Lamb Weston Holdings, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS (Unaudited) ​ Lamb Weston Holdings, Inc. Consolidated Statements of Earnings (unaudited, in millions, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ Twenty-Six Weeks Ended ​ November 28, November 29, November 28, November 29, ​ ​ 2021 ​ 2020 ​ 2021 ​ 2020 Net sales ​ $ 1,006.6 ​ $ 896.1 ​ $ 1,990.8 ​ $ 1,767.6 Cost of sales ​ ​ 801.1 ​ ​ 672.6 ​ ​ 1,634.0 ​ ​ 1,330.3 Gross profit ​ ​ 205.5 ​ ​ 223.5 ​ ​ 356.8 ​ ​ 437.3 Selling, general and administrative expenses ​ ​ 91.1 ​ ​ 83.9 ​ ​ 182.2 ​ ​ 162.0 Income from operations ​ ​ 114.4 ​ ​ 139.6 ​ ​ 174.6 ​ ​ 275.3 Interest expense, net ​ ​ 82.4 ​ ​ 30.0 ​ ​ 110.3 ​ ​ 60.3 Income before income taxes and equity method earnings ​ 32.0 ​ 109.6 ​ 64.3 ​ 215.0 Income tax expense ​ ​ 9.6 ​ ​ 31.9 ​ ​ 18.3 ​ ​ 59.9 Equity method investment earnings ​ ​ 10.1 ​ ​ 19.2 ​ ​ 16.3 ​ ​ 31.1 Net income ​ $ 32.5 ​ $ 96.9 ​ $ 62.3 ​ $ 186.2 Earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.23 ​ $ 0.66 ​ $ 0.43 ​ $ 1.27 Diluted ​ $ 0.22 ​ $ 0.66 ​ $ 0.42 ​ $ 1.27 Weighted average common shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ 146.0 ​ ​ 146.5 ​ ​ 146.1 ​ ​ 146.4 Diluted ​ ​ 146.3 ​ ​ 147.1 ​ ​ 146.6 ​ ​ 147.1 ​ See Condensed Notes to Consolidated Financial Statements. ​ ​ 3 Table of Contents Lamb Weston Holdings, Inc. Consolidated Statements of Comprehensive Income (unaudited, dollars in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ Thirteen Weeks Ended ​ ​ November 28, 2021 ​ November 29, 2020 ​ ​ ​ ​ ​ Tax ​ ​ ​ ​ ​ ​ ​ Tax ​ ​ ​ ​ ​ Pre-Tax ​ (Expense) ​ After-Tax ​ Pre-Tax ​ (Expense) ​ After-Tax ​ Amount Benefit Amount Amount Benefit Amount Net income ​ $ 42.1 ​ $ ( 9.6 ) ​ $ 32.5 ​ $ 128.8 ​ $ ( 31.9 ) ​ $ 96.9 Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reclassification of post-retirement benefits out of accumulated other comprehensive income ​ ​ 0.1 ​ ​ — ​ ​ 0.1 ​ ​ — ​ ​ — ​ — Unrealized currency translation gains (losses) ​ ​ ( 15.6 ) ​ ​ 0.7 ​ ​ ( 14.9 ) ​ ​ 8.1 ​ ( 0.1 ) ​ 8.0 Comprehensive income ​ $ 26.6 ​ $ ( 8.9 ) ​ $ 17.7 ​ $ 136.9 ​ $ ( 32.0 ) ​ $ 104.9 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twenty-Six Weeks Ended ​ Twenty-Six Weeks Ended ​ ​ November 28, 2021 ​ November 29, 2020 ​ ​ ​ ​ ​ Tax ​ ​ ​ ​ ​ ​ ​ Tax ​ ​ ​ ​ ​ Pre-Tax ​ (Expense) ​ After-Tax ​ Pre-Tax ​ (Expense) ​ After-Tax ​ Amount Benefit Amount Amount Benefit Amount Net income ​ $ 80.6 ​ $ ( 18.3 ) ​ $ 62.3 ​ $ 246.1 ​ $ ( 59.9 ) ​ $ 186.2 Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reclassification of post-retirement benefits out of accumulated other comprehensive income ​ 0.2 ​ ​ — ​ 0.2 ​ 0.1 ​ ​ — ​ 0.1 Unrealized currency translation gains (losses) ​ ( 39.4 ) ​ 2.2 ​ ( 37.2 ) ​ 50.0 ​ ( 2.6 ) ​ 47.4 Comprehensive income ​ $ 41.4 ​ $ ( 16.1 ) ​ $ 25.3 ​ $ 296.2 ​ $ ( 62.5 ) ​ $ 233.7 ​ See Condensed Notes to Consolidated Financial Statements. ​ ​ 4 Table of Contents Lamb Weston Holdings, Inc. Consolidated Balance Sheets (unaudited, dollars in millions, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ November 28, ​ May 30, ​ 2021 2021 ASSETS ​ ​ Current assets: ​ ​ Cash and cash equivalents $ 621.9 ​ $ 783.5 Receivables, less allowance for doubtful accounts of $ 1.1 and $ 0.9 ​ 423.2 ​ 366.9 Inventories ​ 613.9 ​ 513.5 Prepaid expenses and other current assets ​ 58.8 ​ 117.8 Total current assets ​ 1,717.8 ​ 1,781.7 Property, plant and equipment, net ​ 1,568.0 ​ 1,524.0 Operating lease assets ​ ​ 136.1 ​ ​ 141.7 Equity method investments ​ ​ 294.7 ​ ​ 310.2 Goodwill ​ 318.6 ​ 334.5 Intangible assets, net ​ 35.0 ​ 36.9 Other assets ​ 85.4 ​ 80.4 Total assets ​ $ 4,155.6 ​ $ 4,209.4 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ Current portion of long-term debt and financing obligations ​ $ 32.2 ​ $ 32.0 Accounts payable ​ 445.4 ​ 359.3 Accrued liabilities ​ 215.4 ​ 226.9 Total current liabilities ​ 693.0 ​ 618.2 Long-term liabilities: ​ ​ ​ ​ ​ ​ Long-term debt and financing obligations, excluding current portion ​ 2,692.1 ​ 2,705.4 Deferred income taxes ​ ​ 161.4 ​ ​ 159.7 Other noncurrent liabilities ​ 243.9 ​ 245.5 Total long-term liabilities ​ ​ 3,097.4 ​ ​ 3,110.6 Commitments and contingencies ​ ​ ​ ​ ​ ​ Stockholders' equity: ​ ​ Common stock of $ 1.00 par value, 600,000,000 shares authorized; 148,028,060 and 147,640,632 shares issued ​ 148.0 ​ 147.6 Additional distributed capital ​ ( 825.8 ) ​ ( 836.8 ) Retained earnings ​ 1,238.3 ​ 1,244.6 Accumulated other comprehensive income (loss) ​ ( 7.5 ) ​ 29.5 Treasury stock, at cost, 2,827,412 and 1,448,768 common shares ​ ​ ( 187.8 ) ​ ​ ( 104.3 ) Total stockholders’ equity ​ 365.2 ​ 480.6 Total liabilities and stockholders’ equity ​ $ 4,155.6 ​ $ 4,209.4 ​ See Condensed Notes to Consolidated Financial Statements. ​ ​ 5 Table of Contents ​ Lamb Weston Holdings, Inc. Consolidated Statements of Stockholders’ Equit y (unaudited, dollars in millions, except share data ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended November 28, 2021 and November 29, 2020 ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ Accumulated ​ ​ ​ ​ Common Stock, ​ Common ​ Treasury ​ Paid-in ​ ​ ​ ​ Other ​ Total ​ ​ net of Treasury ​ Stock ​ Stock ​ (Distributed) ​ Retained ​ Comprehensive ​ Stockholders’ ​ ​ Shares Amount Amount Capital Earnings Income (Loss) Equity Balance at August 29, 2021 ​ ​ 146,061,016 ​ $ 148.0 ​ $ ( 137.7 ) ​ $ ( 830.2 ) ​ $ 1,240.0 $ 7.3 $ 427.4 Dividends declared, $ 0.235 per share ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 34.2 ) ​ ​ — ​ ​ ( 34.2 ) Common stock issued ​ ​ 11,427 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-settled, stock-based compensation expense ​ ​ — ​ ​ — ​ ​ — ​ ​ 4.4 ​ ​ — ​ ​ — ​ ​ 4.4 Repurchase of common stock and common stock withheld to cover taxes ​ ​ ( 871,795 ) ​ ​ — ​ ​ ( 50.1 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 50.1 ) Comprehensive income ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 32.5 ​ ​ ( 14.8 ) ​ ​ 17.7 Balance at November 28, 2021 ​ ​ 145,200,648 ​ $ 148.0 ​ $ ( 187.8 ) ​ $ ( 825.8 ) ​ $ 1,238.3 ​ $ ( 7.5 ) ​ $ 365.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at August 30, 2020 ​ ​ 146,324,943 ​ $ 147.4 ​ $ ( 77.8 ) ​ $ ( 856.5 ) ​ $ 1,119.9 ​ $ ( 1.0 ) ​ $ 332.0 Dividends declared, $ 0.230 per share ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 33.7 ) ​ ​ — ​ ​ ( 33.7 ) Common stock issued ​ ​ 35,494 ​ ​ 0.1 ​ ​ — ​ ​ 0.4 ​ ​ — ​ ​ — ​ ​ 0.5 Stock-settled, stock-based compensation expense ​ ​ — ​ ​ — ​ ​ — ​ ​ 5.3 ​ ​ — ​ ​ — ​ ​ 5.3 Common stock withheld to cover taxes ​ ​ ( 5,355 ) ​ ​ — ​ ​ ( 0.2 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 0.2 ) Other ​ ​ — ​ ​ — ​ ​ — ​ ​ 0.4 ​ ​ ( 0.3 ) ​ ​ — ​ ​ 0.1 Comprehensive income ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 96.9 ​ ​ 8.0 ​ ​ 104.9 Balance at November 29, 2020 ​ ​ 146,355,082 ​ $ 147.5 ​ $ ( 78.0 ) ​ $ ( 850.4 ) ​ $ 1,182.8 ​ $ 7.0 ​ $ 408.9 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twenty-Six Weeks Ended November 28, 2021 and November 29, 2020 ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ Accumulated ​ ​ ​ ​ Common Stock, ​ Common ​ Treasury ​ Paid-in ​ ​ ​ ​ Other ​ Total ​ ​ net of Treasury ​ Stock ​ Stock ​ (Distributed) ​ Retained ​ Comprehensive ​ Stockholders’ ​ ​ Shares Amount Amount Capital Earnings Income (Loss) Equity Balance at May 30, 2021 ​ ​ 146,191,864 ​ $ 147.6 ​ $ ( 104.3 ) ​ $ ( 836.8 ) ​ $ 1,244.6 $ 29.5 $ 480.6 Dividends declared, $ 0.470 per share ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 68.6 ) ​ ​ — ​ ​ ( 68.6 ) Common stock issued ​ ​ 387,428 ​ ​ 0.4 ​ ​ — ​ ​ 1.5 ​ ​ — ​ ​ — ​ ​ 1.9 Stock-settled, stock-based compensation expense ​ ​ — ​ ​ — ​ ​ — ​ ​ 9.6 ​ ​ — ​ ​ — ​ ​ 9.6 Repurchase of common stock and common stock withheld to cover taxes ​ ​ ( 1,378,644 ) ​ ​ — ​ ​ ( 83.5 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 83.5 ) Other ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 0.1 ) ​ ​ — ​ ​ — ​ ​ ( 0.1 ) Comprehensive income ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ 62.3 ​ ​ ( 37.0 ) ​ ​ 25.3 Balance at November 28, 2021 ​ ​ 145,200,648 ​ $ 148.0 ​ $ ( 187.8 ) ​ $ ( 825.8 ) ​ $ 1,238.3 ​ $ ( 7.5 ) ​ $ 365.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at May 31, 2020 ​ ​ 146,038,893 ​ $ 147.0 ​ $ ( 68.2 ) ​ $ ( 862.9 ) ​ $ 1,064.6 ​ $ ( 40.5 ) ​ $ 240.0 Dividends declared, $ 0.460 per share ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 67.4 ) ​ ​ — ​ ​ ( 67.4 ) Common stock issued ​ ​ 472,695 ​ ​ 0.5 ​ ​ — ​ ​ 0.6 ​ ​ — ​ ​ — ​ ​ 1.1 Stock-settled, stock-based compensation expense ​ ​ — ​ ​ — ​ ​ — ​ ​ 11.3 ​ ​ — ​ ​ — ​ ​ 11.3 Common stock withheld to cover taxes ​ ​ ( 156,506 ) ​ ​ — ​ ​ ( 9.8 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 9.8 ) Other ​ ​ — ​ ​ — ​ ​ — ​ ​ 0.6 ​ ​ ( 0.6 ) ​ ​ — ​ ​ — Comprehensive income ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 186.2 ​ ​ 47.5 ​ ​ 233.7 Balance at November 29, 2020 ​ ​ 146,355,082 ​ $ 147.5 ​ $ ( 78.0 ) ​ $ ( 850.4 ) ​ $ 1,182.8 ​ $ 7.0 ​ $ 408.9 ​ See Condensed Notes to Consolidated Financial Statements. ​ 6 Table of Contents Lamb Weston Holdings, Inc. Consolidated Statements of Cash Flows (unaudited, dollars in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twenty-Six Weeks Ended ​ November 28, November 29, ​ ​ 2021 ​ 2020 Cash flows from operating activities ​ ​ ​ ​ ​ ​ Net income ​ $ 62.3 ​ $ 186.2 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization of intangibles and debt issuance costs ​ ​ 94.9 ​ ​ 94.7 Loss on extinguishment of debt ​ ​ 53.3 ​ ​ 1.0 Stock-settled, stock-based compensation expense ​ ​ 9.6 ​ ​ 11.3 Earnings of joint ventures in excess of distributions ​ ​ ( 2.2 ) ​ ​ ( 24.4 ) Deferred income taxes ​ ​ 4.3 ​ ​ 2.5 Other ​ ​ ( 0.5 ) ​ ​ 15.5 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Receivables ​ ​ ( 57.7 ) ​ ​ ( 8.5 ) Inventories ​ ​ ( 101.3 ) ​ ​ ( 140.3 ) Income taxes payable/receivable, net ​ ​ 3.1 ​ ​ 33.0 Prepaid expenses and other current assets ​ ​ 58.5 ​ ​ 51.8 Accounts payable ​ ​ 94.7 ​ ​ 138.5 Accrued liabilities ​ ​ ( 11.5 ) ​ ​ ( 42.5 ) Net cash provided by operating activities ​ $ 207.5 ​ $ 318.8 Cash flows from investing activities ​ ​ ​ ​ ​ ​ Additions to property, plant and equipment ​ ​ ( 147.1 ) ​ ​ ( 42.3 ) Additions to other long-term assets ​ ​ ( 1.0 ) ​ ​ ( 11.4 ) Other ​ ​ 0.5 ​ ​ 0.4 Net cash used for investing activities ​ $ ( 147.6 ) ​ $ ( 53.3 ) Cash flows from financing activities ​ ​ ​ ​ ​ ​ Proceeds from issuance of debt ​ ​ 1,655.4 ​ ​ — Repayments of debt and financing obligations ​ ​ ( 1,682.1 ) ​ ​ ( 289.6 ) Repurchase of common stock and common stock withheld to cover taxes ​ ​ ( 83.5 ) ​ ​ ( 9.8 ) Dividends paid ​ ​ ( 68.7 ) ​ ​ ( 67.2 ) Payments of senior notes call premium ​ ​ ( 39.6 ) ​ ​ — Repayments of short-term borrowings, net ​ — ​ ( 498.8 ) Other ​ ​ ( 0.8 ) ​ ​ ( 1.8 ) Net cash used for financing activities ​ $ ( 219.3 ) ​ $ ( 867.2 ) Effect of exchange rate changes on cash and cash equivalents ​ ​ ( 2.2 ) ​ ​ 1.6 Net decrease in cash and cash equivalents ​ ( 161.6 ) ​ ( 600.1 ) Cash and cash equivalents, beginning of period ​ ​ 783.5 ​ ​ 1,364.0 Cash and cash equivalents, end of period ​ $ 621.9 ​ $ 763.9 ​ See Condensed Notes to Consolidated Financial Statements. ​ ​ 7 Table of Contents Lamb Weston Holdings, Inc. Condensed Notes to Consolidated Financial Statement s (Unaudited) ​ 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ​ Lamb Weston Holdings, Inc. (“we,” “us,” “our,” the “Company,” or “Lamb Weston”), along with our joint venture partners, is a leading global producer, distributor, and marketer of value-added frozen potato products and is headquartered in Eagle, Idaho. We have four reportable segments: Global, Foodservice, Retail, and Other. See Note 13, Segments, for additional information on our reportable segments. ​ Basis of Presentation ​ The accompanying unaudited Consolidated Financial Statements present the financial results of Lamb Weston for the thirteen and twenty-six weeks ended November 28, 2021 and November 29, 2020, and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America. ​ These financial statements include all adjustments that we consider necessary for a fair presentation of such financial statements and consist only of normal recurring adjustments. The preparation of financial statements involves the use of estimates and accruals. The inputs into our judgments and estimates consider the economic implications of the effects of the COVID-19 pandemic on our critical accounting estimates and significant accounting policies. The actual results that we experience may differ materially from those estimates. Results for interim periods should not be considered indicative of results for our full fiscal year, which ends the last Sunday in May. ​ These financial statements and condensed notes should be read together with the consolidated financial statements and notes in our Annual Report on Form 10-K for the fiscal year ended May 30, 2021 (the “Form 10-K”), which we filed with the Securities and Exchange Commission on July 27, 2021. ​ Certain amounts in the prior period consolidated financial statements have been reclassified to conform with the current period presentation. ​ New and Recently Issued Accounting Pronouncements ​ Accounting Pronouncements Not Yet Adopted ​ Reference Rate Reform ​ In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update 2020-04 , Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and the London Interbank Offered Rate (“LIBOR”). This guidance includes practical expedients and exceptions to the current guidance on contract modifications and hedge accounting. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. This guidance was effective immediately and generally can be applied through December 31, 2022. We are currently evaluating the potential impact of the transition from LIBOR to alternative reference rates, however we do not expect a significant impact on our consolidated financial statements. ​ There were no other accounting pronouncements recently issued that had or are expected to have a material impact on our consolidated financial statements. ​ ​ 8 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ Twenty-Six Weeks Ended ​ November 28, November 29, November 28, November 29, (in millions, except per share amounts) ​ 2021 ​ 2020 ​ 2021 ​ 2020 Numerator: ​ ​ ​ ​ Net income ​ $ 32.5 ​ $ 96.9 ​ $ 62.3 ​ $ 186.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ ​ ​ Basic weighted average common shares outstanding ​ 146.0 ​ 146.5 ​ 146.1 ​ 146.4 Add: Dilutive effect of employee incentive plans (a) ​ 0.3 ​ 0.6 ​ 0.5 ​ 0.7 Diluted weighted average common shares outstanding ​ 146.3 ​ 147.1 ​ 146.6 ​ 147.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.23 ​ $ 0.66 ​ $ 0.43 ​ $ 1.27 Diluted ​ $ 0.22 ​ $ 0.66 ​ $ 0.42 ​ $ 1.27 (a) 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 November 28, 2021, 0.3 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive. As of November 29, 2020, an insignificant number of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive. ​ ​ ​ 3. INCOME TAXES ​ Income tax expense was $ 9.6 million and $ 31.9 million for the thirteen weeks ended November 28, 2021 and November 29, 2020, respectively; and $ 18.3 million and $ 59.9 million for the twenty-six weeks ended November 28, 2021 and November 29, 2020, respectively. The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 22.8 % and 24.8 % for the thirteen weeks ended November 28, 2021 and November 29, 2020, respectively; and 22.7 % and 24.3 % for the twenty-six weeks ended November 28, 2021 and November 29, 2020, respectively, in our Consolidated Statements of Earnings. The effective tax rate varies from the U.S. statutory tax rate of 21 % principally due to the impact of U.S. state taxes, foreign taxes, permanent differences, and discrete items. ​ Income Taxes Paid ​ Income taxes paid, net of refunds were $ 10.3 million and $ 24.0 million during the twenty-six weeks ended November 28, 2021 and November 29, 2020, respectively. ​ Unrecognized Tax Benefits ​ There have been no material changes to the unrecognized tax benefits disclosed in Note 3, Income Taxes, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of the Form 10-K. The expiration of statute of limitations could reduce the uncertain tax positions by approximately $ 7 million during the next 12 months. ​ 9 Table of Contents 4. INVENTORIES ​ Inventories are valued at the lower of cost (determined using the first-in, first-out method) or net realizable value and include all costs directly associated with manufacturing products: materials, labor, and manufacturing overhead. The components of inventories were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ November 28, ​ May 30, (in millions) ​ 2021 2021 Raw materials and packaging ​ $ 206.1 $ 89.8 Finished goods ​ 361.1 377.8 Supplies and other ​ 46.7 45.9 Inventories ​ $ 613.9 $ 513.5 ​ ​ ​ 5. PROPERTY, PLANT AND EQUIPMENT ​ The components of property, plant and equipment were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ November 28, ​ May 30, (in millions) ​ 2021 2021 Land and land improvements ​ $ 112.1 ​ $ 108.2 Buildings, machinery, and equipment ​ 2,815.2 ​ 2,763.3 Furniture, fixtures, office equipment, and other ​ 98.6 ​ 97.1 Construction in progress ​ 181.3 ​ 122.5 Property, plant and equipment, at cost ​ 3,207.2 ​ 3,091.1 Less accumulated depreciation ​ ( 1,639.2 ) ​ ( 1,567.1 ) Property, plant and equipment, net ​ $ 1,568.0 ​ $ 1,524.0 ​ ​ Depreciation expense was $ 44.7 million and $ 45.2 million for the thirteen weeks ended November 28, 2021 and November 29, 2020, respectively; and $ 89.2 million and $ 90.1 million for the twenty-six weeks ended November 28, 2021 and November 29, 2020, respectively. At November 28, 2021 and May 30, 2021, purchases of property, plant and equipment included in accounts payable were $ 14.5 million and $ 23.1 million, respectively. ​ Interest capitalized within construction in progress for the thirteen weeks ended November 28, 2021 and November 29, 2020, was $ 1.6 million and $ 0.5 million, respectively; and $ 2.8 million and $ 1.0 million for the twenty-six weeks ended November 28, 2021 and November 29, 2020, respectively. ​ ​ 6. EQUITY METHOD INVESTMENTS ​ We hold a 50 % ownership interest in Lamb-Weston/Meijer v.o.f. (“Lamb-Weston/Meijer”), a joint venture with Meijer Frozen Foods B.V., that is headquartered in the Netherlands and manufactures and sells frozen potato products principally in Europe, Russia, and the Middle East. We hold a 50 % interest in Lamb-Weston/RDO Frozen (“Lamb Weston RDO”), a potato processing joint venture based in the United States. We also hold a 50 % interest in Lamb Weston Alimentos Modernos S.A. (“LWAMSA”), a joint venture with Sociedad Comercial del Plata S.A., that is headquartered in Argentina. LWAMSA manufactures and sells frozen potato products, principally in South America. These investments are accounted for using equity method accounting. The carrying value of these investments at November 28, 2021 and May 30, 2021, was $ 294.7 million and $ 310.2 million, respectively, and are included in “Equity method investments” on our Consolidated Balance Sheets. ​ For the thirteen weeks ended November 28, 2021 and November 29, 2020, we had sales to our equity method investments of $ 3.3 million and $ 3.9 million, respectively, and purchases from our equity method investments of $ 5.8 million and $ 2.2 million, respectively. For the twenty-six weeks ended November 28, 2021 and November 29, 2020, we had sales to our equity method investments of $ 8.2 million and $ 6.9 million, respectively, and purchases from our equity method investments of $ 7.2 million and $ 3.3 million, respectively. Total dividends received from our equity method investments were $ 4.5 million and $ 3.9 million for the thirteen weeks ended November 28, 2021 and November 29, 2020, 10 Table of Contents respectively; and $ 14.2 million and $ 6.6 million for the twenty-six weeks ended November 28, 2021 and November 29, 2020, respectively. ​ We have an agreement to share the costs of our global enterprise resource planning (“ERP”) system and related software and services with Lamb-Weston/Meijer. 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 November 28, 2021 and May 30, 2021, Lamb-Weston/Meijer’s portion of the ERP costs was $ 17.4 million and $ 16.8 million, respectively. Related to this project, we had $ 14.1 million and $ 13.2 million of receivables recorded in “Other assets” on our Consolidated Balance Sheets as of November 28, 2021 and May 30, 2021, respectively. We expect the total receivable from Lamb-Weston/Meijer to increase as development and implementation of the ERP system progresses. ​ ​ 7. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS ​ The following table presents changes in goodwill balances, by segment, during the twenty-six weeks ended November 28, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in millions) Global Foodservice Retail Other Total Balance at May 30, 2021 ​ $ 276.3 ​ $ 42.8 ​ $ 10.9 ​ $ 4.5 ​ $ 334.5 Foreign currency translation adjustment ​ ​ ( 15.9 ) ​ ​ — ​ ​ — ​ ​ — ​ ( 15.9 ) Balance at November 28, 2021 ​ $ 260.4 ​ $ 42.8 ​ $ 10.9 ​ $ 4.5 ​ $ 318.6 ​ ​ Other identifiable intangible assets were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ November 28, 2021 ​ May 30, 2021 ​ Weighted ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ Average ​ Gross ​ ​ ​ ​ ​ ​ ​ Average ​ Gross ​ ​ ​ ​ ​ ​ ​ ​ Useful Life ​ Carrying ​ Accumulated ​ Intangible ​ Useful Life ​ Carrying ​ Accumulated ​ Intangible (dollars in millions) ​ (in years) ​ Amount ​ Amortization ​ Assets, Net ​ (in years) ​ Amount ​ Amortization ​ Assets, Net Non-amortizing intangible assets (a) n/a $ 18.0 $ — $ 18.0 n/a $ 18.0 $ — $ 18.0 Amortizing intangible assets (b) 11 ​ 41.5 ​ ( 24.5 ) ​ 17.0 11 ​ 42.2 ​ ( 23.3 ) ​ 18.9 ​ ​ $ 59.5 $ ( 24.5 ) $ 35.0 ​ $ 60.2 $ ( 23.3 ) $ 36.9 (a) Non-amortizing intangible assets represent brands and trademarks. ​ (b) Amortizing intangible assets are principally composed of licensing agreements, brands, and customer relationships. Developed technology, which is excluded from this balance, is recorded as “Other assets” on our Consolidated Balance Sheets. Amortization expense, including developed technology amortization expense, was $ 1.5 million and $ 1.4 million for the thirteen weeks ended November 28, 2021 and November 29, 2020, respectively; and $ 3.0 million and $ 2.1 million for the twenty-six weeks ended November 28, 2021 and November 29, 2020, respectively. Foreign intangible assets are affected by foreign currency translation. ​ ​ ​ 8. ACCRUED LIABILITIES ​ The components of accrued liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ November 28, ​ May 30, (in millions) ​ 2021 2021 Compensation and benefits ​ $ 70.1 $ 83.2 Accrued trade promotions ​ ​ 47.2 ​ ​ 39.9 Dividends payable to shareholders ​ ​ 34.2 ​ ​ 34.4 Current portion of operating lease obligations ​ ​ 26.3 ​ ​ 29.1 Franchise, property, and sales and use taxes ​ 11.9 11.3 Accrued interest ​ ​ 6.3 ​ ​ 7.9 Other ​ 19.4 21.1 Accrued liabilities ​ $ 215.4 $ 226.9 ​ ​ ​ 11 Table of Contents 9. DEBT AND FINANCING OBLIGATIONS ​ At November 28, 2021 and May 30, 2021, our debt, including financing obligations, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ November 28, May 30, (in millions) ​ 2021 ​ 2021 Long-term debt: ​ ​ ​ ​ ​ ​ Term A-1 loan facility, due June 2024 ​ $ 266.3 ​ $ 273.8 Term A-2 loan facility, due April 2025 ​ ​ 304.7 ​ ​ 312.8 4.625 % senior notes, due November 2024 ​ — 833.0 4.875 % senior notes, due November 2026 ​ ​ — ​ ​ 833.0 4.875 % senior notes, due May 2028 ​ ​ 500.0 ​ ​ 500.0 4.125 % senior notes, due January 2030 ​ ​ 970.0 ​ ​ — 4.375 % senior notes, due January 2032 ​ ​ 700.0 ​ ​ — ​ ​ ​ 2,741.0 ​ ​ 2,752.6 Financing obligations: ​ ​ ​ ​ ​ ​ Lease financing obligations due on various dates through 2040 (a) ​ 7.5 7.3 ​ ​ ​ 7.5 ​ ​ 7.3 ​ ​ ​ ​ ​ ​ ​ Total debt and financing obligations ​ 2,748.5 2,759.9 Debt issuance costs (b) ​ ​ ( 24.2 ) ​ ​ ( 22.5 ) Current portion of long-term debt and financing obligations ​ ( 32.2 ) ( 32.0 ) Long-term debt and financing obligations, excluding current portion ​ $ 2,692.1 $ 2,705.4 (a) The interest rates on our lease financing obligations ranged from 2.08 % to 4.10 % as of November 28, 2021, and 2.49 % to 4.10 % as of May 30, 2021. ​ (b) Excludes debt issuance costs of $ 4.1 million and $ 2.1 million as of November 28, 2021 and May 30, 2021, respectively, primarily related to our Amended Revolving Credit Facility, which are recorded in “Other assets” on the Consolidated Balance Sheets. ​ ​ 4.125 % Senior Notes due 2030 and 4.375 % Senior Notes due 2032 ​ On November 8, 2021 , we issued (i) $ 970.0 million aggregate principal amount of 4.125 % senior notes due 2030 (“2030 Notes”) and (ii) $ 700.0 million aggregate principal amount of 4.375 % senior notes due 2032 (“2032 Notes” and, together with the 2030 Notes, the “Notes”) pursuant to indentures, dated as of November 8, 2021 (together, the “Indentures”), among Lamb Weston, as issuer, certain of our subsidiaries named therein as guarantors and Computershare Trust Company, N.A., as trustee. Our obligations under the 2030 Notes and 2032 Notes are unconditionally guaranteed on a senior unsecured basis by each of our subsidiaries that guarantee our obligations under our existing credit facilities. ​ Interest payments on the Notes are due semi-annually each January 31 and July 31, with the first interest payment due on July 31, 2022. The 2030 Notes will mature on January 31, 2030 , unless earlier redeemed or repurchased, and are subject to the terms and conditions set forth in the applicable Indenture. The 2032 Notes will mature on January 31, 2032 , unless earlier redeemed or repurchased, and are subject to the terms and conditions set forth in the applicable Indenture. ​ We may redeem some or all of the Notes at the redemption prices and on the terms specified in the applicable Indenture. If we experience specific kinds of changes in control and certain negative actions are taken with respect to the ratings of the Notes of a series, we must offer to repurchase such Notes on the terms set forth in the applicable Indenture. ​ The Notes are effectively subordinated to all of our existing and future secured debt, rank equally with all of our existing and future senior debt and rank senior to all of our existing and future subordinated debt. The guarantees of the Notes are effectively subordinated to all of the guarantors’ existing and future secured debt, rank equally with all of their existing and future senior debt and rank senior to all of their existing and future subordinated debt. The Notes are structurally subordinated to all of the liabilities of our non-guarantor subsidiaries. ​ 12 Table of Contents The Indentures limit our ability and the ability of our subsidiaries to, among other things, incur or suffer to exist liens and consolidate, merge, amalgamate or transfer all or substantially all of our assets. The Indentures contain customary events of default that include, among other things (subject in certain cases to customary grace and cure periods): non-payment of principal, interest or premium; failure to perform or observe covenants; cross-acceleration with certain other indebtedness; certain judgments; and certain events of bankruptcy or insolvency. Generally, if an event of default occurs (subject to certain exceptions), the trustee or the holders of at least 25 % in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. ​ In connection with the 2030 Notes and 2032 Notes issuance, we capitalized $ 17.5 million of debt issuance costs within long-term debt on our Consolidated Balance Sheet. ​ 4.625 % Senior Notes due 2024 and 4.875 % Senior Notes due 2026 ​ On November 18, 2021, we used the net proceeds of the issuance of the 2030 Notes and 2032 Notes, together with cash on hand, to redeem all of our outstanding $ 833.0 million aggregate principal amount of 4.625 % senior notes due 2024 (the “2024 Notes”) and $ 833.0 million aggregate principal amount of 4.875 % senior notes due 2026 (the “2026 Notes”). The 2024 Notes were redeemed at a price of 102.313 % of the principal amount and the 2026 Notes were redeemed at a price of 102.438 % of the principal amount. The aggregate call premium for the 2024 Notes and 2026 Notes was $ 39.6 million (included in the redemption prices noted above) and in connection with these redemptions, we also wrote off $ 13.7 million of previously unamortized debt issuance costs. Both of these amounts are included as “Interest Expense, net” in our Consolidated Statements of Earnings for the thirteen and twenty-six weeks ended November 28, 2021. ​ Amended Revolving Credit Facility ​ On August 11, 2021, we amended our credit agreement, dated as of November 9, 2016 (“Amended Revolving Credit Facility”). The Amended Revolving Credit Facility, among other things, increased the aggregate principal amount of available revolving credit facility borrowings to $ 1.0 billion and extended the maturity date to August 11, 2026 . In addition, we may add incremental term loan facilities, increase commitments and/or add new revolving commitments in an aggregate principal amount of $ 650.0 million or greater based on conditions described in the agreement. Borrowings under the Amended Revolving Credit Facility bear interest at LIBOR, the Base Rate, the Alternative Currency Daily Rate, or the Alternative Currency Term Rate (each as defined in the Amended Revolving Credit Facility) plus an applicable rate ranging from 1.125 % to 1.75 % for LIBOR-based loans, Alternative Currency Daily Rate-based loans, and Alternative Currency Term Rate-based loans and from 0.125 % to 0.75 % for Base Rate-based loans, depending upon our consolidated net leverage ratio. In addition to paying interest, we pay an annual commitment fee for undrawn amounts at a rate of 0.15 % to 0.25 %, depending on our consolidated net leverage ratio. The Amended Revolving Credit Facility requires us to maintain a consolidated net leverage ratio no greater than 5.00 to 1.00, decreasing to 4.75 to 1.00 on February 23, 2025 through maturity; and an interest coverage ratio no less than 2.75 to 1.00. ​ In connection with the Amended Revolving Credit Facility, we capitalized $ 2.0 million of debt issuance costs in “Other assets” on our Consolidated Balance Sheet. ​ At November 28, 2021, we had no borrowings outstanding under the Amended Revolving Credit Facility and $ 994.6 million of availability under the facility, which is net of outstanding letters of credit of $ 5.4 million. For the twenty-six weeks ended November 28, 2021, we had no borrowings under the facility. ​ Term A-1 and A-2 Loan Facilities ​ On August 11, 2021, in connection with the Amended Revolving Credit Facility, we amended the credit agreement, dated as of June 28, 2019, relating to our Term A-1 and A-2 Loan Facilities (“Term Loan Facilities”), to, among other things, modify the Term Loan Facilities to make conforming changes to the covenants under the agreement. Under the amended Term Loan Facilities, we are required to maintain a consolidated net leverage ratio no greater than 5.00 to 1.00 , decreasing to 4.75 to 1.00 on February 23, 2025 through maturity; and an interest coverage ratio no less than 2.75 to 1.00 . ​ 13 Table of Contents Other ​ For the twenty-six weeks ended November 28, 2021 and November 29, 2020, we paid $ 61.4 million and $ 60.5 million of interest on debt, respectively. ​ For more information on our debt and financing obligations, interest rates, and debt covenants, see Note 8, Debt and Financing Obligations, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K. ​ 10. STOCK-BASED COMPENSATION ​ The Compensation and Human Capital Committee (“the Committee”) of our Board of Directors administers our stock compensation plan. The Committee, in its discretion, authorizes grants of restricted stock units (“RSUs”), performance awards payable upon the attainment of specified performance goals (“Performance Shares”), dividend equivalents, and other stock-based awards. During the twenty-six weeks ended November 28, 2021, we granted 0.3 million and 0.1 million RSUs and Performance Shares, respectively, at an average grant date fair value of $ 66.00 . As of November 28, 2021, 7.1 million shares were available for future grant under the plan. ​ ​ ​ Our stock-based compensation expense is recorded in “Selling, general and administrative expenses.” Compensation expense for stock-based awards recognized in the Consolidated Statements of Earnings, net of forfeitures, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ ​ Twenty-Six Weeks Ended ​ ​ November 28, ​ November 29, ​ ​ November 28, ​ November 29, (in millions) ​ 2021 ​ 2020 ​ ​ 2021 ​ 2020 Total compensation expense ​ $ 4.4 ​ $ 5.3 ​ ​ $ 9.6 ​ $ 11.3 Income tax benefit (a) ​ ​ ( 0.9 ) ​ ​ ( 0.9 ) ​ ​ ​ ( 1.8 ) ​ ​ ( 2.0 ) Total compensation expense, net of tax benefit ​ $ 3.5 ​ $ 4.4 ​ ​ $ 7.8 ​ $ 9.3 (a) Income tax benefit represents the marginal tax rate, excluding non-deductible compensation. ​ Based on estimates at November 28, 2021, total unrecognized compensation expense related to stock-based awards was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Remaining ​ ​ ​ ​ ​ Weighted ​ ​ Unrecognized ​ Average ​ ​ Compensation ​ Recognition (dollars in millions) ​ Expense ​ Period (in years) Stock-settled RSUs ​ $ 29.3 ​ 2.1 Performance Shares ​ ​ 7.5 ​ 1.9 Total unrecognized compensation expense ​ $ 36.8 ​ 2.1 ​ ​ 14 Table of Contents 11. FAIR VALUE MEASUREMENTS ​ For information about our fair value policies, methods and assumptions used in estimating the fair value of our financial assets and liabilities, see Note 1, Nature of Operations and Summary of Significant Accounting Policies and Note 12, Fair Value Measurements, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of the Form 10-K. ​ The fair values of cash equivalents, receivables, accounts payable, and short-term debt approximate their carrying amounts due to their short duration. ​ The following table presents our financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of November 28, 2021 (in millions) Level 1 Level 2 Level 3 Fair Value of Assets (Liabilities) Derivative assets (a) ​ $ — ​ $ 3.0 ​ $ — ​ $ 3.0 Derivative liabilities (a) ​ ​ — ​ ​ ( 0.6 ) ​ ​ — ​ ​ ( 0.6 ) Deferred compensation liabilities (b) ​ ​ — ​ ( 24.9 ) ​ — ​ ( 24.9 ) Fair value, net ​ $ — ​ $ ( 22.5 ) ​ $ — ​ $ ( 22.5 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of May 30, 2021 (in millions) Level 1 Level 2 Level 3 Fair Value of Assets (Liabilities) Derivative assets (a) ​ $ — ​ $ 15.3 ​ $ — ​ $ 15.3 Deferred compensation liabilities (b) ​ ​ — ​ ( 23.5 ) ​ — ​ ( 23.5 ) Fair value, net ​ $ — ​ $ ( 8.2 ) ​ $ — ​ $ ( 8.2 ) (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. ​ ​ At November 28, 2021, we had $ 2,170.0 million of fixed-rate and $ 571.0 million of variable-rate debt outstanding. Based on current market rates, the fair value of our fixed-rate debt was estimated to be $ 2,195.9 million. Any differences between the book value and fair value are due to the difference between the period-end market interest rate and the stated rate of our fixed-rate debt. The fair value of our variable-rate term debt approximates the carrying amount as our cost of borrowing is variable and approximates current market prices. ​ 15 Table of Contents 12. STOCKHOLDERS’ EQUITY ​ 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. During the thirteen weeks ended November 28, 2021, we repurchased 868,753 shares for $ 50.0 million, or a weighted-average price of $ 57.55 per share. During the twenty-six weeks ended November 28, 2021, we repurchased 1,264,114 shares for $ 76.0 million, or a weighted-average price of $ 60.15 per share. As of November 28, 2021, $ 93.6 million remained authorized for repurchase under the program. In December 2021, our Board of Directors authorized the repurchase of an additional $ 250.0 million of our common stock under the program. We have $ 343.6 million remaining under the updated share repurchase authorization. ​ Dividends ​ During the twenty-six weeks ended November 28, 2021, we paid $ 68.7 million of dividends to common stockholders. On December 3, 2021, we paid $ 34.3 million of dividends to stockholders of record as of the close of business on November 5, 2021. On December 17, 2021 , our Board of Directors increased our quarterly dividend approximately 4 % and declared a dividend of $ 0.245 per share of common stock. The dividend will be paid on March 4, 2022 , to stockholders of record as of the close of business on February 4, 2022 . ​ Accumulated Other Comprehensive Income (“AOCI”) ​ Changes in AOCI, net of taxes, as of November 28, 2021 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ ​ ​ ​ Accumulated ​ ​ Currency ​ Pension and ​ Other ​ ​ Translation ​ Post-Retirement ​ Comprehensive (in millions) Gains (Losses) Benefits Income (Loss) Balance as of May 30, 2021 ​ $ 36.0 $ ( 6.5 ) $ 29.5 Other comprehensive income before reclassifications, net of tax ​ ​ ( 37.2 ) ​ ​ — ​ ​ ( 37.2 ) Amounts reclassified out of AOCI, net of tax ​ ​ — ​ ​ 0.2 ​ ​ 0.2 Net current-period other comprehensive income (loss) ​ ( 37.2 ) 0.2 ​ ( 37.0 ) Balance as of November 28, 2021 ​ $ ( 1.2 ) $ ( 6.3 ) $ ( 7.5 ) ​ 16 Table of Contents 13. SEGMENTS ​ We have four operating segments, each of which is a reportable segment: Global, Foodservice, Retail, and Other. Our chief operating decision maker receives periodic management reports under this structure that generally focus on the nature and scope of our customers’ businesses, which enables operating decisions, performance assessment, and resource allocation decisions at the segment level. The reportable segments are each managed by a general manager and supported by a cross functional team assigned to support the segment. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ Twenty-Six Weeks Ended ​ November 28, November 29, November 28, November 29, (in millions) ​ 2021 ​ 2020 ​ 2021 ​ 2020 Net sales ​ ​ ​ ​ Global ​ $ 516.7 ​ $ 475.9 ​ $ 1,017.9 ​ $ 923.4 Foodservice ​ 313.9 ​ 241.1 ​ 635.3 ​ 477.8 Retail ​ 142.6 ​ 140.7 ​ 275.1 ​ 294.6 Other ​ ​ 33.4 ​ ​ 38.4 ​ ​ 62.5 ​ ​ 71.8 Total net sales ​ ​ 1,006.6 ​ ​ 896.1 ​ ​ 1,990.8 ​ ​ 1,767.6 Product contribution margin (a) ​ ​ ​ ​ ​ ​ ​ ​ Global ​ ​ 80.9 ​ ​ 92.7 ​ ​ 123.5 ​ ​ 170.5 Foodservice ​ ​ 104.4 ​ ​ 87.7 ​ ​ 200.8 ​ ​ 173.5 Retail ​ ​ 21.4 ​ ​ 30.1 ​ ​ 36.2 ​ ​ 65.9 Other (b) ​ ​ ( 6.2 ) ​ ​ 10.5 ​ ​ ( 12.8 ) ​ ​ 23.7 ​ ​ ​ 200.5 ​ ​ 221.0 ​ ​ 347.7 ​ ​ 433.6 Add: Advertising and promotion expenses (a) ​ ​ 5.0 ​ ​ 2.5 ​ ​ 9.1 ​ ​ 3.7 Gross profit ​ ​ 205.5 ​ ​ 223.5 ​ ​ 356.8 ​ ​ 437.3 Selling, general and administrative expenses ​ ​ 91.1 ​ ​ 83.9 ​ ​ 182.2 ​ ​ 162.0 Income from operations ​ ​ 114.4 ​ ​ 139.6 ​ ​ 174.6 ​ ​ 275.3 Interest expense, net (c) ​ ​ 82.4 ​ ​ 30.0 ​ ​ 110.3 ​ ​ 60.3 Income tax expense ​ ​ 9.6 ​ ​ 31.9 ​ ​ 18.3 ​ ​ 59.9 Equity method investment earnings ​ ​ 10.1 ​ ​ 19.2 ​ ​ 16.3 ​ ​ 31.1 Net income ​ $ 32.5 ​ $ 96.9 ​ $ 62.3 ​ $ 186.2 (a) Product contribution margin represents net sales less cost of sales and advertising and promotion expenses. Product contribution margin includes advertising and promotion expenses because those expenses are directly associated with segment performance. ​ (b) The Other segment primarily includes our vegetable and dairy businesses and unrealized mark-to-market adjustments and realized settlements associated with commodity hedging contracts. ​ (c) The thirteen and twenty-six weeks ended November 28, 2021, include a loss on the extinguishment of debt of $ 53.3 million, which includes an aggregate call premium of $ 39.6 million related to the redemption of the 2024 Notes and 2026 Notes, and the write-off of $ 13.7 million of previously unamortized debt issuance costs associated with those notes. ​ Concentrations ​ Lamb Weston’s largest customer, McDonald’s Corporation, accounted for approximately 11 % of consolidated “Net sales” in all periods presented in our Consolidated Statements of Earnings. ​ ​ 17 Table of Contents 14. COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS ​ We have financial commitments and obligations that arise in the ordinary course of our business. These include long-term debt, lease obligations, purchase commitments for goods and services, and legal proceedings. There have been no material changes to the guarantees and indemnifications disclosed in Note 15, Commitments, Contingencies, Guarantees, and Legal Proceedings, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K. ​ We are a party to legal actions arising in the ordinary course of our business. These claims, legal proceedings and litigation principally arise from alleged casualty, product liability, employment, and other disputes. In determining loss contingencies, we consider the likelihood of loss as well as the ability to reasonably estimate the amount of such loss or liability. An estimated loss is recognized when it is considered probable that a liability has been incurred and when the amount of loss can be reasonably estimated. While any claim, proceeding or litigation has an element of uncertainty, we believe the outcome of any of these that are pending or threatened will not have a material adverse effect on our financial condition, results of operations, or cash flows. ​ ​ 18 Table of Contents