Lamb Weston Holdings, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ​ ​ ​ ​ Reports of Independent Registered Public Accounting Firm 42 Consolidated Statements of Earnings for the fiscal years ended May 30, 2021, May 31, 2020 and May 26, 2019 45 Consolidated Statements of Comprehensive Income for the fiscal years ended May 30, 2021, May 31, 2020, and May 26, 2019 46 Consolidated Balance Sheets as of May 30, 2021 and May 31, 2020 47 Consolidated Statements of Stockholders’ Equity for the fiscal years ended May 30, 2021, May 31, 2020, and May 26, 2019 48 Consolidated Statements of Cash Flows for the fiscal years ended May 30, 2021, May 31, 2020, and May 26, 2019 49 Notes to Consolidated Financial Statements 50 ​ ​ 41 Table of Contents Report of Independent Registered Public Accounting Firm ​ To the Stockholders and Board of Directors Lamb Weston Holdings, Inc.: ​ Opinion on the Consolidated Financial Statements ​ We have audited the accompanying consolidated balance sheets of Lamb Weston Holdings, Inc. and subsidiaries (the Company) as of May 30, 2021 and May 31, 2020, the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended May 30, 2021, and the related notes and consolidated financial statement schedule (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of May 30, 2021 and May 31, 2020, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended May 30, 2021, in conformity with U.S. generally accepted accounting principles. ​ We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of May 30, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated July 27, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. ​ Change in Accounting Principle ​ As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases for the fiscal year ended May 31, 2020 due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842), effective May 27, 2019. ​ Basis for Opinion ​ These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ Critical Audit Matter ​ The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. ​ 42 Table of Contents Evaluation of certain sales incentives and trade promotion allowances ​ As discussed in Note 1 to the consolidated financial statements, the Company offers sales incentives and trade promotion allowances through various programs. The Company records accruals based on sales incentive agreements and expectations regarding customer participation and performance levels. Customer participation and performance levels are primarily based on historical sales and redemption rates, current customer sales, and industry trends. ​ We identified the evaluation of certain accruals for sales incentive and trade promotion allowances as a critical audit matter. Subjective and complex auditor judgment was required in evaluating these accruals as a result of the timing difference between when the product is delivered and when the incentive will be claimed by the end consumer, coupled with customer participation expectations. This specifically related to the impact of historical sales, payments, and redemption rates on the Company’s accrual. ​ The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s sales incentive and trade promotion allowance process, including the accrual methodology, and evaluation of the use of historic data. To evaluate the Company’s accrual for certain sales incentives and trade promotions allowances we (1) assessed the Company’s ability to accurately estimate its sales incentive accrual by comparing previously established accruals to actual settlements, (2) evaluated conditions in the current operating environment which may affect the use of historical sales, payments, and redemption rates as inputs to the projected accrual, (3) evaluated a sample of customer and end consumer incentive payments, which are the basis for certain portions of the Company’s accrual for sales incentives and trade promotions, based on volumes sold and the terms of the sales incentives to validate the accuracy of the payment made and the lag time between product invoice and incentive redemption, and (4) evaluated certain customer and end consumer incentive accruals based on volumes sold, historic payments, and the terms of the sales incentives to test the basis of the specific customer’s projected accrual. ​ /s/ KPMG LLP ​ We have served as the Company’s auditor since 2016. ​ Seattle, Washington July 27, 2021 ​ 43 Table of Contents Report of Independent Registered Public Accounting Firm ​ To the Stockholders and Board of Directors Lamb Weston Holdings, Inc.: ​ Opinion on Internal Control Over Financial Reporting ​ We have audited Lamb Weston Holdings, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of May 30, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 30, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. ​ We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of May 30, 2021 and May 31, 2020, the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended May 30, 2021, and the related notes and consolidated financial statement schedule (collectively, the consolidated financial statements), and our report dated July 27, 2021 expressed an unqualified opinion on those consolidated financial statements. ​ Basis for Opinion ​ The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. ​ Definition and Limitations of Internal Control Over Financial Reporting ​ A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. ​ Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. ​ /s/ KPMG LLP ​ Seattle, Washington July 27, 2021 44 Table of Contents Lamb Weston Holdings, Inc. Consolidated Statements of Earnings (dollars in millions, except per-share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May ​ ​ 2021 ​ 2020 ​ 2019 Net sales ​ $ 3,670.9 ​ $ 3,792.4 ​ $ 3,756.5 Cost of sales ​ ​ 2,838.9 ​ ​ 2,897.2 ​ ​ 2,753.0 Gross profit ​ ​ 832.0 ​ ​ 895.2 ​ ​ 1,003.5 Selling, general and administrative expenses ​ ​ 357.2 ​ ​ 338.3 ​ ​ 335.1 Income from operations ​ ​ 474.8 ​ ​ 556.9 ​ ​ 668.4 Interest expense, net ​ ​ 118.3 ​ ​ 108.0 ​ ​ 107.1 Income before income taxes and equity method earnings ​ 356.5 ​ 448.9 ​ 561.3 Income tax expense ​ ​ 90.5 ​ ​ 112.3 ​ ​ 133.6 Equity method investment earnings ​ ​ 51.8 ​ ​ 29.3 ​ ​ 59.5 Net income ​ 317.8 ​ 365.9 ​ 487.2 Less: Income attributable to noncontrolling interests ​ ​ — ​ ​ — ​ ​ 8.6 Net income attributable to Lamb Weston Holdings, Inc. ​ $ 317.8 ​ $ 365.9 ​ $ 478.6 Earnings per share ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 2.17 ​ $ 2.50 ​ $ 3.19 Diluted ​ $ 2.16 ​ $ 2.49 ​ $ 3.18 ​ See Notes to Consolidated Financial Statements. ​ 45 Table of Contents Lamb Weston Holdings, Inc. Consolidated Statements of Comprehensive Income (dollars in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May ​ ​ 2021 ​ 2020 ​ 2019 ​ ​ ​ ​ ​ Tax ​ ​ ​ ​ ​ ​ ​ Tax ​ ​ ​ ​ ​ ​ ​ Tax ​ ​ ​ ​ ​ Pre-Tax ​ (Expense) ​ After-Tax ​ Pre-Tax ​ (Expense) ​ After-Tax ​ Pre-Tax ​ (Expense) ​ After-Tax ​ ​ Amount Benefit Amount Amount Benefit Amount ​ Amount Benefit Amount Net income ​ $ 408.3 ​ $ ( 90.5 ) ​ $ 317.8 ​ $ 478.2 ​ $ ( 112.3 ) ​ $ 365.9 ​ $ 620.8 ​ $ ( 133.6 ) ​ $ 487.2 Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reclassification of post-retirement benefits out of accumulated other comprehensive income (loss) ​ 0.3 ​ ​ ( 0.1 ) ​ 0.2 ​ 0.8 ​ ​ ( 0.3 ) ​ 0.5 ​ 0.7 ​ ​ ( 0.1 ) ​ 0.6 Unrealized pension and post-retirement benefit obligations ​ ( 3.2 ) ​ 0.7 ​ ( 2.5 ) ​ 0.4 ​ ( 0.1 ) ​ 0.3 ​ ( 3.3 ) ​ 0.8 ​ ( 2.5 ) Unrealized currency translation gains (losses) ​ 76.1 ​ ( 3.8 ) ​ 72.3 ​ ( 17.4 ) ​ 1.4 ​ ( 16.0 ) ​ ( 19.1 ) ​ — ​ ( 19.1 ) Comprehensive income ​ 481.5 ​ ( 93.7 ) ​ 387.8 ​ 462.0 ​ ( 111.3 ) ​ 350.7 ​ 599.1 ​ ( 132.9 ) ​ 466.2 Less: Comprehensive income attributable to noncontrolling interests ​ — ​ — ​ — ​ — ​ — ​ — ​ 8.6 ​ — ​ 8.6 Comprehensive income attributable to Lamb Weston Holdings, Inc. ​ $ 481.5 ​ $ ( 93.7 ) ​ $ 387.8 ​ $ 462.0 ​ $ ( 111.3 ) ​ $ 350.7 ​ $ 590.5 ​ $ ( 132.9 ) ​ $ 457.6 ​ ​ ​ See Notes to Consolidated Financial Statements. ​ 46 Table of Contents Lamb Weston Holdings, Inc. Consolidated Balance Sheets (dollars in millions, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ May 30, ​ May 31, ​ 2021 2020 ASSETS ​ ​ Current assets: ​ ​ Cash and cash equivalents $ 783.5 ​ $ 1,364.0 Receivables, less allowance for doubtful accounts of $ 0.9 and $ 1.3 ​ 366.9 ​ 342.1 Inventories ​ 513.5 ​ 486.7 Prepaid expenses and other current assets ​ 117.8 ​ 109.8 Total current assets ​ 1,781.7 ​ 2,302.6 Property, plant and equipment, net ​ 1,524.0 ​ 1,535.0 Operating lease assets ​ ​ 141.7 ​ ​ 167.0 Equity method investments ​ ​ 310.2 ​ ​ 250.2 Goodwill ​ 334.5 ​ 303.8 Intangible assets, net ​ 36.9 ​ 38.3 Other assets ​ 80.4 ​ 65.4 Total assets ​ $ 4,209.4 ​ $ 4,662.3 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ Short-term borrowings ​ $ — ​ $ 498.7 Current portion of long-term debt and financing obligations ​ ​ 32.0 ​ ​ 48.8 Accounts payable ​ 359.3 ​ 244.4 Accrued liabilities ​ 226.9 ​ 233.0 Total current liabilities ​ 618.2 ​ 1,024.9 Long-term liabilities: ​ ​ ​ ​ ​ ​ Long-term debt and financing obligations, excluding current portion ​ 2,705.4 ​ 2,992.6 Deferred income taxes ​ ​ 159.7 ​ ​ 152.5 Other noncurrent liabilities ​ 245.5 ​ 252.3 Total long-term liabilities ​ ​ 3,110.6 ​ ​ 3,397.4 Commitments and contingencies ​ ​ ​ ​ ​ ​ Stockholders' equity: ​ ​ Common stock of $ 1.00 par value, 600,000,000 shares authorized; 147,640,632 and 146,993,751 shares issued ​ 147.6 ​ 147.0 Additional distributed capital ​ ( 836.8 ) ​ ( 862.9 ) Retained earnings ​ 1,244.6 ​ 1,064.6 Accumulated other comprehensive income (loss) ​ 29.5 ​ ( 40.5 ) Treasury stock, at cost, 1,448,768 and 954,858 common shares ​ ​ ( 104.3 ) ​ ​ ( 68.2 ) Total stockholders' equity ​ 480.6 ​ 240.0 Total liabilities and stockholders’ equity ​ $ 4,209.4 ​ $ 4,662.3 ​ See Notes to Consolidated Financial Statements. ​ 47 Table of Contents ​ Lamb Weston Holdings, Inc. Consolidated Statements of Stockholders’ Equity (dollars in millions, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ Accumulated ​ ​ ​ ​ Common Stock, ​ Common ​ Treasury ​ Paid-in ​ ​ ​ ​ Other ​ ​ ​ ​ ​ net of Treasury ​ Stock ​ Stock ​ (Distributed) ​ Retained ​ Comprehensive ​ Total ​ Shares Amount ​ Amount Capital Earnings Income (Loss) Equity Balance at May 27, 2018 ​ ​ 146,332,332 ​ $ 146.4 ​ $ ( 2.9 ) ​ $ ( 900.4 ) ​ $ 426.4 ​ $ ( 4.3 ) ​ $ ( 334.8 ) 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 ) Dividends declared, $ 0.7825 per share ​ ​ — ​ — ​ — ​ — ​ ( 114.6 ) ​ — ​ ​ ( 114.6 ) Common stock issued ​ ​ 258,961 ​ ​ 0.3 ​ ​ — ​ ​ 1.7 ​ ​ — ​ ​ — ​ ​ 2.0 Stock-settled, stock-based compensation expense ​ ​ — ​ ​ — ​ — ​ 18.8 ​ — ​ — ​ ​ 18.8 Repurchase of common stock and common stock withheld to cover taxes ​ ​ ( 522,260 ) ​ ​ — ​ ​ ( 36.4 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 36.4 ) Other ​ ​ — ​ — ​ — ​ 0.4 ​ ( 0.5 ) ​ — ​ ​ ( 0.1 ) Comprehensive income ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 478.6 ​ ​ ( 21.0 ) ​ ​ 457.6 Balance at May 26, 2019 ​ ​ 146,069,033 ​ $ 146.7 ​ $ ( 39.3 ) ​ $ ( 890.3 ) ​ $ 803.6 ​ $ ( 25.3 ) ​ $ ( 4.6 ) Adoption of ASC 842 leases ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 20.5 ​ ​ — ​ ​ 20.5 Dividends declared, $ 0.8600 per share ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 125.6 ) ​ ​ — ​ ​ ( 125.6 ) Common stock issued ​ ​ 338,924 ​ ​ 0.3 ​ ​ — ​ ​ 4.0 ​ ​ — ​ ​ — ​ ​ 4.3 Stock-settled, stock-based compensation expense ​ ​ — ​ ​ — ​ ​ — ​ ​ 22.8 ​ ​ — ​ ​ — ​ ​ 22.8 Repurchase of common stock and common stock withheld to cover taxes ​ ​ ( 369,064 ) ​ ​ — ​ ​ ( 28.9 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 28.9 ) Other ​ ​ — ​ ​ — ​ ​ — ​ ​ 0.6 ​ ​ 0.2 ​ ​ — ​ ​ 0.8 Comprehensive income ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 365.9 ​ ​ ( 15.2 ) ​ ​ 350.7 Balance at May 31, 2020 ​ ​ 146,038,893 ​ $ 147.0 ​ $ ( 68.2 ) ​ $ ( 862.9 ) ​ $ 1,064.6 ​ $ ( 40.5 ) ​ $ 240.0 Dividends declared, $ 0.9300 per share ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 136.2 ) ​ ​ — ​ ​ ( 136.2 ) Common stock issued ​ ​ 646,881 ​ ​ 0.6 ​ ​ — ​ ​ 3.5 ​ ​ — ​ ​ — ​ ​ 4.1 Stock-settled, stock-based compensation expense ​ ​ — ​ ​ — ​ ​ — ​ ​ 20.6 ​ ​ — ​ ​ — ​ ​ 20.6 Repurchase of common stock and common stock withheld to cover taxes ​ ​ ( 493,910 ) ​ ​ — ​ ​ ( 36.1 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 36.1 ) Other ​ ​ — ​ ​ — ​ ​ — ​ ​ 2.0 ​ ​ ( 1.6 ) ​ ​ — ​ ​ 0.4 Comprehensive income ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 317.8 ​ ​ 70.0 ​ ​ 387.8 Balance at May 30, 2021 ​ ​ 146,191,864 ​ $ 147.6 ​ $ ( 104.3 ) ​ $ ( 836.8 ) ​ $ 1,244.6 $ 29.5 $ 480.6 ​ ​ See Notes to Consolidated Financial Statements. ​ 48 Table of Contents Lamb Weston Holdings, Inc. Consolidated Statements of Cash Flows (dollars in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May ​ ​ 2021 ​ 2020 ​ 2019 Cash flows from operating activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 317.8 ​ $ 365.9 ​ $ 487.2 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization of intangibles and debt issuance costs ​ ​ 188.8 ​ ​ 184.0 ​ ​ 162.4 Stock-settled, stock-based compensation expense ​ ​ 20.6 ​ ​ 22.8 ​ ​ 18.8 Earnings of joint ventures in excess of distributions ​ ​ ( 33.0 ) ​ ​ ( 0.4 ) ​ ​ ( 13.8 ) Deferred income taxes ​ ​ 3.8 ​ ​ 20.0 ​ ​ 37.5 Other ​ ​ 10.7 ​ ​ 15.6 ​ ​ 13.2 Changes in operating assets and liabilities, net of acquisition: ​ ​ ​ ​ ​ ​ ​ ​ ​ Receivables ​ ​ ( 21.0 ) ​ ​ 1.1 ​ ​ ( 25.1 ) Inventories ​ ​ ( 22.0 ) ​ ​ 15.3 ​ ​ ( 15.8 ) Income taxes payable/receivable, net ​ ​ ( 3.3 ) ​ ​ 2.7 ​ ​ ( 16.4 ) Prepaid expenses and other current assets ​ ​ ( 4.9 ) ​ ​ ( 2.0 ) ​ ​ ( 1.9 ) Accounts payable ​ ​ 104.7 ​ ​ ( 34.9 ) ​ ​ 32.9 Accrued liabilities ​ ​ ( 9.0 ) ​ ​ ( 16.1 ) ​ ​ 1.9 Net cash provided by operating activities ​ $ 553.2 ​ $ 574.0 ​ $ 680.9 Cash flows from investing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Additions to property, plant and equipment ​ ​ ( 147.2 ) ​ ​ ( 167.7 ) ​ ​ ( 334.2 ) Additions to other long-term assets ​ ​ ( 16.1 ) ​ ​ ( 40.7 ) ​ ​ ( 2.7 ) Acquisition of business, net of cash acquired ​ ​ — ​ ​ ( 116.7 ) ​ ​ ( 88.6 ) Investment in equity method joint venture ​ ​ — ​ ​ ( 22.6 ) ​ ​ — Other ​ ​ 0.8 ​ ​ 1.7 ​ ​ 2.5 Net cash used for investing activities ​ $ ( 162.5 ) ​ $ ( 346.0 ) ​ $ ( 423.0 ) Cash flows from financing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Proceeds (payments) of short-term borrowings, net ​ ( 498.8 ) ​ 490.5 ​ ( 1.0 ) Repayments of debt and financing obligations ​ ​ ( 305.5 ) ​ ​ ( 336.3 ) ​ ​ ( 66.7 ) Dividends paid ​ ​ ( 135.3 ) ​ ​ ( 121.3 ) ​ ​ ( 113.3 ) Repurchase of common stock and common stock withheld to cover taxes ​ ​ ( 36.1 ) ​ ​ ( 28.9 ) ​ ​ ( 36.4 ) Proceeds from issuance of debt ​ ​ — ​ ​ 1,122.9 ​ ​ — Acquisition of noncontrolling interest ​ ​ — ​ ​ — ​ ​ ( 78.2 ) Cash distributions paid to noncontrolling interest ​ ​ — ​ ​ — ​ ​ ( 6.1 ) Other ​ ​ 1.7 ​ ​ ( 1.9 ) ​ ​ 2.1 Net cash provided by (used for) financing activities ​ $ ( 974.0 ) ​ $ 1,125.0 ​ $ ( 299.6 ) Effect of exchange rate changes on cash and cash equivalents ​ ​ 2.8 ​ ​ ( 1.2 ) ​ ​ ( 1.7 ) Net increase (decrease) in cash and cash equivalents ​ ( 580.5 ) ​ 1,351.8 ​ ( 43.4 ) Cash and cash equivalents, beginning of the period ​ ​ 1,364.0 ​ ​ 12.2 ​ ​ 55.6 Cash and cash equivalents, end of period ​ $ 783.5 ​ $ 1,364.0 ​ $ 12.2 ​ See Notes to Consolidated Financial Statements. ​ ​ 49 Table of Contents Notes to Consolidated Financial Statements ​ 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ​ Lamb Weston Holdings, Inc. (“we,” “us,” “our,” the “Company,” or “Lamb Weston”), along with our joint venture partners, 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 14, 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”). ​ Basis of Presentation ​ These Consolidated Financial Statements present the financial results of Lamb Weston for the fiscal years ended May 30, 2021, May 31, 2020, and May 26, 2019 (“fiscal 2021, 2020, and 2019”), and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America. The fiscal year of Lamb Weston ends the last Sunday in May. The fiscal years for the Consolidated Financial Statements presented consist of 52 -week periods for fiscal 2021 and 2019, and a 53 -week period for fiscal 2020. ​ The financial statements include all adjustments (consisting only of normal recurring adjustments) that we consider 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. ​ Our consolidated financial statements include the accounts of Lamb Weston and all of our majority-owned subsidiaries. In addition, the accounts of all variable interest entities for which we are the primary beneficiary are included in our consolidated financial statements from the date such determination was made. Intercompany investments, accounts, and transactions have been eliminated. ​ The equity method of accounting is applied for investments when the Company has significant influence over the investee’s operations, or when the investee is structured with separate capital accounts and our investment is considered more than minor. Our equity method investments are described in Note 4, Investments in Joint Ventures. ​ Use of Estimates ​ The preparation of the consolidated financial statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the amounts reported in our 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. The inputs into our judgments and estimates consider the economic implications of the effects of the COVID-19 pandemic on our critical accounting estimates and significant accounting policies. 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 from Contracts with Customers ​ Generally, we recognize revenue on a point-in-time basis when the customer takes title to the product and assumes the risks and rewards for the product. However, for customized products, which are products manufactured to customers’ unique specifications, we recognize revenue over time, utilizing an output method, which is generally as the products are produced. This is because once a customized product is manufactured pursuant to a purchase order, we have an enforceable right to payment for that product. Our Global segment sells the majority of our customized products, for which revenue is 50 Table of Contents recognized when a purchase order is received to the extent the product has been manufactured, as opposed to sales of non-customized products, for which revenue is generally recognized upon shipment. As a result, the timing of the receipt of a purchase order may create quarterly fluctuations in this segment. ​ The nature of our contracts 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. Our payment terms are consistent with industry standards and generally include early pay discounts. Amounts billed and due from customers are short-term in nature and are classified as receivables, since payments are unconditional and only the passage of time is required before payments are due. As of May 30, 2021 and May 31, 2020, we had $ 111.0 million and $ 72.7 million, respectively, of unbilled receivables for customized products for which we have accelerated the recognition of revenue and recorded the amounts in “Receivables” on our Consolidated Balance Sheets. We generally do not offer financing to our customers. We also do not provide a general right of return. However, customers may seek to return defective or non-conforming products. Following a customer return, we may offer remedies, including cash refunds, credit towards future purchases, or product replacement. As a result, customers’ right of return and related refund or product liabilities are estimated and recorded as reductions in revenue. ​ We have contract terms that give rise to variable consideration including, but not limited to, discounts, coupons, rebates, and volume-based incentives. We estimate volume rebates based on the most likely amount method outlined in ASC 606, Revenue from Contracts with Customers . We estimate early payment discounts and other customer trade incentives 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, which is consistent with the expected value method outlined in ASC 606. We have concluded that these methods result in the best estimate of the consideration we are entitled to from our customers. Because of the complexity of some of these trade promotions, however, 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 30, 2021 and May 31, 2020, we had $ 39.9 million and $ 42.5 million, respectively, of sales incentives and trade promotions payable recorded in “Accrued liabilities” on our Consolidated Balance Sheets. ​ We have elected to present all sales taxes on a net basis, account for shipping and handling activities as fulfillment activities, recognize the incremental costs of obtaining a contract as expense when incurred if the amortization period of the asset we would recognize is one year or less, and not record interest income or interest expense when the difference in timing of control or transfer and customer payment is one year or less. ​ Advertising and Promotion ​ Advertising and promotion expenses totaled $ 17.8 million, $ 23.0 million, and $ 32.4 million in fiscal 2021, 2020, and 2019, respectively, and are included in “Selling, general and administrative expenses” in the Consolidated Statements of Earnings. ​ Research and Development ​ Research and development costs are expensed as incurred and totaled $ 12.9 million in fiscal 2021 and $ 15.4 million in both fiscal 2020 and 2019, and are included in “Selling, general and administrative expenses” in the Consolidated Statements of Earnings. ​ Stock-Based Compensation ​ Compensation expense resulting from all stock-based compensation transactions is measured and recorded in the consolidated financial statements based on the grant date fair value of the equity 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. ​ 51 Table of Contents Cash and Cash Equivalents ​ Cash and all highly liquid investments with an original maturity of three months or less at the date of acquisition are classified as cash and cash equivalents and stated at cost, which approximates market value. We maintain various banking relationships with high quality financial institutions and believe we are not exposed to any significant credit risk for our cash and cash equivalents. Cash and cash equivalents totaled $ 783.5 million and $ 1,364.0 million at May 30, 2021 and May 31, 2020, respectively. We invest available cash in money market funds that are backed by U.S. Treasury securities and can be redeemed without notice. ​ 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 forward-looking information to assess expected credit losses. 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 30, 2021 and May 31, 2020, the allowance for doubtful accounts was $ 0.9 million and $ 1.3 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 30, ​ May 31, ​ ​ 2021 2020 Raw materials and packaging ​ $ 89.8 $ 106.2 Finished goods ​ 377.8 339.2 Supplies and other ​ 45.9 41.3 Inventories ​ $ 513.5 $ 486.7 ​ Leased Assets ​ Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from these leases. Effective May 27, 2019 , the beginning of our fiscal 2020, we adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) . Operating lease assets and liabilities are recognized at the commencement date of the lease based on the present value of the lease payments over the lease term. Our leases may include options to extend or terminate these leases. These options to extend are included in the lease term when it is reasonably certain that we will exercise that option. Some leases have variable payments, however, because they are not based on an index or rate, they are not included in lease assets and liabilities. Variable payments for leases of land and buildings primarily relate to common area maintenance, insurance, taxes, and utilities. Variable payments for equipment, vehicles, and leases within supply agreements primarily relate to usage, repairs, and maintenance. As the implicit rate is not readily determinable for most of our leases, we use an incremental borrowing rate to determine the initial present value of lease payments over the lease terms on a collateralized basis over a similar term, which is based on market and company specific information. This is updated quarterly for measurement of new lease liabilities. Leases having a lease term of twelve months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the term of the lease. In addition, we applied the practical expedient to account for 52 Table of Contents the lease and non-lease components as a single lease component for all of our leases. See Note 9, Leases, for more information. ​ 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 $ 1.9 million, $ 2.6 million, and $ 7.6 million in fiscal 2021, 2020, and 2019, respectively. Repairs and maintenance costs are expensed as incurred. The components of property, plant and equipment were as follows (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ May 30, ​ May 31, ​ ​ 2021 2020 Land and land improvements ​ $ 108.2 ​ $ 107.2 Buildings, machinery, and equipment ​ 2,763.3 ​ 2,670.1 Furniture, fixtures, office equipment, and other ​ 97.1 ​ 107.1 Construction in progress ​ 122.5 ​ 58.3 Property, plant and equipment, at cost ​ 3,091.1 ​ 2,942.7 Less accumulated depreciation ​ ( 1,567.1 ) ​ ( 1,407.7 ) Property, plant and equipment, net ​ $ 1,524.0 ​ $ 1,535.0 ​ Depreciation is computed on the straight-line method over the estimated useful lives of the respective classes of assets as follows: ​ ​ ​ ​ Land improvements 2 - 30 years Buildings 10 - 40 years Machinery and equipment ​ 5 - 20 years Furniture, fixtures, office equipment, and other ​ 3 - 15 years ​ We recorded $ 177.7 million, $ 175.3 million, and $ 155.5 million of depreciation expense in fiscal 2021, 2020, and 2019, respectively. At May 30, 2021 and May 31, 2020, purchases of property, plant and equipment included in accounts payable were $ 23.1 million and $ 9.9 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. We have an option to evaluate goodwill for impairment by first performing a qualitative assessment of events and circumstances to determine whether it is more likely than not that the fair value of a reporting until is less than its carrying amount. If we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amounts, then a quantitative goodwill impairment test is not required to be performed. The quantitative assessment requires us to estimate the fair value of our reporting units using a weighted approach based on discounted future cash flows, market multiples and transaction multiples. If the carrying amount of the reporting units is in excess of their estimated fair value, the reporting unit will record an impairment charge by the amount that the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ​ 53 Table of Contents 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 ​ When determining fair value, we consider the principal or most advantageous market in which we would transact, as well as assumptions that market participants would use when pricing the asset or liability. Unless otherwise specified, we believe the carrying value of financial instruments approximates their fair value. ​ The three levels of inputs that may be used to measure fair value are: ​ Level 1—Quoted market prices in active markets for identical assets or liabilities. We evaluate security-specific market data when determining whether a market is active. ​ 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. ​ 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. ​ 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 and expenses are translated into U.S. dollars using daily and monthly average exchange rates. Gains and losses resulting from the translation of Consolidated Balance Sheets are recorded as a component of “Accumulated other comprehensive income (loss).” ​ Foreign currency transactions resulted in a gain of $ 1.3 million, and losses of $ 0.1 million, and $ 3.3 million in fiscal 2021, 2020, and 2019, respectively. These amounts were recorded in “Selling, general and administrative expenses” in the Consolidated Statements of Earnings. ​ Derivative Financial Instruments ​ We use derivatives and other financial instruments to hedge a portion of our commodity risks. We do not hold or issue derivatives and other financial instruments for trading purposes. Derivative instruments are reported in our Consolidated Balance Sheets at their fair values, unless the derivative instruments qualify for the normal purchase normal sale exception (“NPNS”) under GAAP and such exception has been elected. If the NPNS exception is elected, the fair values of such contracts are not recognized. We do not designate commodity derivatives to achieve hedge accounting treatment. ​ Income Taxes ​ We recognize current tax liabilities and assets based on an estimate of taxes payable or refundable in the current year for each of the jurisdictions in which we transact business. As part of the determination of our current tax liability, management exercises considerable judgment in evaluating positions taken in the tax returns. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions 54 Table of Contents 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. ​ See Note 3, Income Taxes, for more information. ​ New and Recently Issued Accounting Pronouncements ​ Recently Adopted Accounting Pronouncements ​ Receivables – Credit Losses ​ In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . This guidance replaces the existing incurred loss impairment model by requiring the use of forward-looking information to assess expected credit losses. We adopted this guidance on June 1, 2020 , the beginning of fiscal 2021, and it did not have a significant impact on our consolidated financial statements or notes to consolidated financial statements. ​ Accounting Pronouncements Not Yet Adopted ​ Reference Rate Reform ​ In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and the London Interbank Offered Rate (“LIBOR”). This guidance includes practical expedients for contract modifications due to reference rate reform. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. This guidance is effective immediately and generally can be applied through December 31, 2022 . We are currently evaluating the potential impact of this standard on our financial statements. ​ There were no other accounting pronouncements recently issued that had or are expected to have a material impact on our financial statements. ​ ​ ​ 55 Table of Contents 2. EARNINGS PER SHARE ​ The following table sets forth the computation of basic and diluted earnings per common share for the periods presented (dollars and shares in millions, except per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May ​ 2021 ​ 2020 ​ 2019 Numerator: ​ ​ ​ Net income attributable to Lamb Weston Holdings, Inc. ​ $ 317.8 ​ $ 365.9 ​ $ 478.6 Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated, net of tax benefits (a) ​ — ​ — ​ 10.8 Net income available to Lamb Weston common stockholders ​ $ 317.8 ​ $ 365.9 ​ $ 467.8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ ​ Basic weighted average common shares outstanding ​ 146.4 ​ 146.2 ​ 146.5 Add: Dilutive effect of employee incentive plans (b) ​ 0.7 ​ 0.9 ​ 0.8 Diluted weighted average common shares outstanding ​ 147.1 ​ 147.1 ​ 147.3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share (a) ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 2.17 ​ $ 2.50 ​ $ 3.19 Diluted ​ $ 2.16 ​ $ 2.49 ​ $ 3.18 (a) In November 2018, we entered into an agreement to acquire the remaining 50.01 % interest in Lamb Weston BSW, LLC (“Lamb Weston BSW”). Our Consolidated Statements of Earnings includes 100 % of Lamb Weston BSW’s earnings beginning November 2, 2018. During fiscal 2019, net income available to common stockholders and earnings per share included accretion expense, net of estimated tax benefits, of $ 9.4 million, or $ 0.06 per share, to increase the redeemable noncontrolling interest to the amount we agreed to pay to acquire the remaining interest in Lamb Weston BSW. While the accretion, net of estimated tax benefits, reduced net income available to Lamb Weston common stockholders and earnings per share, it did not impact net income in the Consolidated Statements of Earnings. See Note 6, Investments in Joint Ventures, in our Annual Report on Form 10-K for the fiscal year ended May 31, 2020, which we filed with the Securities and Exchange Commission on July 28, 2020. ​ (b) Potentially dilutive shares of common stock from employee incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options and the assumed vesting of outstanding restricted stock units and performance awards. As of May 30, 2021, we did not have any stock-based awards that were antidilutive. As of May 31, 2020 and 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. ​ ​ 56 Table of Contents 3. INCOME TAXES ​ Pre-tax income, inclusive of equity method investment earnings, consisted of the following (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May ​ 2021 2020 2019 United States ​ $ 352.0 ​ $ 462.0 ​ $ 574.5 Foreign ​ 56.3 ​ 16.2 ​ 46.3 Total pre-tax income ​ $ 408.3 ​ $ 478.2 ​ $ 620.8 ​ The provision for income taxes included the following (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May ​ 2021 2020 2019 Current ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. federal $ 66.2 $ 75.7 $ 66.8 State and local ​ ​ 15.0 ​ ​ 13.2 ​ ​ 17.7 Foreign ​ ​ 5.5 ​ ​ 3.4 ​ ​ 11.6 Total current provision for taxes ​ ​ 86.7 ​ ​ 92.3 ​ ​ 96.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. federal ​ ​ ( 0.4 ) ​ ​ 18.6 ​ ​ 42.2 State and local ​ ​ 1.2 ​ ​ 4.4 ​ ​ ( 0.1 ) Foreign ​ ​ 3.0 ​ ​ ( 3.0 ) ​ ​ ( 4.6 ) Total deferred provision for taxes ​ $ 3.8 ​ $ 20.0 ​ $ 37.5 Total provision for taxes ​ $ 90.5 ​ $ 112.3 ​ $ 133.6 ​ A reconciliation of income tax expense using the 21 % U.S. statutory tax rate on income from operations, including equity method earnings and before income taxes, compared with the actual provision for income taxes follows (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May ​ 2021 2020 2019 Provision computed at U.S. statutory rate ​ $ 85.7 $ 100.4 $ 130.4 Increase (reduction) in rate resulting from: ​ ​ ​ ​ ​ ​ ​ ​ ​ State and local taxes, net of federal benefit ​ 13.7 ​ ​ 15.3 ​ ​ 14.8 Effect of taxes on foreign operations ​ ​ ( 4.7 ) ​ ​ ( 4.4 ) ​ ​ ( 4.7 ) Other ​ ​ ( 4.2 ) ​ ​ 1.0 ​ ​ ( 6.9 ) Total provision for taxes ​ $ 90.5 ​ $ 112.3 ​ $ 133.6 Effective income tax rate (a) ​ ​ 22.2 % ​ ​ 23.5 % ​ ​ 21.5 % (a) 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 $ 84.1 million, $ 82.5 million, and $ 103.0 million in fiscal 2021, 2020, and 2019, respectively. ​ ​ 57 Table of Contents 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 30, 2021 ​ May 31, 2020 ​ Assets Liabilities Assets Liabilities Property, plant and equipment ​ $ — ​ $ 187.1 ​ $ — ​ $ 188.8 Goodwill and other intangible assets ​ ​ 46.3 ​ ​ — ​ ​ 54.9 ​ ​ — Compensation and benefit related liabilities ​ ​ 32.2 ​ ​ — ​ ​ 19.7 ​ ​ — Net operating loss and credit carryforwards (a) ​ ​ 3.6 ​ ​ — ​ ​ 5.2 ​ ​ — Accrued expenses and other liabilities ​ ​ 13.9 ​ ​ — ​ ​ 15.2 ​ ​ — Inventory and inventory reserves ​ ​ 5.5 ​ ​ — ​ ​ 4.5 ​ ​ — Lease obligations ​ ​ 32.0 ​ ​ — ​ ​ 36.9 ​ ​ — Lease assets ​ ​ — ​ ​ 30.3 ​ ​ — ​ ​ 35.4 Debt issuance costs ​ ​ — ​ ​ 2.9 ​ ​ — ​ ​ 3.4 Investment in joint ventures ​ ​ — ​ ​ 4.7 ​ ​ — ​ ​ 3.6 Other ​ ​ 3.5 ​ ​ 16.4 ​ ​ 7.7 ​ ​ 8.6 ​ ​ ​ 137.0 ​ ​ 241.4 ​ ​ 144.1 ​ ​ 239.8 Less: Valuation allowance (b) ​ ​ ( 53.1 ) ​ ​ — ​ ​ ( 54.5 ) ​ ​ — Net deferred taxes (c) ​ $ 83.9 ​ $ 241.4 ​ $ 89.6 ​ $ 239.8 (a) At May 30, 2021, Lamb Weston had approximately $ 14.1 million of gross ($ 3.1 million after-tax) foreign net operating loss carryforwards, of which the majority expire during fiscal 2022. Lamb Weston also has a foreign tax credit carryforward of $ 0.5 million, which will expire by fiscal 2031. ​ (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 zero in fiscal 2021 and 2020, and $ 1.1 million of benefit in fiscal 2019. ​ (c) Deferred tax assets of $ 2.2 million and $ 2.3 million as of May 30, 2021 and May 31, 2020, respectively, were presented in “Other assets.” Deferred tax liabilities of $ 159.7 million and $ 152.5 million as of May 30, 2021 and May 31, 2020, respectively, were presented in “Deferred income taxes” as “Long-term liabilities” 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. ​ ​ 58 Table of Contents 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 ​ 2021 ​ 2020 2019 Beginning balance $ 31.3 $ 21.7 $ 13.2 Decreases from positions established during prior fiscal years ​ — ​ ​ — ​ ​ ( 0.8 ) Increases from positions established during current and prior fiscal years ​ 8.7 ​ ​ 10.3 ​ ​ 10.4 Decreases relating to settlements with taxing authorities ​ ( 0.8 ) ​ ​ — ​ ​ — Expiration of statute of limitations ​ ( 2.1 ) ​ ​ ( 0.7 ) ​ ​ ( 1.1 ) Ending balance (a) $ 37.1 ​ $ 31.3 ​ $ 21.7 (a) If we were to prevail on the unrecognized tax benefits recorded as of May 30, 2021 and May 30, 2020, it would result in a tax benefit of $ 31.6 million and $ 26.7 million, respectively, and a reduction in the effective tax rate. The ending balances exclude $ 7.2 million and $ 5.5 million of gross interest and penalties in fiscal 2021 and 2020, 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 we entered into with Conagra in connection with the Separation, 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 . The expiration of statute of limitations could reduce the uncertain tax positions by $ 6.5 million during the next 12 months. ​ 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. ​ 4. INVESTMENTS IN JOINT VENTURES ​ Lamb Weston holds equity interests in three potato processing joint ventures, including 50 % of Lamb-Weston/Meijer v.o.f. (“Lamb-Weston/Meijer”), Lamb-Weston/RDO Frozen (“Lamb Weston RDO”), and Lamb Weston Alimentos Modernos S.A. (“LWAMSA”), which it accounts for its ownership under the equity method of accounting. The carrying value of these equity method investments at May 30, 2021 and May 31, 2020, was $ 310.2 million and $ 250.2 million, respectively, and are included in “Equity method investments” on our Consolidated Balance Sheets. In fiscal 2021, 2020, and 2019, we had sales to our equity method investments of $ 15.3 million, $ 27.8 million, and $ 29.9 million, respectively, and payments to our equity method investments of $ 5.2 million, $ 8.6 million, and $ 10.9 million, respectively. Total dividends from our equity method investments were $ 18.8 million, $ 29.0 million, and $ 45.7 million for fiscal 2021, 2020, and 2019, respectively. As of May 30, 2021 and May 31, 2020, we had receivables included in “Receivables” on our Consolidated Balance Sheet from our joint ventures of $ 6.3 million and $ 7.1 million, respectively. ​ 59 Table of Contents 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 ​ 2021 2020 ​ 2019 Net sales ​ $ 1,169.5 $ 1,137.7 ​ $ 1,172.6 Gross profit ​ 196.5 145.8 ​ 212.2 Income from operations ​ 97.5 59.8 ​ 130.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ May 30, May 31, ​ 2021 2020 Current assets ​ $ 516.1 $ 413.8 Noncurrent assets ​ 627.6 455.1 Current liabilities ​ ​ 366.3 298.8 Noncurrent liabilities ​ ​ 147.3 79.8 ​ Lamb-Weston/Meijer ​ We hold a 50 % ownership interest in Lamb-Weston/Meijer, a joint venture with Meijer Frozen Foods B.V., that is headquartered in the Netherlands and manufactures and sells frozen potato products principally in Europe, Russia, and the Middle East. 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 $ 1.6 million in both fiscal years 2021 and 2020 and $ 1.8 million in fiscal 2019. These fees are recorded as a reduction to “Selling, general and administrative expenses” in our Consolidated Statements of Earnings. Our ownership interest in this venture is included in “Equity method investments” on our Consolidated Balance Sheets. The balance of our investment was $ 263.3 million and $ 207.4 million at May 30, 2021 and May 31, 2020, respectively. We account for this investment using equity method accounting. ​ We have an agreement to share the costs of our global ERP system and related software and services with Lamb-Weston/Meijer. Under the terms of the agreement, Lamb-Weston/Meijer will pay us for the majority of its portion of the ERP costs in five equal annual payments, plus interest, beginning in the period the system is deployed at Lamb-Weston/Meijer. As of May 30, 2021 and May 31, 2020, Lamb-Weston/Meijer’s portion of the ERP costs totaled $ 16.8 million and $ 13.0 million, respectively. We had $ 13.3 million and $ 12.0 million of receivables recorded on our Consolidated Balance Sheets at May 30, 2021 and May 31, 2020, respectively. Of the $ 13.3 million and $ 12.0 million of receivables, $ 0.1 million and $ 1.8 million were recorded in “Receivables, net” and $ 13.2 million and $ 10.2 million were recorded in “Other assets,” respectively. We expect the total receivable from Lamb-Weston/Meijer to increase as development and implementation of the next phase of our ERP system commences in fiscal 2022. ​ Lamb Weston RDO ​ We hold a 50 % interest in Lamb Weston RDO, a joint venture with RDO Frozen Co. This joint venture operates a potato processing plant in Minnesota. 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 $ 14.3 million, $ 14.1 million, and $ 14.8 million in fiscal 2021, 2020, and 2019, respectively. These fees are recorded as a reduction to “Selling, general and administrative expenses” in our Consolidated Statements of Earnings. Our ownership interest in this venture is included in “Equity method investments” on our Consolidated Balance Sheets. The balance of our investment was $ 17.4 million and $ 15.4 million at May 30, 2021 and May 31, 2020, respectively. We account for this investment using equity method accounting. ​ 60 Table of Contents LWAMSA ​ We hold a 50 % ownership interest in LWAMSA, a joint venture with Sociedad Comercial del Plata S.A. , that is headquartered in Argentina. LWAMSA manufactures and sells frozen potato products principally in South America. During fiscal year 2020, we paid $ 22.6 million and will pay the remaining amount of the purchase price, less any amounts for indemnified losses, in October 2024. At May 30, 2021, we had $ 5.5 million, recorded for the remaining amount of the purchase price, which includes accretion and translation, in “Other noncurrent liabilities” on our Consolidated Balance Sheet. We account for the investment using equity method accounting. Included in the initial carrying value of $ 27.3 million, which represents the fair value on the transaction date, was a basis difference of $ 4.8 million due to the difference between the cost of the investment and our proportionate share of LWAMSA’s net assets. This basis difference is comprised of equity method goodwill and will not be amortized. The balance of our investment was $ 28.8 million and $ 26.5 million as of May 30, 2021 and May 31, 2020, respectively. ​ ​ 5. ACQUISITIONS ​ On July 2, 2019 and December 21, 2018, we acquired 100 % of the outstanding shares of two different frozen potato processors in Australia for $ 116.7 million and $ 88.6 million, respectively, net of cash acquired. These acquisitions added approximately 70 million and 50 million pounds of production capacity, respectively, to our manufacturing network and expanded our geographic reach. Net sales, income from operations, and total assets from the acquisitions are not material to our consolidated net sales, income from operations, and total assets. The operating results for the acquisitions are included in our Global segment. ​ We allocated the purchase prices of the July 2019 and December 2018 acquisitions to the assets acquired and liabilities assumed based on estimates of the fair value at the respective date of the acquisition, of which $ 106.1 million and $ 75.1 million, respectively, after final working capital adjustments, was allocated to goodwill (which is not deductible for tax purposes) and $ 3.7 million and $ 4.4 million, respectively, was allocated to intangible assets (both to be amortized on a straight-line basis over a weighted average life of 10 years ). In both acquisitions, the intangible assets primarily related to brand names. The purchase price allocations are complete. ​ 6. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS ​ The following table presents changes in goodwill balances, by segment, for fiscal years 2021 and 2020 (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global Foodservice Retail Other Total Balance at May 26, 2019 ​ $ 147.7 ​ $ 42.8 ​ $ 10.9 ​ $ 4.5 ​ $ 205.9 Acquisition (a) ​ ​ 106.1 ​ ​ — ​ ​ — ​ ​ — ​ ​ 106.1 Foreign currency translation adjustment ​ ​ ( 8.2 ) ​ ​ — ​ ​ — ​ ​ — ​ ( 8.2 ) Balance at May 31, 2020 ​ $ 245.6 ​ $ 42.8 ​ $ 10.9 ​ $ 4.5 ​ $ 303.8 Foreign currency translation adjustment ​ ​ 30.7 ​ ​ — ​ ​ — ​ ​ — ​ 30.7 Balance at May 30, 2021 ​ $ 276.3 ​ $ 42.8 ​ $ 10.9 ​ $ 4.5 ​ $ 334.5 (a) In July 2019, we acquired a frozen potato processor in Australia and recorded $ 106.1 million of goodwill in our Global segment. See Note 5, Acquisitions, for more information. ​ 61 Table of Contents Other identifiable intangible assets were as follows (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ May 30, 2021 ​ May 31, 2020 ​ Weighted ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ Average ​ Gross ​ ​ ​ ​ ​ ​ ​ Average ​ Gross ​ ​ ​ ​ ​ ​ ​ ​ Useful Life ​ Carrying ​ Accumulated ​ Intangible ​ Useful Life ​ Carrying ​ Accumulated ​ Intangible ​ ​ (in years) ​ Amount ​ Amortization ​ Assets, Net ​ (in years) ​ Amount ​ Amortization ​ Assets, Net Non-amortizing intangible assets (a) n/a $ 18.0 $ — $ 18.0 n/a $ 18.0 $ — $ 18.0 Amortizing intangible assets (b) 11 ​ 42.2 ​ ( 23.3 ) ​ 18.9 11 ​ 42.4 ​ ( 22.1 ) ​ 20.3 ​ ​ $ 60.2 $ ( 23.3 ) $ 36.9 ​ $ 60.4 $ ( 22.1 ) $ 38.3 (a) Non-amortizing intangible assets represent brands and trademarks. ​ (b) Amortizing intangible assets are principally comprised of licensing agreements, brands, and customer relationships. In addition, developed technology is recorded as “Other assets” on our Consolidated Balance Sheet. Amortization expense was $ 5.0 million, $ 2.5 million, and $ 2.2 million in fiscal 2021, 2020, and 2019, respectively. Foreign intangible assets are affected by foreign currency translation. ​ ​ ​ Based on current intangibles subject to amortization, we expect intangible asset amortization expense, excluding developed technology, will be approximately $ 2.7 million, $ 2.6 million, and $ 2.1 million in fiscal 2022, 2023, and 2024, respectively, $ 1.8 million in fiscal 2025 and 2026 , and approximately $ 7.9 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 we performed in the fourth quarter of fiscal 2021, 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 reporting units. Additionally, we completed our tests of our non-amortizing intangibles in the fourth quarter of fiscal 2021 and there was no indication of intangible asset impairment. ​ 7. ACCRUED LIABILITIES ​ The components of accrued liabilities were as follows (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ May 30, ​ May 31, ​ ​ 2021 2020 Compensation and benefits ​ $ 83.2 $ 74.5 Accrued trade promotions ​ ​ 39.9 ​ ​ 42.5 Dividends payable to shareholders ​ ​ 34.4 ​ ​ 33.6 Current portion of operating lease obligations ​ ​ 29.1 ​ ​ 28.4 Franchise, property, and sales and use taxes ​ 11.3 9.4 Accrued interest ​ ​ 7.9 ​ ​ 8.7 Income taxes payable ​ ​ 0.8 ​ ​ 1.3 Other ​ 20.3 34.6 Accrued liabilities ​ $ 226.9 $ 233.0 ​ ​ ​ 62 Table of Contents 8. DEBT AND FINANCING OBLIGATIONS ​ At May 30, 2021 and May 31, 2020, our debt and financing obligations were as follows (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ May 30, May 31, ​ ​ 2021 ​ 2020 Short-term borrowings: ​ ​ ​ ​ ​ ​ Revolving credit facility ​ $ — ​ $ 495.0 Other credit facilities ​ ​ — ​ ​ 3.7 ​ ​ ​ — ​ ​ 498.7 Long-term debt: ​ ​ ​ ​ ​ ​ Term loan facility, due November 2021 ​ ​ — ​ 276.6 Term A-1 loan facility, due June 2024 ​ ​ 273.8 ​ ​ 288.7 Term A-2 loan facility, due April 2025 ​ ​ 312.8 ​ ​ 325.0 4.625 % senior notes, due November 2024 ​ 833.0 833.0 4.875 % senior notes, due November 2026 ​ ​ 833.0 ​ ​ 833.0 4.875 % senior notes, due May 2028 ​ ​ 500.0 ​ ​ 500.0 ​ ​ ​ 2,752.6 ​ ​ 3,056.3 Financing obligations: ​ ​ ​ ​ ​ ​ Lease financing obligations due on various dates through 2040 (a) ​ 7.3 13.3 ​ ​ ​ 7.3 ​ ​ 13.3 ​ ​ ​ ​ ​ ​ ​ Total debt and financing obligations ​ 2,759.9 3,568.3 Debt issuance costs (b) ​ ​ ( 22.5 ) ​ ​ ( 28.2 ) Short-term borrowings ​ ​ — ​ ​ ( 498.7 ) Current portion of long-term debt and financing obligations ​ ( 32.0 ) ( 48.8 ) Long-term debt and financing obligations, excluding current portion ​ $ 2,705.4 $ 2,992.6 (a) The interest rates on our lease financing obligations ranged from 2.49 % to 4.10 % at May 30, 2021 and 2.31 % to 4.10 % at May 30, 2020, respectively. For more information on our lease financing obligations, see Note 9, Leases. ​ (b) We amortize debt issuance costs into interest expense using the effective interest method over the life of the loan facilities. In fiscal 2021, 2020, and 2019, we recorded $ 6.1 million, $ 6.2 million, and $ 4.7 million, respectively, of amortization expense in “Interest expense” in our Consolidated Statements of Earnings. Fiscal 2021 included a $ 1.0 million write-off of debt issuance cost in connection with the Amended Revolving Credit Facility. Fiscal 2020 included a $ 1.7 million write-off of debt issuance costs in connection with the $ 300.0 million payment on the term loan facility due in 2021. ​ ​ ​ Amended Revolving Credit Facility ​ We are party to a senior secured credit agreement, dated as of November 9, 2016, with a syndicate of lenders. On September 17, 2020, we amended the credit agreement to, among other things, increase the aggregate principal amount of available revolving credit facility borrowings to $ 750.0 million and extend the maturity date to September 17, 2023 (“Amended Revolving Credit Facility”). In addition, we may add incremental term loan facilities, increase commitments and/or add new revolving commitments in an aggregate principal amount not to exceed the sum of (A) the greater of $ 600.0 million or 75 % of our Consolidated EBITDA (as defined in the Amended Revolving Credit Facility) and (B) an amount based on our consolidated net leverage ratio. Borrowings under the Amended Revolving Credit Facility bear interest at LIBOR or the Base Rate (each as defined in the Amended Revolving Credit Facility) plus an applicable rate ranging from 1.25 % to 2.25 % for LIBOR-based loans and from 0.25 % to 1.25 % for Base Rate-based loans, depending upon our consolidated net leverage ratio. In addition to paying interest, we pay an annual commitment fee for undrawn amounts at a rate of 0.20 % to 0.40 %, depending on our consolidated net leverage ratio. The Amended Revolving Credit Facility requires us to maintain a consolidated net leverage ratio no greater than 5.00 to 1.00, decreasing ratably to 4.50 to 1.00 on February 26, 2022 through maturity; and an interest coverage ratio no less than 2.75 to 1.00. ​ 63 Table of Contents The Amended Revolving Credit Facility also contains 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. Upon the occurrence of an event of default, among other things, amounts outstanding under the credit facility may be accelerated and the commitments may be terminated. Our obligations under the Amended Revolving Credit Facility are unconditionally guaranteed by certain of our direct and indirect domestic subsidiaries on the terms set forth in the credit agreement. The credit agreement is secured by security interests and liens on substantially all of our and each of our subsidiary guarantor’s assets, unless Lamb Weston is rated investment grade by at least two of Fitch Ratings, Inc., Moody’s Investors Service, Inc., and Standard & Poor’s Ratings Services. ​ In connection with the Amended Revolving Credit Facility, we repaid the outstanding $ 271.9 million term loan facility due in November 2021 with cash on hand and capitalized $ 2.4 million of debt issuance costs as “Other assets” on our Consolidated Balance Sheet. During fiscal 2021, we recognized $ 1.0 million of expenses, in “Interest expense, net” for the write-off of debt issuance costs related to the payoff of the term loan facility. ​ At May 30, 2021, we had no borrowings outstanding under our Amended Revolving Credit Facility. At May 30, 2021, we had $ 744.6 million of availability under the facility, which is net of outstanding letters of credit of $ 5.4 million. For the period from June 1, 2020 through May 30, 2021, borrowings under our revolving credit facility ranged from zero dollars to a high of $ 495.0 million. For the period from June 1, 2020 through May 30, 2021 and May 27, 2019 through May 31, 2020, the weighted average interest rate for our outstanding borrowings under the revolving credit facility was 1.68 % and 2.35 %, respectively. ​ In March 2020, we drew $ 495.0 million available under the revolving credit facility and in June and July 2020, we repaid $ 100.0 million and $ 395.0 million, respectively. ​ Term A-1 and A-2 Loan Facilities ​ On June 28, 2019, we entered into a credit agreement, among Lamb Weston, certain of our subsidiaries as guarantors, certain lenders, and Northwest Farm Credit Services, PCA, as administrative agent for the lenders, providing for a $ 300.0 million term loan facility and, under certain circumstances, the ability to add incremental facilities in an aggregate amount of up to $ 100.0 million (collectively, “Term A-1 Loan Facility”). Borrowings on the Term A-1 Loan Facility amortize in equal quarterly installments for a total of 5 % annually, with the balance payable in June 2024. ​ Borrowings under the Term A-1 Loan Facility bear interest, before anticipated patronage dividends, at LIBOR or the Base Rate (as defined in the Term A-1 Loan Facility 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 consolidated net leverage ratio. During the years ended May 30, 2021 and May 31, 2020, the average interest rate on the Term A-1 Loan Facility was approximately 1.77 % and 3.33 %, respectively. We have received and expect to continue receiving patronage dividends under the Term A-1 Loan Facility. After giving effect to expected patronage distributions, the effective average interest rate on the Term A-1 Loan Facility was approximately 0.95 % and 2.52 %, for the years ended May 30, 2021 and May 31, 2020, respectively. ​ On April 20, 2020, we amended the Term A-1 Loan Facility agreement to, among other things, provide for a new $ 325.0 million term loan facility (“Term A-2 Loan Facility”). Borrowings under the Term A-2 Loan Facility bear interest, before anticipated patronage dividends, at LIBOR or the Base Rate (as defined in the Term A-2 Loan Facility agreement) plus an applicable rate ranging from 2.200 % to 2.950 % for LIBOR-based loans and from 1.200 % to 1.950 % for Base Rate-based loans, depending on our consolidated net leverage ratio. Borrowings on the Term A-2 Loan Facility amortize in equal quarterly installments for a total of 5 % annually, with the balance payable in April 2025. During the years ended May 30, 2021 and May 31, 2020, the average interest rate on the Term A-2 Loan Facility was approximately 2.34 % and 2.85 %, respectively. We have received and expect to continue receiving patronage dividends under the Term A-2 Loan 64 Table of Contents Facility. After giving effect to expected patronage distributions, the effective average interest rate on the Term A-2 Loan Facility was approximately 1.53 % and 2.03 %, for the years ended May 30, 2021 and May 31, 2020, respectively. ​ The Term A-1 and A-2 Loan Facilities are unconditionally guaranteed by the same subsidiaries as the Amended Revolving Credit Facility. Borrowings under the Term A-1 and A-2 Loan Facilities may be prepaid without premium or penalty and once repaid, cannot be reborrowed. ​ On September 23, 2020, in connection with the Amended Revolving Credit Facility, we amended the credit agreement relating to the Term A-1 and A-2 Loan Facilities, to, among other things, modify the term loan facilities to make conforming changes to the affirmative and negative covenants under the facilities. As such, the covenants, events of default, securities and liens under the Term A-1 and A-2 Loan Facilities are consistent with the Amended Revolving Credit Facility. The financial covenants under the Term A-1 and A-2 Loan Facilities, however, remain unchanged, requiring us to maintain a consolidated net leverage ratio no greater than 4.50 to 1.00 and an interest coverage ratio no less than 2.75 to 1.00 . ​ 4.625 % Senior Notes due 2024 and 4.875 % Senior Notes due 2026 ​ In November 2016, we issued (i) $ 833.0 million aggregate principal amount of 4.625 % senior notes due 2024 (“2024 Notes”) and (ii) $ 833.0 million aggregate principal amount of 4.875 % senior notes due 2026 (“2026 Notes”) pursuant to indentures, dated as of November 9, 2016, among Lamb Weston, certain of our subsidiaries as guarantors and Wells Fargo Bank, National Association, as trustee. Our obligations under the 2024 Notes and 2026 Notes are unconditionally guaranteed on a senior unsecured basis by each of our subsidiaries that guarantee our obligations under the Amended Revolving Credit Facility and Term A-1 and A-2 Loan Facilities. ​ The 2024 Notes and 2026 Notes are senior unsecured obligations and rank equally with all of our current and future senior indebtedness, rank senior to all our current and future subordinated indebtedness and are subordinated to all of our current and future secured indebtedness (including all borrowings with respect to the Amended Revolving Credit Facility and Term A-1 and A-2 Loan Facilities to the extent of the value of the assets securing such indebtedness). Interest on the 2024 Notes and 2026 Notes is due semiannually. The 2024 Notes mature on November 1, 2024 and the 2026 Notes mature on November 1, 2026 , unless either is redeemed or repurchased. Upon a change of control (as defined in the indentures governing the 2024 Notes and 2026 Notes), we must offer to repurchase the 2024 Notes and 2026 Notes at 101 % of the principal amount of such notes, plus accrued and unpaid interest. ​ We may redeem all or a portion of the 2024 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 2026 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 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. ​ The indentures governing the 2024 Notes and 2026 Notes contain covenants that, subject to exceptions, limit our ability and the ability of our subsidiaries to, among other things, incur, assume or guarantee additional indebtedness, pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt, make loans and investments, incur or suffer to exist liens, sell, transfer or otherwise dispose of assets, enter into agreements that restrict distributions or other payments from restricted subsidiaries to us, engage in transactions with affiliates, designate subsidiaries as unrestricted or restricted, and consolidate, merge, amalgamate or transfer all or substantially all of our assets. ​ 4.875 % Senior Notes due 2028 ​ In May 2020, we issued $ 500.0 million aggregate principal amount of 4.875 % senior notes due in 2028 (“2028 Notes”) pursuant to an indenture, dated as of May 12, 2020, among Lamb Weston, certain of our subsidiaries as guarantors and Wells Fargo Bank, National Association, as trustee. Our obligations under the 2028 Notes are unconditionally guaranteed on a senior unsecured basis by each of our subsidiaries that guarantee our obligations under the Amended Revolving Credit Facility and Term A-1 and A-2 Loan Facilities. The 2028 Notes bear interest at a rate of 4.875 % per 65 Table of Contents year and mature on May 15, 2028 , unless earlier redeemed or repurchased. We capitalized approximately $ 6.2 million of debt issuance costs associated with this offering. ​ The 2028 Notes are senior unsecured obligations and rank equally with all of our current and future senior indebtedness (including the 2024 and 2026 Notes), rank senior to all our current and future subordinated indebtedness and are subordinated to all of our current and future secured indebtedness (including all borrowings with respect to the Amended Revolving Credit Facility and Term A-1 and A-2 Loan Facilities to the extent of the value of the assets securing such indebtedness). Interest on the 2028 Notes is due semiannually. Upon a change of control (as defined in the indenture governing the 2028 Notes), we must offer to repurchase the 2028 Notes at 101 % of the principal amount of the notes, plus accrued and unpaid interest. ​ Prior to November 15, 2027, we may redeem the 2028 Notes, 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. On and after November 15, 2027, we may redeem all or any portion of the 2028 Notes, at once or over time, at a price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest. ​ The covenants and events of default are substantially similar to the 2024 and 2026 Notes discussed above. ​ Debt Maturities ​ 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ Debt (a) 2022 ​ $ 31.3 2023 ​ ​ 31.3 2024 ​ ​ 31.3 2025 ​ ​ 1,325.7 2026 ​ ​ — Thereafter ​ ​ 1,333.0 ​ ​ $ 2,752.6 (a) See Note 9, Leases, for maturities of our lease financing obligations. ​ ​ Other ​ During fiscal 2021, 2020, and 2019 we paid $ 120.6 million, $ 105.7 million, and $ 107.8 million, respectively, of interest on debt. ​ Other Credit Facilities ​ At May 30, 2021, one of our subsidiaries had $ 56.5 million of availability under an overdraft line of credit facility with a financial institution with no borrowings outstanding. At May 31, 2020, we had $ 30.8 million of availability under this facility and another credit facility with the same financial institution, with $ 3.7 million of borrowings outstanding. Borrowings under these facilities bear interest at an effective rate of 3.915 % and 3.560 % at May 30, 2021 and May 31, 2020, respectively, 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 borrowings under the credit facilities. 66 Table of Contents 9. LEASES ​ We lease various real estate, including certain operating facilities, warehouses, office space, and land. We also lease material handling equipment, vehicles, and certain other equipment. Our leases have remaining lease terms of one to 19 years . ​ The components of total lease costs, net, consisted of the following (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Year Ended May (a) ​ ​ 2021 ​ 2020 Operating lease costs ​ $ 33.2 ​ $ 29.7 Short-term and variable lease costs ​ ​ 9.0 ​ ​ 5.8 Sublease income ​ ​ ( 3.4 ) ​ ​ ( 2.7 ) Finance lease costs: ​ ​ ​ ​ ​ ​ Amortization of lease assets ​ ​ 1.9 ​ ​ 3.2 Interest on lease obligations ​ ​ 0.3 ​ ​ 0.6 Total lease costs, net ​ $ 41.0 ​ $ 36.6 (a) Supply-chain-related lease costs are included in “Cost of sales” and the remainder is recorded in “Selling, general, and administrative expenses.” Interest on finance lease obligations is included in “Interest expense, net,” in our Consolidated Statements of Earnings. ​ Rent expense, prior to the adoption of ASC 842, was $ 24.3 million in fiscal 2019. ​ Operating and finance leases, with initial terms greater than one year, were as follows (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ May 30, ​ May 31, Leases ​ Classification ​ 2021 ​ 2020 Assets: ​ ​ ​ ​ ​ ​ ​ ​ Operating lease assets ​ Operating lease assets ​ $ 141.7 ​ $ 167.0 Finance lease assets ​ Property, plant and equipment, net (a) (b) ​ ​ 5.4 ​ ​ 11.3 Total leased assets ​ ​ ​ $ 147.1 ​ $ 178.3 ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ Lease obligations due within one year: ​ ​ ​ ​ ​ ​ ​ ​ Operating lease obligations ​ Accrued liabilities ​ $ 29.1 ​ $ 28.4 Finance lease obligations ​ Current portion of long-term debt and financing obligations (b) ​ ​ 0.7 ​ ​ 2.8 Long-term lease obligations: ​ ​ ​ ​ ​ ​ ​ ​ Operating lease obligations ​ Other noncurrent liabilities ​ ​ 120.3 ​ ​ 144.6 Finance lease obligations ​ Long-term debt and financing obligations, excluding current portion (b) ​ ​ 6.6 ​ ​ 10.5 Total lease obligations ​ ​ ​ $ 156.7 ​ $ 186.3 (a) Finance leases are net of accumulated amortization of $ 4.7 million and $ 12.2 million at May 30, 2021 and May 31, 2020, respectively. ​ (b) During fiscal 2021, we modified certain finance leases in the normal course of business resulting in a reduction of approximately $ 4.3 million of finance lease assets and short-term and long-term finance lease obligations recorded on our Consolidated Balance Sheet. ​ ​ 67 Table of Contents The maturities of our lease obligations for operating and finance leases at May 30, 2021 for the next five fiscal years and thereafter are as follows (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Finance ​ ​ Leases ​ Leases 2022 ​ $ 31.7 ​ $ 0.9 2023 ​ ​ 21.8 ​ ​ 1.0 2024 ​ ​ 20.7 ​ ​ 1.0 2025 ​ ​ 18.6 ​ ​ 0.9 2026 ​ ​ 15.2 ​ ​ 0.8 Thereafter ​ ​ 62.7 ​ ​ 4.5 Total lease payments ​ ​ 170.7 ​ ​ 9.1 Less: Interest ​ ​ ( 21.3 ) ​ ​ ( 1.8 ) Present value of lease obligations ​ $ 149.4 ​ $ 7.3 ​ ​ ​ ​ ​ ​ ​ Weighted-average remaining lease term (years) ​ ​ 7.9 ​ ​ 13.9 Weighted-average discount rate ​ ​ 3.4 % ​ ​ 3.2 % ​ ​ Supplemental cash flow information related to leases was as follows (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May ​ ​ 2021 ​ 2020 Cash paid for amounts included in the measurement of lease obligations: ​ ​ ​ ​ ​ ​ Operating cash flows for operating leases ​ $ 30.9 ​ $ 26.8 Financing cash flows for finance leases ​ ​ 1.7 ​ ​ 2.6 ​ ​ ​ ​ ​ ​ ​ Noncash investing and financing activities: ​ ​ ​ ​ ​ ​ Assets obtained in exchange for new operating lease obligations ​ ​ 5.2 ​ ​ 41.4 Assets obtained in exchange for new finance lease obligations ​ ​ — ​ ​ 2.2 ​ ​ ​ 68 Table of Contents 10. EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS ​ Only certain hourly employees covered by certain collective bargaining agreements continue to accrue pension benefits. Participants that do not actively participate in a pension plan are eligible to participate in defined contribution savings plans with employer matching provisions consistent with other employees without pension benefits. ​ 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 employer-matching contributions of $ 28.8 million, $ 28.7 million, and $ 21.3 million in fiscal 2021, 2020, and 2019, respectively. ​ We sponsor a deferred compensation savings plan that 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. In addition, we sponsor a deferred compensation plan for non-employee directors that allow directors to defer their cash compensation and stock awards. Both deferred compensation plans are unfunded nonqualified defined contribution plans. Participant deferrals and company matching contributions (for the employee deferred compensation plan only) are not invested in separate trusts, but are paid directly from our general assets at the time benefits become due and payable. At May 30, 2021 and May 31, 2020, we had $ 23.5 million and $ 18.0 million, respectively, of liabilities attributable to participation in our deferred compensation plan recorded on our Consolidated Balance Sheets. ​ 69 Table of Contents Obligations and Funded Status of Defined Benefit Pension and Other Post-retirement Benefit Plans ​ The funded status of our plans is based on company contributions, benefit payments, the plan asset investment return, the discount rate used to measure the liability, and expected participant longevity. The following table, which includes only company-sponsored defined benefit and other post-retirement benefit plans, reconciles the beginning and ending balances of the projected benefit obligation and the fair value of plan assets. We recognize the unfunded status of these plans on the Consolidated Balance Sheets, and we recognize changes in funded status in the year changes occur through the Consolidated Statements of Comprehensive Income (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May ​ 2021 ​ 2020 ​ ​ Pension Plans ​ Post-Retirement Plan ​ Pension Plans ​ Post-Retirement Plan Change in benefit obligation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Benefit obligation at beginning of year ​ $ 37.3 ​ $ 6.5 ​ $ 27.4 ​ $ 7.3 Service cost ​ ​ 3.0 ​ ​ — ​ ​ 3.1 ​ ​ — Interest cost ​ ​ 1.2 ​ ​ 0.1 ​ ​ 1.1 ​ ​ 0.2 Participant contributions ​ ​ — ​ ​ 0.3 ​ ​ — ​ ​ 0.2 Benefits paid ​ ​ ( 0.5 ) ​ ​ ( 0.2 ) ​ ​ ( 0.3 ) ​ ​ ( 0.3 ) Plan settlements (a) ​ ​ — ​ ​ — ​ ​ ( 0.4 ) ​ ​ — Actuarial (gain) loss ​ ​ 0.5 ​ ​ ( 0.2 ) ​ ​ 6.4 ​ ​ ( 0.9 ) Benefit obligation at fiscal year end ​ $ 41.5 ​ $ 6.5 ​ $ 37.3 ​ $ 6.5 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated benefit obligation portion of above ​ $ 41.5 ​ ​ ​ ​ $ 37.3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in fair value of plan assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value of plan assets at beginning of year ​ $ 27.2 ​ $ — ​ $ 17.1 ​ $ — Actual return on plan assets ​ ​ ( 2.0 ) ​ ​ — ​ ​ 6.6 ​ ​ — Company contributions ​ ​ 3.4 ​ ​ — ​ ​ 3.8 ​ ​ 0.1 Participant contributions ​ ​ — ​ ​ 0.3 ​ ​ — ​ ​ 0.2 Benefits paid ​ ​ ( 0.5 ) ​ ​ ( 0.2 ) ​ ​ ( 0.3 ) ​ ​ ( 0.3 ) Other ​ ​ — ​ ​ ( 0.1 ) ​ ​ — ​ ​ — Fair value of plan assets at end of year ​ $ 28.1 ​ $ — ​ $ 27.2 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Underfunded status ​ $ ( 13.4 ) ​ $ ( 6.5 ) ​ $ ( 10.1 ) ​ $ ( 6.5 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amounts recognized on Consolidated Balance Sheets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accrued liabilities ​ $ — ​ $ ( 0.3 ) ​ $ — ​ $ ( 0.2 ) Other noncurrent liabilities ​ ​ ( 13.4 ) ​ ​ ( 6.2 ) ​ ​ ( 10.1 ) ​ ​ ( 6.3 ) Accrued obligation recognized ​ $ ( 13.4 ) ​ $ ( 6.5 ) ​ $ ( 10.1 ) ​ $ ( 6.5 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amounts recognized in Accumulated Other Comprehensive (Income) Loss (Pre-tax) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Actuarial loss ​ $ 7.7 ​ $ 0.7 ​ $ 4.4 ​ $ 1.1 Total ​ $ 7.7 ​ $ 0.7 ​ $ 4.4 ​ $ 1.1 (a) In fiscal 2020, plan settlements of $ 0.4 million were paid to certain participants from our rabbi trust plan assets. These assets are excluded from our pension plan assets. ​ 70 Table of Contents Components of Net Periodic Benefit Cost and Other Comprehensive (Income) Loss ​ The components of net periodic benefit cost were as follows (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May ​ ​ 2021 ​ 2020 ​ 2019 ​ Pension Post-Retirement ​ Pension ​ Post-Retirement Pension ​ Post-Retirement ​ ​ Plans ​ Plan ​ Plans ​ Plan ​ Plans ​ Plan Service cost ​ $ 3.0 ​ $ — ​ $ 3.1 ​ $ — ​ $ 6.0 ​ $ — Interest cost ​ 1.2 ​ 0.1 ​ 1.1 ​ 0.2 ​ 0.8 ​ 0.3 Expected return on plan assets ​ ( 0.8 ) ​ — ​ ( 0.9 ) ​ — ​ ( 0.9 ) ​ — Net amortization of unrecognized amounts ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Actuarial loss ​ ​ 0.1 ​ ​ 0.2 ​ ​ 0.2 ​ ​ 0.6 ​ ​ — ​ ​ 0.7 Net periodic benefit cost (a) ​ $ 3.5 ​ $ 0.3 ​ $ 3.5 ​ $ 0.8 ​ $ 5.9 ​ $ 1.0 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Changes in plan assets and benefit obligations recognized in other comprehensive (income) loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Actuarial (gain) loss ​ $ 3.4 ​ $ ( 0.2 ) ​ $ 0.6 ​ $ ( 1.0 ) ​ $ 3.3 ​ $ — Amortization of actuarial loss (b) ​ ​ ( 0.1 ) ​ ​ ( 0.2 ) ​ ​ ( 0.2 ) ​ ​ ( 0.6 ) ​ ​ — ​ ​ ( 0.7 ) Total recognized in other comprehensive loss (income) ​ $ 3.3 ​ $ ( 0.4 ) ​ $ 0.4 ​ $ ( 1.6 ) ​ $ 3.3 ​ $ ( 0.7 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total recognized in net periodic benefit cost and other comprehensive loss (income) (pre-tax) (c) ​ $ 6.8 ​ $ ( 0.1 ) ​ $ 3.9 ​ $ ( 0.8 ) ​ $ 9.2 ​ $ 0.3 (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 Consolidated Statements of Earnings. ​ The decrease in fiscal 2021 and 2020 net periodic pension cost, compared with fiscal 2019, reflects amendments to the pension plans so that no future benefits accrue after certain dates. We did not recognize a curtailment gain or loss with any of the amendments. ​ (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 ten years for our pension plans and approximately two years for our post-retirement benefit plan), to the extent that losses are not offset by gains in subsequent years. ​ 71 Table of Contents 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 ​ ​ 2021 ​ 2020 ​ 2019 ​ ​ 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 ​ ​ 3.11 % ​ ​ 2.82 % ​ 3.14 % ​ ​ ​ 2.85 % ​ 4.01 % ​ ​ ​ 3.81 % Weighted-average assumptions used to determine net periodic benefit cost: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Discount rate ​ ​ 3.14 % ​ ​ 2.85 % ​ 4.01 % ​ ​ ​ 3.81 % ​ 4.25 % ​ ​ ​ 4.18 % Expected return on plan assets ​ ​ 2.90 % ​ ​ N/A ​ 5.12 % ​ ​ ​ N/A ​ 5.30 % ​ ​ ​ 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 30, 2021. 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 30, 2021. 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 2022 to calculate the net periodic pension benefit cost and post-retirement benefit cost is 3.11 % and 2.82 %, 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 2022 net periodic pension benefit cost is 4.00 %. ​ Health Care Cost Trend Rate Assumptions. We review external data and historical trends for health care costs to determine our health care cost trend rate assumptions . We assumed health care cost trend rates for our post-retirement benefit plan obligation as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2020 2019 Health care cost trend rate assumed for next year (Pre65) ​ ​ 6.19 % ​ ​ 6.75 % ​ ​ 7.31 % Ultimate health care cost trend rate ​ ​ 4.50 % ​ ​ 4.50 % ​ ​ 4.50 % Year that the rate reaches the ultimate trend rate ​ ​ 2024 ​ ​ 2024 ​ ​ 2024 ​ 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. 72 Table of Contents 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 30, 2021 ​ ​ 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 ​ $ 0.4 ​ $ — ​ $ — ​ $ 0.4 Equity securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. equity securities (a) ​ $ — ​ $ 4.7 ​ $ — ​ $ 4.7 International equity securities (a) ​ ​ — ​ ​ 3.7 ​ ​ — ​ ​ 3.7 Fixed income securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government securities (b) ​ ​ 19.3 ​ ​ — ​ ​ — ​ ​ 19.3 Total assets ​ $ 19.7 ​ $ 8.4 ​ $ — ​ $ 28.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements at May 31, 2020 ​ ​ 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) ​ $ — ​ $ 4.1 ​ $ — ​ $ 4.1 International equity securities (a) ​ ​ — ​ ​ 3.9 ​ ​ — ​ ​ 3.9 Fixed income securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Government securities (b) ​ ​ 19.2 ​ ​ — ​ ​ — ​ ​ 19.2 Total assets ​ $ 19.2 ​ $ 8.0 ​ $ — ​ $ 27.2 (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. ​ 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 2021, we made $ 3.4 million of discretionary contributions to our qualified plan. There are no minimum required contributions in fiscal 2022, however, in July 2021, we made a $ 2.0 million discretionary contribution to our qualified pension plan. We continually reassess the amount and timing of discretionary contributions, if any. ​ ​ 73 Table of Contents The following are estimated benefit payments to be paid to current plan participants by fiscal 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 2022 ​ $ 0.5 ​ $ 0.2 2023 ​ ​ 0.7 ​ ​ 0.3 2024 ​ ​ 0.9 ​ ​ 0.3 2025 ​ ​ 1.0 ​ ​ 0.4 2026 ​ ​ 1.2 ​ ​ 0.4 2027-2031 ​ ​ 8.7 ​ ​ 2.1 ​ ​ ​ 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”). The Compensation Committee (“the Committee”) of our Board of Directors administers our stock compensation plan. The Committee, in its discretion, authorizes grants of restricted stock units (“RSUs”), performance awards payable upon the attainment of specified performance goals (“Performance Shares”), dividend equivalents, and other stock-based awards. At May 30, 2021, we had 10.0 million shares authorized under the Stock Plan, and 7.4 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. ​ 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. ​ 74 Table of Contents The following table summarizes RSU and Performance Share activity for fiscal 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock-Settled ​ Performance Shares ​ ​ ​ Weighted- ​ ​ Weighted- ​ ​ ​ ​ ​ Average ​ ​ ​ ​ Average ​ ​ ​ ​ ​ Grant- ​ ​ ​ ​ Grant- ​ ​ ​ ​ ​ Date Fair ​ ​ ​ ​ Date Fair ​ ​ Shares ​ Value ​ Shares ​ Value Outstanding at May 31, 2020 ​ 662,205 ​ $ 60.28 ​ ​ 444,457 ​ $ 57.96 Granted (a) ​ 298,040 ​ ​ 62.61 ​ ​ 107,451 ​ ​ 63.93 Vested (b) ​ ( 253,912 ) ​ ​ 46.42 ​ ​ ( 198,436 ) ​ ​ 44.83 Forfeited/expired/cancelled ​ ​ ( 31,031 ) ​ ​ 64.32 ​ ​ ( 18,027 ) ​ ​ 69.37 Outstanding at May 30, 2021 ​ 675,302 ​ $ 66.34 ​ ​ 335,445 ​ $ 67.02 (a) Granted represents new grants and dividend equivalents accrued. ​ (b) The aggregate fair value of awards that vested in fiscal 2021, 2020, and 2019 was $ 29.3 million, $ 24.9 million, and $ 24.7 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. ​ Compensation Expense ​ Our stock-based compensation expense is recorded in “Selling, general and administrative expenses.” Compensation expense for stock-based awards recognized in the Consolidated Statements of Earnings, net of forfeitures, was as follows (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May ​ ​ 2021 ​ 2020 ​ 2019 ​ Total compensation expense ​ ​ 20.6 ​ ​ 23.8 ​ ​ 22.1 ​ Income tax benefit (a) ​ ​ ( 3.7 ) ​ ​ ( 4.6 ) ​ ​ ( 4.4 ) ​ Total compensation expense, net of tax benefit ​ $ 16.9 ​ $ 19.2 ​ $ 17.7 ​ (a) Income tax benefit represents the marginal tax rate, excluding non-deductible compensation. ​ Based on estimates at May 30, 2021, 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 ​ $ 18.0 ​ 1.8 Performance Shares ​ ​ 8.8 ​ 1.6 Total unrecognized stock-based expense ​ $ 26.8 ​ 1.8 ​ ​ 75 Table of Contents 12. FAIR VALUE MEASUREMENTS ​ 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 30, 2021 and May 31, 2020 (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of May 30, 2021 ​ Level 1 Level 2 Level 3 Total Assets: ​ ​ ​ ​ Pension plan assets ​ $ 19.7 ​ $ 8.4 ​ $ — ​ $ 28.1 Derivative assets (a) ​ ​ — ​ ​ 15.3 ​ ​ — ​ ​ 15.3 Total assets ​ $ 19.7 ​ $ 23.7 ​ $ — ​ $ 43.4 Liabilities: ​ ​ ​ ​ Deferred compensation liabilities (b) ​ $ — $ 23.5 $ — $ 23.5 Total liabilities ​ $ — ​ $ 23.5 ​ $ — ​ $ 23.5 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of May 31, 2020 ​ Level 1 Level 2 Level 3 Total Assets: ​ ​ ​ ​ Pension plan assets ​ $ 19.2 ​ $ 8.0 ​ $ — ​ $ 27.2 Deferred compensation assets ​ ​ 0.1 ​ ​ — ​ ​ — ​ ​ 0.1 Total assets ​ $ 19.3 ​ $ 8.0 ​ $ — ​ $ 27.3 Liabilities: ​ ​ ​ ​ Derivative liabilities (a) ​ $ — ​ $ 4.7 ​ $ — ​ $ 4.7 Deferred compensation liabilities (b) ​ — 18.0 — 18.0 Total liabilities ​ $ — ​ $ 22.7 ​ $ — ​ $ 22.7 (a) Derivative assets and liabilities included in Level 2 primarily represent commodity swap and option contracts. The fair values of our Level 2 derivative assets and liabilities were determined using valuation models that use market observable inputs including both forward and spot prices for commodities. Derivative assets are presented within “Prepaid expenses and other current assets” and derivative liabilities are presented within “Accrued liabilities” on our Consolidated Balance Sheets. ​ (b) The fair values of our Level 2 deferred compensation liabilities were valued using third-party valuations, which are based on the net asset values of mutual funds in our retirement plans. While the underlying assets are actively traded on an exchange, the funds are not. ​ ​ The fair values of cash equivalents, receivables, accounts payable and short-term debt approximate their carrying amounts due to their short duration. ​ Non-financial assets such as property, plant and equipment, and intangible assets 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 30, 2021, we had $ 2,166.0 million of fixed-rate and $ 586.6 million of variable-rate debt outstanding. Based on current market rates, the fair value of our fixed-rate debt at May 30, 2021 was estimated to be $ 2,277.7 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. ​ 76 Table of Contents 13. STOCKHOLDERS’ EQUITY ​ Our certificate of incorporation authorizes 600,000,000 shares of common stock and 60,000,000 shares of preferred stock. We had 146,191,864 shares of common stock issued and outstanding as of May 30, 2021. 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 30, 2021. ​ Share Repurchase Program ​ In December 2018, our 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 2021, we purchased 328,918 shares for $ 25.7 million, or a weighted-average price of $ 78.19 per share. As of May 30, 2021, $ 169.6 million remained authorized for repurchase under the program. ​ Dividends ​ During fiscal 2021, 2020, and 2019, we paid $ 135.3 million, $ 121.3 million, and $ 113.3 million, respectively, of dividends to common stockholders. On July 22, 2021 , our Board of Directors declared a dividend of $ 0.235 per share of common stock. The dividend will be paid on September 3, 2021 , to stockholders of record as of the close of business on August 6, 2021 . ​ 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, as of May 30, 2021, were as follows (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ ​ ​ ​ Accumulated ​ ​ Currency ​ Pension and ​ Other ​ ​ Translation ​ Post-Retirement ​ Comprehensive ​ Gains (Losses) Benefits Income (Loss) Balance as of May 31, 2020 ​ $ ( 36.3 ) $ ( 4.2 ) $ ( 40.5 ) Other comprehensive income before reclassifications, net of tax ​ ​ 72.3 ​ ​ ( 2.5 ) ​ ​ 69.8 Amounts reclassified out of AOCI, net of tax ​ ​ — ​ ​ 0.2 (a) ​ 0.2 Net current-period other comprehensive income (loss) ​ 72.3 ( 2.3 ) ​ 70.0 Balance as of May 30, 2021 ​ $ 36.0 $ ( 6.5 ) $ 29.5 (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. ​ ​ ​ 77 Table of Contents 14. 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 (dollars in millions). See “Part I, Item 1. Business” of this Form 10-K for more information on our segments. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May ​ 2021 (a) ​ 2020 (a) ​ 2019 Net sales ​ ​ ​ Global ​ $ 1,911.5 ​ $ 1,973.6 ​ $ 1,961.5 Foodservice ​ 1,017.3 ​ 1,069.1 ​ 1,156.1 Retail ​ 603.4 ​ 595.5 ​ 498.3 Other ​ ​ 138.7 ​ ​ 154.2 ​ ​ 140.6 Total net sales ​ ​ 3,670.9 ​ ​ 3,792.4 ​ ​ 3,756.5 Product contribution margin (b) ​ ​ ​ ​ ​ ​ Global ​ ​ 306.2 ​ ​ 374.5 ​ ​ 446.3 Foodservice ​ ​ 340.0 ​ ​ 356.0 ​ ​ 402.4 Retail ​ ​ 120.2 ​ ​ 117.6 ​ ​ 98.8 Other (c) ​ ​ 47.8 ​ ​ 24.1 ​ ​ 23.6 ​ ​ ​ 814.2 ​ ​ 872.2 ​ ​ 971.1 Add: Advertising and promotion expenses (b) ​ ​ 17.8 ​ ​ 23.0 ​ ​ 32.4 Gross profit ​ ​ 832.0 ​ ​ 895.2 ​ ​ 1,003.5 Selling, general and administrative expenses ​ ​ 357.2 ​ ​ 338.3 ​ ​ 335.1 Income from operations ​ ​ 474.8 ​ ​ 556.9 ​ ​ 668.4 Interest expense, net ​ ​ 118.3 ​ ​ 108.0 ​ ​ 107.1 Income tax expense (d) ​ ​ 90.5 ​ ​ 112.3 ​ ​ 133.6 Equity method investment earnings ​ ​ 51.8 ​ ​ 29.3 ​ ​ 59.5 Net income ​ ​ 317.8 ​ ​ 365.9 ​ ​ 487.2 Less: Income attributable to noncontrolling interests (e) ​ — ​ — ​ 8.6 Net income attributable to Lamb Weston Holdings, Inc. ​ $ 317.8 ​ $ 365.9 ​ $ 478.6 (a) On March 11, 2020, the World Health Organization declared the spread of COVID-19 a global pandemic. In an attempt to minimize the transmission of COVID-19, significant social and economic restrictions, including restrictions on dine-in purchases and the imposition of stay-at-home orders, were imposed in the United States and in our international markets. These restrictions had a negative impact on our sales, costs, and earnings of our joint ventures, resulting in a negative impact on our net income in fiscal 2021 and 2020. The increase in our costs, and the costs of our joint ventures, related to factory utilization and production inefficiencies, manufacturing and operational disruptions directly attributable to the pandemic, as well as incremental warehousing and transportation costs, and costs to enhance employee safety measures, including purchases of safety and health screening equipment, retaining sales employees, and expensing certain capitalized manufacturing facility expansion projects that were stopped. ​ (b) Product contribution margin represents net sales less cost of sales and advertising and promotion expenses. Product contribution margin includes advertising and promotion expenses because those expenses are directly associated with segment performance. ​ (c) The Other segment primarily includes our vegetable and dairy businesses and unrealized mark-to-market adjustments associated with commodity hedging contracts. ​ (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. We completed our analysis of the one-time impacts of the Tax Act in fiscal 2019. ​ 78 Table of Contents (e) In November 2018, we entered into an agreement to acquire the remaining 50.01 % interest in Lamb Weston BSW. Our Consolidated Statements of Earnings includes 100 % of Lamb Weston BSW’s earnings beginning November 2, 2018. See Note 6, Investments in Joint Ventures, in our Annual Report on Form 10-K for the fiscal year ended May 31, 2020, which we filed with the Securities and Exchange Commission on July 28, 2020. ​ Assets by Segment ​ The manufacturing assets of Lamb Weston are shared across all reporting segments. Output from these facilities used by each reporting segment can change from fiscal year to fiscal year. Therefore, it is impracticable to allocate those assets to the reporting segments, as well as disclose total assets by segment. ​ Concentrations ​ Lamb Weston’s largest customer, McDonald’s Corporation, accounted for approximately 11 % of our consolidated net sales in fiscal 2021, and 10 %of our consolidated net sales in both fiscal 2020 and 2019. No customer accounted for 10% of our consolidated accounts receivable at May 30, 2021 or May 31, 2020. ​ 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 $ 91.3 million, $ 104.9 million, and $ 88.5 million, various byproduct sales of $ 36.1 million, $ 36.4 million, and $ 40.2 million, and dairy product sales of $ 11.3 million, $ 12.9 million, and $ 11.9 million in fiscal 2021, 2020, and 2019, 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 2021, 2020, and 2019. Foreign net sales, including sales by domestic segments to customers located outside of the United States, were $ 700.2 million, $ 776.4 million, and $ 742.7 million in fiscal 2021, 2020, and 2019, respectively. Our long-lived assets located outside of the United States are not significant. ​ Labor ​ At May 30, 2021, we had approximately 7,800 employees, of which approximately 800 of these employees work outside of the United States. Approximately 27 % of our 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. Collective bargaining agreements that represent 55 % of our hourly employees, who are parties to collective bargaining agreements, are scheduled to expire over the course of fiscal 2022. As these agreements expire, we believe they will be renegotiated on terms satisfactory to us. ​ 15. 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 8, 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 $ 75.0 million and $ 36.5 million as of May 30, 2021 and May 31, 2020, respectively, in connection with the expansion and replacement of existing facilities and equipment. ​ 79 Table of Contents 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 30, 2021, 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. Total purchases under these agreements were $ 139.8 million, $ 142.7 million, and $ 152.0 million in fiscal 2021, 2020, and 2019, respectively, under the terms of the potato supply agreements. These purchases 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 30, 2021, Lamb Weston has effectively guaranteed $ 35.6 million of supplier loans. Lamb Weston has not established a liability for these guarantees, as Lamb Weston has determined that the likelihood of Lamb Weston’s required performance under the guarantees is remote. Under certain other potato supply agreements, Lamb Weston makes advances to growers prior to the delivery of potatoes. The aggregate amounts of these advances were $ 23.9 million and $ 31.9 million at May 30, 2021 and May 31, 2020, respectively. ​ Lamb Weston and Lamb Weston’s partner are jointly and severally liable for all legal liabilities of Lamb-Weston/Meijer. See Note 4, 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 claims, legal proceedings and litigation principally arise from alleged casualty, product liability, employment, and other disputes. In determining loss contingencies, we consider the likelihood of loss as well as the ability to reasonably estimate the amount of such loss or liability. An estimated loss is recognized when it is considered probable that a liability has been incurred and when the amount of loss can be reasonably estimated. While any claim, proceeding or litigation has an element of uncertainty, we believe the outcome of any of these that are pending or threatened will not have a material adverse effect on our financial condition, results of operations, or cash flows. ​ 80 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE ​ None. ​