1 | 4.1 | |||||
Common stock withheld to cover taxes | $ (0.2) | (0.2) | |||||
Common stock withheld to cover taxes (in shares) | (6,143) | ||||||
Other | 0.2 | 0.2 | |||||
Comprehensive income (loss) | $ 151.1 | 175.8 | (0.1) | 326.8 | |||
Balance at the end of the period at May. 28, 2017 | $ 146.1 | (0.2) | (904.8) | 121 | (9.3) | (647.2) | |
Balance at the end of the period (in shares) at May. 28, 2017 | 146,080,901 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Increase in redemption value of noncontrolling interests in excess of earnings allocated | (2.7) | (2.7) | |||||
Common stock dividends declared | (110.8) | (110.8) | |||||
Common stock issued | $ 0.3 | 1.8 | 2.1 | ||||
Common stock issued (in shares) | 308,822 | ||||||
Stock-settled, stock-based compensation expense | 13.5 | 13.5 | |||||
Common stock withheld to cover taxes | (2.7) | (2.7) | |||||
Common stock withheld to cover taxes (in shares) | (57,391) | ||||||
Other | (8.2) | (0.6) | (8.8) | ||||
Comprehensive income (loss) | 416.8 | 5 | 421.8 | ||||
Balance at the end of the period at May. 27, 2018 | $ 146.4 | (2.9) | (900.4) | 426.4 | (4.3) | (334.8) | |
Balance at the end of the period (in shares) at May. 27, 2018 | 146,332,332 | ||||||
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 | (10.8) | (10.8) | |||||
Common stock dividends declared | (114.6) | (114.6) | |||||
Common stock issued | $ 0.3 | 1.7 | 2 | ||||
Common stock issued (in shares) | 258,961 | ||||||
Stock-settled, stock-based compensation expense | 18.8 | 18.8 | |||||
Repurchase of common stock and common stock withheld to cover taxes | (36.4) | (36.4) | |||||
Repurchase of common stock and common stock withheld to cover taxes (in shares) | (522,260) | ||||||
Other | 0.4 | (0.5) | (0.1) | ||||
Comprehensive income (loss) | 478.6 | (21) | 457.6 | ||||
Balance at the end of the period at May. 26, 2019 | $ 146.7 | $ (39.3) | $ (890.3) | $ 803.6 | $ (25.3) | $ (4.6) | |
Balance at the end of the period (in shares) at May. 26, 2019 | 146,069,033 | 146,069,033 |
Combined and Consolidated Sta_4
Combined and Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | 12 Months Ended | ||||||||||
Aug. 25, 2019 | May 26, 2019 | Feb. 24, 2019 | Nov. 25, 2018 | Aug. 26, 2018 | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Dividends | ||||||||||||
Dividends declared per common share (in dollars per share) | $ 0.20 | $ 0.20000 | $ 0.20000 | $ 0.19125 | $ 0.19125 | $ 0.19125 | $ 0.19125 | $ 0.18750 | $ 0.18750 | $ 0.7825 | $ 0.7575 | $ 0.3750 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Cash flows from operating activities | |||
Net income | $ 487.2 | $ 433.7 | $ 340.2 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization of intangibles and debt issuance costs | 162.4 | 143.3 | 109.1 |
Stock-settled, stock-based compensation expense | 18.8 | 13.5 | 5.7 |
Earnings of joint ventures in excess of distributions | (13.8) | (35.1) | (22.3) |
Deferred income taxes | 37.5 | (3.6) | 14.8 |
Pension expense, net of contributions | 5.5 | (5.9) | 0.1 |
Other | 7.7 | (2.1) | 4.8 |
Changes in operating assets and liabilities, net of acquisition: | |||
Receivables | (25.1) | (40.4) | 1.2 |
Inventories | (15.8) | (23.6) | (26.1) |
Income taxes payable/receivable, net | (16.4) | 13.7 | (16.1) |
Prepaid expenses and other current assets | (1.9) | (15.5) | (11.9) |
Accounts payable | 32.9 | (8.3) | 12.1 |
Accrued liabilities | 1.9 | 11.5 | 35.3 |
Net cash provided by operating activities | 680.9 | 481.2 | 446.9 |
Cash flows from investing activities | |||
Additions to property, plant and equipment | (334.2) | (306.8) | (287.4) |
Acquisition of business, net of cash acquired | (88.6) | ||
Other | (0.2) | 2.1 | |
Net cash used for investing activities | (423) | (306.8) | (285.3) |
Cash flows from financing activities | |||
Repayments of short-term borrowings, net | (1) | (14.4) | (2.8) |
Debt repayments | (66.7) | (39.2) | (23.8) |
Dividends paid | (113.3) | (110.2) | (27.4) |
Acquisition of noncontrolling interest | (78.2) | ||
Repurchase of common stock and common stock withheld to cover taxes | (36.4) | (2.7) | (0.2) |
Cash distributions paid to noncontrolling interest | (6.1) | (14.6) | (12.2) |
Proceeds from issuance of debt | 798.1 | ||
Payments on debt issuance costs | (12.3) | ||
Net transfers to Conagra | (38.8) | ||
Cash distributions paid to Conagra at Separation | (823.5) | ||
Other | 2.1 | 2.2 | 0.9 |
Net cash used for financing activities | (299.6) | (178.9) | (142) |
Effect of exchange rate changes on cash and cash equivalents | (1.7) | 3 | 1.1 |
Net increase (decrease) in cash and cash equivalents | (43.4) | (1.5) | 20.7 |
Cash and cash equivalents, beginning of the period | 55.6 | 57.1 | 36.4 |
Cash and cash equivalents, end of period | $ 12.2 | $ 55.6 | $ 57.1 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
May 26, 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 15, Segments, for additional information on our reportable segments. On November 9, 2016, Lamb Weston separated from Conagra Brands, Inc. (formerly, ConAgra Foods, Inc., “Conagra”) and became an independent publicly traded company through the pro rata distribution by Conagra of 100% of the outstanding common stock of Lamb Weston to Conagra stockholders (“Separation”). As a result, approximately 146 million shares of Lamb Weston common stock were distributed on November 9, 2016, to Conagra stockholders. Information related to the Separation and its effect on our financial statements are discussed throughout these Notes to Combined and Consolidated Financial Statements. Basis of Presentation These Combined and Consolidated Financial Statements present the financial results of Lamb Weston for the fiscal years ended May 26, 2019, May 27, 2018, and May 28, 2017 (“fiscal 2019, 2018, and 2017”), and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America. The fiscal year end of Lamb Weston ends the last Sunday in May. The fiscal years for the Combined and Consolidated Financial Statements presented consist of 52-week periods for fiscal 2019, 2018, and 2017. The financial statements include all adjustments (consisting only of normal recurring adjustments) that management considers necessary for a fair presentation of such financial statements. The preparation of financial statements involves the use of estimates and accruals. Actual results may vary from those estimates. In addition, the financial statements for periods prior to the Separation may not reflect what our results of operations would have been had we operated as a separate stand-alone company and may not be indicative of our future results of operations. Our combined and consolidated financial statements include the accounts of Lamb Weston and all of its majority-owned subsidiaries. In addition, the accounts of all variable interest entities for which we are the primary beneficiary are included in our combined and consolidated financial statements from the date such determination was made. Intercompany investments, accounts, and transactions have been eliminated. Certain amounts in the prior period combined and consolidated financial statements have been reclassified to conform with the current period presentation. Prior to Separation Prior to the Separation from Conagra on November 9, 2016 (the “Separation Date”), the combined financial statements were prepared using the specific accounting records of the entities which comprised the business of Lamb Weston. In some cases, principally foreign locations, those business activities were contained within entities that were engaged in other business activities of Conagra. Because a direct ownership relationship did not exist among the various units comprising Lamb Weston, Conagra and its subsidiaries’ equity investment is shown in lieu of stockholders’ equity in the combined financial statements. Intercompany investments, accounts, and transactions between the various legal entities comprising Lamb Weston have been eliminated in the combined and consolidated financial statements. Prior to the Separation Date, Lamb Weston’s combined financial statements included accounts specifically attributed to Lamb Weston and a portion of Conagra’s shared corporate general and administrative expenses. These shared services included, but were not limited to legal, finance, internal audit, financial reporting, income tax accounting and advisory, insurance, information technology, treasury, and human resources functions. Shared corporate general and administrative expenses not specifically identifiable to Lamb Weston were allocated to Lamb Weston. The allocations were determined on a basis which we consider being reasonable reflections of the utilization of services provided by Conagra. However, these allocations may not reflect the costs and expenses that Lamb Weston would have incurred as a stand-alone public company. A more detailed discussion of the relationship with Conagra, including a description of the costs which have been allocated to Lamb Weston and the methods of cost allocation, is included in Note 14, Related Party Transactions. As further described in Note 14, prior to the Separation Date, Lamb Weston engaged in various intercompany transactions with Conagra and its affiliates, including the sale and purchase of certain products, the procurement of certain materials and services, cash transfers related to Conagra’s centralized cash management process and expense allocations. Changes in parent companies’ equity investment arising from these cash transactions are presented as “Net transfers to Conagra” in financing activities in the fiscal 2017 Combined and Consolidated Statements of Cash Flows, notwithstanding that advances from parent companies were utilized to fund Lamb Weston’s working capital requirements. Use of Estimates The preparation of the combined and consolidated financial statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the amounts reported in our combined and consolidated financial statements and the accompanying notes. On an ongoing basis, we evaluate our estimates, including but not limited to those related to provisions for income taxes, estimates of sales incentives and trade promotion allowances, and the valuation of goodwill and intangible assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the consolidated financial statements in future periods. Revenue Recognition In May 2018, we adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), and its related amendments, collectively known as Accounting Standards Codification (“ASC”) 606 (the “new revenue standard”) using the modified retrospective method. See Note 2, Revenue from Contracts with Customers, for more information. Shipping and Handling Shipping and handling costs, such as freight to our customers’ destinations, are considered fulfillment activities and are included in “Cost of sales” in the Combined and Consolidated Statements of Earnings. When shipping and handling costs are included in the sales price charged for our products, they are recognized in “Net sales.” Sales Incentives and Trade Promotion Allowances We promote our products with advertising, consumer incentives, and trade promotions. Sales promotions include, but are not limited to, discounts, coupons, rebates, and volume-based incentives. The estimates for sales incentives are based principally on historical sales and coupon utilization and redemption rates, influenced by judgments about current market conditions such as competitive activity in specific product categories. Trade promotion programs include introductory marketing funds such as slotting fees, cooperative marketing programs, temporary price reductions, and other activities conducted by our customers to promote our products. The costs of these programs are recognized as a reduction to revenue with a corresponding accrued liability based on estimates made at the time of shipment or coupon release. The estimate of trade promotions is inherently difficult due to information limitations as the products move beyond distributors and through the supply chain to operators. Estimates made by management in accounting for these costs are based primarily on our historical experience with marketing programs, with consideration given to current circumstances and industry trends and include the following: quantity of customer sales, timing of promotional activities, current and past trade-promotion spending patterns, the interpretation of historical spending trends by customer and category, and forecasted costs for activities within the promotional programs. The determination of sales incentive and trade promotion costs requires judgment and may change in the future as a result of changes in customer promotion participation, particularly for new programs related to the introduction of new products. Final determination of the total cost of promotion is dependent upon customers providing information about proof of performance and other information related to the promotional event. Because of the complexity of some of these trade promotions, the ultimate resolution may result in payments that are materially different from our estimates. As additional information becomes known, we may change our estimates. At May 26, 2019 and May 27, 2018, we had $48.6 million and $45.4 million, respectively, of sales incentives and trade promotions payable recorded in “Accrued liabilities” on our Consolidated Balance Sheets. Advertising and Promotion Advertising and promotion expenses totaled $32.4 million, $31.6 million, and $22.6 million in fiscal 2019, 2018, and 2017, respectively, and are included in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. Research and Development Research and development costs are expensed as incurred and totaled $15.4 million, $13.5 million, and $10.6 million in fiscal 2019, 2018, and 2017, respectively, and are included in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. Stock-Based Compensation Compensation expense resulting from all stock-based compensation transactions are measured and recorded in the combined and consolidated financial statements based on the grant date fair value of the equity or liability instruments issued. Compensation expense is recognized over the period the employee provides service in exchange for the award. See Note 11, Stock-Based Compensation, for additional information. Cash and Cash Equivalents Cash and all highly liquid investments with an original maturity of three months or less at the date of acquisition, including short-term time deposits, are classified as cash and cash equivalents. Book overdraft balances, if any, are classified in “Accounts payable” in our Consolidated Balance Sheets and are reported as a component of operating cash flows for accounts payable in our Combined and Consolidated Statements of Cash Flows as they do not represent bank overdrafts. Cash equivalents are stated at cost, which approximates market. Cash and cash equivalents totaled $12.2 million and $55.6 million at May 26, 2019 and May 27, 2018, respectively. Trade Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are stated at the amount we expect to collect based on our past experience, as well as reliance on the Perishable Agricultural Commodities Act, which was enacted to help promote fair trade in the fruit and vegetable industry by establishing a code of fair business practices. The collectability of our accounts receivable is based upon a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations (e.g., bankruptcy filings, substantial downgrading of credit sources), a specific reserve for bad debts is recorded against amounts due to the Company to reduce the net recorded receivable to the amount that we reasonably believe will be collected. For all other customers, reserves for bad debts are recognized based on historical collection experience. If collection experience deteriorates, the estimate of the recoverability of amounts due could be reduced. We periodically review our allowance for doubtful accounts and adjustments to the valuation allowance are recorded as income or expense. Trade accounts receivable balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. At May 26, 2019 and May 27, 2018, the allowance for doubtful accounts was $1.3 million and $0.6 million, respectively. Inventories Inventories are valued at the lower of cost (determined using the first-in, first-out method) or net realizable value and include all costs directly associated with manufacturing products: materials, labor, and manufacturing overhead. The components of inventories were as follows (dollars in millions): May 26, May 27, 2019 2018 Raw materials and packaging $ 93.1 $ 87.2 Finished goods 371.4 430.5 Supplies and other 33.8 32.0 Inventories (a) $ 498.3 $ 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 are recorded at cost. Cost includes expenditures for major improvements and replacements and the amount of interest cost associated with significant capital additions. The amount of interest capitalized from construction in progress was $7.6 million, $4.2 million, and $5.2 million in fiscal 2019, 2018, and 2017, respectively. Repairs and maintenance costs are expensed as incurred. The components of property, plant and equipment were as follows (dollars in millions): May 26, May 27, 2019 2018 Land and land improvements $ 142.2 $ 139.8 Buildings, machinery, and equipment 2,542.3 2,212.6 Furniture, fixtures, office equipment, and other 105.2 101.0 Construction in progress 84.8 127.9 Property, plant and equipment, at cost 2,874.5 2,581.3 Less accumulated depreciation (1,276.7) (1,160.5) Property, plant and equipment, net $ 1,597.8 $ 1,420.8 Depreciation is computed on the straight-line method over the estimated useful lives of the respective classes of assets as follows: Land improvements 1-40 years Buildings 10-40 years Machinery and equipment 5-20 years Furniture, fixtures, office equipment, and other 3-15 years We recorded $155.5 million, $136.3 million, and $104.3 million of depreciation expense in fiscal 2019, 2018, and 2017, respectively. At May 26, 2019 and May 27, 2018, purchases of property, plant and equipment included in accounts payable were $27.1 million and $27.9 million, respectively. Long-Lived Asset Impairment We review long-lived assets for impairment upon the occurrence of events or changes in circumstances which indicate that the carrying amount of the assets may not be fully recoverable, measured by comparing their net book value to the undiscounted projected future cash flows generated by their use. Impaired assets are recorded at their estimated fair value. Goodwill and Other Identifiable Intangible Assets We perform an annual impairment assessment of goodwill at the reporting unit level in the fourth quarter of each year, or more frequently if indicators of potential impairment exist. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment. The reporting unit’s carrying value used in an impairment test represents the assignment of various assets and liabilities, excluding certain corporate assets and liabilities, such as cash, and debt. During the annual goodwill impairment test performed in the fourth quarter of 2019, we assessed qualitative factors to determine whether it was more likely than not that the fair value of each reporting unit was less than its carrying value. Qualitative factors include industry and market considerations, overall financial performance, and other relevant events and factors affecting the reporting unit. Additionally, as part of this assessment, we performed a quantitative analysis to support the qualitative factors by applying sensitivities to assumptions and inputs used in measuring a reporting unit’s fair value. Based on the results of the qualitative impairment test, we determined that it was not more likely than not that the fair value was less than the carrying value of our Global, Foodservice, Retail, and Other segments. We amortize acquisition-related intangible assets with finite lives over their estimated useful life. We perform a review of significant finite-lived identified intangible assets to determine whether facts and circumstances indicate that the carrying amount may not be recoverable. These reviews can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for our products lines. See Note 6, Goodwill and Other Identifiable Intangible Assets, for additional information. Fair Values of Financial Instruments Unless otherwise specified, Lamb Weston believes the carrying value of financial instruments approximates their fair value. See Note 12, Fair Value Measurements, for additional information. Foreign Currency Most of our foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets and liabilities are translated at exchange rates prevailing at the balance sheet dates. Revenues, costs, and expenses are translated into U.S. dollars using daily exchange rates. Gains and losses resulting from the translation of Consolidated Balance Sheets are recorded as a component of accumulated other comprehensive income (loss). Foreign currency transactions resulted in a loss of $3.3 million in fiscal 2019, a gain of $4.7 million in fiscal 2018, and a loss of $2.7 million in fiscal 2017. These amounts were recorded in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. Derivative Financial Instruments We use derivatives and other financial instruments to hedge a portion of our commodity risks. We do not hold or issue derivatives and other financial instruments for trading purposes. Derivative instruments are reported in our Consolidated Balance Sheets at their fair values, unless the derivative instruments qualify for the normal purchase normal sale exception (“NPNS”) under GAAP and such exception has been elected. If the NPNS exception is elected, the fair values of such contracts are not recognized. We do not designate commodity derivatives to achieve hedge accounting treatment. D erivative financial instruments did not have a material impact on our Combined and Consolidated Statements of Earnings in any of the periods presented. Income Taxes We recognize current tax liabilities and assets based on an estimate of taxes payable or refundable in the current year for each of the jurisdictions in which we transact business. As part of the determination of our current tax liability, management exercises considerable judgment in evaluating positions taken in the tax returns. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We also recognize deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences (e.g., the difference in book basis versus tax basis of fixed assets resulting from differing depreciation methods). If appropriate, we recognize valuation allowances to reduce deferred tax assets to amounts that are more likely than not to be ultimately realized, based on our assessment of estimated future taxable income, including the consideration of available tax planning strategies. 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 for 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 and implemented in the third quarter of fiscal 2019, and the other changes have been made to this Form 10-K. In August 2018, the Financial Accounting Standards Board (“FASB”) issued 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 adopted this standard in the second quarter of fiscal 2019 on a prospective basis. The adoption of this standard did not have a significant impact on our financial statements. Effective May 28, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers , and its related amendments, collectively known as ASC 606 using the modified retrospective method. See Note 2, Revenue from Contracts with Customers, for more information. 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 10, 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. 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 (“ASC 842”), 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 adopted 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. We are in the final stages of determining the amount of the right of use assets and lease liabilities and the processes required to account for leasing activity on an ongoing basis. In connection with our adoption of the new lease standard, 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 will also 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 did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. At adoption, we expect to record a net increase to opening retained earnings of approximately $27 million to recognize the unamortized portion of a deferred gain previously recognized in connection with the sale of farmland that did not meet the accounting requirements for sale leaseback accounting (“Farmland Sale Leaseback”). At adoption, the Farmland Sale Leaseback qualifies as a sale under the new revenue standard. To account for the sale of the farmland, we expect to remove approximately $39 million and $66 million from “Property, plant and equipment, net” and “Long term debt, excluding current portion” from our Consolidated Balance Sheet. Additionally, we expect to recognize a right of use asset and lease liability of approximately $160 million, including the lease for the farmland discussed above. For more information, see Note 9, Debt and Financing Obligations. 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 | 12 Months Ended |
May 26, 2019 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | 2. REVENUE FROM CONTRACTS WITH CUSTOMERS On May 28, 2018, we adopted ASC 606 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): Combined and Consolidated Statements of Earnings Year Ended May 26, 2019 Balances As Reported Under ASC 606 Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Net sales $ 3,756.5 $ 3,743.3 $ 13.2 Cost of sales 2,753.0 2,744.4 8.6 Income from operations 668.4 663.8 4.6 Income tax expense 133.6 132.5 1.1 Net income attributable to Lamb Weston Holdings, Inc. 478.6 475.1 3.5 Earnings per share Basic $ 3.19 $ 3.17 $ 0.02 Diluted $ 3.18 $ 3.15 $ 0.03 Consolidated Balance Sheets As of May 26, 2019 Balances As Reported Under ASC 606 Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Receivables, less allowance for doubtful accounts $ 340.1 $ 240.3 $ 99.8 (a) Inventories 498.3 575.7 (77.4) Deferred income taxes 125.7 120.5 5.2 Retained earnings 803.6 786.4 17.2 (a) Amount represents unbilled receivables for customized products for which we have accelerated revenue recognition as a result of the new revenue standard. Combined and Consolidated Statements of Cash Flows Year Ended May 26, 2019 Balances As Reported Under ASC 606 Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Cash flows from operating activities Net income $ 487.2 $ 483.7 $ 3.5 Deferred income taxes 37.5 36.3 1.2 Receivables (25.1) (11.8) (13.3) Inventories (15.8) (24.4) 8.6 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 The nature of our contracts can vary based on the business, customer type, and region; however, 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): Year Ended May 26, 2019 Balances As Reported Under ASC 606 Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Net sales: Global $ 1,961.5 $ 1,948.6 $ 12.9 Foodservice 1,156.1 1,157.3 (1.2) Retail 498.3 497.3 1.0 Other 140.6 140.1 0.5 Total net sales $ 3,756.5 $ 3,743.3 $ 13.2 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. 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 have 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. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
May 26, 2019 | |
ACQUISITION | |
ACQUISITION | 3. ACQUISITIONS 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, are 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 related to a brand name, and all of which are included in the Global segment. Our purchase price allocation is complete. On July 2, 2019, we acquired 100% of the outstanding shares of another frozen potato processor in Australia for approximately $117 million, plus or minus final working capital adjustments. This added approximately 70 million pounds of production capacity to our manufacturing network. Net sales and total assets of the acquired company are not material to our overall net sales and total assets. Beginning in July 2019, operating results of the acquired company will be included in our Global segment’s fiscal 2020 operating results. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
May 26, 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): For the Fiscal Years Ended May 2019 2018 2017 Numerator: Net income attributable to Lamb Weston Holdings, Inc. $ 478.6 $ 416.8 $ 326.9 Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated, net of tax benefits (a) 10.8 2.7 2.1 Net income available to Lamb Weston common stockholders $ 467.8 $ 414.1 $ 324.8 Denominator: Basic weighted average common shares outstanding (b) 146.5 146.3 146.1 Add: Dilutive effect of employee incentive plans (c) 0.8 0.7 0.5 Diluted weighted average common shares outstanding 147.3 147.0 146.6 Earnings per share (a) Basic $ 3.19 $ 2.83 $ 2.22 Diluted $ 3.18 $ 2.82 $ 2.22 (a) Fiscal 2019 included accretion, net of tax benefits, of $9.4 million, or $0.06 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 Combined and Consolidated Statements of Earnings. Fiscal 2019 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 7, Investments in Joint Ventures, for more information. (b) For the periods prior to the Separation, earnings per share was calculated based on approximately 146 million shares of Lamb Weston common stock that were distributed to Conagra stockholders on November 9, 2016. (c) Potentially dilutive shares of common stock from employee incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options and the assumed vesting of outstanding restricted stock units and performance awards. As of May 26, 2019, an insignificant number of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive. As of May 27, 2018 and May 28, 2017, we did not have any stock-based awards that were antidilutive. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
May 26, 2019 | |
INCOME TAXES | |
INCOME TAXES | 5. INCOME TAXES For periods ended on or prior to the Separation Date, we were a member of Conagra’s consolidated group and our U.S. taxable income was included in the consolidated U.S. federal income tax return of Conagra as well as in returns filed by Conagra with certain state and local taxing jurisdictions. Our foreign income tax returns were filed on a separate company basis. For periods prior to the Separation Date, our income tax liability was computed and presented herein under the “separate return method” as if we were a separate tax paying entity. In connection with the Separation, we entered into a tax matters agreement with Conagra. Under the tax matters agreement, Conagra is generally responsible for all taxes associated with consolidated federal and state filings (and will be entitled to all related refunds of taxes) imposed on Conagra and its subsidiaries (including subsidiaries that were transferred to Lamb Weston at Separation) with respect to the taxable periods (or portions thereof) ended on or prior to November 9, 2016. Also, pursuant to this agreement, Lamb Weston is generally responsible for all taxes associated with separately filed foreign, state, and local tax filings (and will be entitled to all related refunds of taxes) imposed on Lamb Weston and its subsidiaries ended on or prior to November 9, 2016. Income Tax Provision Pre-tax income, inclusive of equity method investment earnings, consisted of the following (dollars in millions): For the Fiscal Years Ended May 2019 2018 2017 United States $ 574.5 $ 478.2 $ 467.5 Foreign 46.3 76.7 42.9 Total pre-tax income $ 620.8 $ 554.9 $ 510.4 The provision for income taxes included the following (dollars in millions): For the Fiscal Years Ended May 2019 2018 2017 Current U.S. federal $ 66.8 $ 94.3 $ 132.0 State and local 17.7 14.7 13.9 Foreign 11.6 15.8 9.5 Total current provision for taxes 96.1 124.8 155.4 Deferred U.S. federal 42.2 (4.4) 9.7 State and local (0.1) 0.1 3.2 Foreign (4.6) 0.7 1.9 Total deferred provision for taxes $ 37.5 $ (3.6) $ 14.8 Total provision for taxes $ 133.6 $ 121.2 $ 170.2 Income tax expense decreased in fiscal year 2019 and 2018 predominantly due to the Tax Act enacted in December 2017. Notably, the Tax Act reduced the U.S. statutory tax rate from 35% to 21%, assessed a one-time transition tax on earnings of non-U.S. subsidiaries that have not been taxed previously in the U.S., limited the tax deductibility of interest, provided for immediate deductions for certain new investments instead of deductions for depreciation expense over time, modified or repealed many business deductions and credits, and created new taxes on certain future foreign-sourced earnings. Income taxes computed by applying the U.S. statutory tax rates to income from operations, including equity method earnings, and before income taxes are reconciled to the provision for income taxes set forth in the Combined and Consolidated Statements of Earnings as follows (dollars in millions): For the Fiscal Years Ended May 2019 2018 2017 Provision computed at U.S. statutory rate (a) $ 130.4 $ 162.6 $ 178.6 Increase (reduction) in rate resulting from: State and local taxes, net of federal benefit 14.8 12.6 11.4 Tax credits and domestic manufacturers deduction (0.6) (8.1) (11.0) Effect of taxes on foreign operations (4.7) (7.0) (7.8) Deferred impact of rate change (b) — (45.4) — Transition tax liability (b) (2.4) 11.5 — Other (3.9) (5.0) (1.0) Total provision for taxes $ 133.6 $ 121.2 $ 170.2 Effective income tax rate (c) (a) The U.S. statutory tax rate was 21% for fiscal 2019. Since our fiscal year-end is the last Sunday in May, the impact of the lower U.S. statutory income tax rate from the Tax Act was phased in, resulting in a U.S. statutory tax rate of 29.3% for fiscal 2018. The U.S. statutory tax rate was 35% for fiscal 2017. (b) In connection with our initial analysis of the impact of the Tax Act in fiscal 2018, we recorded a $45.4 million net provisional tax benefit from the estimated impact of remeasuring our net U.S. deferred tax liabilities during fiscal 2018, including $5.5 million of deferred tax benefits originating during the year, with the new lower statutory tax rate. We also recorded an $11.5 million transition tax on our previously untaxed foreign earnings that is primarily payable over eight years. In fiscal 2019, we completed our analysis of the one-time impacts of the Tax Act and reduced the transition tax by $2.4 million. (c) The effective income tax rate is calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings. Income Taxes Paid Income taxes paid, net of refunds, were $103.0 million, $106.9 million, and $170.0 million in fiscal 2019, 2018, and 2017, respectively. Deferred Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Significant components of our deferred income tax assets and liabilities were as follows (dollars in millions): May 26, 2019 May 27, 2018 Assets Liabilities Assets Liabilities Property, plant and equipment $ — $ 178.1 $ — $ 127.7 Goodwill and other intangible assets 64.1 — 68.0 — Compensation and benefit related liabilities 17.8 — 15.3 — Net operating loss carryforwards (a) 15.3 — 15.8 — Accrued expenses and other liabilities 14.2 — 13.3 — Inventory and inventory reserves 11.5 — 2.8 — Debt issuance costs — 4.1 — 4.6 Investment in joint ventures — 3.5 — 9.1 Other 12.1 8.6 7.9 11.4 135.0 194.3 123.1 152.8 Less: Valuation allowance (b) (64.6) — (62.0) — Net deferred taxes (c) $ 70.4 $ 194.3 $ 61.1 $ 152.8 (a) At May 26, 2019, Lamb Weston has approximately $34.9 million of gross ($8.3 million after-tax) foreign net operating loss carryforwards, of which the majority expire by fiscal 2021. Lamb Weston also has approximately $100.0 million of gross ($7.0 million after-tax) state capital loss carryovers expiring in fiscal 2021. (b) The valuation allowance is predominantly related to non-amortizable intangibles and the portion of the net operating loss carryforwards that we are not more likely than not to realize. The net impact on income tax expense related to changes in the valuation allowance, including net operating loss carryforwards, was $1.1 million of benefit in fiscal 2019 and zero in fiscal 2018. (c) Deferred tax assets of $1.8 million and $0.4 million, as of May 26, 2019 and May 27, 2018, respectively, were presented in “Other assets.” Deferred tax liabilities of $125.7 million and $92.1 million, as of May 26, 2019 and May 27, 2018, respectively, were presented in “Deferred income taxes” as a long-term liability on the Consolidated Balance Sheets. The deferred tax asset and liability net position is determined by tax jurisdiction. The FASB allows companies to adopt an accounting policy to either recognize deferred taxes for global intangible low-taxed income (“GILTI”) or treat such as a tax cost in the year incurred. We have elected to recognize the tax on GILTI as a period expense in the period the tax is incurred. Under this policy, we have not provided deferred taxes on temporary differences that upon their reversal will affect the amount of income subject to GILTI in the period. We have not established deferred income taxes on accumulated undistributed earnings and other basis differences for operations outside the U.S., as such earnings and basis differences are indefinitely reinvested. Determining the unrecognized deferred tax liability for these earnings is not practicable. Generally, no U.S. federal income taxes will be imposed on future distributions of foreign earnings under the current law. However, distributions to the U.S. or other foreign jurisdictions could be subject to withholding and other local taxes, and these taxes would not be material. Uncertain Tax Positions The aggregate changes in the gross amount of unrecognized tax benefits, excluding interest and penalties consisted of the following (dollars in millions): For the Fiscal Years Ended May 2019 2018 2017 Beginning balance $ 13.2 $ 6.9 $ 3.8 Decreases from positions established during prior fiscal years (0.8) — — Increases from positions established during current and prior fiscal years 10.4 7.9 2.2 Expiration of statute of limitations (1.1) (1.6) (0.9) Adjustments resulting from the Separation — — 1.8 Ending balance (a) $ 21.7 $ 13.2 $ 6.9 (a) If we were to prevail on the unrecognized tax benefits recorded as of May 26, 2019 and May 27, 2018, it would result in a tax benefit of $18.8 million and $11.1 million, respectively, and a reduction in the effective tax rate. The ending balances exclude $3.9 million and $2.9 million of gross interest and penalties in fiscal 2019 and 2018, respectively. We accrue interest and penalties associated with uncertain tax positions as part of income tax expense. Lamb Weston conducts business and files tax returns in numerous countries, states, and local jurisdictions. We do not have any significant open tax audits. As part of the tax matters agreement, Conagra has responsibility for tax audits associated with pre-Separation periods, including any associated adjustments, for consolidated federal and state filings. Major jurisdictions where we conduct business generally have statutes of limitations ranging from three to five years. Although the timing of the resolutions and/or closures of audits is highly uncertain, it is reasonably possible that certain U.S. federal and non-U.S. tax audits may be concluded within the next 12 months, which could increase or decrease the balance of our gross unrecognized tax benefits. The estimated impact on income tax expense and net income is not expected to be significant. |
GOODWILL AND OTHER IDENTIFIABLE
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | 12 Months Ended |
May 26, 2019 | |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | 6. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS The following table presents changes in goodwill balances as allocated to each segment for fiscal years 2019 and 2018 (dollars in millions): Global Foodservice Retail Other Total Balance at May 28, 2017 $ 74.8 $ 42.8 $ 10.9 $ 4.5 $ 133.0 Foreign currency translation adjustment 2.1 — — — 2.1 Balance at May 27, 2018 $ 76.9 $ 42.8 $ 10.9 $ 4.5 $ 135.1 Acquisition (a) 75.1 — — — 75.1 Foreign currency translation adjustment (4.3) — — — (4.3) Balance at May 26, 2019 $ 147.7 $ 42.8 $ 10.9 $ 4.5 $ 205.9 (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, Acquisitions, for more information. Other identifiable intangible assets were as follows (dollars in millions): May 26, 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 39.1 19.5 14 35.2 17.8 $ 57.1 $ 19.5 $ 53.2 $ 17.8 (a) Non-amortizing intangible assets are comprised of brands and trademarks. (b) Amortizing intangible assets are principally composed of licensing agreements, brands, and customer relationships. Amortization expense was $2.2 million, $2.4 million, and $2.3 million in fiscal 2019, 2018, and 2017, respectively. Total intangible assets, net of amortization, excluding goodwill, as of May 26, 2019 and May 27, 2018, were $37.6 million and $35.4 million, respectively. Foreign intangible assets are affected by foreign currency translation. Based on current intangibles subject to amortization, we expect intangible asset amortization expense will be approximately $2 million in each of fiscal years 2020 through 2024, and approximately $10 million thereafter. Impairment Testing We test goodwill and non-amortizing intangible assets for impairment annually in the fourth quarter or sooner if events or changes in circumstances indicate that the carrying value of the asset may exceed fair value. Additionally, when we experience changes to our business or operating environment, we evaluate the remaining useful lives of our finite-lived purchased intangible assets to determine whether any adjustments to the useful lives are necessary. During the annual goodwill impairment test performed in the fourth quarter of 2019, we assessed qualitative factors to determine whether it was more likely than not that the fair value of each reporting unit was less than its carrying value. Based on the results of the qualitative impairment test, we determined that it was not more likely than not that the fair value was less than the carrying value of our Global, Foodservice, Retail, and Other segments. Additionally, we completed our tests of our non-amortizing intangibles in the fourth quarter and there was no indication of intangible asset impairment. |
INVESTMENTS IN JOINT VENTURES
INVESTMENTS IN JOINT VENTURES | 12 Months Ended |
May 26, 2019 | |
INVESTMENTS IN JOINT VENTURES | |
INVESTMENTS IN JOINT VENTURES | 7. 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, plus $13.2 million attributable to Ochoa’s interest in expected earnings of the joint venture through our fiscal year ended May 26, 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 Combined and Consolidated Statements of Earnings. The Combined and 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 $9.4 million of accretion, net of tax benefits, to increase the redeemable noncontrolling interest to the amount we agreed to pay. The purchase created $9.3 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, both of which did not impact net income. While the accretion, net of tax benefits, had no impact on net income in the Combined and Consolidated Statements of Earnings, it reduced net income available to common stockholders by $9.4 million, net of tax, and both basic and diluted earnings per share by $0.06, during fiscal 2019. 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 such purchases were $24.6 million through November 2, 2018, and $58.7 million and $62.9 million in fiscal 2018 and 2017, respectively. Additionally, Lamb Weston and Lamb Weston BSW utilize storage facilities and water treatment services from a shareholder of Ochoa. The aggregate amounts of such costs were $2.5 million through November 2, 2018, and $5.1 million in both fiscal 2018 and 2017. 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. Lamb-Weston/Meijer, 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 receive a royalty from Lamb-Weston/Meijer based on a per ton rate of the sales volumes of the venture. The fees received were $1.8 million, $1.7 million, and $1.8 million in fiscal 2019, 2018, and 2017, respectively. These fees are recorded as a reduction to selling, general and administrative expense. The capital structure of Lamb-Weston/Meijer includes partners’ equity of $398.1 million and $390.5 million as of May 26, 2019 and May 27, 2018, respectively. As of May 26, 2019 and May 27, 2018, the total liabilities of Lamb-Weston/Meijer were $267.3 million and $242.2 million, respectively. Lamb Weston does not guarantee these obligations and therefore, has not established a liability on its balance sheets for the obligations of Lamb-Weston/Meijer. 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 the joint venture. Accordingly, we do not consolidate the financial statements of this entity and account for this investment using equity method accounting. We provide all sales and marketing services to Lamb Weston RDO, and we receive a fee for these services based on a percentage of the net sales of the venture. The fees received were $14.8 million, $14.4 million, and $13.9 million in fiscal 2019, 2018, and 2017, respectively. These fees are recorded as a reduction to selling, general and administrative expense. Our ownership interest in this venture is included in “Equity method investments” in our Consolidated Balance Sheets. The balance of Lamb Weston’s investment was $17.8 million and $18.0 million at May 26, 2019 and May 27, 2018, respectively, representing our maximum exposure to loss as a result of our involvement with this venture. The capital structure of Lamb Weston RDO includes owners’ equity of $35.7 million and $36.0 million as of May 26, 2019 and May 27, 2018, respectively; and term borrowings from banks of $60.5 million and $57.2 million as of May 26, 2019 and May 27, 2018, respectively. Lamb Weston does not guarantee these obligations and therefore, has not established a liability on its balance sheets for the obligations of Lamb-Weston RDO. The carrying value of our equity method investments, which include Lamb Weston RDO and Lamb-Weston/Meijer, at May 26, 2019 and May 27, 2018, was $224.6 million and $219.8 million, respectively. These amounts are included in “Equity method investments” in our Consolidated Balance Sheets. Summarized combined financial information for our equity method investments based on 100% of their operations is as follows (dollars in millions): For the Fiscal Years Ended May 2019 2018 2017 Net sales $ 1,172.6 $ 1,142.7 $ 992.6 Gross margin 212.2 246.3 190.9 Earnings before income taxes 119.0 167.2 106.6 May 26, May 27, 2019 2018 Current assets $ 406.2 $ 376.9 Noncurrent assets 368.4 362.7 Current liabilities 282.9 247.5 Noncurrent liabilities 55.9 63.4 |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 12 Months Ended |
May 26, 2019 | |
ACCRUED LIABILITIES | |
ACCRUED LIABILITIES | 8. ACCRUED LIABILITIES The components of accrued liabilities were as follows (dollars in millions): May 26, May 27, 2019 2018 Compensation and benefits $ 92.4 $ 91.7 Accrued trade promotions 48.6 45.4 Dividends payable 29.2 28.0 Franchise, property, and sales and use taxes 8.6 9.6 Accrued interest 7.6 10.8 Income taxes payable 0.5 3.1 Other 30.3 27.4 Accrued liabilities $ 217.2 $ 216.0 |
DEBT AND FINANCING OBLIGATIONS
DEBT AND FINANCING OBLIGATIONS | 12 Months Ended |
May 26, 2019 | |
DEBT AND FINANCING OBLIGATIONS | |
DEBT AND FINANCING OBLIGATIONS | 9. DEBT AND FINANCING OBLIGATIONS At May 26, 2019 and May 27, 2018, our debt, including financing obligations, was as follows (dollars in millions): May 26, May 27, 2019 2018 Short-term borrowings: Revolving credit facility $ 7.2 $ — Other credit facilities 1.2 9.6 8.4 9.6 Long-term debt: Term loan facility, due 2021 599.1 632.8 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 2,265.1 2,326.8 Financing obligations: 4.35% lease financing obligation due May 2030 65.3 66.8 Lease financing obligations due on various dates through 2040 (b) 13.6 12.2 78.9 79.0 Total debt and financing obligations 2,352.4 2,415.4 Debt issuance costs (25.8) (30.4) Short-term borrowings (8.4) (9.6) Current portion of long-term debt and financing obligations (38.0) (38.7) Long-term debt, excluding current portion $ 2,280.2 $ 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 2.72% to 4.33% as of May 26, 2019 and 2.39% to 5.00% as of May 27, 2018. In November 2016, as part of the Separation, Lamb Weston issued $2,341.0 million of debt, which included $1,666.0 million of aggregate principal amount of 4.625% and 4.875% senior notes (together, “Senior Notes”) and $675.0 million of borrowings under a five-year senior secured credit agreement (“Credit Agreement”) with a syndicate of lenders. The Credit Agreement consists of a five-year amortizing $675.0 million term loan facility (“Term Loan Facility”) and a five-year non-amortizing $500.0 million revolving credit facility (“Revolving Credit Facility” and, together with the Term Loan Facility, “Credit Facilities”). The Credit Agreement is secured by security interests and liens on substantially all of our and each guarantor’s assets, as long as Lamb Weston remains below investment grade by both Moody’s and Standard & Poor’s. Of the $1,666.0 million of Senior Notes, $1,542.9 million aggregate principal amount from the Senior Notes were distributed directly to Conagra, and we used the proceeds of $123.1 million of Senior Notes, together with $700.4 million of borrowings under the Credit Facilities, to fund an $823.5 million cash payment to Conagra at the time of the Separation. The $1,542.9 million of Senior Notes distributed directly to Conagra was considered a non-cash financing activity for Lamb Weston. At May 26, 2019, we had the following debt obligations: · Revolving Credit Facility : A five-year non-amortizing $500.0 million revolving credit facility with variable annual interest. In addition to paying interest, we pay an annual commitment fee for undrawn amounts at a rate of 0.25% to 0.40% depending on our consolidated net leverage ratio. · Term Loan Facility : A five-year $675.0 million term loan amortizing in equal quarterly installments for a total of 5% annually, commencing in March 2017, with the balance payable in November 2021. · 4.625% Senior Notes : An eight-year $833.0 million senior debt obligation with fixed annual interest, due November 1, 2024. · 4.875% Senior Notes : A ten-year $833.0 million senior debt obligation with fixed annual interest, due November 1, 2026. Credit Facilities Borrowings under the Credit Facilities bear interest at a floating rate per annum based upon the Base Rate or the Eurocurrency rate, in each case, plus an applicable margin which varies based upon our consolidated net leverage ratio. Margins range from 0.500% to 1.250% for Base Rate loans and from 1.500% to 2.250% for Eurocurrency rate loans. The Base Rate is defined as the highest of (a) Bank of America’s prime rate, (b) the federal funds rate plus 0.500%, and (c) the Eurocurrency rate with a term of one month plus 1.0%. Upon the occurrence of an event of default, among other things, amounts outstanding under the Credit Agreement may be accelerated and the commitments may be terminated. Our obligations under the Credit Agreement are guaranteed by certain of our direct and indirect domestic subsidiaries on the terms set forth in the Credit Agreement. The Credit Agreement has a maturity date of November 9, 2021. At May 26, 2019, we had $7.2 million of borrowings outstanding under our Revolving Credit Facility. At May 26, 2019, we had $489.4 million of availability on our Revolving Credit Facility, which is net of outstanding letters of credit of $3.4 million. For the period from May 27, 2018 through May 26, 2019, borrowings under our Revolving Credit Facility ranged from a low of zero dollars to a high of $140.1 million. For the period from May 28, 2018 through May 26, 2019 and May 28, 2017 through May 27, 2018, the weighted average interest rate for our outstanding borrowings under the Revolving Credit Facility was 3.94% and 3.31%, respectively. We are required to maintain the following financial covenant ratios under the Credit Agreement: · Total net leverage ratio of 5.50 to 1.00, decreasing ratably to 4.50 to 1.00 on August 25, 2019 through maturity; and · Interest coverage ratio of 2.75 to 1.00. Our obligations under the Credit Facilities are guaranteed jointly and severally on a senior secured basis by each of our existing and future direct or indirect wholly owned domestic restricted subsidiaries, subject to an exclusion of immaterial subsidiaries. The Credit Agreement and the indentures governing the Senior Notes contain covenants that, subject to exceptions, limit our ability and the ability of our subsidiaries to, among other things, incur, assume or guarantee additional indebtedness, pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt, make loans and investments, incur or suffer to exist liens, sell, transfer or otherwise dispose of assets, enter into agreements that restrict distributions or other payments from restricted subsidiaries to us, engage in transactions with affiliates, designate subsidiaries as unrestricted or restricted, and consolidate, merge, amalgamate or transfer all or substantially all of our assets. New Term Loan Facility On June 28, 2019, we amended the Credit Agreement to refinance $300.0 million of the $599.1 million term loan facility outstanding at May 26, 2019 (“New Term Loan Agreement”), for a lower overall interest rate, including anticipated patronage dividends. The New Term Loan Agreement bears interest, before anticipated patronage dividends, at LIBOR or the Base Rate (each as defined in the New Term Loan Agreement) plus an applicable margin ranging from 1.625% to 2.375% for LIBOR-based loans and from 0.625% to 1.375% for Base Rate-based loans, depending upon our total net leverage ratio. The borrowings under the New Term Loan Agreement mature June 28, 2024, and the covenants, events of default, and guarantees are consistent with the Credit Facilities discussed above. The amended credit agreement also provides for the ability, under certain circumstances, to add incremental facilities in an aggregate amount of up to $100.0 million. Our total term loan indebtedness remains the same before and after the refinancing. We expect to write-off approximately $2 million of debt issuance costs in first quarter of fiscal 2020 associated with this refinancing. 4.625% and 4.875% Senior Notes The Senior Notes are senior unsecured obligations and rank equally with all of our present and future senior indebtedness, senior to all our future subordinated indebtedness and effectively subordinated to all of our present and future senior secured indebtedness (including all borrowings with respect to the Credit Facilities to the extent of the value of the assets securing such indebtedness). Interest on the Senior Notes is due semiannually. Upon a change of control (as defined in the indentures governing the Senior Notes), we must offer to repurchase the Senior Notes at 101% of the principal amount, plus accrued and unpaid interest. We may redeem all or a portion of the 4.625% Senior Notes at any time on or after November 1, 2021, at declining prices starting at 102.313%, plus accrued and unpaid interest. We may redeem all or a portion of the 4.875% Senior Notes at any time on or after November 1, 2021, at declining prices starting at 102.438%, plus accrued and unpaid interest. Prior to November 1, 2021, we may redeem Senior Notes of either series, in whole at any time or in part, from time to time, at a price equal to 100% of the principal amount thereof, plus a make-whole premium, plus accrued and unpaid interest. We may also redeem up to 35% of the aggregate principal amount of either series of Senior Notes on or prior to November 1, 2019 in an aggregate amount equal to the net proceeds from certain equity offerings at redemption prices equal to 104.625% for the 4.625% Senior Notes and 104.875% for the 4.875% Senior Notes, plus, in each case, accrued and unpaid interest. The Senior Notes are jointly and severally guaranteed on a senior unsecured basis by our domestic subsidiaries that guarantee our obligations under the Credit Agreement. Other The aggregate minimum principal maturities of our long-term debt, including current portion, for the next five fiscal years and thereafter, are as follows (dollars in millions): Financing Debt (a) Obligations Total 2020 $ 42.1 $ 4.3 $ 46.4 2021 33.8 4.0 37.8 2022 531.6 4.1 535.7 2023 — 3.5 3.5 2024 — 3.2 3.2 Thereafter 1,666.0 59.8 1,725.8 $ 2,273.5 $ 78.9 $ 2,352.4 (a) Debt includes $7.2 million of borrowings on the Revolving Credit Facility and $1.2 million of expected payments on our other credit facilities in 2020. Conagra paid $25.4 million of costs in connection with the debt issuances described above and we paid $12.3 million. We amortize the costs in interest expense using the effective interest method over the life of the loans. In fiscal 2019, 2018, and 2017, we recorded $4.7 million, $4.6 million and $2.5 million, respectively, of amortization expense in “Interest expense” in our Combined and Consolidated Statements of Earnings. During fiscal 2019 and 2018, we paid $107.8 million and $104.0 million, respectively, of interest on debt. During fiscal 2017, we paid $48.8 million of interest on debt, after the Separation. Other Credit Facilities We have $31.9 million of other credit facilities, under which $1.2 million and $9.6 million were outstanding at May 26, 2019 and May 27, 2018, respectively. These facilities consist of two overdraft lines. Borrowings under the facilities bear interest at a percentage of the stated rate, 4.35% at both May 26, 2019 and May 27, 2018, and may be prepaid without penalty. We guarantee the full amount of our subsidiary’s obligations to the financial institution up to the maximum amount of the credit facility. Financing Obligations During fiscal 2010, we completed the sale of approximately 17,600 acres of farmland to an unrelated buyer and immediately entered into an agreement with an affiliate of the buyer to lease back the farmland. Lamb Weston’s performance under the lease was guaranteed by Conagra. Conagra’s guarantee precluded accounting for this transaction as a sale and leaseback and, accordingly, the $75.0 million of proceeds received were treated as a financing obligation and the land and related equipment remain on our Consolidated Balance Sheets. At May 26, 2019 and May 27, 2018, the remaining balance of the financing obligation was $65.3 million and $66.8 million, respectively, and the net carrying value of the related property was $38.7 million and $39.3 million, respectively. The lease agreement has a remaining initial term of one year and two five-year renewal options. Upon adoption of ASC 842, Leases , in fiscal 2020, we expect the Farmland Sale Leaseback to qualify for a sale under the new revenue standard. To account for the sale of the farmland, we expect to remove approximately $39 million and $66 million from “Property, plant and equipment, net” and “Long term debt, excluding current portion.” Additionally, we expect to recognize a right of use asset and lease liability of approximately $160 million, including the lease for the farmland discussed above. See Note 1, Nature of Operations and Summary of Significant Accounting Policies, for more information. |
EMPLOYEE BENEFIT PLANS AND OTHE
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | 12 Months Ended |
May 26, 2019 | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | 10. 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 certain 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. Other Plans Eligible U.S. employees participate in a contributory defined contribution plan (“the Plan”). The Plan permits participants to make contributions by salary reduction pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended. We generally match 100% of the first 6% of the employee’s contribution election and provide an additional 3% contribution to eligible participants, regardless of employee participation level. The Plan’s matching contributions have a five-year graded vesting with 20% vesting each year. We made $21.3 million of employer-matching contributions in fiscal 2019, $13.9 million in fiscal 2018, and $6.0 million in fiscal 2017 after the Separation. Prior to the Separation, matching contributions were paid by Conagra. We sponsor a deferred compensation savings plan, which is an unfunded nonqualified defined contribution plan. The plan permits eligible employees to continue to make deferrals and receive company matching contributions when their contributions to the defined contribution plan are stopped due to limitations under U.S. tax law. With the exception of a $0.5 million Rabbi Trust, participant deferrals and company matching contributions are not invested in separate trusts, but are paid directly from our general assets at the time benefits become due and payable. At May 26, 2019 and May 27, 2018, we had $15.1 million and $12.4 million, respectively, of liabilities attributable to participation in our deferred compensation plan recorded on our Consolidated Balance Sheets. Obligations and Funded Status of Defined Benefit Pension and Other Post-retirement Benefits Plans The funded status of our plans is based on company contributions, benefit payments, the plan asset investment return, the discount rate used to measure the liability, and expected participant longevity. The following table, which includes only company-sponsored defined benefit and other post-retirement benefit plans, reconciles the beginning and ending balances of the projected benefit obligation and the fair value of plan assets. We recognize the unfunded status of these plans on the Consolidated Balance Sheets, and we recognize changes in funded status in the year changes occur through the Combined and Consolidated Statements of Comprehensive Income (Loss) (dollars in millions): For the Fiscal Years Ended May 2019 2018 Pension Plans Post-Retirement Plan Pension Plans Post-Retirement Plan Change in Benefit Obligation Benefit obligation at beginning of year $ 18.9 $ 7.0 $ 10.1 $ 2.5 Service cost 6.0 — 7.8 — Interest cost 0.8 0.3 0.4 0.2 Participant contributions — 0.2 — 0.1 Benefits paid (0.3) (0.3) (0.1) (0.1) Actuarial loss 2.0 0.1 0.7 4.3 Benefit obligation at fiscal year-end $ 27.4 $ 7.3 $ 18.9 $ 7.0 Accumulated benefit obligation portion of above $ 27.4 $ 18.9 Change in Fair Value of Plan Assets Fair value of plan assets at beginning of year $ 17.3 $ — $ 4.5 $ — Actual return on plan assets (0.3) — (0.7) — Company contributions 0.4 0.1 13.6 — Participant contributions — 0.2 — 0.1 Benefits paid (0.3) (0.3) (0.1) (0.1) Fair value of plan assets at end of year $ 17.1 $ — $ 17.3 $ — Underfunded status $ (10.3) $ (7.3) $ (1.6) $ (7.0) Amounts Recognized on Consolidated Balance Sheets Accrued liabilities $ — $ (0.3) $ — $ (0.3) Other noncurrent liabilities (10.3) (7.0) (1.6) (6.7) Accrued obligation recognized $ (10.3) $ (7.3) $ (1.6) $ (7.0) Amounts Recognized in Accumulated Other Comprehensive Income Loss (Pre-tax) Actuarial loss $ 4.0 $ 2.7 $ 0.7 $ 3.4 Total $ 4.0 $ 2.7 $ 0.7 $ 3.4 Components of Net Periodic Benefit Cost and Other Comprehensive (Income) Loss For the period after the Separation Date, the components of net periodic benefit cost were as follows (dollars in millions): For the Fiscal Years Ended May 2019 2018 2017 Pension Post-Retirement Pension Post-Retirement Pension Post-Retirement Plans Plan Plans Plan Plans Plan Service cost $ 6.0 $ — $ 7.8 $ — $ 4.4 $ — Interest cost 0.8 0.3 0.4 0.2 0.1 0.1 Expected return on plan assets (0.9) — (0.4) — — — Net amortization of unrecognized amounts Prior service benefit — — — (0.2) — — Actuarial gain — 0.7 — 0.5 — — Net periodic benefit cost (a) $ 5.9 $ 1.0 $ 7.8 $ 0.5 $ 4.5 $ 0.1 Changes in plan assets and benefit obligations recognized in other comprehensive (income) loss Prior service benefit $ — $ — $ — $ — $ — $ (0.2) Actuarial (gain) loss 3.3 — 1.7 4.3 (1.0) (0.4) Amortization of prior service cost — — — 0.2 — — Amortization of actuarial gain (b) — (0.7) — (0.5) — — Total recognized in other comprehensive loss (income) $ 3.3 $ (0.7) $ 1.7 $ 4.0 $ (1.0) $ (0.6) Total recognized in net periodic benefit cost and other comprehensive loss (income) (pre-tax) $ 9.2 $ 0.3 $ 9.5 $ 4.5 $ 3.5 $ (0.5) (a) Pension service costs are allocated to operations and reflected in “Cost of sales” and expected returns on pension assets and interest costs are reflected in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. The decrease in fiscal 2019 net periodic pension cost, compared with fiscal 2018, reflects the amendment to the Lamb Weston, Inc. Pension Plan for Plant Hourly Employees, for employees not covered by a collective bargaining agreement, so that no future benefits accrue after December 31, 2018. (b) Accumulated losses in excess of 10% of the greater of the projected benefit obligation or the market-related value of assets will be recognized on a straight-line basis over the average remaining service period of active employees in our plans (which is between seven to eleven years for our pension plans and approximately four years for our post-retirement benefit plan), to the extent that losses are not offset by gains in subsequent years. The estimated net amount of actuarial losses on pension and post-retirement benefits included in “Accumulated other comprehensive loss” on our Consolidated Balance Sheets to be amortized in fiscal 2020 is a net loss of $0.7 million ($0.5 million after tax). Assumptions The actuarial assumptions used in determining the benefit obligations and net periodic pension cost for our defined benefit and post-retirement plans are as follows: For the Fiscal Years Ended May 2019 2018 2017 Pension Plans Post-Retirement Plan Pension Plans Post-Retirement Plan Pension Plans Post-Retirement Plan Weighted-Average Assumptions Used to Determine Benefit Obligations: Discount rate 4.01% 3.81% 4.25% 4.18% 4.33% 3.50% Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost: Discount rate 4.25% 4.18% 4.33% 3.60% 3.81% 3.18% Expected return on plan assets 5.30% N/A 7.50% N/A 7.50% N/A Discount Rate Assumption. The discount rate reflects the current rate at which the pension and post-retirement benefit obligations could be settled on the measurement date: May 26, 2019. The discount rate assumption used to calculate the present value of pension and post-retirement benefit obligations reflects the rates available on high-quality bonds on May 26, 2019. The bonds included in the models reflect anticipated investments that would be made to match the expected monthly benefit payments over time. The plans’ projected cash flows were duration-matched to these models to develop an appropriate discount rate. The discount rate we will use in fiscal 2020 to calculate the net periodic pension benefit cost and post-retirement benefit cost is 4.01% and 3.81%, respectively. Asset Return Assumption: Our investment strategies are governed by our Employee Benefit Investments Council. The expected return on plan assets reflects the expected long-term rates of return for the categories of investments currently held in the plan as well as anticipated returns for additional contributions made in the future. The expected long-term rate of return is adjusted when there are fundamental changes in expected returns on the plan investments. The weighted-average expected return on plan assets we will use in our calculation of fiscal 2020 net period pension benefit cost is 5.1%. Health Care Cost Trend Rate Assumptions. We review external data and historical trends for health care costs to determine our healthcare cost trend rate assumptions . We assumed health care cost trend rates for our post-retirement benefit plan as follows: 2019 2018 2017 Health care cost trend rate (Pre65/Post65) 7.3/5.8% 8.4/6.3% 9.0/6.5% Ultimate health care cost trend rate 4.5% 4.5% 4.5% Year that the rate reaches the ultimate trend rate 2024 2024 2024 A one-percentage point increase in the assumed health care cost trend rate would have an insignificant effect on the fiscal 2019, 2018 and 2017 postretirement benefit obligation. Investment Policies and Strategies and Fair Value Measurements of Plan Assets We utilize professional advisors to oversee pension investments and provide recommendations regarding investment strategy. Our overall strategy and related apportionments between equity and debt securities may change from time to time based on market conditions, external economic factors, timing of contributions and the funded status of the plans. The general investment objective for all of our plan assets is to optimize growth of the pension plan trust assets, while minimizing the risk of significant losses to enable the plans to satisfy their benefit payment obligations over time. The objectives consider the long-term nature of the benefit obligations, the liquidity needs of the plans, and the expected risk/return trade-offs of the asset classes in which the plans may choose to invest. Our current investment policy is to invest 30% in equity securities and 70% in fixed income securities. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility risk, all of which are subject to change. Due to the level of risk associated with some investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term, and such changes could materially affect the reported amounts (dollars in millions). Fair Value Measurements at May 26, 2019 Quoted Market Prices in Active Markets for Identical Assets Significant Observable Market-Based Inputs Significant Unobservable Inputs Level 1 Level 2 Level 3 Total Equity securities: U.S. equity securities (a) $ — $ 2.6 $ — $ 2.6 International equity securities (a) — 2.7 — 2.7 Fixed income securities: Government securities (b) 11.8 — — 11.8 Total assets $ 11.8 $ 5.3 $ — $ 17.1 Fair Value Measurements at May 27, 2018 Quoted Market Prices in Active Markets for Identical Assets Significant Observable Market-Based Inputs Significant Unobservable Inputs Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 11.8 $ — $ — $ 11.8 Equity securities: U.S. equity securities (a) — 1.0 — 1.0 International equity securities (a) — 1.5 — 1.5 Fixed income securities: Government securities (b) 3.0 — — 3.0 Total assets $ 14.8 $ 2.5 $ — $ 17.3 (c) (a) Includes investments in common/collective trust funds that are valued using net asset values (“NAV”) provided by the administrator of the funds. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of units outstanding. While the underlying assets are actively traded on an exchange, the funds are not. There are currently no redemption restrictions or unfunded commitments on these investments. There are certain funds with thirty-day redeemable notice requirements. (b) Includes investments in exchange-traded funds based on quoted prices in active markets. (c) At May 27, 2018, the fair value of our plan assets was $17.3 million, which includes $12.0 million we contributed to the Plan in the fourth quarter of fiscal 2018, net of benefit payments. The fourth quarter contribution was invested in cash and cash equivalents at May 27, 2018, and invested per the target investment allocation policy after fiscal year-end. The remaining $5.5 million was invested per our investment policy. In connection with the fourth quarter contribution, we changed our investment policy to invest 30% in equities and 70% in fixed income securities. The asset portfolio was rebalanced in June 2018. Funding and Cash Flows We make pension plan contributions that are sufficient to fund our actuarially determined costs, generally equal to the minimum amounts required by the Employee Retirement Income Security Act of 1974, as amended. From time to time, we may make discretionary contributions based on the funded status of the plans, tax deductibility, income from operations, and other factors. In fiscal 2019, we made $0.4 million of contributions to our qualified plan, which represented our minimum contribution requirements. In fiscal 2020, our minimum contribution requirements are $0.8 million. We continually reassess the amount and timing of discretionary contributions, if any. The following are estimated benefit payments to be paid to current plan participants by year (dollars in millions). Qualified pension benefit payments are paid from plan assets, while nonqualified pension benefit payments are paid by the Company. Pension Plans Post-Retirement Plan 2020 $ 0.3 $ 0.3 2021 0.4 0.3 2022 0.6 0.4 2023 0.8 0.4 2024 0.9 0.5 Succeeding 5 years 7.4 2.5 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
May 26, 2019 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 11. STOCK-BASED COMPENSATION On October 29, 2016, our Board of Directors adopted the Lamb Weston Holdings, Inc. 2016 Stock Plan, which was amended in July 2017 (“Stock Plan”). Under the Stock Plan, we may grant eligible employees and non-employee directors awards of stock options, cash, and stock-settled restricted stock units (“RSUs”), restricted stock awards, other awards based on our common stock, and performance-based long-term incentive awards (“Performance Shares”). At May 26, 2019, we had 10.0 million shares authorized under the Stock Plan, and 7.8 million were available for future grant. RSUs and Performance Shares We grant RSUs to eligible employees and non-employee directors. The employee RSUs generally vest over a three-year period while the non-employee director RSUs generally vest after one year. We estimate the fair value of the RSUs based upon the market price of our common stock at the date of grant. Certain RSU grants do not provide for the payment of dividend equivalents to the participant during the vesting period. For those grants, the value of the grants is reduced by the net present value of the foregone dividend equivalent payments. Performance Shares are granted to certain executives and other key employees with vesting contingent upon meeting various Company-wide performance goals. Awards actually earned range from 0% to 200% of the targeted number of Performance Shares for each of the performance periods. Awards, if earned, will be paid in shares of our common stock. Subject to limited exceptions set forth in the Stock Plan, any shares earned will be distributed at the end of the three-year performance period. The value of the Performance Shares is adjusted based upon the market price of our common stock at the end of each reporting period and amortized as compensation expense over the vesting period. The following table summarizes RSU and Performance Share activity for fiscal 2019, 2018 and 2017: Stock-Settled Cash-Settled Performance Shares Weighted- Weighted- Weighted- Average Average Average Grant- Grant- Grant- Date Fair Date Fair Date Fair Shares Value Shares Value Shares Value Outstanding at May 29, 2016 — — — — — — Converted on November 9, 2016 (a) 459,466 $ 25.05 469,837 $ 25.33 56,050 $ 25.84 Granted (b) 86,642 33.96 — — 1,640 25.84 Vested (c) (17,753) 18.68 (1,503) 23.70 — — Forfeited/expired/cancelled (38,751) 24.24 (5,722) 26.73 — — Outstanding at May 28, 2017 489,604 $ 26.92 462,612 $ 25.33 57,690 $ 25.84 Granted (b) 293,209 $ 45.22 — $ — 125,524 $ 43.90 Performance condition adjustment (d) — — — — (818) 19.70 Vested (c) (172,772) 23.82 (173,762) 20.00 (15,228) 19.70 Forfeited/expired/cancelled (28,166) 31.52 (3,198) 27.75 (6,898) 43.87 Outstanding at May 27, 2018 581,875 $ 36.84 285,652 $ 28.54 160,270 $ 39.82 Granted (b) 215,382 $ 70.22 — $ — 98,414 $ 69.82 Performance condition adjustment (d) — — — — 97,803 40.35 Vested (c) (141,567) 29.96 (157,167) 28.61 (42,206) 27.32 Forfeited/expired/cancelled (14,670) 54.61 (7,675) 30.55 — — Outstanding at May 26, 2019 641,020 $ 49.17 120,810 $ 28.33 314,281 $ 51.06 (a) In connection with the Separation, outstanding Conagra RSUs and Performance Shares granted to Lamb Weston employees and non-employee directors under Conagra’s equity incentive plans were adjusted and converted into Lamb Weston stock awards under the Stock Plan. The awards were adjusted and converted in a manner intended to preserve the aggregate intrinsic value of the original Conagra equity award and are subject to substantially the same terms and conditions after the Separation as the terms and conditions applicable to the original Conagra award prior to the Separation Date. (b) Granted represents new grants and dividend equivalents accrued. (c) The aggregate fair value of awards that vested in fiscal 2019, 2018 and 2017 was $24.7 million, $16.6 million and $0.7 million, respectively, which represents the market value of our common stock on the date that the RSUs and Performance Shares vested. The number of RSUs and Performance Shares vested includes shares of common stock that we withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements. RSUs that are expected to vest are net of estimated future forfeitures. (d) Amount represents adjustment for performance results attained on Performance Shares during fiscal 2019 and 2018. Stock Options We have historically granted options to employees for the purchase of stock at exercise prices equal to the fair market value of the underlying stock on the date of grant. Options generally become exercisable in three annual installments beginning on the first anniversary of the grant date and have a maximum term of ten years. We do not expect to issue new stock option awards under our Stock Plan. The following table summarizes stock option activity for fiscal 2019, 2018 and 2017: Weighted- Weighted- Average Average Aggregate Exercise Remaining Intrinsic Price Contractual Value Shares (per share) Term (Years) (in millions) Outstanding at May 29, 2016 — — Converted on November 9, 2016 (a) 607,420 $ 23.60 Granted 146,514 35.15 Exercised (22,896) 21.90 Forfeited/cancelled (10,211) 30.68 Outstanding at May 28, 2017 720,827 $ 25.90 7.4 $ 14.2 Granted 56,496 $ 43.82 Exercised (125,717) 17.47 Forfeited/cancelled — — Outstanding at May 27, 2018 651,606 $ 29.08 7.3 $ 23.7 Granted — $ — Exercised (75,076) 26.22 Forfeited/cancelled (1,427) 30.67 Outstanding at May 26, 2019 575,103 $ 29.45 6.4 $ 18.8 Exercisable at May 26, 2019 476,628 $ 27.93 6.1 $ 16.3 (b) (a) In connection with the Separation, outstanding Conagra stock options granted to Lamb Weston employees and non-employee directors under Conagra’s equity incentive plans were adjusted and converted into Lamb Weston stock awards under the Stock Plan. The awards were adjusted and converted in a manner intended to preserve the aggregate intrinsic value of the original Conagra equity award and are subject to substantially the same terms and conditions after the Separation as the terms and conditions applicable to the original Conagra award prior to the Separation Date. (b) 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 fourth quarter, or May 24, 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 fiscal year. The amount changes based on the fair market value of our common 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 Combined and Consolidated Statements of Earnings, net of forfeitures, was as follows (dollars in millions): For the Fiscal Years Ended May 2019 2018 2017 Stock-settled RSUs $ 10.2 $ 7.9 $ 4.0 Performance Shares 8.3 4.4 1.1 Stock options 0.3 1.2 0.6 Stock-settled compensation expense 18.8 13.5 5.7 Cash-settled RSUs (a) 3.3 8.8 9.7 Total compensation expense 22.1 22.3 15.4 Income tax benefit (b) (5.1) (6.9) (5.7) Total compensation expense, net of tax benefit $ 17.0 $ 15.4 $ 9.7 (a) All cash-settled RSUs are marked-to-market and presented within “Accrued liabilities” and “Other noncurrent liabilities” in our Consolidated Balance Sheets. (b) Income tax benefit represents the marginal tax rate. Based on estimates at May 26, 2019, total unrecognized compensation expense related to stock-based awards was as follows (dollars in millions): Remaining Weighted Unrecognized Average Compensation Recognition Expense Period (in years) Stock-settled RSUs $ 15.2 1.8 Cash-settled RSUs 0.3 0.1 Performance shares 12.2 1.7 Stock options 0.1 0.5 Total unrecognized compensation expense $ 27.8 1.8 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
May 26, 2019 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 12. FAIR VALUE MEASUREMENTS FASB guidance establishes a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The three levels of inputs used to measure fair value are as follows: Level 1—Quoted market prices in active markets for identical assets or liabilities, Level 2—Observable market-based inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, and Level 3—Unobservable inputs for the asset or liability reflecting our own assumptions and best estimate of what inputs market participants would use in pricing the asset or liability. The following table presents our financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of May 26, 2019 and May 27, 2018 (dollars in millions): As of May 26, 2019 Level 1 Level 2 Level 3 Total Assets: Pension plan assets $ 11.8 $ 5.3 $ — $ 17.1 Deferred compensation assets 0.5 — — 0.5 Derivative assets (a) — 0.4 — 0.4 Total assets $ 12.3 $ 5.7 $ — $ 18.0 Liabilities: Derivative liabilities (a) $ — $ 3.8 $ — $ 3.8 Deferred compensation liabilities (b) — 15.1 — 15.1 Total liabilities $ — $ 18.9 $ — $ 18.9 As of May 27, 2018 Level 1 Level 2 Level 3 Total Assets: Pension plan assets $ 14.8 $ 2.5 $ — $ 17.3 Deferred compensation assets 0.5 — — 0.5 Derivative assets (a) — 0.8 — 0.8 Total assets $ 15.3 $ 3.3 $ — $ 18.6 Liabilities: Derivative liabilities (a) $ — $ 1.4 $ — $ 1.4 Deferred compensation liabilities (b) — 12.4 — 12.4 Total liabilities $ — $ 13.8 $ — $ 13.8 (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 commodities. Derivative assets and liabilities included in Level 2 primarily represent commodity swap and option contracts. (b) The fair values of our Level 2 deferred compensation liabilities were valued using third-party valuations, which are based on the net asset values of mutual funds in our retirement plans. While the underlying assets are actively traded on an exchange, the funds are not. Non-financial assets such as intangible assets, property, plant and equipment are recorded at fair value only if an impairment is recognized. Cost and equity investments are measured at fair value on a non-recurring basis. At May 26, 2019, we had $1,666.0 million of fixed-rate and $607.5 million of variable-rate debt outstanding. Based on current market rates, the fair value of our fixed-rate debt at May 26, 2019 was estimated to be $1,679.4 million. Any differences between the book value and fair value are due to the difference between the period-end market interest rate and the stated rate of our fixed-rate debt. We estimated the fair value of our fixed-rate debt using quoted market prices (Level 2 inputs) within the fair value hierarchy that is described above. The fair value of our variable-rate term debt approximates the carrying amount as our cost of borrowing is variable and approximates current market prices. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
May 26, 2019 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 13. STOCKHOLDERS’ EQUITY In connection with the Separation, we amended and restated our certificate of incorporation to authorize 600,000,000 shares of common stock and 60,000,000 shares of preferred stock. We had 146,069,033 shares of common stock issued and outstanding as of May 26, 2019. Each share of common stock entitles the holder to one vote on matters to be voted on by our stockholders. No preferred stock was issued or outstanding on May 26, 2019. 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 fiscal 2019, we purchased 458,749 shares for $31.8 million, or a weighted-average price of $69.40 per share. Dividends During fiscal 2019, 2018 and 2017, we paid $113.3 million, $110.2 million and $27.4 million, respectively, of dividends to common stockholders. On July 18, 2019, our Board of Directors declared a dividend of $0.20 per share of common stock. The dividend will be paid on August 30, 2019, to stockholders of record as of the close of business on August 2, 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 benefit plans. We generally deem our foreign investments to be indefinite in nature and we do not provide for taxes on currency translation adjustments arising from converting the investment denominated in a foreign currency to the U.S. dollar. If we determine that a foreign investment, as well as undistributed earnings, are no longer indefinite in nature, estimated taxes are provided for the related deferred tax liability (asset), if any, resulting from currency translation adjustments. Changes in AOCI, net of taxes, by component follows (dollars in millions). Amounts in parentheses indicate losses. Foreign Accumulated Currency Pension and Other Translation Post-Retirement Comprehensive Gains (Losses) Benefits Loss Balance as of May 27, 2018 $ (1.2) $ (3.1) $ (4.3) Other comprehensive income before reclassifications, net of tax (19.1) (2.5) (21.6) Amounts reclassified out of AOCI, net of tax — 0.6 (a) 0.6 Net current-period other comprehensive income (loss) (19.1) (1.9) (21.0) Balance as of May 26, 2019 $ (20.3) $ (5.0) $ (25.3) (a) These AOCI components are included in the computation of net pension and postretirement benefit costs. See Note 10, Employee Benefit Plans and Other Post-Retirement Benefits, for additional information. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
May 26, 2019 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 14. 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, employee matters agreement, trademark license agreement and the tax matters 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. The services included information technology, accounting, and human resource services. In April 2018, we concluded our transition services agreement with Conagra. The fiscal years ended May 27, 2018 and May 28, 2017 included $2.4 million and $4.2 million, respectively, of expenses related to the transition services agreement. Prior to the Separation Date, Conagra allocated certain selling, general and administrative costs to Lamb Weston based on specific metrics correlated with the cost of services it provided or costs incurred on behalf of the Company (e.g., employee headcount, net sales, and square footage of office space). Allocations based upon these metrics resulted in $7.7 million of selling, general and administrative costs allocated to Lamb Weston in fiscal 2017. Beginning in fiscal 2017, certain departmental charges, which were previously allocated, were directly absorbed by Lamb Weston. The above allocations were consistent with historical allocations for Lamb Weston; however, Conagra did not historically allocate certain other corporate costs to its various segments. For any remaining indirect corporate costs that supported Lamb Weston, Conagra allocated additional selling, general and administrative costs using an equal weighting between Lamb Weston product contribution margin (net sales less cost of sales and advertising and promotion expenses) and Lamb Weston total assets relative to consolidated Conagra product contribution margin and total assets. Allocations of indirect corporate costs were $17.3 million of selling, general and administrative costs in fiscal 2017. Although it is not practicable to estimate what such costs would have been if Lamb Weston had operated as a separate public company, Lamb Weston considers such allocations to have been made on a reasonable basis. The allocations discussed above ceased after the Separation Date. The Combined and Consolidated Statements of Earnings for the periods up to the Separation Date, include only the specific interest expense of the legal entities that comprise Lamb Weston, and do not include any allocated interest expense of Conagra. Included in fiscal 2017 net sales are sales to Conagra of $8.4 million. The related cost of sales were $3.4 million. Lamb Weston also made purchases from Conagra of $7.9 million in fiscal 2017. |
SEGMENTS
SEGMENTS | 12 Months Ended |
May 26, 2019 | |
SEGMENTS | |
SEGMENTS | 15. SEGMENTS We have four operating segments, each of which is a reportable segment: Global, Foodservice, Retail, and Other. Our chief operating decision maker receives periodic management reports under this structure that generally focus on the nature and scope of our customers’ businesses, which enables operating decisions, performance assessment, and resource allocation decisions at the segment level. The reportable segments are each managed by a general manager and supported by a cross functional team assigned to support the segment. We measure our segments’ product contribution margin, which is defined as net sales, less cost of sales and advertising and promotion expenses and excludes general corporate expenses, interest, and taxes. See “Part I, Item 1. Business” of this Form 10-K for more information on our segments. For the Fiscal Years Ended May (in millions) 2019 2018 2017 Net sales Global $ 1,961.5 $ 1,744.2 $ 1,624.8 Foodservice 1,156.1 1,099.1 1,030.0 Retail 498.3 449.2 384.9 Other 140.6 131.2 128.3 Total net sales 3,756.5 3,423.7 3,168.0 Product contribution margin (a) Global 446.3 375.7 338.6 Foodservice 402.4 365.9 330.7 Retail 98.8 87.3 77.6 Other (b) 23.6 19.0 9.3 Total product contribution margin 971.1 847.9 756.2 Other selling, general and administrative expenses (a) (c) 302.7 267.8 237.9 Income from operations 668.4 580.1 518.3 Interest expense, net 107.1 108.8 61.2 Income tax expense (d) 133.6 121.2 170.2 Equity method investment earnings 59.5 83.6 53.3 Net income 487.2 433.7 340.2 Less: Income attributable to noncontrolling interests (e) 8.6 16.9 13.3 Net income attributable to Lamb Weston Holdings, Inc. $ 478.6 $ 416.8 $ 326.9 (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 Other segment primarily includes our vegetable and dairy businesses and unrealized mark-to-market adjustments associated with commodity hedging contracts. (c) Fiscal 2018 includes $8.7 million of pre-tax expenses related to the Separation, primarily related to professional fees and employee-related costs. Fiscal 2017 includes $26.5 million of pre-tax expenses related to the Separation, primarily related to professional fees, and a $3.1 million non-cash pre-tax gain on assets received during the period. (d) In fiscal 2019, the Tax Act decreased income tax expense and increased net income by $27.2 million, or $0.19 per share, including a $24.8 million, or $0.17 per share, tax benefit related to a lower U.S. corporate tax rate and a $2.4 million, or $0.02 per share, benefit from the true-up of the transition tax on previously untaxed foreign earnings. Since our fiscal year-end is the last Sunday in May, in fiscal 2018, we phased in the impact of the lower tax rate, resulting in a U.S. corporate tax rate of 29.3%, compared with 21% in fiscal 2019. We completed our analysis of the one-time impacts of the Tax Act in fiscal 2019. In connection with our initial analysis of the impact of the Tax Act in fiscal 2018, we decreased income tax expense and increased net income $64.7 million, or $0.44 per share. This included a $28.4 million, or $0.19 per share net benefit for one-time items, including a $39.9 million net provisional tax benefit from the estimated impact of remeasuring our net U.S. deferred tax liabilities with a new lower federal tax rate, partially offset by an $11.5 million transition tax on our previously untaxed foreign earnings. It also included a $36.3 million, or $0.25 per share, tax benefit related to a lower U.S. corporate tax rate. In fiscal 2018, we phased in the impact of the lower tax rate, resulting in a 29.3% U.S. corporate tax rate in fiscal 2018, compared with 35% in fiscal 2017. (e) 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 Combined and Consolidated Statements of Earnings include 100% of Lamb Weston BSW’s earnings beginning November 2, 2018. See Note 7, Investments in Joint Ventures, for more information. Assets by Segment The manufacturing assets of Lamb Weston are shared across all reporting segments. Output from these facilities used by each reporting segment can change from fiscal year to fiscal year. Therefore, it is impracticable to allocate those assets to the reporting segments, as well as disclose total assets by segment. Concentrations Lamb Weston’s largest customer, McDonald’s Corporation, accounted for approximately 10% of our net sales in fiscal 2019 and 11% of our net sales in both fiscal 2018 and 2017. Accounts receivable from one customer accounted for 12% of our consolidated accounts receivable at May 27, 2018. No customer accounted for 10% of our consolidated accounts receivable at May 26, 2019. Other Information The net sales of each of our Global, Foodservice, and Retail reporting segments are comprised of sales of frozen potato and frozen sweet potato products. The net sales of our Other reporting segment included vegetable sales of $88.5 million, $81.7 million, and $81.6 million, various byproduct sales of $40.2 million, $38.1 million, and $35.4 million, and dairy product sales of $11.9 million, $11.5 million, and $11.3 million in fiscal 2019, 2018, and 2017, respectively. Our operations are principally in the United States. With respect to operations outside of the United States, no single foreign country or geographic region was significant with respect to consolidated operations in fiscal 2019, 2018, and 2017. Foreign net sales, including sales by domestic segments to customers located outside of the United States, were $742.7 million, $665.8 million, and $663.5 million in fiscal 2019, 2018, and 2017, respectively. Our long-lived assets located outside of the United States are not significant. Labor At May 26, 2019, we had approximately 7,600 employees, excluding our joint ventures. Approximately 700 of these employees work outside of the United States. Approximately 32% of our hourly employees are parties to collective bargaining agreements on terms that we believe are typical for the industry in which we operate. Most of the union workers at our facilities are represented under contracts that expire at various times throughout the next several years. Approximately 32% expire in fiscal 2020. As these agreements expire, we believe they will be renegotiated on terms satisfactory to us. |
COMMITMENTS, CONTINGENCIES, GUA
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS | 12 Months Ended |
May 26, 2019 | |
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS | |
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS | 16. COMMITMENTS, CONTINGENCIES, GUARANTEES, AND LEGAL PROCEEDINGS We have financial commitments and obligations that arise in the ordinary course of our business. These include long-term debt (discussed in Note 9, Debt and Financing Obligations), lease obligations, purchase commitments for goods and services, and legal proceedings (discussed below). Capital Commitments We had capital commitments of approximately $41.5 million and $158.7 million as of May 26, 2019 and May 27, 2018, respectively, in connection with the expansion and replacement of existing facilities and equipment. Lease Obligations We lease certain facilities, land, and transportation equipment under agreements that expire at various dates. Rent expense for operating leases was $63.1 million, $62.8 million, and $63.0 million in fiscal 2019, 2018, and 2017, respectively. The minimum lease payments under non-cancellable operating leases with lease terms in excess of one year are as follows (dollars in millions): 2020 $ 18.6 2021 16.5 2022 15.7 2023 10.5 2024 8.6 Thereafter 26.6 Total $ 96.5 For more information on our operating lease obligations upon the adoption of ASC 842, Leases , in fiscal 2020, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Obligations and Commitments” of this Form 10-K. Guarantees and Indemnifications We provide guarantees, indemnifications, and other assurances to third parties in the normal course of our business. These include tort indemnifications, environmental assurances, and representations and warranties in commercial agreements. At May 26, 2019 , we were not aware of any material liabilities arising from any guarantee, indemnification, or financial assurance we have provided. If the fair value of such liability becomes material, we will accrue for it at that time. Lamb Weston is a party to various potato purchase supply agreements with partner growers, under which they deliver their potato crop from the contracted acres to Lamb Weston during the harvest season, and pursuant to the potato supply agreements, pricing for this inventory is determined after delivery, taking into account crop size and quality, among other factors. Lamb Weston paid $152.0 million, $132.8 million, and $150.8 million in fiscal 2019, 2018, and 2017, respectively, under the terms of the potato supply agreements. Amounts paid are initially recorded in inventory and charged to cost of sales as related inventories are produced and subsequently sold. Under the terms of these potato supply agreements, Lamb Weston has guaranteed repayment of short-term bank loans of the potato suppliers, under certain conditions. At May 26, 2019, Lamb Weston has effectively guaranteed $26.4 million of supplier loans. Lamb Weston has not established a liability for these guarantees, as Lamb Weston has determined that the likelihood of Lamb Weston’s required performance under the guarantees is remote. Under certain other potato supply agreements, Lamb Weston makes advances to growers prior to the delivery of potatoes. The aggregate amounts of these advances were $36.5 million and $24.6 million at May 26, 2019 and May 27, 2018, respectively. Lamb Weston and Lamb Weston’s partner are jointly and severally liable for all legal liabilities of Lamb-Weston/Meijer. See Note 7, Investments in Joint Ventures, for further information on Lamb-Weston/Meijer’s liabilities and capital structure. After taking into account liabilities recognized for all of the foregoing matters, management believes the ultimate resolution of such matters would not have a material adverse effect on Lamb Weston’s financial condition, results of operations, or cash flows. It is reasonably possible that a change to an estimate of the foregoing matters may occur in the future. Legal Proceedings We are a party to legal actions arising in the ordinary course of our business. These legal actions include commercial liability claims, premises liability claims, and employment-related claims, among others. As of the date of this filing, we do not believe that any of the legal actions against us would, either individually or in the aggregate, have a material adverse effect on our financial condition, results of operations, or cash flows. Costs of legal services associated with the foregoing matters are recognized in earnings as services are provided. |
QUARTERLY FINANCIAL DATA (unaud
QUARTERLY FINANCIAL DATA (unaudited) | 12 Months Ended |
May 26, 2019 | |
QUARTERLY FINANCIAL DATA (unaudited) | |
QUARTERLY FINANCIAL DATA (Unaudited) | 17. QUARTERLY FINANCIAL DATA (unaudited; dollars in millions, except per-share amounts) 2019 (a) First Second Third Fourth Quarter Quarter Quarter Quarter Net sales $ 914.9 $ 911.4 $ 926.8 $ 1,003.4 Gross profit 230.6 249.0 273.4 250.5 Income before income taxes and equity method earnings 125.8 147.8 166.8 120.9 Income tax expense 34.3 34.0 39.6 25.7 Net income attributable to Lamb Weston Holdings, Inc. 107.8 119.0 141.4 110.4 Earnings per share Basic 0.73 0.74 0.96 0.76 Diluted 0.73 0.74 0.95 0.75 Dividends declared 0.19125 0.19125 0.20000 0.20000 2018 (a) First Second Third Fourth Quarter Quarter Quarter Quarter Net sales $ 817.5 $ 824.6 $ 863.4 $ 918.2 Gross profit 196.3 208.2 242.3 232.7 Income before income taxes and equity method earnings 112.4 112.4 140.7 105.8 Income tax expense 44.1 41.5 7.5 28.1 Net income attributable to Lamb Weston Holdings, Inc. 83.4 76.6 156.8 100.0 Earnings per share Basic 0.56 0.52 1.07 0.68 Diluted 0.56 0.52 1.06 0.68 Dividends declared 0.18750 0.18750 0.19125 0.19125 (a) The sum of quarterly amounts may not agree to our annual results due to rounding. The first and second quarters of fiscal 2019, included a $14.0 million and $15.4 million benefit, respectively, related to lower U.S. corporate tax rates as part of the Tax Act. The third quarter of fiscal 2019 included $6.4 million expense; approximately $7.4 million of expense related to a higher U.S. corporate tax related to the timing of the Tax Act, offset partially by a $1.0 million benefit for the estimated true-up of the transition tax under the Tax Act. The fourth quarter of fiscal 2019 included a $4.2 million benefit related to the Tax Act; approximately $2.8 million relates to a lower U.S. corporate tax rate and $1.4 million relates to the true-up of the transition tax under the Tax Act. The third and fourth quarters of fiscal 2018 included a $47.0 million and $17.7 million benefit, respectively, related to the Tax Act; approximately $23.0 million and $13.3 million, respectively, relates to a lower U.S. corporate tax rate and $24.0 million and $4.4 million, respectively, relate to the provisional impacts of remeasuring our net U.S. deferred tax liabilities with the new lower statutory rate, partially offset by the estimate of transition tax on our previously untaxed foreign earnings. The first, second, third, and fourth quarters of fiscal 2018 included $2.2 million ($1.4 million net of taxes), $4.0 million ($2.5 million net taxes), $1.7 million ($1.2 million net of taxes), and $0.8 million ($0.6 million net of taxes), respectively, of expenses related to the Separation. |
SCHEDULE II Valuation and Quali
SCHEDULE II Valuation and Qualifying Accounts | 12 Months Ended |
May 26, 2019 | |
SCHEDULE II Valuation and Qualifying Accounts | |
SCHEDULE II Valuation and Qualifying Accounts | Schedule II – Lamb Weston - Valuation and Qualifying Accounts (dollars in millions). Additions Charged Balance to Costs, Deductions Balance Beginning of Expenses from End of Year and Equity Reserves Year Year ended May 26, 2019 Deferred tax asset valuation allowance $ 62.0 $ 3.7 $ 1.1 $ 64.6 Year ended May 27, 2018 Deferred tax asset valuation allowance $ 98.4 $ — $ 36.4 (a) $ 62.0 Year ended May 28, 2017 Deferred tax asset valuation allowance $ 12.3 $ 86.1 (b) $ — $ 98.4 (a) Includes $31.2 million reduction resulting from the revaluation of U.S. deferred tax assets to the new 21% federal statutory tax rate as a result of the Tax Act. (b) Includes $83.3 million of additions charged to equity; primarily due to the step-up in tax basis of certain assets in connection with our Separation from Conagra. See Note 5, Income Taxes, of the Notes to Combined and Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K. |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
May 26, 2019 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation These Combined and Consolidated Financial Statements present the financial results of Lamb Weston for the fiscal years ended May 26, 2019, May 27, 2018, and May 28, 2017 (“fiscal 2019, 2018, and 2017”), and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America. The fiscal year end of Lamb Weston ends the last Sunday in May. The fiscal years for the Combined and Consolidated Financial Statements presented consist of 52-week periods for fiscal 2019, 2018, and 2017. The financial statements include all adjustments (consisting only of normal recurring adjustments) that management considers necessary for a fair presentation of such financial statements. The preparation of financial statements involves the use of estimates and accruals. Actual results may vary from those estimates. In addition, the financial statements for periods prior to the Separation may not reflect what our results of operations would have been had we operated as a separate stand-alone company and may not be indicative of our future results of operations. Our combined and consolidated financial statements include the accounts of Lamb Weston and all of its majority-owned subsidiaries. In addition, the accounts of all variable interest entities for which we are the primary beneficiary are included in our combined and consolidated financial statements from the date such determination was made. Intercompany investments, accounts, and transactions have been eliminated. Certain amounts in the prior period combined and consolidated financial statements have been reclassified to conform with the current period presentation. Prior to Separation Prior to the Separation from Conagra on November 9, 2016 (the “Separation Date”), the combined financial statements were prepared using the specific accounting records of the entities which comprised the business of Lamb Weston. In some cases, principally foreign locations, those business activities were contained within entities that were engaged in other business activities of Conagra. Because a direct ownership relationship did not exist among the various units comprising Lamb Weston, Conagra and its subsidiaries’ equity investment is shown in lieu of stockholders’ equity in the combined financial statements. Intercompany investments, accounts, and transactions between the various legal entities comprising Lamb Weston have been eliminated in the combined and consolidated financial statements. Prior to the Separation Date, Lamb Weston’s combined financial statements included accounts specifically attributed to Lamb Weston and a portion of Conagra’s shared corporate general and administrative expenses. These shared services included, but were not limited to legal, finance, internal audit, financial reporting, income tax accounting and advisory, insurance, information technology, treasury, and human resources functions. Shared corporate general and administrative expenses not specifically identifiable to Lamb Weston were allocated to Lamb Weston. The allocations were determined on a basis which we consider being reasonable reflections of the utilization of services provided by Conagra. However, these allocations may not reflect the costs and expenses that Lamb Weston would have incurred as a stand-alone public company. A more detailed discussion of the relationship with Conagra, including a description of the costs which have been allocated to Lamb Weston and the methods of cost allocation, is included in Note 14, Related Party Transactions. As further described in Note 14, prior to the Separation Date, Lamb Weston engaged in various intercompany transactions with Conagra and its affiliates, including the sale and purchase of certain products, the procurement of certain materials and services, cash transfers related to Conagra’s centralized cash management process and expense allocations. Changes in parent companies’ equity investment arising from these cash transactions are presented as “Net transfers to Conagra” in financing activities in the fiscal 2017 Combined and Consolidated Statements of Cash Flows, notwithstanding that advances from parent companies were utilized to fund Lamb Weston’s working capital requirements. |
Use of Estimates | Use of Estimates The preparation of the combined and consolidated financial statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the amounts reported in our combined and consolidated financial statements and the accompanying notes. On an ongoing basis, we evaluate our estimates, including but not limited to those related to provisions for income taxes, estimates of sales incentives and trade promotion allowances, and the valuation of goodwill and intangible assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the consolidated financial statements in future periods. |
Revenue Recognition | Revenue Recognition In May 2018, we adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), and its related amendments, collectively known as Accounting Standards Codification (“ASC”) 606 (the “new revenue standard”) using the modified retrospective method. See Note 2, Revenue from Contracts with Customers, for more information. |
Shipping and Handling | Shipping and Handling Shipping and handling costs, such as freight to our customers’ destinations, are considered fulfillment activities and are included in “Cost of sales” in the Combined and Consolidated Statements of Earnings. When shipping and handling costs are included in the sales price charged for our products, they are recognized in “Net sales.” |
Sales Incentives and Trade Promotion Allowances | Sales Incentives and Trade Promotion Allowances We promote our products with advertising, consumer incentives, and trade promotions. Sales promotions include, but are not limited to, discounts, coupons, rebates, and volume-based incentives. The estimates for sales incentives are based principally on historical sales and coupon utilization and redemption rates, influenced by judgments about current market conditions such as competitive activity in specific product categories. Trade promotion programs include introductory marketing funds such as slotting fees, cooperative marketing programs, temporary price reductions, and other activities conducted by our customers to promote our products. The costs of these programs are recognized as a reduction to revenue with a corresponding accrued liability based on estimates made at the time of shipment or coupon release. The estimate of trade promotions is inherently difficult due to information limitations as the products move beyond distributors and through the supply chain to operators. Estimates made by management in accounting for these costs are based primarily on our historical experience with marketing programs, with consideration given to current circumstances and industry trends and include the following: quantity of customer sales, timing of promotional activities, current and past trade-promotion spending patterns, the interpretation of historical spending trends by customer and category, and forecasted costs for activities within the promotional programs. The determination of sales incentive and trade promotion costs requires judgment and may change in the future as a result of changes in customer promotion participation, particularly for new programs related to the introduction of new products. Final determination of the total cost of promotion is dependent upon customers providing information about proof of performance and other information related to the promotional event. Because of the complexity of some of these trade promotions, the ultimate resolution may result in payments that are materially different from our estimates. As additional information becomes known, we may change our estimates. At May 26, 2019 and May 27, 2018, we had $48.6 million and $45.4 million, respectively, of sales incentives and trade promotions payable recorded in “Accrued liabilities” on our Consolidated Balance Sheets. |
Advertising and Promotion | Advertising and Promotion Advertising and promotion expenses totaled $32.4 million, $31.6 million, and $22.6 million in fiscal 2019, 2018, and 2017, respectively, and are included in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. |
Research and Development | Research and Development Research and development costs are expensed as incurred and totaled $15.4 million, $13.5 million, and $10.6 million in fiscal 2019, 2018, and 2017, respectively, and are included in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. |
Stock-Based Compensation | Stock-Based Compensation Compensation expense resulting from all stock-based compensation transactions are measured and recorded in the combined and consolidated financial statements based on the grant date fair value of the equity or liability instruments issued. Compensation expense is recognized over the period the employee provides service in exchange for the award. See Note 11, Stock-Based Compensation, for additional information. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and all highly liquid investments with an original maturity of three months or less at the date of acquisition, including short-term time deposits, are classified as cash and cash equivalents. Book overdraft balances, if any, are classified in “Accounts payable” in our Consolidated Balance Sheets and are reported as a component of operating cash flows for accounts payable in our Combined and Consolidated Statements of Cash Flows as they do not represent bank overdrafts. Cash equivalents are stated at cost, which approximates market. Cash and cash equivalents totaled $12.2 million and $55.6 million at May 26, 2019 and May 27, 2018, respectively. |
Trade Accounts Receivable and Allowance for Doubtful Accounts | Trade Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are stated at the amount we expect to collect based on our past experience, as well as reliance on the Perishable Agricultural Commodities Act, which was enacted to help promote fair trade in the fruit and vegetable industry by establishing a code of fair business practices. The collectability of our accounts receivable is based upon a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations (e.g., bankruptcy filings, substantial downgrading of credit sources), a specific reserve for bad debts is recorded against amounts due to the Company to reduce the net recorded receivable to the amount that we reasonably believe will be collected. For all other customers, reserves for bad debts are recognized based on historical collection experience. If collection experience deteriorates, the estimate of the recoverability of amounts due could be reduced. We periodically review our allowance for doubtful accounts and adjustments to the valuation allowance are recorded as income or expense. Trade accounts receivable balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. At May 26, 2019 and May 27, 2018, the allowance for doubtful accounts was $1.3 million and $0.6 million, respectively. |
Inventories | Inventories Inventories are valued at the lower of cost (determined using the first-in, first-out method) or net realizable value and include all costs directly associated with manufacturing products: materials, labor, and manufacturing overhead. The components of inventories were as follows (dollars in millions): May 26, May 27, 2019 2018 Raw materials and packaging $ 93.1 $ 87.2 Finished goods 371.4 430.5 Supplies and other 33.8 32.0 Inventories (a) $ 498.3 $ 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 Property, plant and equipment are recorded at cost. Cost includes expenditures for major improvements and replacements and the amount of interest cost associated with significant capital additions. The amount of interest capitalized from construction in progress was $7.6 million, $4.2 million, and $5.2 million in fiscal 2019, 2018, and 2017, respectively. Repairs and maintenance costs are expensed as incurred. The components of property, plant and equipment were as follows (dollars in millions): May 26, May 27, 2019 2018 Land and land improvements $ 142.2 $ 139.8 Buildings, machinery, and equipment 2,542.3 2,212.6 Furniture, fixtures, office equipment, and other 105.2 101.0 Construction in progress 84.8 127.9 Property, plant and equipment, at cost 2,874.5 2,581.3 Less accumulated depreciation (1,276.7) (1,160.5) Property, plant and equipment, net $ 1,597.8 $ 1,420.8 Depreciation is computed on the straight-line method over the estimated useful lives of the respective classes of assets as follows: Land improvements 1-40 years Buildings 10-40 years Machinery and equipment 5-20 years Furniture, fixtures, office equipment, and other 3-15 years We recorded $155.5 million, $136.3 million, and $104.3 million of depreciation expense in fiscal 2019, 2018, and 2017, respectively. At May 26, 2019 and May 27, 2018, purchases of property, plant and equipment included in accounts payable were $27.1 million and $27.9 million, respectively. |
Long-Lived Asset Impairment | Long-Lived Asset Impairment We review long-lived assets for impairment upon the occurrence of events or changes in circumstances which indicate that the carrying amount of the assets may not be fully recoverable, measured by comparing their net book value to the undiscounted projected future cash flows generated by their use. Impaired assets are recorded at their estimated fair value. |
Goodwill and Other Identifiable Intangible Assets | Goodwill and Other Identifiable Intangible Assets We perform an annual impairment assessment of goodwill at the reporting unit level in the fourth quarter of each year, or more frequently if indicators of potential impairment exist. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment. The reporting unit’s carrying value used in an impairment test represents the assignment of various assets and liabilities, excluding certain corporate assets and liabilities, such as cash, and debt. During the annual goodwill impairment test performed in the fourth quarter of 2019, we assessed qualitative factors to determine whether it was more likely than not that the fair value of each reporting unit was less than its carrying value. Qualitative factors include industry and market considerations, overall financial performance, and other relevant events and factors affecting the reporting unit. Additionally, as part of this assessment, we performed a quantitative analysis to support the qualitative factors by applying sensitivities to assumptions and inputs used in measuring a reporting unit’s fair value. Based on the results of the qualitative impairment test, we determined that it was not more likely than not that the fair value was less than the carrying value of our Global, Foodservice, Retail, and Other segments. We amortize acquisition-related intangible assets with finite lives over their estimated useful life. We perform a review of significant finite-lived identified intangible assets to determine whether facts and circumstances indicate that the carrying amount may not be recoverable. These reviews can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for our products lines. See Note 6, Goodwill and Other Identifiable Intangible Assets, for additional information. |
Fair Values of Financial Instruments | Fair Values of Financial Instruments Unless otherwise specified, Lamb Weston believes the carrying value of financial instruments approximates their fair value. See Note 12, Fair Value Measurements, for additional information. |
Foreign Currency | Foreign Currency Most of our foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets and liabilities are translated at exchange rates prevailing at the balance sheet dates. Revenues, costs, and expenses are translated into U.S. dollars using daily exchange rates. Gains and losses resulting from the translation of Consolidated Balance Sheets are recorded as a component of accumulated other comprehensive income (loss). Foreign currency transactions resulted in a loss of $3.3 million in fiscal 2019, a gain of $4.7 million in fiscal 2018, and a loss of $2.7 million in fiscal 2017. These amounts were recorded in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. |
Derivative Financial Instruments | Derivative Financial Instruments We use derivatives and other financial instruments to hedge a portion of our commodity risks. We do not hold or issue derivatives and other financial instruments for trading purposes. Derivative instruments are reported in our Consolidated Balance Sheets at their fair values, unless the derivative instruments qualify for the normal purchase normal sale exception (“NPNS”) under GAAP and such exception has been elected. If the NPNS exception is elected, the fair values of such contracts are not recognized. We do not designate commodity derivatives to achieve hedge accounting treatment. D erivative financial instruments did not have a material impact on our Combined and Consolidated Statements of Earnings in any of the periods presented. |
Income Taxes | Income Taxes We recognize current tax liabilities and assets based on an estimate of taxes payable or refundable in the current year for each of the jurisdictions in which we transact business. As part of the determination of our current tax liability, management exercises considerable judgment in evaluating positions taken in the tax returns. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We also recognize deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences (e.g., the difference in book basis versus tax basis of fixed assets resulting from differing depreciation methods). If appropriate, we recognize valuation allowances to reduce deferred tax assets to amounts that are more likely than not to be ultimately realized, based on our assessment of estimated future taxable income, including the consideration of available tax planning strategies. |
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 for 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 and implemented in the third quarter of fiscal 2019, and the other changes have been made to this Form 10-K. In August 2018, the Financial Accounting Standards Board (“FASB”) issued 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 adopted this standard in the second quarter of fiscal 2019 on a prospective basis. The adoption of this standard did not have a significant impact on our financial statements. Effective May 28, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers , and its related amendments, collectively known as ASC 606 using the modified retrospective method. See Note 2, Revenue from Contracts with Customers, for more information. 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 10, 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. 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 (“ASC 842”), 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 adopted 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. We are in the final stages of determining the amount of the right of use assets and lease liabilities and the processes required to account for leasing activity on an ongoing basis. In connection with our adoption of the new lease standard, 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 will also 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 did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. At adoption, we expect to record a net increase to opening retained earnings of approximately $27 million to recognize the unamortized portion of a deferred gain previously recognized in connection with the sale of farmland that did not meet the accounting requirements for sale leaseback accounting (“Farmland Sale Leaseback”). At adoption, the Farmland Sale Leaseback qualifies as a sale under the new revenue standard. To account for the sale of the farmland, we expect to remove approximately $39 million and $66 million from “Property, plant and equipment, net” and “Long term debt, excluding current portion” from our Consolidated Balance Sheet. Additionally, we expect to recognize a right of use asset and lease liability of approximately $160 million, including the lease for the farmland discussed above. For more information, see Note 9, Debt and Financing Obligations. There were no other accounting standards recently issued that had or are expected to have a material impact on our financial statements. |
NATURE OF OPERATIONS AND SUMM_3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
May 26, 2019 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of major classes of inventories | May 26, May 27, 2019 2018 Raw materials and packaging $ 93.1 $ 87.2 Finished goods 371.4 430.5 Supplies and other 33.8 32.0 Inventories (a) $ 498.3 $ 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. |
Schedule of components of property, plant and equipment | May 26, May 27, 2019 2018 Land and land improvements $ 142.2 $ 139.8 Buildings, machinery, and equipment 2,542.3 2,212.6 Furniture, fixtures, office equipment, and other 105.2 101.0 Construction in progress 84.8 127.9 Property, plant and equipment, at cost 2,874.5 2,581.3 Less accumulated depreciation (1,276.7) (1,160.5) Property, plant and equipment, net $ 1,597.8 $ 1,420.8 |
Schedule of estimated useful lives | Land improvements 1-40 years Buildings 10-40 years Machinery and equipment 5-20 years Furniture, fixtures, office equipment, and other 3-15 years |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 12 Months Ended |
May 26, 2019 | |
Revenue from Contracts with Customers | |
Schedule of impact of adoption of new revenue standard | Combined and Consolidated Statements of Earnings Year Ended May 26, 2019 Balances As Reported Under ASC 606 Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Net sales $ 3,756.5 $ 3,743.3 $ 13.2 Cost of sales 2,753.0 2,744.4 8.6 Income from operations 668.4 663.8 4.6 Income tax expense 133.6 132.5 1.1 Net income attributable to Lamb Weston Holdings, Inc. 478.6 475.1 3.5 Earnings per share Basic $ 3.19 $ 3.17 $ 0.02 Diluted $ 3.18 $ 3.15 $ 0.03 Consolidated Balance Sheets As of May 26, 2019 Balances As Reported Under ASC 606 Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Receivables, less allowance for doubtful accounts $ 340.1 $ 240.3 $ 99.8 (a) Inventories 498.3 575.7 (77.4) Deferred income taxes 125.7 120.5 5.2 Retained earnings 803.6 786.4 17.2 (a) Amount represents unbilled receivables for customized products for which we have accelerated revenue recognition as a result of the new revenue standard. Combined and Consolidated Statements of Cash Flows Year Ended May 26, 2019 Balances As Reported Under ASC 606 Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Cash flows from operating activities Net income $ 487.2 $ 483.7 $ 3.5 Deferred income taxes 37.5 36.3 1.2 Receivables (25.1) (11.8) (13.3) Inventories (15.8) (24.4) 8.6 |
Schedule of segment net sales and product contribution margin | Year Ended May 26, 2019 Balances As Reported Under ASC 606 Balances Without Adoption of ASC 606 Impact of Adoption Increase (Decrease) Net sales: Global $ 1,961.5 $ 1,948.6 $ 12.9 Foodservice 1,156.1 1,157.3 (1.2) Retail 498.3 497.3 1.0 Other 140.6 140.1 0.5 Total net sales $ 3,756.5 $ 3,743.3 $ 13.2 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
May 26, 2019 | |
EARNINGS PER SHARE | |
Schedule of computation of basic and diluted earnings per common | For the Fiscal Years Ended May 2019 2018 2017 Numerator: Net income attributable to Lamb Weston Holdings, Inc. $ 478.6 $ 416.8 $ 326.9 Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated, net of tax benefits (a) 10.8 2.7 2.1 Net income available to Lamb Weston common stockholders $ 467.8 $ 414.1 $ 324.8 Denominator: Basic weighted average common shares outstanding (b) 146.5 146.3 146.1 Add: Dilutive effect of employee incentive plans (c) 0.8 0.7 0.5 Diluted weighted average common shares outstanding 147.3 147.0 146.6 Earnings per share (a) Basic $ 3.19 $ 2.83 $ 2.22 Diluted $ 3.18 $ 2.82 $ 2.22 (a) Fiscal 2019 included accretion, net of tax benefits, of $9.4 million, or $0.06 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 Combined and Consolidated Statements of Earnings. Fiscal 2019 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 7, Investments in Joint Ventures, for more information. (b) For the periods prior to the Separation, earnings per share was calculated based on approximately 146 million shares of Lamb Weston common stock that were distributed to Conagra stockholders on November 9, 2016. (c) Potentially dilutive shares of common stock from employee incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options and the assumed vesting of outstanding restricted stock units and performance awards. As of May 26, 2019, an insignificant number of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive. As of May 27, 2018 and May 28, 2017, we did not have any stock-based awards that were antidilutive. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
May 26, 2019 | |
INCOME TAXES | |
Schedule of Pre-tax income (loss) | Pre-tax income, inclusive of equity method investment earnings, consisted of the following (dollars in millions): For the Fiscal Years Ended May 2019 2018 2017 United States $ 574.5 $ 478.2 $ 467.5 Foreign 46.3 76.7 42.9 Total pre-tax income $ 620.8 $ 554.9 $ 510.4 |
Schedule of analysis of the components of the consolidated income tax provision | The provision for income taxes included the following (dollars in millions): For the Fiscal Years Ended May 2019 2018 2017 Current U.S. federal $ 66.8 $ 94.3 $ 132.0 State and local 17.7 14.7 13.9 Foreign 11.6 15.8 9.5 Total current provision for taxes 96.1 124.8 155.4 Deferred U.S. federal 42.2 (4.4) 9.7 State and local (0.1) 0.1 3.2 Foreign (4.6) 0.7 1.9 Total deferred provision for taxes $ 37.5 $ (3.6) $ 14.8 Total provision for taxes $ 133.6 $ 121.2 $ 170.2 |
Schedule of reconciliation of income tax expense using the statutory U.S. income tax rate compared with the actual income tax provision | Income taxes computed by applying the U.S. statutory tax rates to income from operations, including equity method earnings, and before income taxes are reconciled to the provision for income taxes set forth in the Combined and Consolidated Statements of Earnings as follows (dollars in millions): For the Fiscal Years Ended May 2019 2018 2017 Provision computed at U.S. statutory rate (a) $ 130.4 $ 162.6 $ 178.6 Increase (reduction) in rate resulting from: State and local taxes, net of federal benefit 14.8 12.6 11.4 Tax credits and domestic manufacturers deduction (0.6) (8.1) (11.0) Effect of taxes on foreign operations (4.7) (7.0) (7.8) Deferred impact of rate change (b) — (45.4) — Transition tax liability (b) (2.4) 11.5 — Other (3.9) (5.0) (1.0) Total provision for taxes $ 133.6 $ 121.2 $ 170.2 Effective income tax rate (c) (a) The U.S. statutory tax rate was 21% for fiscal 2019. Since our fiscal year-end is the last Sunday in May, the impact of the lower U.S. statutory income tax rate from the Tax Act was phased in, resulting in a U.S. statutory tax rate of 29.3% for fiscal 2018. The U.S. statutory tax rate was 35% for fiscal 2017. (b) In connection with our initial analysis of the impact of the Tax Act in fiscal 2018, we recorded a $45.4 million net provisional tax benefit from the estimated impact of remeasuring our net U.S. deferred tax liabilities during fiscal 2018, including $5.5 million of deferred tax benefits originating during the year, with the new lower statutory tax rate. We also recorded an $11.5 million transition tax on our previously untaxed foreign earnings that is primarily payable over eight years. In fiscal 2019, we completed our analysis of the one-time impacts of the Tax Act and reduced the transition tax by $2.4 million. (c) The effective income tax rate is calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings. |
Schedule of deferred income tax assets and liabilities | May 26, 2019 May 27, 2018 Assets Liabilities Assets Liabilities Property, plant and equipment $ — $ 178.1 $ — $ 127.7 Goodwill and other intangible assets 64.1 — 68.0 — Compensation and benefit related liabilities 17.8 — 15.3 — Net operating loss carryforwards (a) 15.3 — 15.8 — Accrued expenses and other liabilities 14.2 — 13.3 — Inventory and inventory reserves 11.5 — 2.8 — Debt issuance costs — 4.1 — 4.6 Investment in joint ventures — 3.5 — 9.1 Other 12.1 8.6 7.9 11.4 135.0 194.3 123.1 152.8 Less: Valuation allowance (b) (64.6) — (62.0) — Net deferred taxes (c) $ 70.4 $ 194.3 $ 61.1 $ 152.8 (a) At May 26, 2019, Lamb Weston has approximately $34.9 million of gross ($8.3 million after-tax) foreign net operating loss carryforwards, of which the majority expire by fiscal 2021. Lamb Weston also has approximately $100.0 million of gross ($7.0 million after-tax) state capital loss carryovers expiring in fiscal 2021. (b) The valuation allowance is predominantly related to non-amortizable intangibles and the portion of the net operating loss carryforwards that we are not more likely than not to realize. The net impact on income tax expense related to changes in the valuation allowance, including net operating loss carryforwards, was $1.1 million of benefit in fiscal 2019 and zero in fiscal 2018. (c) Deferred tax assets of $1.8 million and $0.4 million, as of May 26, 2019 and May 27, 2018, respectively, were presented in “Other assets.” Deferred tax liabilities of $125.7 million and $92.1 million, as of May 26, 2019 and May 27, 2018, respectively, were presented in “Deferred income taxes” as a long-term liability on the Consolidated Balance Sheets. The deferred tax asset and liability net position is determined by tax jurisdiction. |
Schedule of change in the unrecognized tax benefits | The aggregate changes in the gross amount of unrecognized tax benefits, excluding interest and penalties consisted of the following (dollars in millions): For the Fiscal Years Ended May 2019 2018 2017 Beginning balance $ 13.2 $ 6.9 $ 3.8 Decreases from positions established during prior fiscal years (0.8) — — Increases from positions established during current and prior fiscal years 10.4 7.9 2.2 Expiration of statute of limitations (1.1) (1.6) (0.9) Adjustments resulting from the Separation — — 1.8 Ending balance (a) $ 21.7 $ 13.2 $ 6.9 (a) If we were to prevail on the unrecognized tax benefits recorded as of May 26, 2019 and May 27, 2018, it would result in a tax benefit of $18.8 million and $11.1 million, respectively, and a reduction in the effective tax rate. The ending balances exclude $3.9 million and $2.9 million of gross interest and penalties in fiscal 2019 and 2018, respectively. We accrue interest and penalties associated with uncertain tax positions as part of income tax expense. |
GOODWILL AND OTHER IDENTIFIAB_2
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS (Tables) | 12 Months Ended |
May 26, 2019 | |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | |
Schedule of changes in the carrying amount of goodwill | Global Foodservice Retail Other Total Balance at May 28, 2017 $ 74.8 $ 42.8 $ 10.9 $ 4.5 $ 133.0 Foreign currency translation adjustment 2.1 — — — 2.1 Balance at May 27, 2018 $ 76.9 $ 42.8 $ 10.9 $ 4.5 $ 135.1 Acquisition (a) 75.1 — — — 75.1 Foreign currency translation adjustment (4.3) — — — (4.3) Balance at May 26, 2019 $ 147.7 $ 42.8 $ 10.9 $ 4.5 $ 205.9 (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, Acquisitions, for more information. |
Schedule of other identifiable intangible assets, non-amortizing intangible assets | May 26, 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 39.1 19.5 14 35.2 17.8 $ 57.1 $ 19.5 $ 53.2 $ 17.8 (a) Non-amortizing intangible assets are comprised of brands and trademarks. (b) Amortizing intangible assets are principally composed of licensing agreements, brands, and customer relationships. Amortization expense was $2.2 million, $2.4 million, and $2.3 million in fiscal 2019, 2018, and 2017, respectively. |
Schedule of other identifiable intangible assets, amortizing intangible assets | May 26, 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 39.1 19.5 14 35.2 17.8 $ 57.1 $ 19.5 $ 53.2 $ 17.8 (a) Non-amortizing intangible assets are comprised of brands and trademarks. (b) Amortizing intangible assets are principally composed of licensing agreements, brands, and customer relationships. Amortization expense was $2.2 million, $2.4 million, and $2.3 million in fiscal 2019, 2018, and 2017, respectively. |
INVESTMENTS IN JOINT VENTURES (
INVESTMENTS IN JOINT VENTURES (Tables) | 12 Months Ended |
May 26, 2019 | |
INVESTMENTS IN JOINT VENTURES | |
Summarized combined financial information for our equity method investments | For the Fiscal Years Ended May 2019 2018 2017 Net sales $ 1,172.6 $ 1,142.7 $ 992.6 Gross margin 212.2 246.3 190.9 Earnings before income taxes 119.0 167.2 106.6 May 26, May 27, 2019 2018 Current assets $ 406.2 $ 376.9 Noncurrent assets 368.4 362.7 Current liabilities 282.9 247.5 Noncurrent liabilities 55.9 63.4 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 12 Months Ended |
May 26, 2019 | |
ACCRUED LIABILITIES | |
Schedule of components of accrued liabilities | May 26, May 27, 2019 2018 Compensation and benefits $ 92.4 $ 91.7 Accrued trade promotions 48.6 45.4 Dividends payable 29.2 28.0 Franchise, property, and sales and use taxes 8.6 9.6 Accrued interest 7.6 10.8 Income taxes payable 0.5 3.1 Other 30.3 27.4 Accrued liabilities $ 217.2 $ 216.0 |
DEBT AND FINANCING OBLIGATIONS
DEBT AND FINANCING OBLIGATIONS (Tables) | 12 Months Ended |
May 26, 2019 | |
DEBT AND FINANCING OBLIGATIONS | |
Schedule of debt, including financing obligations | At May 26, 2019 and May 27, 2018, our debt, including financing obligations, was as follows (dollars in millions): May 26, May 27, 2019 2018 Short-term borrowings: Revolving credit facility $ 7.2 $ — Other credit facilities 1.2 9.6 8.4 9.6 Long-term debt: Term loan facility, due 2021 599.1 632.8 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 2,265.1 2,326.8 Financing obligations: 4.35% lease financing obligation due May 2030 65.3 66.8 Lease financing obligations due on various dates through 2040 (b) 13.6 12.2 78.9 79.0 Total debt and financing obligations 2,352.4 2,415.4 Debt issuance costs (25.8) (30.4) Short-term borrowings (8.4) (9.6) Current portion of long-term debt and financing obligations (38.0) (38.7) Long-term debt, excluding current portion $ 2,280.2 $ 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 2.72% to 4.33% as of May 26, 2019 and 2.39% to 5.00% as of May 27, 2018. |
Schedule of aggregate minimum principal maturities of long term debt | The aggregate minimum principal maturities of our long-term debt, including current portion, for the next five fiscal years and thereafter, are as follows (dollars in millions): Financing Debt (a) Obligations Total 2020 $ 42.1 $ 4.3 $ 46.4 2021 33.8 4.0 37.8 2022 531.6 4.1 535.7 2023 — 3.5 3.5 2024 — 3.2 3.2 Thereafter 1,666.0 59.8 1,725.8 $ 2,273.5 $ 78.9 $ 2,352.4 (a) Debt includes $7.2 million of borrowings on the Revolving Credit Facility and $1.2 million of expected payments on our other credit facilities in 2020. |
EMPLOYEE BENEFIT PLANS AND OT_2
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS (Tables) | 12 Months Ended |
May 26, 2019 | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |
Schedule of funded status and amounts recognized in our Condensed Combined and Consolidated Balance Sheets | For the Fiscal Years Ended May 2019 2018 Pension Plans Post-Retirement Plan Pension Plans Post-Retirement Plan Change in Benefit Obligation Benefit obligation at beginning of year $ 18.9 $ 7.0 $ 10.1 $ 2.5 Service cost 6.0 — 7.8 — Interest cost 0.8 0.3 0.4 0.2 Participant contributions — 0.2 — 0.1 Benefits paid (0.3) (0.3) (0.1) (0.1) Actuarial loss 2.0 0.1 0.7 4.3 Benefit obligation at fiscal year-end $ 27.4 $ 7.3 $ 18.9 $ 7.0 Accumulated benefit obligation portion of above $ 27.4 $ 18.9 Change in Fair Value of Plan Assets Fair value of plan assets at beginning of year $ 17.3 $ — $ 4.5 $ — Actual return on plan assets (0.3) — (0.7) — Company contributions 0.4 0.1 13.6 — Participant contributions — 0.2 — 0.1 Benefits paid (0.3) (0.3) (0.1) (0.1) Fair value of plan assets at end of year $ 17.1 $ — $ 17.3 $ — Underfunded status $ (10.3) $ (7.3) $ (1.6) $ (7.0) Amounts Recognized on Consolidated Balance Sheets Accrued liabilities $ — $ (0.3) $ — $ (0.3) Other noncurrent liabilities (10.3) (7.0) (1.6) (6.7) Accrued obligation recognized $ (10.3) $ (7.3) $ (1.6) $ (7.0) Amounts Recognized in Accumulated Other Comprehensive Income Loss (Pre-tax) Actuarial loss $ 4.0 $ 2.7 $ 0.7 $ 3.4 Total $ 4.0 $ 2.7 $ 0.7 $ 3.4 |
Schedule of components of net periodic benefit cost for our pension and postretirement benefit plans | For the period after the Separation Date, the components of net periodic benefit cost were as follows (dollars in millions): For the Fiscal Years Ended May 2019 2018 2017 Pension Post-Retirement Pension Post-Retirement Pension Post-Retirement Plans Plan Plans Plan Plans Plan Service cost $ 6.0 $ — $ 7.8 $ — $ 4.4 $ — Interest cost 0.8 0.3 0.4 0.2 0.1 0.1 Expected return on plan assets (0.9) — (0.4) — — — Net amortization of unrecognized amounts Prior service benefit — — — (0.2) — — Actuarial gain — 0.7 — 0.5 — — Net periodic benefit cost (a) $ 5.9 $ 1.0 $ 7.8 $ 0.5 $ 4.5 $ 0.1 Changes in plan assets and benefit obligations recognized in other comprehensive (income) loss Prior service benefit $ — $ — $ — $ — $ — $ (0.2) Actuarial (gain) loss 3.3 — 1.7 4.3 (1.0) (0.4) Amortization of prior service cost — — — 0.2 — — Amortization of actuarial gain (b) — (0.7) — (0.5) — — Total recognized in other comprehensive loss (income) $ 3.3 $ (0.7) $ 1.7 $ 4.0 $ (1.0) $ (0.6) Total recognized in net periodic benefit cost and other comprehensive loss (income) (pre-tax) $ 9.2 $ 0.3 $ 9.5 $ 4.5 $ 3.5 $ (0.5) (a) Pension service costs are allocated to operations and reflected in “Cost of sales” and expected returns on pension assets and interest costs are reflected in “Selling, general and administrative expenses” in the Combined and Consolidated Statements of Earnings. The decrease in fiscal 2019 net periodic pension cost, compared with fiscal 2018, reflects the amendment to the Lamb Weston, Inc. Pension Plan for Plant Hourly Employees, for employees not covered by a collective bargaining agreement, so that no future benefits accrue after December 31, 2018. (b) Accumulated losses in excess of 10% of the greater of the projected benefit obligation or the market-related value of assets will be recognized on a straight-line basis over the average remaining service period of active employees in our plans (which is between seven to eleven years for our pension plans and approximately four years for our post-retirement benefit plan), to the extent that losses are not offset by gains in subsequent years. The estimated net amount of actuarial losses on pension and post-retirement benefits included in “Accumulated other comprehensive loss” on our Consolidated Balance Sheets to be amortized in fiscal 2020 is a net loss of $0.7 million ($0.5 million after tax). |
Schedule of actuarial assumptions used in determining the benefit obligations and net periodic pension cost for our defined benefit and postretirement plans | For the Fiscal Years Ended May 2019 2018 2017 Pension Plans Post-Retirement Plan Pension Plans Post-Retirement Plan Pension Plans Post-Retirement Plan Weighted-Average Assumptions Used to Determine Benefit Obligations: Discount rate 4.01% 3.81% 4.25% 4.18% 4.33% 3.50% Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost: Discount rate 4.25% 4.18% 4.33% 3.60% 3.81% 3.18% Expected return on plan assets 5.30% N/A 7.50% N/A 7.50% N/A |
Schedule of health care cost trend rate assumption | 2019 2018 2017 Health care cost trend rate (Pre65/Post65) 7.3/5.8% 8.4/6.3% 9.0/6.5% Ultimate health care cost trend rate 4.5% 4.5% 4.5% Year that the rate reaches the ultimate trend rate 2024 2024 2024 |
Schedule of fair Value measurements of plan assets | Fair Value Measurements at May 26, 2019 Quoted Market Prices in Active Markets for Identical Assets Significant Observable Market-Based Inputs Significant Unobservable Inputs Level 1 Level 2 Level 3 Total Equity securities: U.S. equity securities (a) $ — $ 2.6 $ — $ 2.6 International equity securities (a) — 2.7 — 2.7 Fixed income securities: Government securities (b) 11.8 — — 11.8 Total assets $ 11.8 $ 5.3 $ — $ 17.1 Fair Value Measurements at May 27, 2018 Quoted Market Prices in Active Markets for Identical Assets Significant Observable Market-Based Inputs Significant Unobservable Inputs Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 11.8 $ — $ — $ 11.8 Equity securities: U.S. equity securities (a) — 1.0 — 1.0 International equity securities (a) — 1.5 — 1.5 Fixed income securities: Government securities (b) 3.0 — — 3.0 Total assets $ 14.8 $ 2.5 $ — $ 17.3 (c) (a) Includes investments in common/collective trust funds that are valued using net asset values (“NAV”) provided by the administrator of the funds. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of units outstanding. While the underlying assets are actively traded on an exchange, the funds are not. There are currently no redemption restrictions or unfunded commitments on these investments. There are certain funds with thirty-day redeemable notice requirements. (b) Includes investments in exchange-traded funds based on quoted prices in active markets. (c) At May 27, 2018, the fair value of our plan assets was $17.3 million, which includes $12.0 million we contributed to the Plan in the fourth quarter of fiscal 2018, net of benefit payments. The fourth quarter contribution was invested in cash and cash equivalents at May 27, 2018, and invested per the target investment allocation policy after fiscal year-end. The remaining $5.5 million was invested per our investment policy. In connection with the fourth quarter contribution, we changed our investment policy to invest 30% in equities and 70% in fixed income securities. The asset portfolio was rebalanced in June 2018. |
Schedule of Expected Benefit Payments | The following are estimated benefit payments to be paid to current plan participants by year (dollars in millions). Qualified pension benefit payments are paid from plan assets, while nonqualified pension benefit payments are paid by the Company. Pension Plans Post-Retirement Plan 2020 $ 0.3 $ 0.3 2021 0.4 0.3 2022 0.6 0.4 2023 0.8 0.4 2024 0.9 0.5 Succeeding 5 years 7.4 2.5 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
May 26, 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 29, 2016 — — — — — — Converted on November 9, 2016 (a) 459,466 $ 25.05 469,837 $ 25.33 56,050 $ 25.84 Granted (b) 86,642 33.96 — — 1,640 25.84 Vested (c) (17,753) 18.68 (1,503) 23.70 — — Forfeited/expired/cancelled (38,751) 24.24 (5,722) 26.73 — — Outstanding at May 28, 2017 489,604 $ 26.92 462,612 $ 25.33 57,690 $ 25.84 Granted (b) 293,209 $ 45.22 — $ — 125,524 $ 43.90 Performance condition adjustment (d) — — — — (818) 19.70 Vested (c) (172,772) 23.82 (173,762) 20.00 (15,228) 19.70 Forfeited/expired/cancelled (28,166) 31.52 (3,198) 27.75 (6,898) 43.87 Outstanding at May 27, 2018 581,875 $ 36.84 285,652 $ 28.54 160,270 $ 39.82 Granted (b) 215,382 $ 70.22 — $ — 98,414 $ 69.82 Performance condition adjustment (d) — — — — 97,803 40.35 Vested (c) (141,567) 29.96 (157,167) 28.61 (42,206) 27.32 Forfeited/expired/cancelled (14,670) 54.61 (7,675) 30.55 — — Outstanding at May 26, 2019 641,020 $ 49.17 120,810 $ 28.33 314,281 $ 51.06 (a) In connection with the Separation, outstanding Conagra RSUs and Performance Shares granted to Lamb Weston employees and non-employee directors under Conagra’s equity incentive plans were adjusted and converted into Lamb Weston stock awards under the Stock Plan. The awards were adjusted and converted in a manner intended to preserve the aggregate intrinsic value of the original Conagra equity award and are subject to substantially the same terms and conditions after the Separation as the terms and conditions applicable to the original Conagra award prior to the Separation Date. (b) Granted represents new grants and dividend equivalents accrued. (c) The aggregate fair value of awards that vested in fiscal 2019, 2018 and 2017 was $24.7 million, $16.6 million and $0.7 million, respectively, which represents the market value of our common stock on the date that the RSUs and Performance Shares vested. The number of RSUs and Performance Shares vested includes shares of common stock that we withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements. RSUs that are expected to vest are net of estimated future forfeitures. (d) Amount represents adjustment for performance results attained on Performance Shares during fiscal 2019 and 2018. |
The Schedule of stock option activity | Weighted- Weighted- Average Average Aggregate Exercise Remaining Intrinsic Price Contractual Value Shares (per share) Term (Years) (in millions) Outstanding at May 29, 2016 — — Converted on November 9, 2016 (a) 607,420 $ 23.60 Granted 146,514 35.15 Exercised (22,896) 21.90 Forfeited/cancelled (10,211) 30.68 Outstanding at May 28, 2017 720,827 $ 25.90 7.4 $ 14.2 Granted 56,496 $ 43.82 Exercised (125,717) 17.47 Forfeited/cancelled — — Outstanding at May 27, 2018 651,606 $ 29.08 7.3 $ 23.7 Granted — $ — Exercised (75,076) 26.22 Forfeited/cancelled (1,427) 30.67 Outstanding at May 26, 2019 575,103 $ 29.45 6.4 $ 18.8 Exercisable at May 26, 2019 476,628 $ 27.93 6.1 $ 16.3 (b) (a) In connection with the Separation, outstanding Conagra stock options granted to Lamb Weston employees and non-employee directors under Conagra’s equity incentive plans were adjusted and converted into Lamb Weston stock awards under the Stock Plan. The awards were adjusted and converted in a manner intended to preserve the aggregate intrinsic value of the original Conagra equity award and are subject to substantially the same terms and conditions after the Separation as the terms and conditions applicable to the original Conagra award prior to the Separation Date. (b) 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 fourth quarter, or May 24, 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 fiscal year. The amount changes based on the fair market value of our common stock. |
Schedule of compensation expenses for stock-based awards recognized, net of forfeitures | Compensation expense for share-based awards recognized in the Combined and Consolidated Statements of Earnings, net of forfeitures, was as follows (dollars in millions): For the Fiscal Years Ended May 2019 2018 2017 Stock-settled RSUs $ 10.2 $ 7.9 $ 4.0 Performance Shares 8.3 4.4 1.1 Stock options 0.3 1.2 0.6 Stock-settled compensation expense 18.8 13.5 5.7 Cash-settled RSUs (a) 3.3 8.8 9.7 Total compensation expense 22.1 22.3 15.4 Income tax benefit (b) (5.1) (6.9) (5.7) Total compensation expense, net of tax benefit $ 17.0 $ 15.4 $ 9.7 (a) All cash-settled RSUs are marked-to-market and presented within “Accrued liabilities” and “Other noncurrent liabilities” in our Consolidated Balance Sheets. (b) Income tax benefit represents the marginal tax rate. |
Schedule of total unrecognized compensation expense, net of estimated forfeitures, related to stock-based payments | Based on estimates at May 26, 2019, total unrecognized compensation expense related to stock-based awards was as follows (dollars in millions): Remaining Weighted Unrecognized Average Compensation Recognition Expense Period (in years) Stock-settled RSUs $ 15.2 1.8 Cash-settled RSUs 0.3 0.1 Performance shares 12.2 1.7 Stock options 0.1 0.5 Total unrecognized compensation expense $ 27.8 1.8 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
May 26, 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 May 26, 2019 and May 27, 2018 (dollars in millions): As of May 26, 2019 Level 1 Level 2 Level 3 Total Assets: Pension plan assets $ 11.8 $ 5.3 $ — $ 17.1 Deferred compensation assets 0.5 — — 0.5 Derivative assets (a) — 0.4 — 0.4 Total assets $ 12.3 $ 5.7 $ — $ 18.0 Liabilities: Derivative liabilities (a) $ — $ 3.8 $ — $ 3.8 Deferred compensation liabilities (b) — 15.1 — 15.1 Total liabilities $ — $ 18.9 $ — $ 18.9 As of May 27, 2018 Level 1 Level 2 Level 3 Total Assets: Pension plan assets $ 14.8 $ 2.5 $ — $ 17.3 Deferred compensation assets 0.5 — — 0.5 Derivative assets (a) — 0.8 — 0.8 Total assets $ 15.3 $ 3.3 $ — $ 18.6 Liabilities: Derivative liabilities (a) $ — $ 1.4 $ — $ 1.4 Deferred compensation liabilities (b) — 12.4 — 12.4 Total liabilities $ — $ 13.8 $ — $ 13.8 (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 commodities. Derivative assets and liabilities included in Level 2 primarily represent commodity swap and option contracts. (b) The fair values of our Level 2 deferred compensation liabilities were valued using third-party valuations, which are based on the net asset values of mutual funds in our retirement plans. While the underlying assets are actively traded on an exchange, the funds are not. |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 12 Months Ended |
May 26, 2019 | |
STOCKHOLDERS' EQUITY | |
Changes in AOCI, net of tax | Changes in AOCI, net of taxes, by component follows (dollars in millions). Amounts in parentheses indicate losses. Foreign Accumulated Currency Pension and Other Translation Post-Retirement Comprehensive Gains (Losses) Benefits Loss Balance as of May 27, 2018 $ (1.2) $ (3.1) $ (4.3) Other comprehensive income before reclassifications, net of tax (19.1) (2.5) (21.6) Amounts reclassified out of AOCI, net of tax — 0.6 (a) 0.6 Net current-period other comprehensive income (loss) (19.1) (1.9) (21.0) Balance as of May 26, 2019 $ (20.3) $ (5.0) $ (25.3) (a) These AOCI components are included in the computation of net pension and postretirement benefit costs. See Note 10, Employee Benefit Plans and Other Post-Retirement Benefits, for additional information. |
SEGMENTS (Tables)
SEGMENTS (Tables) | 12 Months Ended |
May 26, 2019 | |
SEGMENTS | |
Schedule of segment information | For the Fiscal Years Ended May (in millions) 2019 2018 2017 Net sales Global $ 1,961.5 $ 1,744.2 $ 1,624.8 Foodservice 1,156.1 1,099.1 1,030.0 Retail 498.3 449.2 384.9 Other 140.6 131.2 128.3 Total net sales 3,756.5 3,423.7 3,168.0 Product contribution margin (a) Global 446.3 375.7 338.6 Foodservice 402.4 365.9 330.7 Retail 98.8 87.3 77.6 Other (b) 23.6 19.0 9.3 Total product contribution margin 971.1 847.9 756.2 Other selling, general and administrative expenses (a) (c) 302.7 267.8 237.9 Income from operations 668.4 580.1 518.3 Interest expense, net 107.1 108.8 61.2 Income tax expense (d) 133.6 121.2 170.2 Equity method investment earnings 59.5 83.6 53.3 Net income 487.2 433.7 340.2 Less: Income attributable to noncontrolling interests (e) 8.6 16.9 13.3 Net income attributable to Lamb Weston Holdings, Inc. $ 478.6 $ 416.8 $ 326.9 (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 Other segment primarily includes our vegetable and dairy businesses and unrealized mark-to-market adjustments associated with commodity hedging contracts. (c) Fiscal 2018 includes $8.7 million of pre-tax expenses related to the Separation, primarily related to professional fees and employee-related costs. Fiscal 2017 includes $26.5 million of pre-tax expenses related to the Separation, primarily related to professional fees, and a $3.1 million non-cash pre-tax gain on assets received during the period. (d) In fiscal 2019, the Tax Act decreased income tax expense and increased net income by $27.2 million, or $0.19 per share, including a $24.8 million, or $0.17 per share, tax benefit related to a lower U.S. corporate tax rate and a $2.4 million, or $0.02 per share, benefit from the true-up of the transition tax on previously untaxed foreign earnings. Since our fiscal year-end is the last Sunday in May, in fiscal 2018, we phased in the impact of the lower tax rate, resulting in a U.S. corporate tax rate of 29.3%, compared with 21% in fiscal 2019. We completed our analysis of the one-time impacts of the Tax Act in fiscal 2019. In connection with our initial analysis of the impact of the Tax Act in fiscal 2018, we decreased income tax expense and increased net income $64.7 million, or $0.44 per share. This included a $28.4 million, or $0.19 per share net benefit for one-time items, including a $39.9 million net provisional tax benefit from the estimated impact of remeasuring our net U.S. deferred tax liabilities with a new lower federal tax rate, partially offset by an $11.5 million transition tax on our previously untaxed foreign earnings. It also included a $36.3 million, or $0.25 per share, tax benefit related to a lower U.S. corporate tax rate. In fiscal 2018, we phased in the impact of the lower tax rate, resulting in a 29.3% U.S. corporate tax rate in fiscal 2018, compared with 35% in fiscal 2017. (e) 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 Combined and Consolidated Statements of Earnings include 100% of Lamb Weston BSW’s earnings beginning November 2, 2018. See Note 7, Investments in Joint Ventures, for more information. |
COMMITMENTS, CONTINGENCIES, G_2
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS (Tables) | 12 Months Ended |
May 26, 2019 | |
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS | |
Summary of non-cancellable operating lease commitments | 2020 $ 18.6 2021 16.5 2022 15.7 2023 10.5 2024 8.6 Thereafter 26.6 Total $ 96.5 |
QUARTERLY FINANCIAL DATA (una_2
QUARTERLY FINANCIAL DATA (unaudited) (Tables) | 12 Months Ended |
May 26, 2019 | |
QUARTERLY FINANCIAL DATA (unaudited) | |
Schedule of Quarterly Financial Information | 2019 (a) First Second Third Fourth Quarter Quarter Quarter Quarter Net sales $ 914.9 $ 911.4 $ 926.8 $ 1,003.4 Gross profit 230.6 249.0 273.4 250.5 Income before income taxes and equity method earnings 125.8 147.8 166.8 120.9 Income tax expense 34.3 34.0 39.6 25.7 Net income attributable to Lamb Weston Holdings, Inc. 107.8 119.0 141.4 110.4 Earnings per share Basic 0.73 0.74 0.96 0.76 Diluted 0.73 0.74 0.95 0.75 Dividends declared 0.19125 0.19125 0.20000 0.20000 2018 (a) First Second Third Fourth Quarter Quarter Quarter Quarter Net sales $ 817.5 $ 824.6 $ 863.4 $ 918.2 Gross profit 196.3 208.2 242.3 232.7 Income before income taxes and equity method earnings 112.4 112.4 140.7 105.8 Income tax expense 44.1 41.5 7.5 28.1 Net income attributable to Lamb Weston Holdings, Inc. 83.4 76.6 156.8 100.0 Earnings per share Basic 0.56 0.52 1.07 0.68 Diluted 0.56 0.52 1.06 0.68 Dividends declared 0.18750 0.18750 0.19125 0.19125 (a) The sum of quarterly amounts may not agree to our annual results due to rounding. |
NATURE OF OPERATIONS AND SUMM_4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reportable Segments (Details) - segment | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Number of reportable segments | 4 | 4 | 4 |
NATURE OF OPERATIONS AND SUMM_5
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_6
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Basis of Presentation (Details) | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Fiscal year duration (weeks converted to days) | 364 days | 364 days | 364 days |
NATURE OF OPERATIONS AND SUMM_7
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Sales Incentives and Trade Promotion Allowances (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Accrued sales incentives and trade promotions | $ 48.6 | $ 45.4 |
NATURE OF OPERATIONS AND SUMM_8
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising and Promotion (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Advertising and Promotion | |||
Advertising and promotion expenses | $ 32.4 | $ 31.6 | $ 22.6 |
NATURE OF OPERATIONS AND SUMM_9
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Research and Development (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Research and Development | |||
Research and development costs | $ 15.4 | $ 13.5 | $ 10.6 |
NATURE OF OPERATIONS AND SUM_10
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and Cash Equivalents (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Cash and Cash Equivalents | ||
Cash and cash equivalents | $ 12.2 | $ 55.6 |
NATURE OF OPERATIONS AND SUM_11
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Trade Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Trade Accounts Receivable and Allowance for Doubtful Accounts | ||
Allowance for doubtful accounts | $ 1.3 | $ 0.6 |
NATURE OF OPERATIONS AND SUM_12
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventories (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Major classes of inventories | ||
Raw materials and packaging | $ 93.1 | $ 87.2 |
Finished goods | 371.4 | 430.5 |
Supplies and other | 33.8 | 32 |
Inventories | $ 498.3 | $ 549.7 |
NATURE OF OPERATIONS AND SUM_13
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment - Interest Capitalized (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Construction in progress | |||
Property, Plant and Equipment | |||
Interest capitalized | $ 7.6 | $ 4.2 | $ 5.2 |
NATURE OF OPERATIONS AND SUM_14
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment - Components (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | $ 2,874.5 | $ 2,581.3 |
Less accumulated depreciation | (1,276.7) | (1,160.5) |
Property, plant, and equipment, net | 1,597.8 | 1,420.8 |
Land and land improvements | ||
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | 142.2 | 139.8 |
Buildings, machinery, and equipment | ||
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | 2,542.3 | 2,212.6 |
Furniture, fixtures, office equipment, and other | ||
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | 105.2 | 101 |
Construction in progress | ||
Property, Plant and Equipment | ||
Property, plant, and equipment, at cost | $ 84.8 | $ 127.9 |
NATURE OF OPERATIONS AND SUM_15
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment - Useful Lives (Details) | 12 Months Ended |
May 26, 2019 | |
Land improvements | Minimum | |
Property, Plant and Equipment | |
Estimated useful lives | 1 year |
Land improvements | Maximum | |
Property, Plant and Equipment | |
Estimated useful lives | 40 years |
Buildings | Minimum | |
Property, Plant and Equipment | |
Estimated useful lives | 10 years |
Buildings | Maximum | |
Property, Plant and Equipment | |
Estimated useful lives | 40 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment | |
Estimated useful lives | 5 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment | |
Estimated useful lives | 20 years |
Furniture, fixtures, office equipment, and other | Minimum | |
Property, Plant and Equipment | |
Estimated useful lives | 3 years |
Furniture, fixtures, office equipment, and other | Maximum | |
Property, Plant and Equipment | |
Estimated useful lives | 15 years |
NATURE OF OPERATIONS AND SUM_16
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Depreciation Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Property, Plant and Equipment | |||
Depreciation expense | $ 155.5 | $ 136.3 | $ 104.3 |
NATURE OF OPERATIONS AND SUM_17
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Purchases in Accounts Payable (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 26, 2019 | May 27, 2018 | |
Property, Plant and Equipment | ||
Purchases of property, plant and equipment included in accounts payable | $ 27.1 | $ 27.9 |
NATURE OF OPERATIONS AND SUM_18
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Foreign Currency (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Selling, general and administrative | |||
Foreign Currency | |||
Gains and losses from foreign currency transactions | $ (3.3) | $ 4.7 | $ (2.7) |
NATURE OF OPERATIONS AND SUM_19
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ASU 2016-02 (Details) - USD ($) $ in Millions | May 27, 2019 | May 26, 2019 | May 27, 2018 |
New and Recently Issued Accounting Standards | |||
Net increase to opening retained earnings | $ 803.6 | $ 426.4 | |
Property, plant and equipment, net | 1,597.8 | 1,420.8 | |
Long-term debt, excluding current portion | $ 2,280.2 | $ 2,336.7 | |
Forecast | Accounting Standards Update 2016-02 | |||
New and Recently Issued Accounting Standards | |||
Cumulative effect of adoption of accounting standard | $ 27 | ||
Scenario forecast adjustment | Accounting Standards Update 2016-02 | |||
New and Recently Issued Accounting Standards | |||
Property, plant and equipment, net | (39) | ||
Long-term debt, excluding current portion | (66) | ||
Finance Lease, right of use asset | 160 | ||
Finance Lease, liability | $ 160 |
NATURE OF OPERATIONS AND SUM_20
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - New and Recently Issued Accounting Standards (Details) | May 26, 2019 |
Accounting Standards Update 2018-15 | |
New and Recently Issued Accounting Standards | |
Change in Accounting Principle, Accounting Standards Update, Adopted | true |
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Aug. 27, 2018 |
Change in Accounting Principle, Accounting Standards Update, Early Adoption | true |
Change in Accounting Principle, Accounting Standards Update, Transition Option Elected | Prospective |
Accounting Standards Update 2014-09 | |
New and Recently Issued Accounting Standards | |
Change in Accounting Principle, Accounting Standards Update, Adopted | true |
Change in Accounting Principle, Accounting Standards Update, Adoption Date | May 28, 2018 |
Change in Accounting Principle, Accounting Standards Update, Early Adoption | false |
Change in Accounting Principle, Accounting Standards Update, Transition Option Elected | Modified Retrospective |
Accounting Standards Update 2017-07 | |
New and Recently Issued Accounting Standards | |
Change in Accounting Principle, Accounting Standards Update, Adopted | true |
Change in Accounting Principle, Accounting Standards Update, Adoption Date | May 28, 2018 |
Change in Accounting Principle, Accounting Standards Update, Early Adoption | false |
Accounting Standards Update 2018-14 | |
New and Recently Issued Accounting Standards | |
Change in Accounting Principle, Accounting Standards Update, Adopted | false |
Change in Accounting Principle, Accounting Standards Update, Early Adoption | false |
Accounting Standards Update 2016-02 | |
New and Recently Issued Accounting Standards | |
Change in Accounting Principle, Accounting Standards Update, Adopted | true |
Change in Accounting Principle, Accounting Standards Update, Adoption Date | May 27, 2019 |
Change in Accounting Principle, Accounting Standards Update, Early Adoption | false |
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 | 12 Months Ended | |||||||||
May 26, 2019 | Feb. 24, 2019 | Nov. 25, 2018 | Aug. 26, 2018 | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Revenue from Contracts with Customers | |||||||||||
Net sales | $ 1,003.4 | $ 926.8 | $ 911.4 | $ 914.9 | $ 918.2 | $ 863.4 | $ 824.6 | $ 817.5 | $ 3,756.5 | $ 3,423.7 | $ 3,168 |
Cost of sales | 2,753 | 2,544.2 | 2,389.2 | ||||||||
Income from operations | 668.4 | 580.1 | 518.3 | ||||||||
Income tax expense | 25.7 | 39.6 | 34 | 34.3 | 28.1 | 7.5 | 41.5 | 44.1 | 133.6 | 121.2 | 170.2 |
Net income attributable to Lamb Weston Holdings, Inc. | $ 110.4 | $ 141.4 | $ 119 | $ 107.8 | $ 100 | $ 156.8 | $ 76.6 | $ 83.4 | $ 478.6 | $ 416.8 | $ 326.9 |
Earnings per share | |||||||||||
Basic (in dollars per share) | $ 0.76 | $ 0.96 | $ 0.74 | $ 0.73 | $ 0.68 | $ 1.07 | $ 0.52 | $ 0.56 | $ 3.19 | $ 2.83 | $ 2.22 |
Diluted (in dollars per share) | $ 0.75 | $ 0.95 | $ 0.74 | $ 0.73 | $ 0.68 | $ 1.06 | $ 0.52 | $ 0.56 | $ 3.18 | $ 2.82 | $ 2.22 |
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Net sales | $ 3,743.3 | ||||||||||
Cost of sales | 2,744.4 | ||||||||||
Income from operations | 663.8 | ||||||||||
Income tax expense | 132.5 | ||||||||||
Net income attributable to Lamb Weston Holdings, Inc. | $ 475.1 | ||||||||||
Earnings per share | |||||||||||
Basic (in dollars per share) | $ 3.17 | ||||||||||
Diluted (in dollars per share) | $ 3.15 | ||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Net sales | $ 13.2 | ||||||||||
Cost of sales | 8.6 | ||||||||||
Income from operations | 4.6 | ||||||||||
Income tax expense | 1.1 | ||||||||||
Net income attributable to Lamb Weston Holdings, Inc. | $ 3.5 | ||||||||||
Earnings per share | |||||||||||
Basic (in dollars per share) | $ 0.02 | ||||||||||
Diluted (in dollars per share) | $ 0.03 |
REVENUE FROM CONTRACTS WITH C_5
REVENUE FROM CONTRACTS WITH CUSTOMERS - Consolidated Balance Sheets (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Revenue from Contracts with Customers | ||
Receivables, less allowance for doubtful accounts | $ 340.1 | $ 225.9 |
Inventories | 498.3 | 549.7 |
Deferred income taxes | 125.7 | 92.1 |
Retained earnings | 803.6 | $ 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 | 240.3 | |
Inventories | 575.7 | |
Deferred income taxes | 120.5 | |
Retained earnings | 786.4 | |
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 | 99.8 | |
Inventories | (77.4) | |
Deferred income taxes | 5.2 | |
Retained earnings | $ 17.2 |
REVENUE FROM CONTRACTS WITH C_6
REVENUE FROM CONTRACTS WITH CUSTOMERS - Consolidated Statements of Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Cash flows from operating activities | |||
Net income | $ 487.2 | $ 433.7 | $ 340.2 |
Deferred income taxes | 37.5 | (3.6) | 14.8 |
Receivables | (25.1) | (40.4) | 1.2 |
Inventories | (15.8) | $ (23.6) | $ (26.1) |
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | |||
Cash flows from operating activities | |||
Net income | 483.7 | ||
Deferred income taxes | 36.3 | ||
Receivables | (11.8) | ||
Inventories | (24.4) | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||
Cash flows from operating activities | |||
Net income | 3.5 | ||
Deferred income taxes | 1.2 | ||
Receivables | (13.3) | ||
Inventories | $ 8.6 |
REVENUE FROM CONTRACTS WITH C_7
REVENUE FROM CONTRACTS WITH CUSTOMERS - Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 26, 2019 | Feb. 24, 2019 | Nov. 25, 2018 | Aug. 26, 2018 | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Revenue from Contracts with Customers | |||||||||||
Revenue | $ 1,003.4 | $ 926.8 | $ 911.4 | $ 914.9 | $ 918.2 | $ 863.4 | $ 824.6 | $ 817.5 | $ 3,756.5 | $ 3,423.7 | $ 3,168 |
Global | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Revenue | 1,961.5 | 1,744.2 | 1,624.8 | ||||||||
Foodservice | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Revenue | 1,156.1 | 1,099.1 | 1,030 | ||||||||
Retail | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Revenue | 498.3 | 449.2 | 384.9 | ||||||||
Other | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Revenue | 140.6 | $ 131.2 | $ 128.3 | ||||||||
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Revenue | 3,743.3 | ||||||||||
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | Global | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Revenue | 1,948.6 | ||||||||||
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | Foodservice | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Revenue | 1,157.3 | ||||||||||
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | Retail | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Revenue | 497.3 | ||||||||||
Calculated under Revenue Guidance in Effect before Topic 606 | Accounting Standards Update 2014-09 | Other | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Revenue | 140.1 | ||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Revenue | 13.2 | ||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Global | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Revenue | 12.9 | ||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Foodservice | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Revenue | (1.2) | ||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Retail | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Revenue | 1 | ||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Other | |||||||||||
Revenue from Contracts with Customers | |||||||||||
Revenue | $ 0.5 |
REVENUE FROM CONTRACTS WITH C_8
REVENUE FROM CONTRACTS WITH CUSTOMERS - Practical Expedients and Exemptions (Details) | 12 Months Ended |
May 26, 2019 | |
Practical Expedients and Exemptions | |
Incremental costs of obtaining a contract as expense when incurred if the amortization period of assets would recognize | true |
ACQUISITIONS (Details)
ACQUISITIONS (Details) lb in Millions, $ in Millions, $ in Millions | Jul. 02, 2019USD ($)AUD ($) | Dec. 21, 2018USD ($)lb | May 26, 2019USD ($) | May 27, 2018USD ($) | May 28, 2017USD ($) |
Purchase price allocation | |||||
Goodwill | $ 205.9 | $ 135.1 | $ 133 | ||
Frozen Potato Processor in Australia, Acquired 21 December 2018 | |||||
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 | ||||
Frozen Potato Processor in Australia, Acquired 2 July 2019 | |||||
Ownership interest acquired | |||||
Ownership interest acquired (as a percent) | 100.00% | ||||
Consideration transferred | |||||
Consideration transferred | $ 117 | ||||
Increase in production capacity | 70 |
EARNINGS PER SHARE - Computatio
EARNINGS PER SHARE - Computation of Basic and Diluted Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 26, 2019 | Feb. 24, 2019 | Nov. 25, 2018 | Aug. 26, 2018 | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Numerator: | |||||||||||
Net income attributable to Lamb Weston Holdings, Inc. | $ 110.4 | $ 141.4 | $ 119 | $ 107.8 | $ 100 | $ 156.8 | $ 76.6 | $ 83.4 | $ 478.6 | $ 416.8 | $ 326.9 |
Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated, net of tax benefits | 10.8 | 2.7 | 2.1 | ||||||||
Net income available to Lamb Weston common stockholders | $ 467.8 | $ 414.1 | $ 324.8 | ||||||||
Denominator: | |||||||||||
Basic weighted average common shares outstanding | 146.5 | 146.3 | 146.1 | ||||||||
Add: Dilutive effect of employee incentive plans | 0.8 | 0.7 | 0.5 | ||||||||
Diluted weighted average common shares outstanding | 147.3 | 147 | 146.6 | ||||||||
Earnings per share | |||||||||||
Basic (in dollars per share) | $ 0.76 | $ 0.96 | $ 0.74 | $ 0.73 | $ 0.68 | $ 1.07 | $ 0.52 | $ 0.56 | $ 3.19 | $ 2.83 | $ 2.22 |
Diluted (in dollars per share) | $ 0.75 | $ 0.95 | $ 0.74 | $ 0.73 | $ 0.68 | $ 1.06 | $ 0.52 | $ 0.56 | $ 3.18 | $ 2.82 | $ 2.22 |
EARNINGS PER SHARE - Variable I
EARNINGS PER SHARE - Variable Interest Entity - Consolidated - Acquisition - Pro Forma (Details) - Lamb Weston BSW, LLC $ / shares in Units, $ in Millions | 12 Months Ended |
May 26, 2019USD ($)$ / shares | |
Pro Forma Information | |
Net income available to common stockholders | $ | $ (9.4) |
Basic and diluted earning per share (in dollars per share) | $ / shares | $ (0.06) |
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 - Additional
EARNINGS PER SHARE - Additional Information (Details) shares in Millions | Nov. 09, 2016shares |
Conagra | |
Related Party Transactions | |
Issuance of common stock at Separation (in shares) | 146 |
EARNINGS PER SHARE - Antidiluti
EARNINGS PER SHARE - Antidilutive Securities (Details) - shares | 12 Months Ended | |
May 27, 2018 | May 28, 2017 | |
Stock options | ||
EARNINGS PER SHARE | ||
Antidilutive securities (in shares) | 0 | 0 |
Stock-settled restricted stock units | ||
EARNINGS PER SHARE | ||
Antidilutive securities (in shares) | 0 | 0 |
Cash-settled RSUs | ||
EARNINGS PER SHARE | ||
Antidilutive securities (in shares) | 0 | 0 |
Performance shares | ||
EARNINGS PER SHARE | ||
Antidilutive securities (in shares) | 0 | 0 |
INCOME TAXES - Pre-tax income i
INCOME TAXES - Pre-tax income inclusive of equity method investment earnings (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Pre-tax income inclusive of equity method investment earnings | |||
United States | $ 574.5 | $ 478.2 | $ 467.5 |
Foreign | 46.3 | 76.7 | 42.9 |
Total pre-tax income | $ 620.8 | $ 554.9 | $ 510.4 |
INCOME TAXES - Provision for In
INCOME TAXES - Provision for Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 26, 2019 | Feb. 24, 2019 | Nov. 25, 2018 | Aug. 26, 2018 | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Current | |||||||||||
U.S. federal | $ 66.8 | $ 94.3 | $ 132 | ||||||||
State and local | 17.7 | 14.7 | 13.9 | ||||||||
Foreign | 11.6 | 15.8 | 9.5 | ||||||||
Total current provision for taxes | 96.1 | 124.8 | 155.4 | ||||||||
Deferred | |||||||||||
U.S. federal | 42.2 | (4.4) | 9.7 | ||||||||
State and local | (0.1) | 0.1 | 3.2 | ||||||||
Foreign | (4.6) | 0.7 | 1.9 | ||||||||
Total deferred provision for taxes | 37.5 | (3.6) | 14.8 | ||||||||
Total provision for taxes | $ 25.7 | $ 39.6 | $ 34 | $ 34.3 | $ 28.1 | $ 7.5 | $ 41.5 | $ 44.1 | $ 133.6 | $ 121.2 | $ 170.2 |
INCOME TAXES - Tax Act - Statut
INCOME TAXES - Tax Act - Statutory Rates (Details) | Dec. 31, 2017 | May 29, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 |
INCOME TAXES | |||||
Federal statutory tax rate (as a percent) | 35.00% | 35.00% | 21.00% | 29.30% | 35.00% |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Income Tax Expenses - Tabular Disclosure (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 26, 2019 | Feb. 24, 2019 | Nov. 25, 2018 | Aug. 26, 2018 | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Reconciliation of income tax expense | |||||||||||
Provision computed at U.S. statutory rate | $ 130.4 | $ 162.6 | $ 178.6 | ||||||||
State and local taxes, net of federal benefit | 14.8 | 12.6 | 11.4 | ||||||||
Tax credits and domestic manufacturers deduction | (0.6) | (8.1) | (11) | ||||||||
Effect of taxes on foreign operations | (4.7) | (7) | (7.8) | ||||||||
Deferred impact of rate change | (45.4) | ||||||||||
Transition tax liability | (2.4) | 11.5 | |||||||||
Other | (3.9) | (5) | (1) | ||||||||
Total provision for taxes | $ 25.7 | $ 39.6 | $ 34 | $ 34.3 | $ 28.1 | $ 7.5 | $ 41.5 | $ 44.1 | $ 133.6 | $ 121.2 | $ 170.2 |
Effective income tax rate (as a percent) | 21.50% | 21.80% | 33.30% |
INCOME TAXES - Reconciliation_2
INCOME TAXES - Reconciliation of Income Tax Expenses - Statutory Rates (Details) | Dec. 31, 2017 | May 29, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 |
INCOME TAXES | |||||
Federal statutory tax rate (as a percent) | 35.00% | 35.00% | 21.00% | 29.30% | 35.00% |
INCOME TAXES - Reconciliation_3
INCOME TAXES - Reconciliation of Income Tax Expenses - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
May 27, 2018 | Feb. 25, 2018 | May 26, 2019 | May 27, 2018 | |
INCOME TAXES | ||||
Deferred impact of rate change | $ 45.4 | |||
Net provisional tax benefit from the estimated impact of remeasuring net U.S. deferred tax liabilities, deferred tax benefits | 5.5 | |||
Net tax benefit for the re-measurement of U.S. deferred taxes | $ 13.3 | $ 23 | 39.9 | |
Transition tax liability | $ (2.4) | $ 11.5 | ||
Transition tax period for payment | 8 years |
INCOME TAXES - Income Taxes Pai
INCOME TAXES - Income Taxes Paid (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
INCOME TAXES | |||
Income taxes paid, net of refunds | $ 103 | $ 106.9 | $ 170 |
INCOME TAXES - Deferred Income
INCOME TAXES - Deferred Income Taxes - Statutory Rates (Details) | Dec. 31, 2017 | May 29, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 |
INCOME TAXES | |||||
Federal statutory tax rate (as a percent) | 35.00% | 35.00% | 21.00% | 29.30% | 35.00% |
INCOME TAXES - Deferred Incom_2
INCOME TAXES - Deferred Income Taxes - Deferred Tax Assets (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Deferred Tax Assets | ||
Goodwill and other intangible assets, deferred tax assets | $ 64.1 | $ 68 |
Compensation and benefit related liabilities | 17.8 | 15.3 |
Net operating loss carryforwards | 15.3 | 15.8 |
Accrued expenses and other liabilities | 14.2 | 13.3 |
Inventory and inventory reserves | 11.5 | 2.8 |
Other | 12.1 | 7.9 |
Deferred Tax Assets, Gross, Total | 135 | 123.1 |
Less: Valuation allowance | (64.6) | (62) |
Net deferred tax assets | $ 70.4 | $ 61.1 |
INCOME TAXES - Deferred Incom_3
INCOME TAXES - Deferred Income Taxes - Deferred Tax Liabilities (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Deferred Tax Liabilities | ||
Property, plant and equipment | $ 178.1 | $ 127.7 |
Debt issuance cost | 4.1 | 4.6 |
Investment in joint ventures | 3.5 | 9.1 |
Other | 8.6 | 11.4 |
Deferred Tax Liabilities, Gross, Total | $ 194.3 | $ 152.8 |
INCOME TAXES - Deferred Incom_4
INCOME TAXES - Deferred Income Taxes - Net Operating Loss Carryforwards (Details) - Foreign $ in Millions | May 26, 2019USD ($) |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 34.9 |
Net operating loss carryforwards, after tax | $ 8.3 |
INCOME TAXES - Deferred Incom_5
INCOME TAXES - Deferred Income Taxes - Tax Credit Carryforwards (Details) - State $ in Millions | May 26, 2019USD ($) |
Tax Credit Carryforward [Line Items] | |
Gross state capital loss carryovers | $ 100 |
Gross state capital loss carryovers, after tax | $ 7 |
INCOME TAXES - Deferred Incom_6
INCOME TAXES - Deferred Income Taxes - Valuation Allowance (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
May 26, 2019 | Feb. 24, 2019 | Nov. 25, 2018 | Aug. 26, 2018 | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Income taxes | |||||||||||
Income tax expense | $ 25,700,000 | $ 39,600,000 | $ 34,000,000 | $ 34,300,000 | $ 28,100,000 | $ 7,500,000 | $ 41,500,000 | $ 44,100,000 | $ 133,600,000 | $ 121,200,000 | $ 170,200,000 |
Net Operating Loss Carryforwards | |||||||||||
Income taxes | |||||||||||
Income tax expense | $ 1,100,000 | $ 0 |
INCOME TAXES - Deferred Incom_7
INCOME TAXES - Deferred Income Taxes - Consolidated Balance Sheets (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Other assets | ||
Deferred tax assets | $ 1.8 | $ 0.4 |
Deferred income taxes | ||
Deferred income taxes | $ 125.7 | $ 92.1 |
INCOME TAXES - Uncertain Tax Po
INCOME TAXES - Uncertain Tax Positions - Changes in Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Uncertain Tax Positions | |||
Beginning balance | $ 13.2 | $ 6.9 | $ 3.8 |
Decreases from positions established during prior fiscal years | (0.8) | ||
Increases from positions established during current and prior fiscal years | 10.4 | 7.9 | 2.2 |
Expiration of statute of limitations | (1.1) | (1.6) | (0.9) |
Adjustments resulting from the Separation | 1.8 | ||
Ending balance | $ 21.7 | $ 13.2 | $ 6.9 |
INCOME TAXES - Uncertain Tax _2
INCOME TAXES - Uncertain Tax Positions - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |||
May 26, 2019 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
INCOME TAXES | ||||
Unrecognized tax benefits | $ 21.7 | $ 13.2 | $ 6.9 | $ 3.8 |
Tax benefit if unrecognized tax benefits are recognized | 18.8 | 11.1 | ||
Gross interest and penalties | 3.9 | 2.9 | ||
Accrued estimated interest and penalties | $ 3.9 | $ 2.9 | ||
Statutes of limitations, minimum | 3 years | |||
Statutes of limitations, maximum | 5 years |
GOODWILL AND OTHER IDENTIFIAB_3
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Carrying Amount of Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 26, 2019 | May 27, 2018 | |
Goodwill | ||
Balance at the beginning period | $ 135.1 | $ 133 |
Foreign currency translation adjustment | (4.3) | 2.1 |
Acquisition | 75.1 | |
Balance at the end of the period | 205.9 | 135.1 |
Global | ||
Goodwill | ||
Balance at the beginning period | 76.9 | 74.8 |
Foreign currency translation adjustment | (4.3) | 2.1 |
Acquisition | 75.1 | |
Balance at the end of the period | 147.7 | 76.9 |
Foodservice | ||
Goodwill | ||
Balance at the beginning period | 42.8 | 42.8 |
Balance at the end of the period | 42.8 | 42.8 |
Retail | ||
Goodwill | ||
Balance at the beginning period | 10.9 | 10.9 |
Balance at the end of the period | 10.9 | 10.9 |
Other | ||
Goodwill | ||
Balance at the beginning period | 4.5 | 4.5 |
Balance at the end of the period | $ 4.5 | $ 4.5 |
GOODWILL AND OTHER IDENTIFIAB_4
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Goodwill Acquired (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended |
Dec. 31, 2018 | May 26, 2019 | |
Goodwill | ||
Acquisition | $ 75.1 | |
Global | ||
Goodwill | ||
Acquisition | $ 75.1 | |
Frozen Potato Processor in Australia, Acquired 21 December 2018 | Global | ||
Goodwill | ||
Acquisition | $ 75.1 |
GOODWILL AND OTHER IDENTIFIAB_5
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Weighted Average Useful Life (Details) | 12 Months Ended | |
May 26, 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 | May 26, 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 | 39.1 | 35.2 |
Total intangible assets, excluding goodwill | 57.1 | 53.2 |
Accumulated Amortization, amortizing intangible assets | 19.5 | 17.8 |
Total intangible assets, net of amortization, excluding goodwill | $ 37.6 | $ 35.4 |
GOODWILL AND OTHER IDENTIFIAB_7
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Amortization Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | |||
Amortization expense | $ 2.2 | $ 2.4 | $ 2.3 |
GOODWILL AND OTHER IDENTIFIAB_8
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Estimated Intangible Assets Amortization Expense (Details) $ in Millions | May 26, 2019USD ($) |
Estimated intangible asset amortization expense | |
2020 | $ 2 |
2021 | 2 |
2022 | 2 |
2023 | 2 |
2024 | 2 |
Thereafter | $ 10 |
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 $ in Millions | Nov. 02, 2018USD ($) |
Consideration transferred | |
Call option | $ 65 |
Additional payment | $ 13.2 |
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 | $ 9.3 |
INVESTMENTS IN JOINT VENTURES_4
INVESTMENTS IN JOINT VENTURES - Variable Interest Entity - Consolidated - Acquisition - Pro Forma (Details) - Lamb Weston BSW, LLC $ / shares in Units, $ in Millions | 12 Months Ended |
May 26, 2019USD ($)$ / shares | |
Pro Forma Information | |
Net income available to common stockholders | $ | $ (9.4) |
Basic and diluted earning per share (in dollars per share) | $ / shares | $ (0.06) |
INVESTMENTS IN JOINT VENTURES_5
INVESTMENTS IN JOINT VENTURES - Variable Interest Entity - Consolidated - Transactions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Conagra | |||
Related Party Transactions | |||
Purchases | $ 7.9 | ||
Co-venturer | |||
Related Party Transactions | |||
Purchases | $ 24.6 | $ 58.7 | 62.9 |
Costs | $ 2.5 | $ 5.1 | $ 5.1 |
INVESTMENTS IN JOINT VENTURES_6
INVESTMENTS IN JOINT VENTURES - Other Investments and Variable Interest Entity - Not Consolidated (Details) - USD ($) $ in Millions | 12 Months Ended | |||
May 26, 2019 | May 27, 2018 | May 28, 2017 | May 29, 2016 | |
Variable Interest Entity - Not Consolidated | ||||
Stockholders' equity | $ (4.6) | $ (334.8) | $ (647.2) | $ 1,400.6 |
Equity method investments | 224.6 | 219.8 | ||
Lamb-Weston Meijer v.o.f. | ||||
Variable Interest Entity - Not Consolidated | ||||
Partners' equity | 398.1 | 390.5 | ||
Total liabilities | 267.3 | 242.2 | ||
Lamb-Weston Meijer v.o.f. | Selling, general and administrative | ||||
Variable Interest Entity - Not Consolidated | ||||
Fees received | 1.8 | 1.7 | 1.8 | |
Lamb-Weston RDO Frozen | ||||
Variable Interest Entity - Not Consolidated | ||||
Stockholders' equity | 35.7 | 36 | ||
Term borrowings from banks | 60.5 | 57.2 | ||
Equity method investments | 17.8 | 18 | ||
Lamb-Weston RDO Frozen | Selling, general and administrative | ||||
Variable Interest Entity - Not Consolidated | ||||
Fees received | $ 14.8 | $ 14.4 | $ 13.9 | |
Variable Interest Entity, Not Primary Beneficiary | Lamb-Weston Meijer v.o.f. | ||||
Variable Interest Entity - Not Consolidated | ||||
Ownership interest (as a percent) | 50.00% | |||
Variable Interest Entity, Not Primary Beneficiary | 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 | May 26, 2019 | May 27, 2018 |
INVESTMENTS IN JOINT VENTURES | ||
Carrying value of equity method investments | $ 224.6 | $ 219.8 |
INVESTMENTS IN JOINT VENTURES_8
INVESTMENTS IN JOINT VENTURES - Transactions with Ventures - Sales and Payments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Conagra | |||
Related Party Transactions | |||
Net sales | $ 8.4 | ||
Payments | 7.9 | ||
Corporate Joint Venture | |||
Related Party Transactions | |||
Net sales | $ 29.9 | $ 29.3 | 30.1 |
Payments | 10.9 | 10.7 | $ 11.7 |
Receivables | $ 12.7 | $ 12.4 |
INVESTMENTS IN JOINT VENTURES_9
INVESTMENTS IN JOINT VENTURES - Transactions with Ventures - Dividends Received (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
INVESTMENTS IN JOINT VENTURES | |||
Dividends received from equity method investments | $ 45.7 | $ 48.7 | $ 31 |
INVESTMENTS IN JOINT VENTURE_10
INVESTMENTS IN JOINT VENTURES - Combined Financial Information for Equity Method Investments - General Information (Details) | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Summarized combined financial information for equity method investments | |||
Summarized financial information of equity method investments, percentage of operations presented (as a percent) | 100.00% | 100.00% | 100.00% |
INVESTMENTS IN JOINT VENTURE_11
INVESTMENTS IN JOINT VENTURES - Combined Financial Information for Equity Method Investments - Income Statement (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Income Statement | |||
Net sales | $ 1,172.6 | $ 1,142.7 | $ 992.6 |
Gross margin | 212.2 | 246.3 | 190.9 |
Earnings before income taxes | $ 119 | $ 167.2 | $ 106.6 |
INVESTMENTS IN JOINT VENTURE_12
INVESTMENTS IN JOINT VENTURES - Combined Financial Information for Equity Method Investments - Balance Sheet (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Assets | ||
Current assets | $ 406.2 | $ 376.9 |
Noncurrent assets | 368.4 | 362.7 |
Liabilities | ||
Current liabilities | 282.9 | 247.5 |
Noncurrent liabilities | $ 55.9 | $ 63.4 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
ACCRUED LIABILITIES | ||
Compensation and benefits | $ 92.4 | $ 91.7 |
Accrued trade promotions | 48.6 | 45.4 |
Dividends payable | 29.2 | 28 |
Franchise, property, and sales and use taxes | 8.6 | 9.6 |
Accrued interest | 7.6 | 10.8 |
Income taxes payable | 0.5 | 3.1 |
Other | 30.3 | 27.4 |
Accrued liabilities | $ 217.2 | $ 216 |
DEBT AND FINANCING OBLIGATION_2
DEBT AND FINANCING OBLIGATIONS - Tabular Disclosure - Components (Details) - USD ($) $ in Millions | Jun. 28, 2019 | May 26, 2019 | May 27, 2018 | Nov. 30, 2016 |
Debt and Financing Obligations | ||||
Short-term borrowings | $ 8.4 | $ 9.6 | ||
Long-term debt | 2,265.1 | 2,326.8 | ||
Financing obligations: | 78.9 | 79 | ||
Total debt and financing obligations | 2,352.4 | 2,415.4 | ||
4.625% Senior Notes, due 2024 | Senior Notes | ||||
Debt and Financing Obligations | ||||
Long-term debt | $ 833 | $ 833 | ||
Interest rate (as a percent) | 4.625% | 4.625% | 4.625% | |
4.875% Senior Notes, due 2026 | Senior Notes | ||||
Debt and Financing Obligations | ||||
Long-term debt | $ 833 | $ 833 | ||
Interest rate (as a percent) | 4.875% | 4.875% | 4.875% | |
Revolving Credit Facility, November 2016 | Secured Debt | Revolving Credit Facility | ||||
Debt and Financing Obligations | ||||
Short-term borrowings | $ 7.2 | |||
Term Loan Facility, due 2021 | Secured Debt | ||||
Debt and Financing Obligations | ||||
Long-term debt | $ 599.1 | 599.1 | $ 632.8 | |
Other credit facilities | Line of Credit | ||||
Debt and Financing Obligations | ||||
Short-term borrowings | $ 1.2 | $ 9.6 | ||
Interest rate (as a percent) | 4.35% | 4.35% | ||
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: | $ 65.3 | $ 66.8 | ||
Interest rate (as a percent) | 4.35% | 4.35% | ||
Lease financing obligations due on various dates through 2040 | ||||
Debt and Financing Obligations | ||||
Financing obligations: | $ 13.6 | $ 12.2 | ||
Lease financing obligations due on various dates through 2040 | Minimum | ||||
Debt and Financing Obligations | ||||
Interest rate (as a percent) | 2.72% | 2.39% | ||
Lease financing obligations due on various dates through 2040 | Maximum | ||||
Debt and Financing Obligations | ||||
Interest rate (as a percent) | 4.33% | 5.00% |
DEBT AND FINANCING OBLIGATION_3
DEBT AND FINANCING OBLIGATIONS - Tabular Disclosure - Current and Noncurrent (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Debt and Financing Obligations | ||
Total debt and financing obligations | $ 2,352.4 | $ 2,415.4 |
Debt issuance costs | (25.8) | (30.4) |
Short-term borrowings | (8.4) | (9.6) |
Current portion of long-term debt and financing obligations | (38) | (38.7) |
Long-term debt, excluding current portion | $ 2,280.2 | $ 2,336.7 |
DEBT AND FINANCING OBLIGATION_4
DEBT AND FINANCING OBLIGATIONS - Credit Agreement (Details) $ in Millions | Aug. 25, 2019 | Jun. 28, 2019USD ($) | Nov. 30, 2016USD ($) | May 26, 2019USD ($) | May 27, 2018USD ($) | May 28, 2017 |
Debt and Financing Obligations | ||||||
Total face value of debt | $ 2,265.1 | $ 2,326.8 | ||||
Short-term borrowings | $ 8.4 | 9.6 | ||||
Conagra | ||||||
Debt and Financing Obligations | ||||||
Cash payment to Conagra | $ 823.5 | |||||
Senior Notes and Credit Agreement, November 2016 | ||||||
Debt and Financing Obligations | ||||||
Face amount | 2,341 | |||||
Senior Notes, November 2016 | Senior Notes | ||||||
Debt and Financing Obligations | ||||||
Face amount | 1,666 | |||||
Change of control, redemption price (as a percent) | 101.00% | |||||
Senior Notes, November 2016 | Senior Notes | Prior to November 1, 2021 | ||||||
Debt and Financing Obligations | ||||||
Percentage of principal amount redeemed (as a percent) | 100.00% | |||||
Senior Notes, November 2016 | Senior Notes | On or prior to November 1, 2019 | ||||||
Debt and Financing Obligations | ||||||
Redemption, aggregate principal (as a percent) | 35.00% | |||||
Senior Notes, November 2016 | Senior Notes | Conagra | ||||||
Debt and Financing Obligations | ||||||
Aggregate principal amount distributed directly to Conagra | 1,542.9 | |||||
Proceeds from Senior Notes to fund cash payment to Conagra | 123.1 | |||||
Related party noncash financing activity | 1,542.9 | |||||
4.625% Senior Notes, due 2024 | Senior Notes | ||||||
Debt and Financing Obligations | ||||||
Face amount | $ 833 | $ 833 | 833 | |||
Total face value of debt | $ 833 | $ 833 | ||||
Debt term (in years) | 8 years | 8 years | 8 years | |||
Interest rate (as a percent) | 4.625% | 4.625% | 4.625% | |||
4.625% Senior Notes, due 2024 | Senior Notes | On or after November 1, 2021 | ||||||
Debt and Financing Obligations | ||||||
Redemption prices (as a percent) | 102.313% | |||||
4.625% Senior Notes, due 2024 | Senior Notes | On or prior to November 1, 2019 | ||||||
Debt and Financing Obligations | ||||||
Redemption prices (as a percent) | 104.625% | |||||
4.875% Senior Notes, due 2026 | Senior Notes | ||||||
Debt and Financing Obligations | ||||||
Face amount | $ 833 | $ 833 | $ 833 | |||
Total face value of debt | $ 833 | $ 833 | ||||
Debt term (in years) | 10 years | 10 years | 10 years | |||
Interest rate (as a percent) | 4.875% | 4.875% | 4.875% | |||
4.875% Senior Notes, due 2026 | Senior Notes | On or after November 1, 2021 | ||||||
Debt and Financing Obligations | ||||||
Redemption prices (as a percent) | 102.438% | |||||
4.875% Senior Notes, due 2026 | Senior Notes | On or prior to November 1, 2019 | ||||||
Debt and Financing Obligations | ||||||
Redemption prices (as a percent) | 104.875% | |||||
Credit Agreement, November 2016 | Secured Debt | ||||||
Debt and Financing Obligations | ||||||
Face amount | $ 675 | |||||
Debt term (in years) | 5 years | |||||
Credit Facilities, November 2016 | ||||||
Debt and Financing Obligations | ||||||
Total net leverage ratio | 5.50 | |||||
Interest coverage rate | 2.75 | |||||
Credit Facilities, November 2016 | Forecast | ||||||
Debt and Financing Obligations | ||||||
Total net leverage ratio | 4.50 | |||||
Credit Facilities, November 2016 | Federal Fund Rate | ||||||
Debt and Financing Obligations | ||||||
Variable interest rate spread (as a percent) | 0.50% | |||||
Credit Facilities, November 2016 | One month Eurocurrency Rate | ||||||
Debt and Financing Obligations | ||||||
Variable interest rate spread (as a percent) | 1.00% | |||||
Credit Facilities, November 2016 | Minimum | Base Rate | ||||||
Debt and Financing Obligations | ||||||
Variable interest rate spread (as a percent) | 0.50% | |||||
Credit Facilities, November 2016 | Minimum | Eurocurrency rate | ||||||
Debt and Financing Obligations | ||||||
Variable interest rate spread (as a percent) | 1.50% | |||||
Credit Facilities, November 2016 | Maximum | Base Rate | ||||||
Debt and Financing Obligations | ||||||
Variable interest rate spread (as a percent) | 1.25% | |||||
Credit Facilities, November 2016 | Maximum | Eurocurrency rate | ||||||
Debt and Financing Obligations | ||||||
Variable interest rate spread (as a percent) | 2.25% | |||||
Credit Facilities, November 2016 | Conagra | ||||||
Debt and Financing Obligations | ||||||
Borrowings under Credit Facilities to fund payment to Conagra | $ 700.4 | |||||
Credit Facilities, November 2016 | Secured Debt | Revolving Credit Facility | ||||||
Debt and Financing Obligations | ||||||
Debt term (in years) | 5 years | |||||
Revolving Credit Facility, November 2016 | Revolving Credit Facility | ||||||
Debt and Financing Obligations | ||||||
Debt term (in years) | 5 years | 5 years | 5 years | |||
Revolving Credit Facility, November 2016 | Secured Debt | Revolving Credit Facility | ||||||
Debt and Financing Obligations | ||||||
Short-term borrowings | $ 7.2 | |||||
Available amount | 489.4 | |||||
Letter of credit outstanding | 3.4 | |||||
Maximum borrowing capacity | $ 500 | 500 | $ 500 | |||
Minimum borrowings during the period | 0 | |||||
Maximum borrowings during the period | $ 140.1 | |||||
Average interest rate (as a percent) | 3.94% | 3.31% | ||||
Revolving Credit Facility, November 2016 | Secured Debt | Revolving Credit Facility | Minimum | ||||||
Debt and Financing Obligations | ||||||
Commitment fee for undrawn amount (as a percent) | 0.25% | |||||
Revolving Credit Facility, November 2016 | Secured Debt | Revolving Credit Facility | Maximum | ||||||
Debt and Financing Obligations | ||||||
Commitment fee for undrawn amount (as a percent) | 0.40% | |||||
Term Loan Facility, due 2021 | Secured Debt | ||||||
Debt and Financing Obligations | ||||||
Face amount | $ 675 | $ 675 | $ 675 | |||
Total face value of debt | $ 599.1 | $ 599.1 | $ 632.8 | |||
Debt term (in years) | 5 years | 5 years | 5 years | 5 years | ||
Periodic amortization rate (as a percent) | 5.00% | |||||
New Term Loan Facility | Secured Debt | ||||||
Debt and Financing Obligations | ||||||
Face amount | $ 300 | |||||
Debt instrument, maturity date | Jun. 28, 2024 | |||||
Increased amount in borrowing capacity | $ 100 | |||||
Expected write off of deferred debt issuance cost in refinancing | $ 2 | |||||
New Term Loan Facility | Secured Debt | Minimum | LIBOR | ||||||
Debt and Financing Obligations | ||||||
Variable interest rate spread (as a percent) | 1.625% | |||||
New Term Loan Facility | Secured Debt | Minimum | Base Rate | ||||||
Debt and Financing Obligations | ||||||
Variable interest rate spread (as a percent) | 0.625% | |||||
New Term Loan Facility | Secured Debt | Maximum | LIBOR | ||||||
Debt and Financing Obligations | ||||||
Variable interest rate spread (as a percent) | 2.375% | |||||
New Term Loan Facility | Secured Debt | Maximum | Base Rate | ||||||
Debt and Financing Obligations | ||||||
Variable interest rate spread (as a percent) | 1.375% |
DEBT AND FINANCING OBLIGATION_5
DEBT AND FINANCING OBLIGATIONS - Aggregate Minimum Principal Maturities - Tabular Disclosure (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Debt | ||
2020 | $ 42.1 | |
2021 | 33.8 | |
2022 | 531.6 | |
Thereafter | 1,666 | |
Total | 2,273.5 | |
Financing Obligations | ||
2020 | 4.3 | |
2021 | 4 | |
2022 | 4.1 | |
2023 | 3.5 | |
2024 | 3.2 | |
Thereafter | 59.8 | |
Total | 78.9 | |
Total | ||
2020 | 46.4 | |
2021 | 37.8 | |
2022 | 535.7 | |
2023 | 3.5 | |
2024 | 3.2 | |
Thereafter | 1,725.8 | |
Total debt and financing obligations | $ 2,352.4 | $ 2,415.4 |
DEBT AND FINANCING OBLIGATION_6
DEBT AND FINANCING OBLIGATIONS - Aggregate Minimum Principal Maturities - Additional Information (Details) $ in Millions | May 26, 2019USD ($) |
Debt | |
2020 | $ 42.1 |
Revolving Credit Facility, November 2016 | Secured Debt | Revolving Credit Facility | |
Debt | |
2020 | 7.2 |
Other credit facilities | Line of Credit | |
Debt | |
2020 | $ 1.2 |
DEBT AND FINANCING OBLIGATION_7
DEBT AND FINANCING OBLIGATIONS - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Debt and Financing Obligations | |||
Payments of debt issuance costs | $ 12.3 | ||
Amortization expense | $ 4.7 | $ 4.6 | 2.5 |
Interest paid | $ 107.8 | $ 104 | 48.8 |
Conagra | |||
Debt and Financing Obligations | |||
Payments of debt issuance costs | $ 25.4 |
DEBT AND FINANCING OBLIGATION_8
DEBT AND FINANCING OBLIGATIONS - Other Credit Facilities (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Short-term Debt [Line Items] | ||
Short-term borrowings | $ 8.4 | $ 9.6 |
Line of Credit | Other credit facilities | ||
Short-term Debt [Line Items] | ||
Face amount | 31.9 | 31.9 |
Short-term borrowings | $ 1.2 | $ 9.6 |
Interest rate (as a percent) | 4.35% | 4.35% |
DEBT AND FINANCING OBLIGATION_9
DEBT AND FINANCING OBLIGATIONS - Financing Obligation (Details) $ in Millions | 12 Months Ended | |||
May 26, 2019USD ($)item | May 30, 2010USD ($)a | May 27, 2019USD ($) | May 27, 2018USD ($) | |
Financing obligation | ||||
Property, plant and equipment, net | $ 1,597.8 | $ 1,420.8 | ||
Long-term debt, excluding current portion | 2,280.2 | 2,336.7 | ||
Farmland | ||||
Financing obligation | ||||
Acres of farmland in sale-leaseback transaction | a | 17,600 | |||
Proceeds received as a financing obligation | $ 75 | |||
Remaining balance of the financing obligation | 65.3 | 66.8 | ||
Net carrying value of the related property | $ 38.7 | $ 39.3 | ||
Remaining initial term | 1 year | |||
Number of renewal options | item | 2 | |||
Renewal term | 5 years | |||
Accounting Standards Update 2016-02 | Scenario forecast adjustment | ||||
Financing obligation | ||||
Property, plant and equipment, net | $ (39) | |||
Long-term debt, excluding current portion | (66) | |||
Finance Lease, right of use asset | 160 | |||
Finance Lease, liability | $ 160 |
EMPLOYEE BENEFIT PLANS AND OT_3
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Other Plans - Conagra's Defined Contribution Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Matching percentage (as a percent) | 100.00% | ||
Employee’s contribution election (as a percent) | 6.00% | ||
Employee compensation (as a percent) | 3.00% | ||
Plan matching contribution, vesting period | 5 years | ||
Plan matching contribution, vesting percentage (as a percent) | 20.00% | ||
Plan matching contribution | $ 21.3 | $ 13.9 | $ 6 |
EMPLOYEE BENEFIT PLANS AND OT_4
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Other Plans - Deferred Compensation Savings Plan (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | ||
Rabbi trust amount | $ 0.5 | |
Liabilities under deferred compensation plan | $ 15.1 | $ 12.4 |
EMPLOYEE BENEFIT PLANS AND OT_5
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Change in Benefit Obligation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Pension Plans | |||
Change in Benefit Obligation | |||
Benefit obligation at beginning of year | $ 18.9 | $ 10.1 | |
Service cost | 6 | 7.8 | $ 4.4 |
Interest cost | 0.8 | 0.4 | 0.1 |
Benefits paid | (0.3) | (0.1) | |
Actuarial loss | 2 | 0.7 | |
Benefit obligation at fiscal year-end | 27.4 | 18.9 | 10.1 |
Accumulated benefit obligation portion of above | 27.4 | 18.9 | |
Post-Retirement Plan | |||
Change in Benefit Obligation | |||
Benefit obligation at beginning of year | 7 | 2.5 | |
Interest cost | 0.3 | 0.2 | 0.1 |
Participant contributions | 0.2 | 0.1 | |
Benefits paid | (0.3) | (0.1) | |
Actuarial loss | 0.1 | 4.3 | |
Benefit obligation at fiscal year-end | $ 7.3 | $ 7 | $ 2.5 |
EMPLOYEE BENEFIT PLANS AND OT_6
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Changes in Plan Assets (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
May 27, 2018 | May 26, 2019 | May 27, 2018 | |
Pension Plans | |||
Change in Plan Assets | |||
Fair value of plan assets at beginning of year | $ 17.3 | $ 4.5 | |
Actual return on plan assets | (0.3) | (0.7) | |
Company contributions | $ 12 | 0.4 | 13.6 |
Benefits paid | (0.3) | (0.1) | |
Fair value of plan assets at end of year | $ 17.3 | 17.1 | 17.3 |
Post-Retirement Plan | |||
Change in Plan Assets | |||
Company contributions | 0.1 | ||
Plan participants contributions | 0.2 | 0.1 | |
Benefits paid | $ (0.3) | $ (0.1) |
EMPLOYEE BENEFIT PLANS AND OT_7
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Underfunded Status (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Pension Plans | ||
Funded Status | ||
Underfunded status | $ (10.3) | $ (1.6) |
Post-Retirement Plan | ||
Funded Status | ||
Underfunded status | $ (7.3) | $ (7) |
EMPLOYEE BENEFIT PLANS AND OT_8
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Condensed Combined and Consolidated Balance Sheets (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Pension Plans | ||
Amounts Recognized on Consolidated Balance Sheets | ||
Other noncurrent liabilities | $ (10.3) | $ (1.6) |
Accrued obligation recognized | (10.3) | (1.6) |
Amounts Recognized in Accumulated Other Comprehensive Income Loss (Pre-tax) | ||
Actuarial loss | 4 | 0.7 |
Total | 4 | 0.7 |
Post-Retirement Plan | ||
Amounts Recognized on Consolidated Balance Sheets | ||
Accrued liabilities | (0.3) | (0.3) |
Other noncurrent liabilities | (7) | (6.7) |
Accrued obligation recognized | (7.3) | (7) |
Amounts Recognized in Accumulated Other Comprehensive Income Loss (Pre-tax) | ||
Actuarial loss | 2.7 | 3.4 |
Total | $ 2.7 | $ 3.4 |
EMPLOYEE BENEFIT PLANS AND OT_9
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Pension Plans | |||
Components of net periodic benefit cost for our pension and postretirement benefit plans | |||
Service cost | $ 6 | $ 7.8 | $ 4.4 |
Interest cost | 0.8 | 0.4 | 0.1 |
Expected return on plan assets | (0.9) | (0.4) | |
Net periodic benefit cost | 5.9 | 7.8 | 4.5 |
Post-Retirement Plan | |||
Components of net periodic benefit cost for our pension and postretirement benefit plans | |||
Interest cost | 0.3 | 0.2 | 0.1 |
Prior service benefit | (0.2) | ||
Actuarial gain | 0.7 | 0.5 | |
Net periodic benefit cost | $ 1 | $ 0.5 | $ 0.1 |
EMPLOYEE BENEFIT PLANS AND O_10
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Changes in Plan Assets and Benefit Obligations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Pension Plans | |||
Components of other comprehensive income (loss) | |||
Actuarial (gain) loss | $ 3.3 | $ 1.7 | $ (1) |
Total recognized in other comprehensive loss (income) | 3.3 | 1.7 | (1) |
Post-Retirement Plan | |||
Components of other comprehensive income (loss) | |||
Prior service benefit | (0.2) | ||
Actuarial (gain) loss | 4.3 | (0.4) | |
Amortization of prior service cost | 0.2 | ||
Amortization of actuarial gain | (0.7) | (0.5) | |
Total recognized in other comprehensive loss (income) | $ (0.7) | $ 4 | $ (0.6) |
EMPLOYEE BENEFIT PLANS AND O_11
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Components of Net Periodic Benefit Cost and Other Comprehensive (Income) Loss - Tabular Disclosure (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Pension Plans | |||
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Net periodic benefit cost | $ 5.9 | $ 7.8 | $ 4.5 |
Total recognized in other comprehensive loss (income) | 3.3 | 1.7 | (1) |
Total recognized in net periodic benefit cost and other comprehensive loss (income) (pre-tax) | 9.2 | 9.5 | 3.5 |
Post-Retirement Plan | |||
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Net periodic benefit cost | 1 | 0.5 | 0.1 |
Total recognized in other comprehensive loss (income) | (0.7) | 4 | (0.6) |
Total recognized in net periodic benefit cost and other comprehensive loss (income) (pre-tax) | $ 0.3 | $ 4.5 | $ (0.5) |
EMPLOYEE BENEFIT PLANS AND O_12
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Components of Net Periodic Benefit Cost and Other Comprehensive (Income) Loss - Additional Information (Details) $ in Millions | 12 Months Ended |
May 26, 2019USD ($) | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |
Accumulated losses (as a percent) | 10.00% |
Estimated net amount of actuarial losses on pension and post-retirement benefits included in AOCI | $ 0.7 |
Estimated net amount of actuarial losses on pension and post-retirement benefits included in AOCI, net of tax | $ 0.5 |
Pension Plans | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |
Average remaining service period | 4 years |
Pension Plans | Minimum | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |
Average remaining service period | 7 years |
Pension Plans | Maximum | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |
Average remaining service period | 11 years |
EMPLOYEE BENEFIT PLANS AND O_13
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Actuarial Assumptions (Details) | 12 Months Ended | |||
May 31, 2020 | May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Pension Plans | ||||
Weighted-Average Assumptions Used to Determine Benefit Obligations: | ||||
Discount rate (as percent) | 4.01% | 4.25% | 4.33% | |
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost: | ||||
Discount rate (as percent) | 4.25% | 4.33% | 3.81% | |
Long-term rate of return on plan assets (as percent) | 5.30% | 7.50% | 7.50% | |
Pension Plans | Forecast | ||||
Weighted-Average Assumptions Used to Determine Benefit Obligations: | ||||
Discount rate (as percent) | 4.01% | |||
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost: | ||||
Long-term rate of return on plan assets (as percent) | 5.10% | |||
Post-Retirement Plan | ||||
Weighted-Average Assumptions Used to Determine Benefit Obligations: | ||||
Discount rate (as percent) | 3.81% | 4.18% | 3.50% | |
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost: | ||||
Discount rate (as percent) | 4.18% | 3.60% | 3.18% | |
Post-Retirement Plan | Forecast | ||||
Weighted-Average Assumptions Used to Determine Benefit Obligations: | ||||
Discount rate (as percent) | 3.81% |
EMPLOYEE BENEFIT PLANS AND O_14
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Health Care Cost Trend Rate Assumptions (Details) | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Health Care Cost Trend Rate Assumptions | |||
Ultimate health care cost trend rate (as a percent) | 4.50% | 4.50% | 4.50% |
Year that the rate reaches the ultimate trend rate | 2024 | 2024 | 2024 |
Age pre-65 | |||
Health Care Cost Trend Rate Assumptions | |||
Health care cost trend rate (as a percent) | 7.30% | 8.40% | 9.00% |
Age 65 and over | |||
Health Care Cost Trend Rate Assumptions | |||
Health care cost trend rate (as a percent) | 5.80% | 6.30% | 6.50% |
EMPLOYEE BENEFIT PLANS AND O_15
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Fair Value Measurements of Plan Assets - Tabular Disclosure (Details) - Pension Plans - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 | May 28, 2017 |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Pension plan assets | $ 17.1 | $ 17.3 | $ 4.5 |
Level 1 | |||
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Pension plan assets | 11.8 | 14.8 | |
Level 2 | |||
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Pension plan assets | 5.3 | 2.5 | |
Cash and cash equivalents | |||
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Pension plan assets | 11.8 | ||
Cash and cash equivalents | Level 1 | |||
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Pension plan assets | 11.8 | ||
U.S. equity securities | |||
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Pension plan assets | 2.6 | 1 | |
U.S. equity securities | Level 2 | |||
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Pension plan assets | 2.6 | 1 | |
International equity securities | |||
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Pension plan assets | 2.7 | 1.5 | |
International equity securities | Level 2 | |||
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Pension plan assets | 2.7 | 1.5 | |
US treasury securities | |||
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Pension plan assets | 11.8 | 3 | |
US treasury securities | Level 1 | |||
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Pension plan assets | $ 11.8 | $ 3 |
EMPLOYEE BENEFIT PLANS AND O_16
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Fair Value Measurements of Plan Assets - Redeemable Notice (Details) | 12 Months Ended |
May 26, 2019 | |
Pension Plans | Equity securities | |
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS | |
Redeemable notice period for certain funds | 30 days |
EMPLOYEE BENEFIT PLANS AND O_17
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Fair Value Measurements of Plan Assets - Investment Policy (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
May 27, 2018 | May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Employer contributions, invested per investment policy | $ 5.5 | |||
Pension Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets | 17.3 | $ 17.1 | $ 17.3 | $ 4.5 |
Employer contributions | $ 12 | $ 0.4 | $ 13.6 | |
Pension Plans | Equity securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Target investment allocation (as a percent) | 30.00% | 30.00% | 30.00% | |
Pension Plans | Debt securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Target investment allocation (as a percent) | 70.00% | 70.00% | 70.00% |
EMPLOYEE BENEFIT PLANS AND O_18
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Funding and Cash Flows - Contributions (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
May 27, 2018 | May 26, 2019 | May 27, 2018 | |
Qualified Plan | |||
Contributions | |||
Employer contributions | $ 0.4 | ||
Pension Plans | |||
Contributions | |||
Employer contributions | $ 12 | 0.4 | $ 13.6 |
Required minimum qualified pension contribution in fiscal 2020 | $ 0.8 |
EMPLOYEE BENEFIT PLANS AND O_19
EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS - Funding and Cash Flows - Estimated Benefit Payments (Details) $ in Millions | May 26, 2019USD ($) |
Pension Plans | |
Estimated benefit payments | |
2020 | $ 0.3 |
2021 | 0.4 |
2022 | 0.6 |
2023 | 0.8 |
2024 | 0.9 |
Succeeding 5 years | 7.4 |
Post-Retirement Plan | |
Estimated benefit payments | |
2020 | 0.3 |
2021 | 0.3 |
2022 | 0.4 |
2023 | 0.4 |
2024 | 0.5 |
Succeeding 5 years | $ 2.5 |
STOCK-BASED COMPENSATION - Gene
STOCK-BASED COMPENSATION - General Information (Details) shares in Millions | May 26, 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 - Gran
STOCK-BASED COMPENSATION - Grants (Details) - Stock options | 12 Months Ended |
May 26, 2019installment | |
SHARE-BASED PAYMENTS | |
Number of annual installments | 3 |
Vesting period | 10 years |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Unit and Performance-based Restricted Stock Unit - General Information (Details) | 12 Months Ended |
May 26, 2019 | |
Stock-based Compensation | |
Performance period | 3 years |
Restricted Stock Units (RSUs) | Employees | |
Stock-based Compensation | |
Vesting period | 3 years |
Restricted Stock Units (RSUs) | Non-employee | |
Stock-based Compensation | |
Vesting period | 1 year |
Performance shares | |
Stock-based Compensation | |
Awards earned rate, low end of range (as a percent) | 0.00% |
Awards earned rate, high end of range (as a percent) | 200.00% |
Stock options | |
Stock-based Compensation | |
Vesting period | 10 years |
STOCK-BASED COMPENSATION - Re_2
STOCK-BASED COMPENSATION - Restricted Stock Unit and Performance-based Restricted Stock Unit - Tabular Disclosure (Details) - $ / shares | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Stock-settled restricted stock units | |||
Shares | |||
Outstanding at beginning of the period (in shares) | 581,875 | 489,604 | |
Converted (in shares) | 459,466 | ||
Granted (in shares) | 215,382 | 293,209 | 86,642 |
Vested (in shares) | (141,567) | (172,772) | (17,753) |
Forfeited/expired/cancelled (in shares) | (14,670) | (28,166) | (38,751) |
Outstanding at end of the period (in shares) | 641,020 | 581,875 | 489,604 |
Weighted-Average Grant-Date Fair Value | |||
Outstanding at beginning of the period (in dollars per share) | $ 36.84 | $ 26.92 | |
Converted (in dollars per shares) | $ 25.05 | ||
Granted (in dollars per share) | 70.22 | 45.22 | 33.96 |
Vested (in dollars per share) | 29.96 | 23.82 | 18.68 |
Forfeited/expired/cancelled (in dollars per share) | 54.61 | 31.52 | 24.24 |
Outstanding at end of the period (in dollars per share) | $ 49.17 | $ 36.84 | $ 26.92 |
Cash-settled RSUs | |||
Shares | |||
Outstanding at beginning of the period (in shares) | 285,652 | 462,612 | |
Converted (in shares) | 469,837 | ||
Vested (in shares) | (157,167) | (173,762) | (1,503) |
Forfeited/expired/cancelled (in shares) | (7,675) | (3,198) | (5,722) |
Outstanding at end of the period (in shares) | 120,810 | 285,652 | 462,612 |
Weighted-Average Grant-Date Fair Value | |||
Outstanding at beginning of the period (in dollars per share) | $ 28.54 | $ 25.33 | |
Converted (in dollars per shares) | $ 25.33 | ||
Vested (in dollars per share) | 28.61 | 20 | 23.70 |
Forfeited/expired/cancelled (in dollars per share) | 30.55 | 27.75 | 26.73 |
Outstanding at end of the period (in dollars per share) | $ 28.33 | $ 28.54 | $ 25.33 |
Performance shares | |||
Shares | |||
Outstanding at beginning of the period (in shares) | 160,270 | 57,690 | |
Converted (in shares) | 56,050 | ||
Granted (in shares) | 98,414 | 125,524 | 1,640 |
Performance condition adjustment | 97,803 | (818) | |
Vested (in shares) | (42,206) | (15,228) | |
Forfeited/expired/cancelled (in shares) | (6,898) | ||
Outstanding at end of the period (in shares) | 314,281 | 160,270 | 57,690 |
Weighted-Average Grant-Date Fair Value | |||
Outstanding at beginning of the period (in dollars per share) | $ 39.82 | $ 25.84 | |
Converted (in dollars per shares) | $ 25.84 | ||
Granted (in dollars per share) | 69.82 | 43.90 | 25.84 |
Performance condition adjustment (in dollars per share) | 40.35 | 19.70 | |
Vested (in dollars per share) | 27.32 | 19.70 | |
Forfeited/expired/cancelled (in dollars per share) | 43.87 | ||
Outstanding at end of the period (in dollars per share) | $ 51.06 | $ 39.82 | $ 25.84 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Option Activity (Details) - Stock options - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Shares | |||
Outstanding at beginning of the period (in shares) | 651,606 | 720,827 | |
Converted (in shares) | 607,420 | ||
Granted (in shares) | 56,496 | 146,514 | |
Exercised (in shares) | (75,076) | (125,717) | (22,896) |
Forfeited/cancelled (in shares) | (1,427) | (10,211) | |
Outstanding at end of the period (in shares) | 575,103 | 651,606 | 720,827 |
Weighted-Average Exercise Price (per share) | |||
Outstanding at beginning of the period (in dollars per share) | $ 29.08 | $ 25.90 | |
Converted (in dollars per share) | $ 23.60 | ||
Granted (in dollars per share) | 43.82 | 35.15 | |
Exercised (in dollars per share) | 26.22 | 17.47 | 21.90 |
Forfeited/cancelled (in dollars per share) | 30.67 | 30.68 | |
Outstanding at end of the period (in dollars per share) | $ 29.45 | $ 29.08 | $ 25.90 |
Additional information | |||
Weighted-Average Remaining Contractual Term - Outstanding (in years) | 6 years 4 months 24 days | 7 years 3 months 18 days | 7 years 4 months 24 days |
Aggregate Intrinsic Value - Outstanding | $ 18.8 | $ 23.7 | $ 14.2 |
Shares - Exercisable at end of year (in shares) | 476,628 | ||
Weighted-Average Exercise Price - Exercisable (in dollars per share) | $ 27.93 | ||
Weighted-Average Remaining Contractual Term - Exercisable (in years) | 6 years 1 month 6 days | ||
Aggregate Intrinsic Value - Exercisable | $ 16.3 |
STOCK-BASED COMPENSATION - Re_3
STOCK-BASED COMPENSATION - Restricted Stock Unit and Performance-based Restricted Stock Unit - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Stock-based Compensation | |||
Aggregate fair value of awards vested | $ 24.7 | $ 16.6 | $ 0.7 |
STOCK-BASED COMPENSATION - Comp
STOCK-BASED COMPENSATION - Compensation Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Compensation expense | |||
Stock-settled compensation expense | $ 18.8 | $ 13.5 | $ 5.7 |
Cash-settled RSUs | 3.3 | 8.8 | 9.7 |
Share-based compensation expense | 22.1 | 22.3 | 15.4 |
Income tax benefit | (5.1) | (6.9) | (5.7) |
Total compensation expense, net of tax benefit | 17 | 15.4 | 9.7 |
Stock-settled restricted stock units | |||
Compensation expense | |||
Stock-settled compensation expense | 10.2 | 7.9 | 4 |
Performance shares | |||
Compensation expense | |||
Stock-settled compensation expense | 8.3 | 4.4 | 1.1 |
Stock options | |||
Compensation expense | |||
Stock-settled compensation expense | $ 0.3 | $ 1.2 | $ 0.6 |
STOCK-BASED COMPENSATION - Unre
STOCK-BASED COMPENSATION - Unrecognized Compensation Expense, Net of Estimated Forfeitures (Details) $ in Millions | 12 Months Ended |
May 26, 2019USD ($) | |
Unrecognized compensation expense, net of estimated forfeitures | |
Unrecognized Compensation Expense | $ 27.8 |
Remaining Weighted Average Recognition Period (in years) | 1 year 9 months 18 days |
Stock-settled restricted stock units | |
Unrecognized compensation expense, net of estimated forfeitures | |
Unrecognized Compensation Expense | $ 15.2 |
Remaining Weighted Average Recognition Period (in years) | 1 year 9 months 18 days |
Cash-settled RSUs | |
Unrecognized compensation expense, net of estimated forfeitures | |
Unrecognized Compensation Expense | $ 0.3 |
Remaining Weighted Average Recognition Period (in years) | 1 month 6 days |
Performance shares | |
Unrecognized compensation expense, net of estimated forfeitures | |
Unrecognized Compensation Expense | $ 12.2 |
Remaining Weighted Average Recognition Period (in years) | 1 year 8 months 12 days |
Stock options | |
Unrecognized compensation expense, net of estimated forfeitures | |
Unrecognized Compensation Expense | $ 0.1 |
Remaining Weighted Average Recognition Period (in years) | 6 months |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value Hierarchy (Details) - USD ($) $ in Millions | May 26, 2019 | May 27, 2018 |
Liabilities: | ||
Deferred compensation liabilities | $ 15.1 | $ 12.4 |
Recurring | ||
Assets: | ||
Pension plan assets | 17.1 | 17.3 |
Deferred compensation assets | 0.5 | 0.5 |
Derivative assets | 0.4 | 0.8 |
Total assets | 18 | 18.6 |
Liabilities: | ||
Derivative liabilities | 3.8 | 1.4 |
Deferred compensation liabilities | 15.1 | 12.4 |
Total liabilities | 18.9 | 13.8 |
Recurring | Level 1 | ||
Assets: | ||
Pension plan assets | 11.8 | 14.8 |
Deferred compensation assets | 0.5 | 0.5 |
Total assets | 12.3 | 15.3 |
Recurring | Level 2 | ||
Assets: | ||
Pension plan assets | 5.3 | 2.5 |
Derivative assets | 0.4 | 0.8 |
Total assets | 5.7 | 3.3 |
Liabilities: | ||
Derivative liabilities | 3.8 | 1.4 |
Deferred compensation liabilities | 15.1 | 12.4 |
Total liabilities | $ 18.9 | $ 13.8 |
FAIR VALUE MEASUREMENTS - Debt
FAIR VALUE MEASUREMENTS - Debt Outstanding (Details) $ in Millions | May 26, 2019USD ($) |
Carrying Value | Fixed rate debt | |
Fair Value Measurements | |
Debt | $ 1,666 |
Carrying Value | Variable rate debt | |
Fair Value Measurements | |
Debt | 607.5 |
Level 2 | Fair Value | Fixed rate debt | |
Fair Value Measurements | |
Debt | $ 1,679.4 |
STOCKHOLDERS' EQUITY - Common a
STOCKHOLDERS' EQUITY - Common and Preferred Stock (Details) | May 26, 2019Voteshares | May 27, 2018shares |
STOCKHOLDERS' EQUITY | ||
Common stock, authorized shares | 600,000,000 | 600,000,000 |
Preferred stock, authorized shares | 60,000,000 | 60,000,000 |
Common stock, outstanding shares | 146,069,033 | |
Number of votes that each share holder is entitled | Vote | 1 | |
Preferred stock, issued shares | 0 | |
Preferred stock, outstanding shares | 0 |
STOCKHOLDERS' EQUITY - Share Re
STOCKHOLDERS' EQUITY - Share Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
May 26, 2019 | Dec. 20, 2018 | |
Share Repurchase Program | ||
Authorization to repurchase common stock not to exceed | $ 250 | |
Number of shares repurchased | 458,749 | |
Treasury stock value | $ 31.8 | |
Weighted Average | ||
Share Repurchase Program | ||
Share Price | $ 69.40 |
STOCKHOLDERS' EQUITY - Dividend
STOCKHOLDERS' EQUITY - Dividends Paid (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Dividends | |||
Dividends paid | $ 113.3 | $ 110.2 | $ 27.4 |
STOCKHOLDERS' EQUITY - Changes
STOCKHOLDERS' EQUITY - Changes in AOCI (Details) $ in Millions | 12 Months Ended |
May 26, 2019USD ($) | |
Changes in AOCI: | |
Balance at the beginning of the period | $ (334.8) |
Balance at the end of the period | (4.6) |
Accumulated Other Comprehensive Loss | |
Changes in AOCI: | |
Balance at the beginning of the period | (4.3) |
Other comprehensive income before reclassifications, net of tax | (21.6) |
Amounts reclassified out of AOCI, net of tax | 0.6 |
Net current-period other comprehensive income (loss) | (21) |
Balance at the end of the period | (25.3) |
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 | (19.1) |
Net current-period other comprehensive income (loss) | (19.1) |
Balance at the end of the period | (20.3) |
Pension and Post-Retirement Benefits | |
Changes in AOCI: | |
Balance at the beginning of the period | (3.1) |
Other comprehensive income before reclassifications, net of tax | (2.5) |
Amounts reclassified out of AOCI, net of tax | 0.6 |
Net current-period other comprehensive income (loss) | (1.9) |
Balance at the end of the period | $ (5) |
STOCKHOLDERS' EQUITY - Divide_2
STOCKHOLDERS' EQUITY - Dividends Declared (Details) - $ / shares | 3 Months Ended | 12 Months Ended | ||||||||||
Aug. 25, 2019 | May 26, 2019 | Feb. 24, 2019 | Nov. 25, 2018 | Aug. 26, 2018 | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Dividends | ||||||||||||
Dividends declared per common share (in dollars per share) | $ 0.20 | $ 0.20000 | $ 0.20000 | $ 0.19125 | $ 0.19125 | $ 0.19125 | $ 0.19125 | $ 0.18750 | $ 0.18750 | $ 0.7825 | $ 0.7575 | $ 0.3750 |
Dividends declared per common share, declared date | Jul. 18, 2019 | |||||||||||
Dividends declared per common share, payable date | Aug. 30, 2019 | |||||||||||
Dividends declared per common share, record date | Aug. 2, 2019 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - Conagra - USD ($) $ in Millions | 12 Months Ended | |
May 27, 2018 | May 28, 2017 | |
Related Party Transactions | ||
Net sales | $ 8.4 | |
Cost of sales | 3.4 | |
Purchases | 7.9 | |
Transition services agreement | ||
Related Party Transactions | ||
Related party transaction expenses | $ 2.4 | 4.2 |
Allocations based upon certain metrics | ||
Related Party Transactions | ||
Selling, general and administrative costs | 7.7 | |
Allocations based upon indirect corporate costs | ||
Related Party Transactions | ||
Selling, general and administrative costs | $ 17.3 |
SEGMENTS - General Information
SEGMENTS - General Information (Details) - segment | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Segments | |||
Number of operating segments | 4 | 4 | 4 |
Number of reportable segments | 4 | 4 | 4 |
SEGMENTS - General Financial In
SEGMENTS - General Financial Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 26, 2019 | Feb. 24, 2019 | Nov. 25, 2018 | Aug. 26, 2018 | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Segment information | |||||||||||
Revenue | $ 1,003.4 | $ 926.8 | $ 911.4 | $ 914.9 | $ 918.2 | $ 863.4 | $ 824.6 | $ 817.5 | $ 3,756.5 | $ 3,423.7 | $ 3,168 |
Product contribution margin | 971.1 | 847.9 | 756.2 | ||||||||
Other selling, general and administrative expenses | 302.7 | 267.8 | 237.9 | ||||||||
Income from operations | 668.4 | 580.1 | 518.3 | ||||||||
Interest expense, net | 107.1 | 108.8 | 61.2 | ||||||||
Income tax expense | 25.7 | 39.6 | 34 | 34.3 | 28.1 | 7.5 | 41.5 | 44.1 | 133.6 | 121.2 | 170.2 |
Equity method investment earnings | 59.5 | 83.6 | 53.3 | ||||||||
Net income | 487.2 | 433.7 | 340.2 | ||||||||
Less: Income attributable to noncontrolling interests | 8.6 | 16.9 | 13.3 | ||||||||
Net income attributable to Lamb Weston Holdings, Inc. | $ 110.4 | $ 141.4 | $ 119 | $ 107.8 | $ 100 | $ 156.8 | $ 76.6 | $ 83.4 | 478.6 | 416.8 | 326.9 |
Global | |||||||||||
Segment information | |||||||||||
Revenue | 1,961.5 | 1,744.2 | 1,624.8 | ||||||||
Product contribution margin | 446.3 | 375.7 | 338.6 | ||||||||
Foodservice | |||||||||||
Segment information | |||||||||||
Revenue | 1,156.1 | 1,099.1 | 1,030 | ||||||||
Product contribution margin | 402.4 | 365.9 | 330.7 | ||||||||
Retail | |||||||||||
Segment information | |||||||||||
Revenue | 498.3 | 449.2 | 384.9 | ||||||||
Product contribution margin | 98.8 | 87.3 | 77.6 | ||||||||
Other | |||||||||||
Segment information | |||||||||||
Revenue | 140.6 | 131.2 | 128.3 | ||||||||
Product contribution margin | $ 23.6 | $ 19 | $ 9.3 |
SEGMENTS - Separation-related E
SEGMENTS - Separation-related Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 27, 2018 | May 28, 2017 | |
SEGMENTS | ||||||
Pre-tax expense related to Separation | $ 0.8 | $ 1.7 | $ 4 | $ 2.2 | $ 8.7 | $ 26.5 |
Non-cash pre-tax gain on assets | $ 3.1 |
SEGMENTS - Tax Act (Details)
SEGMENTS - Tax Act (Details) - USD ($) $ / shares in Units, $ in Millions | Dec. 31, 2017 | May 29, 2017 | May 26, 2019 | Feb. 24, 2019 | Nov. 25, 2018 | Aug. 26, 2018 | May 27, 2018 | Feb. 25, 2018 | May 26, 2019 | May 27, 2018 | May 28, 2017 |
SEGMENTS | |||||||||||
Impact of Tax Act | $ 4.4 | $ 24 | |||||||||
Net tax benefit for the re-measurement of U.S. deferred taxes | 13.3 | 23 | $ 39.9 | ||||||||
Provisional net tax benefit | (28.4) | ||||||||||
Transition tax liability | $ (2.4) | 11.5 | |||||||||
Transition tax payable (in years) | 8 years | ||||||||||
Benefit from lower tax rate | $ 4.2 | $ (6.4) | $ 17.7 | $ 47 | |||||||
Expense (benefit) from impact of remeasuring net US corporate tax rate | (2.8) | 7.4 | $ (15.4) | $ (14) | $ (27.2) | $ (64.7) | |||||
Per share change from impact of remeasuring net US corporate tax rate (in dollars per share) | $ 0.19 | $ 0.44 | |||||||||
Benefit related to change in tax rate | $ 24.8 | $ 36.3 | |||||||||
Per share change related to change in tax rate (in dollars per share) | $ 0.17 | $ 0.25 | |||||||||
Benefit relating to lower U.S. corporate tax rate | $ 1.4 | $ 1 | $ 2.4 | ||||||||
Per share change from benefit relating to lower U.S. corporate tax rate (in dollars per share) | $ 0.02 | ||||||||||
Federal statutory tax rate (as a percent) | 35.00% | 35.00% | 21.00% | 29.30% | 35.00% | ||||||
Benefit for one-time items | $ 28.4 | ||||||||||
Per share change from benefit for one-time items | $ 0.19 |
SEGMENTS - Variable Interest En
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) | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Net sales | Customer Concentration Risk | McDonald's Corporation | |||
Segments | |||
Concentration risk (as a percent) | 10.00% | 11.00% | 11.00% |
SEGMENTS - Concentrations - Acc
SEGMENTS - Concentrations - Accounts Receivable (Details) | 12 Months Ended |
May 27, 2018 | |
Accounts Receivable | Credit Concentration Risk | |
Segments | |
Concentration risk (as a percent) | 12.00% |
SEGMENTS - Other Information -
SEGMENTS - Other Information - Net Sales by Geographical Area (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 26, 2019 | Feb. 24, 2019 | Nov. 25, 2018 | Aug. 26, 2018 | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net sales | $ 1,003.4 | $ 926.8 | $ 911.4 | $ 914.9 | $ 918.2 | $ 863.4 | $ 824.6 | $ 817.5 | $ 3,756.5 | $ 3,423.7 | $ 3,168 |
Non-US | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net sales | $ 742.7 | $ 665.8 | $ 663.5 |
SEGMENTS - Other Information _2
SEGMENTS - Other Information - Net Sales by Product (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
May 26, 2019 | Feb. 24, 2019 | Nov. 25, 2018 | Aug. 26, 2018 | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Segments | |||||||||||
Net sales | $ 1,003.4 | $ 926.8 | $ 911.4 | $ 914.9 | $ 918.2 | $ 863.4 | $ 824.6 | $ 817.5 | $ 3,756.5 | $ 3,423.7 | $ 3,168 |
Other | |||||||||||
Segments | |||||||||||
Net sales | 140.6 | 131.2 | 128.3 | ||||||||
Vegetable product | Other | |||||||||||
Segments | |||||||||||
Net sales | 88.5 | 81.7 | 81.6 | ||||||||
Byproduct | Other | |||||||||||
Segments | |||||||||||
Net sales | 40.2 | 38.1 | 35.4 | ||||||||
Dairy product | Other | |||||||||||
Segments | |||||||||||
Net sales | $ 11.9 | $ 11.5 | $ 11.3 |
SEGMENTS - Labor (Details)
SEGMENTS - Labor (Details) | 12 Months Ended |
May 26, 2019employee | |
Segments | |
Number of employees | 7,600 |
Workforce Subject to Collective Bargaining Arrangements | Labor Force Concentration Risk | |
Segments | |
Concentration risk (as a percent) | 32.00% |
Workforce Subject to Collective Bargaining Arrangements Expiring within One Year | Labor Force Concentration Risk | |
Segments | |
Concentration risk (as a percent) | 32.00% |
Non-US | |
Segments | |
Number of employees | 700 |
COMMITMENTS, CONTINGENCIES, G_3
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS - Capital Commitments (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 26, 2019 | May 27, 2018 | |
Capital Addition Purchase Commitments | ||
Long-term Purchase Commitment [Line Items] | ||
Purchase commitment amount | $ 41.5 | $ 158.7 |
COMMITMENTS, CONTINGENCIES, G_4
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS - Lease Obligations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Lease Obligations | |||
Rent expense for operating leases | $ 63.1 | $ 62.8 | $ 63 |
COMMITMENTS, CONTINGENCIES, G_5
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS - Minimum Lease Payments (Details) $ in Millions | May 26, 2019USD ($) |
Summary of non-cancellable operating lease commitments | |
2020 | $ 18.6 |
2021 | 16.5 |
2022 | 15.7 |
2023 | 10.5 |
2024 | 8.6 |
Thereafter | 26.6 |
Total | $ 96.5 |
COMMITMENTS, CONTINGENCIES, G_6
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS - Purchase Supply Agreements (Details) - Inventories - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS | |||
Purchase supply agreement amount | $ 152 | $ 132.8 | $ 150.8 |
Advances | $ 36.5 | $ 24.6 |
COMMITMENTS, CONTINGENCIES, G_7
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS - Guarantees (Details) $ in Millions | May 26, 2019USD ($) |
Guarantee of Indebtedness of Others | |
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS | |
Guarantee amount | $ 26.4 |
QUARTERLY FINANCIAL DATA (una_3
QUARTERLY FINANCIAL DATA (unaudited) - Financial Information (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Aug. 25, 2019 | May 26, 2019 | Feb. 24, 2019 | Nov. 25, 2018 | Aug. 26, 2018 | May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 | |
QUARTERLY FINANCIAL DATA (unaudited) | ||||||||||||
Revenue | $ 1,003.4 | $ 926.8 | $ 911.4 | $ 914.9 | $ 918.2 | $ 863.4 | $ 824.6 | $ 817.5 | $ 3,756.5 | $ 3,423.7 | $ 3,168 | |
Gross profit | 250.5 | 273.4 | 249 | 230.6 | 232.7 | 242.3 | 208.2 | 196.3 | 1,003.5 | 879.5 | 778.8 | |
Income before income taxes and equity method earnings | 120.9 | 166.8 | 147.8 | 125.8 | 105.8 | 140.7 | 112.4 | 112.4 | 561.3 | 471.3 | 457.1 | |
Income tax expense | 25.7 | 39.6 | 34 | 34.3 | 28.1 | 7.5 | 41.5 | 44.1 | 133.6 | 121.2 | 170.2 | |
Net income attributable to Lamb Weston Holdings, Inc. | $ 110.4 | $ 141.4 | $ 119 | $ 107.8 | $ 100 | $ 156.8 | $ 76.6 | $ 83.4 | $ 478.6 | $ 416.8 | $ 326.9 | |
Earnings per share | ||||||||||||
Basic (in dollars per share) | $ 0.76 | $ 0.96 | $ 0.74 | $ 0.73 | $ 0.68 | $ 1.07 | $ 0.52 | $ 0.56 | $ 3.19 | $ 2.83 | $ 2.22 | |
Diluted (in dollars per share) | 0.75 | 0.95 | 0.74 | 0.73 | 0.68 | 1.06 | 0.52 | 0.56 | 3.18 | 2.82 | 2.22 | |
Dividends declared per common share (in dollars per share) | $ 0.20 | $ 0.20000 | $ 0.20000 | $ 0.19125 | $ 0.19125 | $ 0.19125 | $ 0.19125 | $ 0.18750 | $ 0.18750 | $ 0.7825 | $ 0.7575 | $ 0.3750 |
QUARTERLY FINANCIAL DATA (una_4
QUARTERLY FINANCIAL DATA (unaudited) - Tax Act (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||
May 26, 2019 | Feb. 24, 2019 | Nov. 25, 2018 | Aug. 26, 2018 | May 27, 2018 | Feb. 25, 2018 | May 26, 2019 | May 27, 2018 | |
QUARTERLY FINANCIAL DATA (unaudited) | ||||||||
Expense (benefit) from change in tax rate | $ (4.2) | $ 6.4 | $ (17.7) | $ (47) | ||||
Net tax benefit for the re-measurement of U.S. deferred taxes | 13.3 | 23 | $ 39.9 | |||||
Impact of Tax Act | $ 4.4 | $ 24 | ||||||
Expense (benefit) from impact of remeasuring net US corporate tax rate | (2.8) | 7.4 | $ (15.4) | $ (14) | $ (27.2) | $ (64.7) | ||
Tax Cuts and Jobs Act, Change in Tax Rate, Deferred Tax Asset, Income Tax Expense | 7.4 | |||||||
Tax Cuts and Jobs Act of 2017, Change in Tax Rate, Deferred Tax Liability, Income Tax Benefit Relating To Transition Tax | $ 1.4 | $ 1 | $ 2.4 |
QUARTERLY FINANCIAL DATA (una_5
QUARTERLY FINANCIAL DATA (unaudited) - Separation Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
May 27, 2018 | Feb. 25, 2018 | Nov. 26, 2017 | Aug. 27, 2017 | May 27, 2018 | May 28, 2017 | |
QUARTERLY FINANCIAL DATA (unaudited) | ||||||
Pre-tax expense related to Separation | $ 0.8 | $ 1.7 | $ 4 | $ 2.2 | $ 8.7 | $ 26.5 |
Post tax expense related to separation | $ 0.6 | $ 1.2 | $ 2.5 | $ 1.4 |
SCHEDULE II Valuation and Qua_2
SCHEDULE II Valuation and Qualifying Accounts - Tabular Disclosure (Details) - Valuation Allowance of Deferred Tax Assets - USD ($) $ in Millions | 12 Months Ended | ||
May 26, 2019 | May 27, 2018 | May 28, 2017 | |
Valuation and Qualifying Accounts | |||
Valuation Allowances and Reserves, Balance, Beginning Balance | $ 62 | $ 98.4 | $ 12.3 |
Additions Charged to Costs, Expenses and Equity | 3.7 | 86.1 | |
Deductions from Reserves | 1.1 | 36.4 | |
Valuation Allowances and Reserves, Balance, Ending Balance | $ 64.6 | $ 62 | $ 98.4 |
SCHEDULE II Valuation and Qua_3
SCHEDULE II Valuation and Qualifying Accounts - Additional Information (Details) - USD ($) $ in Millions | Dec. 31, 2017 | May 29, 2017 | May 26, 2019 | May 27, 2018 | May 28, 2017 |
Valuation and Qualifying Accounts | |||||
Reduction in revaluation of deferred tax assets | $ 31.2 | ||||
Federal statutory tax rate (as a percent) | 35.00% | 35.00% | 21.00% | 29.30% | 35.00% |
Valuation Allowance of Deferred Tax Assets | |||||
Valuation and Qualifying Accounts | |||||
Additions charged to equity | $ 83.3 |