What changed in this filing

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Item 1. Financial Statements

2023-01-05 compared with 2022-10-05 · 140 added, 95 removed, 301 unchanged (44% of the section changed)

4 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Cost of sales

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Income tax expense

Equity method investment earnings

Equity method investment earnings (loss)

Earnings per share:

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Consolidated Statements of Comprehensive Income

(unaudited, dollars in millions)

(unaudited, in millions)

Thirteen Weeks Ended

August 28, 2022

August 29, 2021

November 27, 2022

November 28, 2021

Other comprehensive income (loss):

Reclassification of post-retirement benefits out of accumulated other comprehensive income

Reclassification of post-retirement benefits out of accumulated other comprehensive income (loss)

Unrealized currency translation gains (losses)

Comprehensive income

Twenty-Six Weeks Ended

November 27, 2022

November 28, 2021

Other comprehensive income (loss):

Reclassification of post-retirement benefits out of accumulated other comprehensive income (loss)

Unrealized currency translation gains (losses)

Comprehensive income

See Condensed Notes to Consolidated Financial Statements.

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Consolidated Balance Sheets

(unaudited, dollars in millions, except share data)

(unaudited, in millions, except share data)

Current assets:

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Consolidated Statements of Stockholders’ Equit y

(unaudited, dollars in millions, except share data )

Thirteen Weeks Ended August 28, 2022 and August 29, 2021

(unaudited, in millions, except share data )

Thirteen Weeks Ended November 27, 2022 and November 28, 2021

Common Stock,

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Income (Loss)

Balance at May 29, 2022

Balance at August 28, 2022

Dividends declared, $ 0.245 per share

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Comprehensive income

Balance at November 27, 2022

Balance at August 29, 2021

Dividends declared, $ 0.235 per share

Common stock issued

Stock-settled, stock-based compensation expense

Repurchase of common stock and common stock withheld to cover taxes

Comprehensive income

Balance at November 28, 2021

Twenty-Six Weeks Ended November 27, 2022 and November 28, 2021

Common Stock,

net of Treasury

(Distributed)

Comprehensive

Stockholders’

Income (Loss)

Balance at May 29, 2022

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Comprehensive income

Balance at August 29, 2021

Balance at November 27, 2022

Balance at May 30, 2021

Dividends declared, $ 0.470 per share

Common stock issued

Stock-settled, stock-based compensation expense

Repurchase of common stock and common stock withheld to cover taxes

( 1,378,644 )

Comprehensive income

Balance at November 28, 2021

See Condensed Notes to Consolidated Financial Statements.

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Consolidated Statements of Cash Flows

(unaudited, dollars in millions)

Thirteen Weeks Ended

(unaudited, in millions)

Twenty-Six Weeks Ended

Cash flows from operating activities

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Depreciation and amortization of intangibles and debt issuance costs

Loss on extinguishment of debt

Stock-settled, stock-based compensation expense

Equity method investment (earnings) loss in excess of distributions

Equity method investment earnings in excess of distributions

Deferred income taxes

Foreign currency remeasurement gain

Changes in operating assets and liabilities, net of acquisition:

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Repurchase of common stock and common stock withheld to cover taxes

Payments of senior notes call premium

Net cash used for financing activities

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents, beginning of period

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Basis of Presentation

The accompanying unaudited Consolidated Financial Statements present the financial results of Lamb Weston for the thirteen weeks ended August 28, 2022 and August 29, 2021, and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America (“U.S”).

The accompanying unaudited Consolidated Financial Statements present the financial results of Lamb Weston for the thirteen and twenty-six weeks ended November 27, 2022 and November 28, 2021, and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America (“U.S”).

These consolidated financial statements are unaudited, and include all adjustments that we consider necessary for a fair presentation of such financial statements and consist only of normal recurring adjustments.

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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 29, 2022 (the “Form 10-K”), where we include additional information on our critical accounting estimates, policies, and the methods and assumptions used in our estimates.

These financial statements and related 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 29, 2022 (the “Form 10-K”), where we include additional information on our critical accounting estimates, policies, and the methods and assumptions used in our estimates.

We filed the Form 10-K with the Securities and Exchange Commission on July 27, 2022.

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Thirteen Weeks Ended

Twenty-Six Weeks Ended

(in millions, except per share amounts)

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(a) Potential dilutive shares of common stock under 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 August 28, 2022, 0.6 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive.

As of August 29, 2021, an insignificant number of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive.

Income tax expense was $ 73.7 million and $ 8.7 million for the thirteen weeks ended August 28, 2022 and August 29, 2021, 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 24.1 % and 22.6 % for the thirteen weeks ended August 28, 2022 and August 29, 2021, respectively, in our Consolidated Statements of Earnings.

As of November 27, 2022, 0.6 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive.

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.

Income tax expense was $ 36.8 million and $ 9.6 million for the thirteen weeks ended November 27, 2022 and November 28, 2021, respectively;

and $ 110.5 million and $ 18.3 million for the twenty-six weeks ended November 27, 2022 and November 28, 2021, 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 26.3 % and 22.8 % for the thirteen weeks ended November 27, 2022 and November 28, 2021, respectively;

and 24.8 % and 22.7 % for the twenty-six weeks ended November 27, 2022 and November 28, 2021, respectively, in our Consolidated Statements of Earnings.

The effective tax rate varies from the U.S.

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state taxes, foreign taxes, permanent differences, and discrete items.

Excluding the impact of both the gain associated with the acquisition of an additional 40 % interest in our Argentina joint venture, Lamb Weston Alimentos Modernos S.A.

(“LWAMSA”), and the mark-to-market adjustments associated with changes in natural gas and electricity derivatives at our Lamb-Weston/Meijer v.o.f (“LWM”) joint venture, which are discussed at Note 6, Joint Venture Investments, and Note 13, Segments, respectively, our effective tax rate was 25.0 %.

Excluding the impact of the following items, our effective tax rate was 25.9 % and 25.5 % for the thirteen and twenty-six weeks ended November 27, 2022, respectively:

● Gain associated with the acquisition of an additional 40 % interest in our Argentina joint venture, Lamb Weston Alimentos Modernos S.A.

(“LWAMSA”), which is discussed in Note 6, Joint Venture Investments.

● Gains related to actions taken to mitigate the effect of changes in currency rates on the pending purchase of the remaining 50 % ownership interest in our European joint venture, Lamb-Weston/Meijer v.o.f.

(“LWM”), net of other acquisition-related costs.

See Note 6, Joint Venture Investments, for more information.

● Mark-to-market adjustments associated with changes in natural gas and electricity derivatives at LWM, which is discussed in Note 13, Segments.

Income Taxes Paid

Income tax refunds, net of taxes paid, were $ 3.2 million and $ 2.9 million during the thirteen weeks ended August 28, 2022 and August 29, 2021, respectively.

Income taxes paid, net of refunds, were $ 92.1 million and $ 10.3 million during the twenty-six weeks ended November 27, 2022 and November 28, 2021, respectively.

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:

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Property, plant and equipment, net

Depreciation expense was $ 47.3 million and $ 44.5 million for the thirteen weeks ended August 28, 2022 and August 29, 2021, respectively.

At August 28, 2022 and May 29, 2022, purchases of property, plant and equipment included in accounts payable were $ 64.4 million and $ 38.3 million, respectively.

Interest capitalized within construction in progress for the thirteen weeks ended August 28, 2022 and August 29, 2021, was $ 2.0 million and $ 1.2 million, respectively.

Depreciation expense was $ 49.7 million and $ 44.7 million for the thirteen weeks ended November 27, 2022 and November 28, 2021, respectively;

and $ 97.0 million and $ 89.2 million for the twenty-six weeks ended November 27, 2022 and November 28, 2021, respectively.

At November 27, 2022 and May 29, 2022, purchases of property, plant and equipment included in accounts payable were $ 65.1 million and $ 38.3 million, respectively.

Interest capitalized within construction in progress for the thirteen weeks ended November 27, 2022 and November 28, 2021, was $ 4.1 million and $ 1.6 million, respectively;

and $ 6.1 million and $ 2.8 million for the twenty-six weeks ended November 27, 2022 and November 28, 2021, respectively.

JOINT VENTURE INVESTMENTS

Consolidated Joint Ventures

Consolidated Joint Venture

In July 2022 , we acquired an additional 40 % interest in LWAMSA, which increased our total ownership from 50 % to 90 %.

We recorded LWAMSA’s assets and liabilities at fair value, which included remeasuring our previously held equity interest at fair value, and we recognized a $ 15.1 million gain in “Equity method investment earnings” in our Consolidated Statement of Earnings.

We recorded LWAMSA’s assets and liabilities at fair value, which included remeasuring our previously held equity interest at fair value, and for the twenty-six weeks ended November 27, 2022, we recognized a $ 15.1 million gain in “Equity method investment earnings” in our Consolidated Statement of Earnings.

The fair value was determined utilizing industry EBITDA multiples and control premium comparable information, which are unobservable inputs, or Level 3 in the fair value hierarchy.

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LWAMSA’s operating results are included in our Global segment.

On September 6, 2022, we announced an expansion of french fry processing capacity in Argentina with the planned construction of a new manufacturing facility in Mar del Plata.

In September 2022, we announced an expansion of french fry processing capacity in Argentina with the planned construction of a new manufacturing facility in Mar del Plata.

The new processing facility is expected to produce more than 200 million pounds of frozen french fries and other potato products per year.

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This investment will add to the capacity produced at LWAMSA’s existing production facility in Buenos Aires.

Noncontrolling Interest

As of August 28, 2022, total LWAMSA interest not directly attributable to Lamb Weston, or NCI, was $ 8.2 million and was recorded in “Additional distributed capital” on our Consolidated Balance Sheet.

For the thirteen weeks ended August 28, 2022, the net loss attributable to NCI was not significant and was recorded in “Selling, general and administrative expenses” in our Consolidated Statement of Earnings.

Noncontrolling Interest (“NCI”)

As of November 27, 2022, total LWAMSA interest not directly attributable to Lamb Weston, or NCI, was $ 8.1 million and was recorded in “Additional distributed capital” on our Consolidated Balance Sheet.

For the thirteen and twenty-six weeks ended November 27, 2022, the net loss attributable to NCI was not significant and was recorded in “Selling, general and administrative expenses” in our Consolidated Statements of Earnings.

Unconsolidated Joint Ventures

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Lamb-Weston/RDO Frozen ("Lamb Weston RDO") (b)

(a) We own 50 % of LWM, a joint venture with Meijer Frozen Foods B.V., headquartered in the Netherlands that manufactures and sells frozen potato products principally in Europe and the Middle East.

The investment balance includes $ 146.3 million of unrealized gains related to mark-to-market adjustments associated with changes in natural gas and electricity derivatives as commodity markets in Europe have experienced significant volatility during the thirteen weeks ended August 28, 2022.

In September 2022, LWM completed the previously announced withdrawal from its joint venture in Russia.

(a) We own 50 % of LWM, a joint venture with Meijer Frozen Foods B.V.

LWM is headquartered in the Netherlands and manufactures and sells frozen potato products principally in Europe and the Middle East.

(b) We own 50 % of Lamb Weston RDO, a joint venture with RDO Frozen Co., that operates a potato processing facility in the U.S.

(c) In July 2022, we acquired an additional 40 % interest in LWAMSA, increasing our total ownership to 90 % and began consolidating the joint venture.

We have an agreement to share the costs of our global enterprise resource planning (“ERP”) system and related software and services with LWM.

Under the terms of the agreement, LWM 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 LWM.

At August 28, 2022 and May 29, 2022, LWM’s portion of the ERP costs totaled $ 29.5 million and $ 23.4 million, respectively.

We had $ 25.3 million and $ 20.5 million of receivables recorded in “Other assets” on our Consolidated Balance Sheets at August 28, 2022 and May 29, 2022, respectively.

We expect the total receivable from LWM to increase as development and implementation of the next phase of our ERP system continues throughout fiscal 2023.

In September 2022, LWM completed the previously announced withdrawal from its joint venture in Russia.

In October 2022, we entered into an agreement to acquire the remaining interest in LWM for consideration consisting of € 525.0 million in cash and € 175.0 million in shares of our common stock.

The number of shares of our common stock to be paid will be equal to the U.S.

dollar equivalent of € 175.0 million, valued at the volume weighted average of the trading price per share of our common stock for the five trading days immediately preceding the signing date of the agreement and the five trading days immediately preceding the closing date of the transaction.

Upon completion of the transaction, we will own 100 % of LWM.

We expect to close the transaction in the fourth quarter of fiscal 2023, subject to customary regulatory approvals.

Following closing of the transaction, we will include LWM’s operating results in our Global segment.

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

The following table presents changes in goodwill balances, by segment, during the thirteen weeks ended August 28, 2022:

The following table presents changes in goodwill balances, by segment, during the twenty-six weeks ended November 27, 2022:

(in millions)

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Foreign currency translation adjustment

Balance at August 28, 2022

Balance at November 27, 2022

(a) In July 2022, we acquired an additional 40 % interest in LWAMSA, which increased our total ownership from 50 % to 90 % , and we recorded $ 42.1 million of goodwill, that is not deductible for tax purposes, in our Global segment.

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Other identifiable intangible assets were as follows:

August 28, 2022

(dollars in millions)

November 27, 2022

(in millions, except useful lives)

Non-amortizing intangible assets (a)

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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 $ 1.4 million and $ 1.5 million for the thirteen weeks ended August 28, 2022 and August 29, 2021, respectively.

Amortization expense, including developed technology amortization expense, was $ 1.5 million and $ 1.5 million for the thirteen weeks ended November 27, 2022 and November 28, 2021, respectively;

and $ 2.9 million and $ 3.0 million for the twenty-six weeks ended November 27, 2022 and November 28, 2021, respectively.

Foreign intangible assets are affected by foreign currency translation.

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Accrued trade promotions

Income taxes payable

Dividends payable to shareholders

Current portion of operating lease obligations

Accrued interest

Current portion of operating lease obligations

Income taxes payable

Franchise, property, and sales and use taxes

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Term A-2 loan facility, due April 2025

RMB loan facility, due February 2027 (a)

RMB loan facility, due February 2027

4.875 % senior notes, due May 2028

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Financing obligations:

Lease financing obligations due on various dates through 2040 (b)

Lease financing obligations due on various dates through 2040

Total debt and financing obligations

Debt issuance costs (c)

Debt issuance costs (a)

Short-term borrowings

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Long-term debt and financing obligations, excluding current portion

(a) The effective average interest rate on this facility was 4.60 % as of August 28, 2022.

(b) The interest rates on our lease financing obligations ranged from 2.08 % to 3.32 % as of August 28, 2022 and May 29, 2022.

(c) Excludes debt issuance costs of $ 3.1 million and $ 3.3 million as of August 28, 2022 and May 29, 2022, respectively, related to our revolving credit facility, which are recorded in “Other assets” on our Consolidated Balance Sheets.

At August 28, 2022, we had no borrowings outstanding under our 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 thirteen weeks ended August 28, 2022, we had no borrowings under the facility.

For the thirteen weeks ended August 28, 2022 and August 29, 2021, we paid $ 56.8 million and $ 2.7 million of interest on debt, respectively.

(a) Excludes debt issuance costs of $ 2.9 million and $ 3.3 million as of November 27, 2022 and May 29, 2022, respectively, related to our revolving credit facility, which are recorded in “Other assets” on our Consolidated Balance Sheets.

At November 27, 2022, we had no borrowings outstanding under our 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 27, 2022, we had no material borrowings under the facility.

For the twenty-six weeks ended November 27, 2022 and November 28, 2021, we paid $ 76.6 million and $ 61.4 million of interest on debt, respectively.

For more information on our debt and financing obligations, interest rates, and debt covenants, see Note 7, Debt and Financing Obligations, of the Notes to Consolidated Financial Statements in “Part II, Item 8.

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The Committee, in its discretion, authorizes grants of restricted stock units (“RSUs”), performance awards payable upon the attainment of specified performance goals (“Performance Shares”), stock options, dividend equivalents, and other stock-based awards.

As of August 28, 2022, 6.2 million shares were available for future grant under the plan.

As of November 27, 2022, 6.0 million shares were available for future grant under the plan.

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 .

The employee RSUs generally vest over a three-year period following the grant date, while the non-employee director RSUs generally vest one year after the grant date.

We estimate the fair value of the RSUs based upon the market price of our common stock on the date of grant.

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Awards, if earned, would be paid in shares of our common stock.

Subject to limited exceptions set forth in our stock plan, any shares earned will generally vest over a three-year service period.

Subject to limited exceptions set forth in our stock plan, any shares earned will generally vest over a three-year service period following the grant date.

The value of these Performance Shares is adjusted based upon the market price of our common stock and the anticipated attainment of Company-wide performance goals at the end of each reporting period and amortized as compensation expense over the service period.

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Awards actually earned range from 0 % to 200 % , in the case of awards contingent on total shareholder return goals, or 0 % to 300 % , in the case of awards contingent on stock price growth goals, of the targeted number of Performance Shares.

These Performance Shares are equity-settled awards that vest over a three-year service period, and the number of units that actually vest is determined based on the achievement of the performance criteria set forth in the respective award agreement.

These Performance Shares are equity-settled awards that vest over a three-year service period following the grant date, and the number of units that actually vest is determined based on the achievement of the performance criteria set forth in the respective award agreement.

The awards are measured based on estimated fair value as of the date of grant using a Monte Carlo simulation, and are amortized over the service period.

The weighted average Monte Carlo assumptions for Performance Shares granted during the thirteen weeks ended August 28, 2022 were:

The weighted average Monte Carlo assumptions for Performance Shares granted during the twenty-six weeks ended November 27, 2022 were:

Dividend yield (%)

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Stock Options

Under special circumstances, we have granted options to employees for the purchase of stock at exercise prices equal to the fair market value of the underlying stock on the grant date.

Options generally become exercisable in three annual installments beginning on the first anniversary of the grant date and have a maximum term of seven years .

The weighted average Black-Sholes assumptions for stock options granted during the thirteen weeks ended August 28, 2022 were:

Under special circumstances, we have granted options to employees and non-employee directors for the purchase of stock at exercise prices equal to the fair market value of the underlying stock on the grant date.

Options granted to employees generally become exercisable in three annual installments beginning on the first anniversary of the grant date and have a maximum term of seven years .

Options granted to non-employee directors generally vest one year after the grant date and have a term of ten years .

The weighted average Black-Scholes assumptions for stock options granted during the twenty-six weeks ended November 27, 2022 were:

Weighted average fair value

25.90 - $ 29.25

Dividend yield (%)

Expected volatility of stock (%)

33.73 - 34.06

Risk-free interest rate (%)

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Weighted average exercise price per share

79.66 - $ 82.73

Stock Based Compensation Grants

During the thirteen weeks ended August 28, 2022, we granted 0.3 million, 0.3 million, and 0.6 million RSUs, Performance Shares, and stock options, respectively, at an average grant date fair value of $ 79.47 , $ 92.85 , and $ 25.90 , respectively.

During the twenty-six weeks ended November 27, 2022, we granted 0.4 million, 0.3 million, and 0.6 million RSUs, Performance Shares, and stock options, respectively, at an average grant date fair value of $ 79.48 , $ 92.83 , and $ 25.93 , respectively.

Compensation Expense

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Thirteen Weeks Ended

Twenty-Six Weeks Ended

(in millions)

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(a) Income tax benefit represents the marginal tax rate, excluding non-deductible compensation.

Based on estimates at August 28, 2022, total unrecognized compensation expense related to stock-based awards was as follows:

Based on estimates at November 27, 2022, total unrecognized compensation expense related to stock-based awards was as follows:

(in millions, except data in years)

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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 August 28, 2022

As of November 27, 2022

(in millions)

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Derivative assets (a)

Derivative liabilities (a)

Deferred compensation liabilities (b)

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Fair value, net

(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.

(a) Derivative assets included in Level 2 primarily represent commodity swaps, option contracts, and currency contracts.

The fair values of our Level 2 derivative assets 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” 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.

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Deferred compensation liabilities are primarily presented within “Other noncurrent liabilities” on our Consolidated Balance Sheets.

At August 28, 2022, we had $ 2,170.0 million of fixed-rate and $ 587.6 million of variable-rate debt outstanding.

At November 27, 2022, we had $ 2,170.0 million of fixed-rate and $ 588.0 million of variable-rate debt outstanding.

Based on current market rates, the fair value of our fixed-rate debt was estimated to be $ 1,944.7 million.

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Our Board of Directors authorized a program, with no expiration date, to repurchase up to $ 500.0 million of our common stock.

During the thirteen weeks ended August 28, 2022, we repurchased 404,476 shares for $ 28.4 million, or a weighted average price of $ 70.11 per share.

As of August 28, 2022, $ 240.6 million remained authorized for repurchase under the program.

During the thirteen weeks ended August 28, 2022, we paid $ 35.3 million of dividends to common stockholders.

On September 2, 2022, we paid $ 35.2 million of dividends to stockholders of record as of the close of business on August 5, 2022.

On September 28, 2022 , our Board of Directors declared a dividend of $ 0.245 per share of common stock.

The dividend will be paid on December 2, 2022 , to stockholders of record as of the close of business on November 4, 2022 .

During the thirteen weeks ended November 27, 2022, there were no share repurchases.

During the twenty-six weeks ended November 27, 2022, we repurchased 404,476 shares for an aggregate purchase price of $ 28.4 million, or a weighted average price of $ 70.11 per share.

As of November 27, 2022, $ 240.6 million remained authorized for repurchase under the program.

During the twenty-six weeks ended November 27, 2022, we paid $ 70.6 million of dividends to our common stockholders.

On December 2, 2022, we paid $ 35.2 million of dividends to stockholders of record as of the close of business on November 4, 2022.

On December 14, 2022 , our Board of Directors declared a dividend of $ 0.28 per share of common stock.

This dividend will be paid on March 3, 2023 , to stockholders of record as of the close of business on February 3, 2023 .

Accumulated Other Comprehensive Income (“AOCI”)

Changes in AOCI, net of taxes, as of August 28, 2022 were as follows:

Changes in AOCI, net of taxes, as of November 27, 2022 were as follows:

Post-Retirement

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(in millions)

Gains (Losses)

Income (Loss)

Balance as of May 29, 2022

Other comprehensive income before reclassifications, net of tax

Other comprehensive income (loss) before reclassifications, net of tax

Amounts reclassified out of AOCI, net of tax

Net current-period other comprehensive income (loss)

Balance as of August 28, 2022

Balance as of November 27, 2022

We have four operating segments, each of which is a reportable segment:

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Thirteen Weeks Ended

Twenty-Six Weeks Ended

(in millions)

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Advertising and promotion expenses (a)

Selling, general and administrative expenses

Selling, general and administrative expenses (c)

Income from operations

Interest expense, net

Interest expense, net (d)

Income tax expense

Equity method investment earnings (c)

Equity method investment earnings (loss) (e)

(a) Product contribution margin represents net sales less cost of sales and advertising and promotion expenses.

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(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) Equity method investment earnings for the thirteen weeks ended August 28, 2022 and August 29, 2021 include a $ 146.3 million and $ 5.0 million unrealized gain, respectively, related to mark-to-market adjustments associated with changes in natural gas and electricity derivatives as commodity markets in Europe have experienced significant volatility.

In July 2022, we acquired an additional 40 % interest in LWAMSA, increasing our total ownership from 50 % to 90 %.

See Note 6, Joint Venture Investments, for more information.

(c) Selling, general and administrative expenses for the thirteen and twenty-six weeks ended November 27, 2022 included a net $ 26.5 million gain related to actions taken to mitigate the effect of changes in currency rates on the pending purchase of the remaining ownership interest in LWM, net of other acquisition-related costs.

(d) The thirteen and twenty-six weeks ended November 28, 2021 included 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 our outstanding 4.625 % senior notes due 2024 and 4.875 % senior notes due 2026, and the write-off of $ 13.7 million of previously unamortized debt issuance costs associated with those notes.

(e) E quity method investment earnings (loss) included a $ 136.8 million unrealized loss and a $ 6.3 million unrealized gain for the thirteen weeks ended November 27, 2022 and November 28, 2021, respectively;

and a $ 9.5 million and $ 11.3 million unrealized gain for the twenty-six weeks ended November 27, 2022 and November 28, 2021, respectively, related to mark-to-market adjustments associated with changes in natural gas and electricity derivatives as commodity markets in Europe have experienced significant volatility.

Equity method investment earnings for the twenty-six weeks ended November 27, 2022 also included a $ 15.1 million gain recognized in connection with our acquisition of an additional 40 % interest in our Argentina joint venture, increasing our ownership from 50 % to 90 %.

COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS

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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 14, Commitments, Contingencies, Guarantees, and Legal Proceedings, of the Notes to Consolidated Financial Statements in “Part II, Item 8.

Except for the agreement to acquire the remaining interest in LWM for consideration of € 525.0 million in cash and € 175.0 million in shares of our common stock discussed in Note 6, Joint Venture Investments, there have been no material changes to the commitments, contingencies, guarantees and legal proceedings disclosed in Note 14, 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 matters that are pending or threatened will not have a material adverse effect on our financial condition, results of operations, or cash flows.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements