What changed in this filing

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Item 1. Financial Statements

2024-01-04 compared with 2023-10-05 · 153 added, 71 removed, 288 unchanged (44% of the section changed)

4 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Cost of sales

4 unchanged sentences

Income tax expense

Equity method investment earnings

Equity method investment earnings (loss)

Earnings per share:

6 unchanged sentences

Thirteen Weeks Ended

August 27, 2023

August 28, 2022

November 26, 2023

November 27, 2022

Other comprehensive income (loss):

Unrealized pension and post-employment benefit obligations

Unrealized pension and post-retirement benefit obligations loss

Unrealized currency translation gains (losses)

Comprehensive income

Twenty-Six Weeks Ended

November 26, 2023

November 27, 2022

Other comprehensive income (loss):

Unrealized pension and post-retirement benefit obligations loss

Unrealized currency translation gains (losses)

Comprehensive income

See Condensed Notes to Consolidated Financial Statements.

29 unchanged sentences

Retained earnings

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Total stockholders’ equity

4 unchanged sentences

(unaudited, in millions, except share data )

Thirteen Weeks Ended August 27, 2023 and August 28, 2022

Thirteen Weeks Ended November 26, 2023 and November 27, 2022

Common Stock,

4 unchanged sentences

Income (Loss)

Balance at May 28, 2023

Balance at August 27, 2023

Dividends declared, $ 0.280 per share

2 unchanged sentences

Repurchase of common stock and common stock withheld to cover taxes

( 1,124,432 )

Comprehensive income

Balance at November 26, 2023

Balance at August 28, 2022

Dividends declared, $ 0.245 per share

Common stock issued

Stock-settled, stock-based compensation expense

Repurchase of common stock and common stock withheld to cover taxes

Comprehensive income (loss)

Balance at November 27, 2022

Twenty-Six Weeks Ended November 26, 2023 and November 27, 2022

Common Stock,

net of Treasury

(Distributed)

Comprehensive

Stockholders’

Income (Loss)

Balance at May 28, 2023

3 unchanged sentences

Repurchase of common stock and common stock withheld to cover taxes

( 1,698,691 )

Comprehensive income

Balance at August 28, 2022

Balance at November 26, 2023

Balance at May 29, 2022

Dividends declared, $ 0.490 per share

Common stock issued

Stock-settled, stock-based compensation expense

Repurchase of common stock and common stock withheld to cover taxes

Comprehensive income (loss)

Balance at November 27, 2022

See Condensed Notes to Consolidated Financial Statements.

2 unchanged sentences

(unaudited, in millions)

Thirteen Weeks Ended

Twenty-Six Weeks Ended

Cash flows from operating activities

4 unchanged sentences

Deferred income taxes

Foreign currency remeasurement gain

Changes in operating assets and liabilities, net of acquisitions:

7 unchanged sentences

Additions to other long-term assets

Acquisition of interests in joint ventures, net

Acquisition of interests in joint venture, net

Acquisition of business, net of cash acquired

Net cash used for investing activities

Cash flows from financing activities

Proceeds from short-term borrowings, net

Proceeds from issuance of debt

Repayments of short-term borrowings, net

Repayments of debt and financing obligations

12 unchanged sentences

(“we,” “us,” “our,” the “Company,” or “Lamb Weston”) is a leading global producer, distributor, and marketer of value-added frozen potato products and is headquartered in Eagle, Idaho.

We have two reportable segments:

Beginning in fiscal 2024, in connection with our recent acquisitions and to align with our expanded global footprint, we began managing our operations in two reportable segments:

North America and International.

1 unchanged sentence

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements present the financial results of Lamb Weston for the thirteen weeks ended August 27, 2023 and August 28, 2022, 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 and its consolidated subsidiaries for the thirteen and twenty-six weeks ended November 26, 2023 and November 27, 2022, 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.

3 unchanged sentences

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 28, 2023 (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 25, 2023.

Effective May 29, 2023, in connection with our recent acquisitions and to align with our expanded global footprint, we began managing our operations in two reportable segments, North America and International, as further described in Note 12, Segments.

We filed the Form 10-K with the Securities and Exchange Commission (“SEC”) on July 25, 2023.

Certain amounts from prior period consolidated financial statements have been reclassified to conform with current period presentation.

There were no accounting pronouncements recently issued that had or are expected to have a material impact on our consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements:

Codification Amendments in Response to the Securities and Exchange Commission’s Disclosure Update and Simplification Initiati ve.

The amendments in this update modify the disclosure or presentation requirements of a variety of Topics in the Accounting Standards Codification (“ASC”) in response to the SEC’s Release No.

33-10532, Disclosure Update and Simplification Initiative , and align the ASC’s requirements with the SEC’s regulations.

The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective.

However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective.

Early adoption is prohibited.

We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.

The ASU is effective for our Annual Report on Form 10-K for the fiscal year ending May 25, 2025, and subsequent interim periods, with early adoption permitted.

We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , to enhance transparency and decision usefulness of income tax disclosures.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis, with early adoption permitted.

We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

There were no other accounting pronouncements recently issued that had or are expected to have a material impact on our consolidated financial statements.

EARNINGS PER SHARE

1 unchanged sentence

Thirteen Weeks Ended

Twenty-Six Weeks Ended

(in millions, except per share amounts)

4 unchanged sentences

(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 27, 2023, 0.2 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive.

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.

Income tax expense for the thirteen weeks ended August 27, 2023 and August 28, 2022 was as follows:

As of November 26, 2023, 0.7 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive.

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.

Income tax expense for the thirteen and twenty-six weeks ended November 26, 2023 and November 27, 2022 was as follows:

Thirteen Weeks Ended

Twenty-Six Weeks Ended

(in millions)

Income before income taxes and equity method earnings

Equity method investment earnings

Equity method investment earnings (loss)

Income tax expense

4 unchanged sentences

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

Excluding the impact of the following items, our effective tax rate was 23.1 % for the thirteen weeks ended August 27, 2023:

● Integration and acquisition-related expenses recognized in connection with our acquisition of the remaining 50 % equity interest (the “LW EMEA Acquisition”) in Lamb-Weston/Meijer v.o.f., our former European joint venture (“LW EMEA”).

● The step-up and sale of inventory related to the LW EMEA Acquisition.

● Mark-to-market adjustments associated with changes in commodity and currency derivatives.

● Foreign currency exchange losses.

Excluding the impact of mark-to-market adjustments associated with changes in commodity and currency derivatives, our effective tax rate was 25.0 % for the thirteen weeks ended August 28, 2022.

Income Taxes Paid

Income taxes paid, net of refunds, were $ 4.2 million during the thirteen weeks ended August 27, 2023.

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

Income taxes paid, net of refunds, were $ 101.1 million and $ 92.1 million during the twenty-six weeks ended November 26, 2023 and November 27, 2022, 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:

15 unchanged sentences

Property, plant and equipment, net

Depreciation expense was $ 65.9 million and $ 47.3 million for the thirteen weeks ended August 27, 2023 and August 28, 2022, respectively.

At August 27, 2023 and May 28, 2023, purchases of property, plant and equipment included in accounts payable were $ 159.3 million and $ 82.6 million, respectively.

Interest capitalized within construction in progress for the thirteen weeks ended August 27, 2023 and August 28, 2022, was $ 10.5 million and $ 2.0 million, respectively.

Depreciation expense was $ 66.5 million and $ 49.7 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively;

and $ 132.4 million and $ 97.0 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively.

At November 26, 2023 and May 28, 2023, purchases of property, plant and equipment included in accounts payable were $ 188.7 million and $ 82.6 million, respectively.

Interest capitalized within construction in progress for the thirteen weeks ended November 26, 2023 and November 27, 2022, was $ 13.0 million and $ 4.1 million, respectively;

and $ 23.5 million and $ 6.1 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively.

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

The following table presents changes in goodwill balances, by segment, during the thirteen weeks ended August 27, 2023:

The following table presents changes in goodwill balances, by segment, for the twenty-six weeks ended November 26, 2023:

(in millions)

3 unchanged sentences

Foreign currency translation adjustment

Balance at August 27, 2023

(a) As a result of our change in segments, effective May 29, 2023, goodwill was reassigned to the North America and International segments based on relative fair value using a market approach.

Balance at November 26, 2023

(a) As a result of our change in segments, effective May 29, 2023, goodwill was reassigned to the North America and International segments based on relative fair value using a market-based approach.

Before and after the reassignment of our goodwill, we completed impairment assessments and concluded there were no indications of impairment in our segments.

1 unchanged sentence

Other identifiable intangible assets were as follows:

August 27, 2023

November 26, 2023

(in millions, except useful lives)

3 unchanged sentences

(b) Amortizing intangible assets are principally composed of licensing agreements, brands, and customer relationships.

Amortization expense, including developed technology amortization expense, was $ 2.7 million and $ 1.4 million for the thirteen weeks ended August 27, 2023 and August 28, 2022, respectively.

Amortization expense, including developed technology amortization expense, was $ 2.6 million and $ 1.5 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively;

and $ 5.3 million and $ 2.9 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively.

Foreign intangible assets are affected by foreign currency translation.

9 unchanged sentences

Accrued trade promotions

Taxes payable

Dividends payable to shareholders

Taxes payable

Accrued interest

Current portion of operating lease obligations

Derivative liabilities and payables

Accrued interest

Plant utilities and accruals

3 unchanged sentences

(in millions)

August 27, 2023

November 26, 2023

Interest Rate

23 unchanged sentences

We have received and expect to continue receiving patronage dividends under all three term loan facilities.

(c) Excludes debt issuance costs of $ 2.3 million and $ 2.5 million as of August 27, 2023 and May 28, 2023, respectively, related to our U.S.

(c) Excludes debt issuance costs of $ 2.1 million and $ 2.5 million as of November 26, 2023 and May 28, 2023, respectively, related to our U.S.

revolving credit facility, which are recorded in “Other assets” on our Consolidated Balance Sheets.

As of August 27, 2023, we had no borrowings outstanding under our U.S.

As of November 26, 2023, we had $ 175.0 million of borrowings outstanding under our U.S.

revolving credit facility and $ 819.6 million of availability under the facility, which is net of outstanding letters of credit of $ 5.4 million.

For the thirteen weeks ended August 27, 2023 and August 28, 2022, we paid $ 56.9 million and $ 56.8 million of interest on debt, respectively.

For the twenty-six weeks ended November 26, 2023 and November 27, 2022, we paid $ 89.4 million and $ 76.6 million of interest on debt, respectively.

For more information about 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.

3 unchanged sentences

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 27, 2023

As of November 26, 2023

(in millions)

17 unchanged sentences

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

As of August 27, 2023, we had $ 2,170.0 million of fixed-rate and $ 1,291.9 million of variable-rate debt outstanding.

As of November 26, 2023, we had $ 2,170.0 million of fixed-rate and $ 1,448.5 million of variable-rate debt outstanding.

Based on current market rates, the fair value of our fixed-rate debt was estimated to be $ 1,946.8 million.

3 unchanged sentences

Share Repurchase Program

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 27, 2023, we repurchased 992,365 shares for an aggregate purchase price of $ 100.0 million, or a weighted-average price of $ 100.77 per share.

As of August 27, 2023, $ 123.9 million remained authorized for repurchase under the program.

During the thirteen weeks ended August 27, 2023, we paid $ 40.8 million of dividends to our common stockholders.

On September 1, 2023, we paid $ 40.8 million of dividends to stockholders of record as of the close of business on August 4, 2023.

On September 28, 2023 , our Board of Directors declared a dividend of $ 0.28 per share of our common stock.

This dividend will be paid on December 1, 2023 , to stockholders of record as of the close of business on November 3, 2023 .

On October 11, 2023, we announced that our Board of Directors increased our share repurchase authorization to an aggregate amount of $ 500.0 million, including approximately $ 124.0 million of remaining unused capacity under the Board’s previous share repurchase authorization.

The program has no expiration date.

During the thirteen weeks ended November 26, 2023, we repurchased 571,986 shares for an aggregate purchase price of $ 50.0 million, or a weighted-average price of $ 87.41 per share.

During the twenty-six weeks ended November 26, 2023, we repurchased 1,564,351 shares for an aggregate purchase price of $ 150.0 million, or a weighted-average price of $ 95.89 per share.

As of November 26, 2023, $ 450.0 million remained authorized for repurchase under the program.

During the twenty-six weeks ended November 26, 2023, we paid $ 81.6 million of cash dividends to our common stockholders.

In addition, on December 1, 2023, we paid $ 40.4 million of cash dividends to common stockholders of record as of the close of business on November 3, 2023.

On December 14, 2023 , our Board of Directors declared a cash dividend of $ 0.36 per share of our common stock.

This dividend will be paid on March 1, 2024 , to common stockholders of record as of the close of business on February 2, 2024 .

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), net of taxes, as of August 27, 2023 were as follows:

Changes in accumulated other comprehensive income (loss), net of taxes, as of November 26, 2023 were as follows:

Post-Retirement

1 unchanged sentence

(in millions)

Income (Loss)

Balance as of May 28, 2023

1 unchanged sentence

Net current-period other comprehensive income

Balance as of August 27, 2023

Effective May 29, 2023, to align with our expanded global footprint following the completion of the LW EMEA Acquisition, management, including our chief executive officer (who is our chief operating decision maker), began managing operations in two business segments based on management’s change to the way it monitors performance, aligns strategies, and allocates resources.

Balance as of November 26, 2023

Effective May 29, 2023, to align with our expanded global footprint following the completion of our acquisition of the remaining 50 % equity interest in Lamb-Weston/Meijer v.o.f., our former European joint venture (“LW EMEA”), management, including our chief executive officer (who is our chief operating decision maker), began managing operations in two business segments based on management’s change to the way it monitors performance, aligns strategies, and allocates resources.

As a result of this change, we now have two operating segments, each of which is a reportable segment:

3 unchanged sentences

Thirteen Weeks Ended

Twenty-Six Weeks Ended

(in millions)

2 unchanged sentences

International (a)

Thirteen Weeks Ended August 27, 2023

Thirteen Weeks Ended November 26, 2023

North America

International (a)

Unallocated Corporate Costs (c)

Unallocated Corporate Costs (b)

Total Company

Adjusted EBITDA (c)

Unrealized derivative losses

Foreign currency exchange gains

Items impacting comparability:

Inventory step-up from acquisition

Integration and acquisition-related items, net

Depreciation and amortization (d)

Income (loss) from operations including equity method investment earnings

Interest expense, net

Income tax expense

Thirteen Weeks Ended November 27, 2022

Adjusted EBITDA

Unrealized derivative losses (gains)

Unrealized derivative gains

Foreign currency exchange losses

Unconsolidated joint venture unrealized derivative losses

Item impacting comparability:

Integration and acquisition-related items, net

Depreciation and amortization (d)

Income (loss) from operations including equity method investment earnings

Interest expense, net

Income tax expense

Twenty-Six Weeks Ended November 26, 2023

North America

International (a)

Unallocated Corporate Costs (b)

Total Company

Adjusted EBITDA (c)

Unrealized derivative gains

Foreign currency exchange gains

Items impacting comparability:

5 unchanged sentences

Income tax expense

Thirteen Weeks Ended August 28, 2022

Twenty-Six Weeks Ended November 27, 2022

Adjusted EBITDA

1 unchanged sentence

Foreign currency exchange losses

Unconsolidated joint venture unrealized derivative losses (gains)

Item impacting comparability:

Gain on acquisition of interest in joint ventures (b)

Unconsolidated joint venture unrealized derivative gains

Items impacting comparability:

Integration and acquisition-related items, net

Gain on acquisition of interest in joint ventures (e)

Depreciation and amortization (d)

Income from operations including equity method investment earnings

Income (loss) from operations including equity method investment earnings

Interest expense, net

1 unchanged sentence

(a) We acquired the remaining interest in LW EMEA in the fourth quarter of fiscal 2023.

Accordingly, LW EMEA’s adjusted EBITDA is reported in the International segment for the thirteen weeks ended August 27, 2023, whereas in the same period in the prior year, our 50 % equity interest in LW EMEA was recorded using equity method accounting.

As a result, only 50 % of LW EMEA’s adjusted EBITDA is reported in the International segment for the thirteen weeks ended August 28, 2022.

(b) The thirteen weeks ended August 28, 2022 included a $ 15.1 million (before and after-tax) gain recognized in connection with our acquisition of an additional 40 % equity interest in Lamb Weston Alimentos Modernos S.A.

(“LWAMSA”) in July 2022.

This gain related to remeasuring our previously held 50 % equity interest to fair value, recorded in “Equity method investment earnings” in the Consolidated Statements of Earnings, and is excluded from the financial results of our International segment.

(c) Unallocated corporate costs included costs related to corporate support staff and support services, foreign exchange gains and losses and unrealized mark-to-market derivative gains and losses.

Accordingly, LW EMEA’s adjusted EBITDA is reported in the International segment for the thirteen and twenty-six weeks ended November 26, 2023, whereas in the same period in the prior year, our 50 % equity interest in LW EMEA was recorded using equity method accounting.

As a result, only 50 % of LW EMEA’s adjusted EBITDA is reported in the International segment for the thirteen and twenty-six weeks ended November 27, 2022.

(b) Unallocated corporate costs included costs related to corporate support staff and support services, foreign exchange gains and losses and unrealized mark-to-market derivative gains and losses.

Support services include, but are not limited to, our administrative, information technology, human resources, finance, and accounting functions that are not specifically allocated to the segments.

Unallocated corporate costs for the thirteen weeks ended August 27, 2023 included unallocated corporate costs of LW EMEA whereas in the same period in the prior year, our portion of LW EMEA’s unallocated corporate costs were recorded in “Equity method investment earnings” in the International segment

(d) Depreciation and amortization included interest expense, income tax expense, and depreciation and amortization from equity method investments of $ 2.2 million and $ 8.9 million for the thirteen weeks ended August 27, 2023 and August 28, 2022, respectively.

Unallocated corporate costs for the thirteen and twenty-six weeks ended November 26, 2023 included unallocated corporate costs of LW EMEA, whereas in the same period in the prior year, our portion of LW EMEA’s unallocated corporate costs were recorded in “Equity method investment earnings” in the Consolidated Statements of Earnings in the International segment.

(c) The thirteen and twenty-six weeks ended November 26, 2023 included a $ 70.9 million charge ( $ 53.9 million after-tax, or $ 0.37 per share) related to a write-off of excess raw potatoes.

The total charge to the reporting segments was as follows:

$ 63.3 million to the North America segment and $ 7.6 million to the International segment.

(d) Depreciation and amortization included interest expense, income tax expense, and depreciation and amortization from equity method investments of $ 2.1 million and $ 8.6 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively;

and $ 4.3 million and $ 17.6 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively.

(e) The twenty-six weeks ended November 27, 2022 included a $ 15.1 million (before and after-tax) gain recognized in connection with our acquisition of an additional 40 % equity interest in Lamb Weston Alimentos Modernos S.A.

(“LWAMSA”) in July 2022.

This gain related to remeasuring our previously held 50 % equity interest in LWAMSA to fair value, recorded in “Equity method investment earnings” in the Consolidated Statements of Earnings, and is excluded from the financial results of our International segment.

COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS

4 unchanged sentences

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