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Lamb Weston

Lamb WestonLW财报

NYSE · Consumer Staples · Packaged Foods & Meats

Lamb Weston Holdings, Inc. is an American food processing company that is one of the world's largest producers and processors of frozen french fries, waffle fries, and other frozen potato products. It is headquartered in Eagle, Idaho, a suburb of Boise.

What changed in Lamb Weston's 10-K — 2023 vs 2024

Top changes in Lamb Weston's 2024 10-K

375 paragraphs added · 331 removed · 251 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

69 edited+9 added−12 removed31 unchanged
Annually, we make cash grants through the Lamb Weston Foundation, including through our Pay it Forward program, which gives our employees a role in directing some of the Foundation’s funds. In addition, we offer a matching gifts program to employees, paid volunteer time off, non-profit board service grants, and an employee dependent scholarship program.
Annually, we make cash grants through the Lamb Weston Foundation, including through our Pay it Forward program, which gives our employees a role in directing some of the Foundation’s funds. In addition, we offer a matching gifts program to employees and directors, paid volunteer time off, non-profit board service grants, and an employee dependent scholarship program.
Miller was a key sales and business leader within Lamb Weston in both the U.S. and Canada. She also has held various sales positions with North American food manufacturers and foodservice distributors. ​ Sukshma Rajagopalan has served as our Chief Information and Digital Officer since June 2023. Ms.
Miller was a key sales and business leader within Lamb Weston in both the U.S. and Canada. She also has held various sales positions with other North American food manufacturers and foodservice distributors. Sukshma Rajagopalan has served as our Chief Information and Digital Officer since June 2023. Ms.
Madarieta has more than 25 years of finance management and leadership experience spanning public and privately held companies and Big 4 public accounting firms. ​ Sharon L. Miller has served as our President, North America since May 29, 2023.
Madarieta has more than 25 years of finance management and leadership experience spanning public and privately held companies and Big 4 public accounting firms. Sharon L. Miller has served as our President, North America since May 2023.
Prior to that, he spent more than 14 years at PepsiCo, Inc., a food and beverage company, and held various operating, commercial and corporate leadership roles, including Senior Vice President Global Nutrition Group from August 2014 to January 2016, Vice President Global Grains (Quaker) from September 2012 to July 2014 and General Manager of Frito-Lay in Russia from October 2009 to August 2012. ​ Michael J.
Prior to that, he spent more than 14 years at PepsiCo, Inc., a food and beverage company, and held various operating, commercial and corporate leadership roles, including Senior Vice President Global Nutrition Group from August 2014 to January 2016, Vice President Global Grains (Quaker) from September 2012 to July 2014 and General Manager of Frito-Lay in Russia from October 2009 to August 2012.
We typically hold 50 to 90 days of finished goods inventory on a first-in-first-out basis, so the costs incurred from our fiscal second quarter harvest, which are generally favorable, will flow through our income statement in our fiscal third quarter. Inventory levels also tend to be higher in our fiscal third quarter, requiring more working capital at that time.
We typically hold 50 to 60 days of finished goods inventory on a first-in-first-out basis, so the costs incurred from our fiscal second quarter harvest, which are generally favorable, will flow through our income statement in our fiscal third quarter. Inventory levels also tend to be higher in our fiscal third quarter, requiring more working capital at that time.
In addition, the Nutrition Label Reform Act of 2016 and regulations promulgated thereunder by the FDA prescribe the format and content in which specific nutrition information is required to appear on the labels of food products. We are also subject to regulation by certain other governmental agencies, including the U.S.
In addition, the Nutrition Label Reform Act of 2016 and regulations promulgated thereunder by the FDA prescribe the format and content in which specific nutrition information is required to appear on the labels of food products. We are also subject to regulation by certain other governmental agencies, including the U.S. Department of Agriculture.
We also evaluate the sustainability impacts of our manufacturing processes and products in our research and development activities and continue to drive processing innovations aimed at reducing waste and water usage and improving food safety and quality. ​ Trademarks, Licenses and Patents ​ Our trademarks are material to our business and are protected by registration or other means in the U.S. and most other geographic markets where the related food items are sold.
We also evaluate the sustainability impacts of our manufacturing processes and products in our research and development activities and continue to drive processing innovations aimed at reducing waste and water usage and improving food safety and quality. 4 Table of Contents Trademarks, Licenses and Patents Our trademarks are material to our business and are protected by registration or other means in the U.S. and most other geographic markets where the related food items are sold.
The information on our website is not, and shall not be deemed to be, a part of this Form 10-K or incorporated into any other filings we make with the SEC unless expressly noted in other such filings. ​
The information on our website is not, and shall not be deemed to be, a part of this Form 10-K or incorporated into any other filings we make with the SEC unless expressly noted in other such filings. 10 Table of Contents
By paying close attention to the results of both surveys and implementing actions based on our findings, both at an aggregate enterprise level as well as at department, business, and work group levels, we believe that we have been able to enhance our workplace culture and improve overall employee engagement levels. ​ We are also committed to creating and building a culture of giving.
By paying close attention to the results of the surveys and implementing actions based on our findings, both at an aggregate enterprise level as well as at department, business, and work group levels, we believe that we have been able to enhance our workplace culture and improve overall employee engagement levels. 7 Table of Contents We are also committed to creating and building a culture of giving.
We also sell certain products, such as Grown in Idaho and Alexia , which we license from third parties. ​ We own numerous patents worldwide. We consider our portfolio of patents, patent applications, patent licenses, proprietary trade secrets, technology, know-how processes, and related intellectual property rights to be material to our operations.
We also sell certain products in connection with marks such as Grown in Idaho and Alexia , which we license from third parties. We own numerous patents worldwide. We consider our portfolio of patents, patent applications, patent licenses, proprietary trade secrets, technology, know-how processes, and related intellectual property rights to be material to our operations.
Werner served as Senior Vice President of Finance for Conagra’s Private Brands and Commercial Foods operating segments from June 2013 to April 2015, and Senior Vice President of Finance for Lamb Weston from May 2011 until June 2013. ​ 9 Table of Contents Bernadette M. Madarieta has served as our Chief Financial Officer since August 2021.
Werner served as Senior Vice President of Finance for Conagra’s Private Brands and Commercial Foods operating segments from June 2013 to April 2015, and Senior Vice President of Finance for Lamb Weston from May 2011 until June 2013. Bernadette M. Madarieta has served as our Chief Financial Officer since August 2021.
Smith has served as our Chief Operating Officer since May 29, 2023. Prior to that, he served as Senior Vice President and General Manager of Foodservice, Retail, Marketing and Innovation since April 2018 and Senior Vice President, Growth and Strategy from September 2016 until March 2018. Mr.
Michael J. Smith has served as our Chief Operating Officer since May 2023. Prior to that, he served as Senior Vice President and General Manager of Foodservice, Retail, Marketing and Innovation since April 2018 and Senior Vice President, Growth and Strategy from September 2016 until March 2018. Mr.
Depending on the country, trademarks generally remain valid for as long as they are in use and their registrations are maintained. Trademark registrations generally are for renewable, fixed terms.
Depending on the country, trademarks generally remain valid for as long as they are in use or their registrations are maintained. Trademark registrations generally are for renewable, fixed terms.
Similar to our fiscal 2022 engagement survey, our executive leadership team reviewed the results of the survey and shared those results with our Compensation and Human Capital Committee.
Similar to our fiscal 2024 engagement survey, our executive leadership team reviewed the results of the survey and shared those results with our Compensation and Human Capital Committee.
Smith held various brand management roles at Dean Foods Company, a food and beverage company, and its WhiteWave division from May 2003 until December 2007. ​ 10 Table of Contents Eryk J. Spytek has served as our General Counsel and Chief Compliance Officer since October 2016.
Smith held various brand management roles at Dean Foods Company, a food and beverage company, and its WhiteWave division from May 2003 until December 2007. Eryk J. Spytek has served as our General Counsel and Chief Compliance Officer since October 2016.
(“LWAMSA”), our joint venture in Argentina, and, in February 2023, we acquired the remaining equity interest in LW EMEA, our joint venture in Europe. With the completion of the transactions, we own 90 percent and 100 percent of the equity interests in LWAMSA and LW EMEA, respectively.
(“LWAMSA”), our joint venture in Argentina. In addition, in February 2023, we acquired the remaining 50% equity interest in LW EMEA, our joint venture in Europe. With the completion of the transactions, we own 90% and 100% of the equity interests in LWAMSA and LW EMEA, respectively.
No other customer accounted for more than 10% of our fiscal 2023, 2022, or 2021 consolidated net sales. ​ Research and Development ​ We leverage our research and development resources for both growth and efficiency initiatives.
No other customer accounted for more than 10% of our consolidated net sales in fiscal 2024, 2023, or 2022. Research and Development We leverage our research and development resources for both growth and efficiency initiatives.
We are the number one supplier of value-added frozen potato products in North America and a leading supplier of value-added frozen potato products internationally, with a strong presence in high-growth emerging markets. We offer a broad product portfolio to a diverse channel and customer base in over 100 countries.
We are the number one supplier of value-added frozen potato products in North America and a leading supplier of value-added frozen potato products internationally, with a strong presence in high-growth emerging markets. We offer a broad product portfolio to a diverse channel and customer base in over 100 countries. French fries represent most of our value-added frozen potato product portfolio.
Rivershore Lane, Eagle, Idaho 83616. ​ The information on our website is not, and shall not be deemed to be, a part of this Form 10-K or incorporated into any other filings we make with the SEC. ​ Food Safety and Labeling ​ We are subject to extensive regulation, including, among other things, the Food, Drug and Cosmetic Act, as amended by the Food Safety Modernization Act, the Public Health Security and Bioterrorism Preparedness and Response Act of 2002, and the rules and regulations promulgated thereunder by the U.S.
The information on our website is not, and shall not be deemed to be, a part of this Form 10-K or incorporated into any other filings we make with the SEC. 9 Table of Contents Food Safety and Labeling We are subject to extensive regulation, including, among other things, the Food, Drug and Cosmetic Act, as amended by the Food Safety Modernization Act, the Public Health Security and Bioterrorism Preparedness and Response Act of 2002, and the rules and regulations promulgated thereunder by the U.S.
Department of Agriculture. ​ Our operations and products are also subject to state and local regulation, including the registration and licensing of production facilities, enforcement by state health agencies of various state standards, and the registration and inspection of facilities. Compliance with federal, state, and local regulation is costly and time-consuming.
In addition, our operations and products are subject to state and local regulation, including the registration and licensing of production facilities, enforcement by state health agencies of various state standards, and the registration and inspection of facilities. Compliance with federal, state, and local regulation is costly and time-consuming.
All of these materials are available on our website at www.lambweston.com and will be provided free of charge to any stockholder requesting a copy by writing to: Corporate Secretary, Lamb Weston Holdings, Inc., 599 S.
These materials are available on our website at www.lambweston.com and will be provided free of charge to any stockholder requesting a copy by writing to: Corporate Secretary, Lamb Weston Holdings, Inc., 599 S. Rivershore Lane, Eagle, Idaho 83616.
We have long-tenured relationships with leading quick service and fast casual restaurant chains, global foodservice distributors, large grocery retailers, and mass merchants. ​ Our largest customer, McDonald’s Corporation, accounted for approximately 13%, 10%, and 11% of our consolidated net sales in fiscal 2023, 2022, and 2021, respectively. Sales to McDonald’s Corporation are included in our Global segment.
We have long-tenured relationships with leading quick service and fast casual restaurant chains, global foodservice distributors, large grocery retailers, and mass merchants. Our largest customer, McDonald’s Corporation, accounted for approximately 14%, 13%, and 10% of our consolidated net sales in fiscal 2024, 2023, and 2022, respectively.
Smith ​ Chief Operating Officer ​ 46 Eryk J. Spytek ​ General Counsel and Chief Compliance Officer ​ 55 Steven J. Younes ​ Chief Human Resources Officer ​ 57 ​ Thomas P. Werner has served as our President and Chief Executive Officer and a member of our board of directors since November 2016.
Smith Chief Operating Officer 47 Eryk J. Spytek General Counsel and Chief Compliance Officer 56 Steven J. Younes Chief Human Resources Officer 58 Thomas P. Werner has served as our President and Chief Executive Officer and a member of our Board since November 2016.
Our capital and operating budgets include costs and expenses associated with complying with these laws and other requirements. ​ Available Information ​ We make available, free of charge on our website at www.lambweston.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC.
Available Information We make available, free of charge on our website at www.lambweston.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC.
In general, our product contribution margin percentage tends to be highest in our fiscal third quarter, reflecting the cost benefit of freshly-harvested potatoes. We typically harvest potatoes in the Pacific Northwest of the U.S. and Europe in July through October, which is primarily in our fiscal second quarter.
In general, our segment adjusted EBITDA percentage tends to be highest in our fiscal third quarter, reflecting the cost benefits of freshly-harvested potatoes. We typically harvest potatoes in the Pacific Northwest of the U.S. and Europe in July through October, which is primarily in our fiscal second quarter.
Our significant trademarks include: Lamb Weston, Lamb Weston Supreme, Lamb Weston Seeing Possibilities in Potatoes (and design), Lamb Weston Seasoned, Lamb Weston Private Reserve, Lamb Weston Stealth Fries, Lamb Weston Colossal Crisp, Lamb Weston Crispy on Delivery, Lamb Weston Twisters, Lamb Weston Twister Fries, Lamb Weston Crisscuts, Sweet Things, and Butler.
Our significant trademarks include Lamb Weston, Lamb Weston Supreme, Lamb Weston Seeing Possibilities in Potatoes (and design), Lamb Weston Seasoned, Lamb Weston Private Reserve, Lamb Weston Stealth Fries, Lamb Weston Colossal Crisp, Lamb Weston Crispy on Delivery, Lamb Weston Twister Fries , and Lamb Weston CrissCut .
We sell our products through a network of internal sales personnel and independent brokers, agents, and distributors to chain restaurants, wholesale, grocery, mass merchants, club retailers, specialty retailers, and foodservice distributors and institutions, including businesses, educational institutions, independent restaurants, regional chain restaurants, and convenience stores.
Sales, Distribution and Customers We benefit from strong relationships with a diverse set of customers. We sell our products through a network of internal sales personnel and independent brokers, agents, and distributors to chain restaurants, wholesale, grocery, mass merchants, club retailers, specialty retailers, and foodservice distributors and institutions, including businesses, educational institutions, independent restaurants, regional chain restaurants, and convenience stores.
Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of this Form 10-K for further discussion. ​ Manufacturing ​ We operate 26 production facilities for our products. See "Item 2. Properties" for more information about our production facilities.
See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of this Form 10-K for a further discussion of these issues. Manufacturing We operate 27 production facilities for our products. See "Item 2. Properties" for more information about our production facilities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 13, Segments, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 13, 3 Table of Contents Segments, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K.
We provide all sales and marketing services to Lamb Weston RDO and receive a fee for these services based on a percentage of the net sales of the venture. 4 Table of Contents We account for our investment in Lamb Weston RDO under the equity method of accounting.
We provide all sales and marketing services to Lamb Weston RDO and receive a fee for these services based on a percentage of the net sales of the venture. We account for our investment in Lamb Weston RDO under the equity method of accounting. In July 2022, we acquired an additional 40% interest in Lamb Weston Alimentos Modernos S.A.
Prior to joining Avantor, she spent 15 years at PepsiCo, Inc., a food and beverage company, and held various information technology and digital leadership roles, most recently as Vice President, Global Applications from March 2018 to March 2020. ​ Gerardo Scheufler has served as our Chief Supply Chain Officer since August 2019.
Prior to joining Avantor, she spent 8 Table of Contents 15 years at PepsiCo, Inc., a food and beverage company, and held various information technology and digital leadership roles, most recently as Vice President, Global Applications from March 2018 to March 2020. Marc Schroeder has served as our President, International since May 2023. Mr.
We also regularly review our compensation practices to promote fair and equitable pay. In addition to base salaries, many employees also participate in an annual short-term incentive program and may also receive long-term equity awards.
In addition to base salaries, many employees also participate in an annual short-term incentive program and may also receive long-term equity awards.
Enforcement actions for violations of federal, state, and local regulations may include seizure and condemnation of products, cease and desist orders, injunctions, voluntary or mandatory recalls or market withdrawals of products, and monetary penalties.
Enforcement actions for violations of federal, state, and local regulations may include seizure and condemnation of products, cease and desist orders, injunctions, voluntary or mandatory recalls or market withdrawals of products, and monetary penalties. We believe that our practices are sufficient to maintain compliance with applicable government regulations.
See Note 13, Segments, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K for additional information on our U.S. and non-U.S. operations. Also see “Item 2. Properties,” for more information on our production and other facilities.
Financial Statements and Supplementary Data” of this Form 10-K for additional information on our U.S. and non-U.S. operations. Also see “Item 2. Properties,” for more information on our production and other facilities. For a discussion of risks related to our operations outside the U.S., see “Item 1A.
We believe that our practices are sufficient to maintain compliance with applicable government regulations. ​ 11 Table of Contents Environmental, Health and Safety Regulations ​ We are subject to a number of foreign, domestic, federal, state, and local laws and other regulations relating to the protection of human health, the environment and the safety and health of personnel.
Environmental, Health and Safety Regulations We are subject to a number of foreign, domestic, federal, state, and local laws and other regulations relating to the protection of human health, the environment and the safety and health of personnel.
The actual protection afforded by a patent, which can vary from country to country, depends upon the type of patent, the scope of its coverage as determined by the patent office or courts in the country, and the availability of legal remedies in the country. ​ 5 Table of Contents Raw Materials ​ Our primary raw materials are potatoes, edible oils, packaging, grains, starches, and energy inputs.
The actual protection afforded by a patent, which can vary from country to country, depends upon the type of patent, the scope of its coverage as determined by the patent office or courts in the country, and the availability of legal remedies in the country.
To understand employee sentiments, we conduct a bi-annual engagement survey of our global workforce. This survey was completed in fiscal 2022 and was administered and analyzed by an independent third-party. The survey results were then reviewed by our executive leadership team and our Compensation and Human Capital Committee of the Board of Directors.
This survey was completed in fiscal 2024 and was administered and analyzed by an independent third-party provider. The survey results were then reviewed by our executive leadership team and our Compensation and Human Capital Committee of the Board of Directors (the “Board”).
Risk Factors – Industry Risks – Increased competition may result in reduced sales or profits” of this Form 10-K. ​ 6 Table of Contents Seasonality ​ Our product contribution margin percentage, inventory levels, net sales, and cash flows are affected by seasonality.
Risk Factors – Industry Risks – Increased competition may result in reduced sales or profits” of this Form 10-K for further discussion of the risks associated with competition in our industry. Seasonality Our inventory levels, net sales, segment adjusted EBITDA, and cash flows are affected by seasonality.
Further, in fiscal 2023, we adopted a volunteer reward program that allows employees to provide monetary donations to organizations where they volunteer and established the Team Member Relief Fund to provide financial support to employees experiencing hardships such as catastrophic events, illness, domestic violence, and other unforeseen circumstances. ​ Information About Our Executive Officers ​ The following are our executive officers as of July 17, 2023: ​ ​ ​ ​ ​ ​ Name ​ Title ​ Age Thomas P.
Further, we have implemented a volunteer reward program that allows employees to provide monetary donations to organizations where they volunteer and established the Team Member Relief Fund to provide financial support to employees experiencing hardships such as catastrophic events, illness, domestic violence, and other unforeseen circumstances.
The Global segment’s product portfolio includes frozen potatoes and appetizers sold under the Lamb Weston brand, as well as many customer labels. ​ Foodservice ​ Our Foodservice segment includes frozen potato products sold throughout the U.S. and Canada to commercial distributors, restaurant chains generally outside the top 100 North American based restaurant chains, and non-commercial channels.
International Our International segment primarily includes frozen potato products sold outside of North America to quick service and full-service restaurant chains, foodservice distributors, non-commercial channels, and retailers. Our International segment’s product portfolio includes frozen potatoes, commercial ingredients, and appetizers sold under the Lamb Weston brand, as well as many customer labels.
In addition to our own production facilities, we source a portion of our products under “co-packing” agreements, a common industry practice in which manufacturing is outsourced to other companies.
In addition to our own production facilities, we source a portion of our products under “co-packing” agreements, a common industry practice in which manufacturing is outsourced to other companies. We regularly evaluate our co-packing arrangements to ensure the most cost-effective manufacturing of our products and to utilize company-owned production facilities most effectively.
We source a significant amount of our raw potatoes under both strategic, long-term grower relationships and short-term annual contracts. In the U.S., most of the potato crop used in our products is grown in Washington, Idaho, and Oregon. In Europe, growing regions for the necessary potatoes are concentrated in the Netherlands, Austria, Belgium, Germany, France, and the United Kingdom.
Raw Materials Our primary raw materials are potatoes, edible oils, packaging, grains, starches, and energy inputs. We source a significant amount of our raw potatoes under both strategic, long-term grower relationships and short-term annual contracts. In the U.S., most of the potato crop used in our products is grown in Washington, Idaho, and Oregon.
We regularly review our compensation and benefit programs with the aim of keeping them competitive and designed to meet our employees’ health and wellness needs, which we believe is important to attract and retain the best available talent. ​ Diversity, Equity, and Inclusion (“DEI”) ​ As a global company, we strive to honor and celebrate diversity in our team, which we believe enriches our work lives and drives diversity of perspectives in our decision-making as a company.
We regularly review our compensation and benefit programs with the aim of keeping them competitive and designed to meet our employees’ health and wellness needs, which we believe is important to attract and retain the best available talent.
We source edible oils through strategic relationships with key suppliers, and we source packaging and energy inputs through multiple suppliers under a variety of agreement types. ​ The prices paid for these raw materials, as well as other raw materials used in making our products, generally reflect factors such as weather, commodity market fluctuations, currency fluctuations, tariffs, and the effects of governmental agricultural programs.
The prices paid for these raw materials, as well as other raw materials used in making our products, generally reflect factors such as weather, commodity market fluctuations, currency fluctuations, tariffs, and the effects of governmental agricultural programs. The prices of raw materials can fluctuate as a result of these factors.
These requirements apply to a broad range of our activities, including: the regulation and discharge of pollutants into the air, land and water; the identification, generation, storage, handling, transportation, disposal, recordkeeping, labeling, spill prevention and reporting of, and emergency response in connection with, hazardous materials and chemical substances; noise and odor emissions from our facilities; and safety and health standards, practices, and procedures that apply to the workplace and the operation of our facilities. ​ In order to comply with these requirements, we may need to spend substantial amounts of money and other resources from time to time to: (i) construct or acquire new equipment, (ii) acquire or amend permits to authorize facility operations, (iii) modify, upgrade, or replace existing and proposed equipment, and (iv) clean up or decommission our facilities or other locations in accordance with regulatory requirements.
These requirements apply to a broad range of our activities, including: the regulation and discharge of pollutants into the air, land and water; the identification, generation, storage, handling, transportation, disposal, recordkeeping, labeling, spill prevention and reporting of, and emergency response in connection with, hazardous materials and chemical substances; noise and odor emissions from our facilities; and safety and health standards, practices, and procedures that apply to the workplace and the operation of our facilities.
We use recruitment vehicles, including partnerships with universities and communities, local and national organizations, and various social media outlets, to attract strong talent to our organization. Our leadership and people teams are responsible for attracting and retaining top talent by facilitating an environment where employees feel supported and encouraged in their professional and personal development.
Our leadership and people teams are responsible for attracting and retaining top talent by facilitating an environment where employees feel supported and encouraged in their professional and personal development.
We will disclose any waiver we grant to our Chief Executive Officer, Chief Financial Officer, or Controller under our codes, or certain amendments to the codes, on our website at www.lambweston.com. ​ In addition, we adopted Corporate Governance Principles and charters for the Audit and Finance Committee, Nominating and Corporate Governance Committee, and Compensation and Human Capital Committee.
These codes are available on our website at www.lambweston.com through the “Investors – Corporate Governance” link. We will disclose any waiver we grant to our Chief Executive Officer, Chief Financial Officer, or Controller under our codes, or certain amendments to the codes, on our website at www.lambweston.com.
We are committed to equal pay for equal work, regardless of gender, race, ethnicity, or other personal characteristics. As part of this commitment, we benchmark and set pay ranges based on market data and consider various factors such as an employee’s role and experience, job location, and performance.
As part of this commitment, we benchmark and set pay ranges based on market data and consider various factors such as an employee’s role and experience, job location, and performance. We also regularly review our 6 Table of Contents compensation practices to promote fair and equitable pay.
We strive for world-class safety at every one of our facilities. This means we continuously focus on creating a zero-incident culture, where every employee goes home every day, accident free. To help achieve this goal, we foster safety leadership throughout the organization as part of our comprehensive environment, health, safety, and sustainability management system.
As the agreements expire, we believe they will be renegotiated on terms satisfactory to the parties. Health and Safety Our employees’ health, safety, and well-being are our highest priority. We strive for world-class safety at each of our facilities. This means we continuously focus on creating a zero-incident culture, where every employee goes home every day, accident free.
This joint venture’s financial results are consolidated in our financial statements. ​ For more information, see Note 4, Joint Venture Investments, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K. ​ Sales, Distribution and Customers ​ We benefit from strong relationships with a diverse set of customers.
Prior to their respective acquisitions, we accounted for our investments in LW EMEA and LWAMSA under the equity method of accounting. For more information, see Note 12, Joint Venture Investments, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K.
In addition, with both in-person and our e-learning resources, employees can also focus on timely and topical development areas, including leadership capabilities, management excellence, functional skill building, and DEI. ​ 8 Table of Contents Employee Engagement ​ We believe that having a workplace culture that supports and values all employees is critical to our success.
We also hold courses focused on leadership development for employees and people leaders across our global organization. In addition, with both in-person and our e-learning resources, employees can also focus on timely and topical development areas, including leadership capabilities, management excellence, functional skill building, and DEI.
Some of our competitors are larger and have substantially more financial, sales and marketing, and other resources than us. We compete with producers of similar products on the basis of, among other things, customer service, value, product innovation, product quality, brand recognition and loyalty, price, and the ability to identify and satisfy customer preferences.
We compete with producers of similar products on the basis of, among other things, customer service, value, product innovation, product quality, brand recognition and loyalty, price, and the ability to identify and satisfy customer and consumer preferences. The markets in which we operate are expected to remain highly competitive for the foreseeable future. See also “Item 1A.
We seek to mitigate higher input costs through long-term relationships, contract strategies, and hedging activities where an active market for an input exists, as well as through our pricing and productivity initiatives. See “Part II, Item 7.
During fiscal 2024, we continued to face increased costs for the primary raw materials for our products, including potatoes, edible oils, packaging, grains, starches, and energy inputs. We seek to mitigate higher input costs through long-term relationships, contracting strategies, and hedging activities where an active market for an input exists, as well as through our pricing and productivity initiatives.
As of July 17, 2023, approximately 30% of our employees are parties to collective bargaining agreements with terms that we believe are typical for the industry in which we operate. Most of the union workers at our facilities are represented under contracts that expire at various times over the next several years.
As of July 17, 2024, we had approximately 10,700 employees, of which approximately 2,900 employees work outside of the U.S. As of July 17, 2024, approximately 30% of our employees are parties to collective bargaining agreements with terms that we believe are typical for the industry in which we operate.
Werner ​ Director, President and Chief Executive Officer ​ 57 Bernadette M. Madarieta ​ Chief Financial Officer ​ 48 Sharon L. Miller ​ President, North America ​ 57 Sukshma Rajagopalan ​ Chief Information and Digital Officer ​ 49 Gerardo Scheufler ​ Chief Supply Chain Officer ​ 55 Marc Schroeder ​ President, International ​ 52 Michael J.
Information About Our Executive Officers The following are our executive officers as of July 17, 2024: Name Title Age Thomas P. Werner Director, President and Chief Executive Officer 58 Bernadette M. Madarieta Chief Financial Officer 49 Sharon L. Miller President, North America 58 Sukshma Rajagopalan Chief Information and Digital Officer 50 Marc Schroeder President, International 53 Michael J.
Attracting, developing, and retaining the best talent globally with the right skills to drive our mission, vision, and values are central components of our strategies for long-term growth. As of July 17, 2023, we had approximately 10,300 employees, of which approximately 2,600 employees work outside of the U.S.
Human Capital Resources We believe that our employees and our workplace culture are among our most important assets, and that our employees are integral to our ability to achieve our strategic objectives. Attracting, developing, and retaining the best talent globally with the right skills to drive our mission, vision, and values are central components of our strategies for long-term growth.
Competitors include large North American and European frozen potato product companies that compete globally, as well as local and regional companies. Significant competitors include Agristo NV, Aviko B.V., Cavendish Farms Corporation, Clarebout Potatoes NV, Farm Frites International B.V., J.R. Simplot Company, The Kraft Heinz Company, and McCain Foods Limited.
Significant competitors include Agristo NV, Aviko B.V., Cavendish Farms Corporation, Clarebout Potatoes NV, Farm Frites International B.V., J.R. Simplot Company, The Kraft Heinz Company, and McCain Foods Limited. Some of our competitors are larger and have substantially more financial, sales and marketing, and other resources than us.
In addition, in fiscal 2023, we introduced a DEI learning and development platform to our global workforce to support team members’ DEI learning. ​ Recruitment, Training, and Development ​ We believe maintaining a robust pipeline of talent is crucial to our ongoing success and is a key aspect of succession planning efforts across the organization.
Recruitment, Training, and Development We believe maintaining a robust pipeline of talent is crucial to our ongoing success and is a key aspect of succession planning efforts across the organization. We use recruitment vehicles, including partnerships with universities and communities, local and national organizations, and various social media outlets, to attract strong talent to our organization.
Through ongoing communications, routine assessments of our safety programs, safety and job-related training, daily risk assessments at facilities, defined standards, and safety measures, we strive to improve our safety performance each year. ​ 7 Table of Contents Total Rewards ​ Our compensation and benefits are designed to support the financial, mental, and physical well-being of our employees.
To help achieve this goal, we foster safety leadership throughout the organization as part of our comprehensive environment, health, safety, and sustainability management system. Through ongoing communications, routine assessments of our safety programs, safety and job-related training, daily risk assessments at facilities, defined standards, and safety measures, we strive to improve our safety performance each year.
In fiscal 2023, we launched our first business resource groups, which are voluntary, team member-led groups that bring employees together aligned around affinity areas. We believe these groups help create community and build inclusion. We have three business resource groups centered on women, multiculture and young professionals.
We are committed to providing a work environment that fosters respect, inclusion, fairness, and dignity, and is free of harassment, discrimination, or fear of retaliation. In addition, we have created business resource groups, which are voluntary, team member-led groups that bring employees together aligned around affinity areas. We believe these groups help create community and build inclusion.
For a discussion of risks related to our operations outside the U.S., see “Item 1A. Risk Factors” of this Form 10-K. ​ Competition ​ The value-added frozen potato products industry in North America, Europe and other international markets is highly competitive.
Risk Factors” of this Form 10-K. 5 Table of Contents Competition The value-added frozen potato products industry in North America, Europe and other international markets is highly competitive. Competitors include large North American and European frozen potato product companies that compete globally, as well as local and regional companies.
We also have potato growing regions in Canada, China, Australia, and Argentina that support our processing facilities in those countries. We believe that the grower networks to which we have access provide a sufficient source of raw potato inputs year-to-year.
In Europe, growing regions for the necessary potatoes are concentrated in the Netherlands, Austria, Belgium, Germany, France, and the United Kingdom. We also have grower relationships in potato growing regions in Canada, China, Australia, and Argentina that support our processing facilities in those countries.
Of the hourly employees who are represented by these contracts, 51% are party to a collective bargaining agreement scheduled to expire over the course of the next twelve months. As the agreements expire, we believe they will be renegotiated on terms satisfactory to the parties. ​ Health and Safety ​ Our employees’ health, safety, and well-being are our highest priority.
Most of the union workers at our facilities are represented under contracts that expire at various times over the next several years. Of the hourly employees who are represented by these contracts, 27% are party to a collective bargaining agreement scheduled to expire over the course of the next twelve months.
The Retail segment’s primary products are frozen potatoes sold under our owned or licensed brands, including Grown in Idaho and Alexia , other licensed equities comprised of brand names of major North American restaurant chains, and the retailers’ own brands. ​ Other ​ The Other reporting segment primarily includes our vegetable and dairy businesses, as well as unrealized mark-to-market adjustments associated with commodity hedging contracts. ​ Joint Venture Relationships ​ We hold a 50 percent ownership interest in Lamb-Weston/RDO Frozen (“Lamb Weston RDO”), a joint venture with RDO Frozen Co., that operates a single potato processing facility in the U.S.
Our North America segment’s product portfolio includes frozen potatoes, commercial ingredients, and appetizers sold under the Lamb Weston brand, as well as frozen potatoes sold under the Company’s owned or licensed brands, including Grown in Idaho and Alexia , other licensed equities comprised of brand names of major North American restaurant chains, customer labels, and retailers’ own brands.
Accordingly, we consolidated LWAMSA’s and LW EMEA’s financial results in our consolidated financial statements beginning in our fiscal first and fourth quarters, respectively. The results are included in our Global segment. ​ During fiscal 2023, we had four reportable segments: Global, Foodservice, Retail, and Other. For further segment and financial information, see “Part II, Item 7.
Accordingly, we consolidated LWAMSA’s and LW EMEA’s financial results in our Consolidated Financial Statements beginning in the first and fourth quarters of our fiscal 2023, respectively. In addition, LW EMEA owns a 75% interest in a joint venture in Austria. This joint venture’s financial results are consolidated in our financial statements.
We define diversity as the unique abilities, experiences, and cultural backgrounds our employees bring to our Company’s workplace. We are committed to providing a work environment that fosters respect, inclusion, fairness, and dignity, and is free of harassment, discrimination, or fear of retaliation.
Diversity, Equity, and Inclusion (“DEI”) As a global company, we strive to honor and celebrate diversity in our team, which we believe enriches our work lives and drives diversity of perspectives in our decision-making as a company. We define diversity as the unique abilities, experiences, and cultural backgrounds our employees bring to our Company’s workplace.
We regularly evaluate our co-packing arrangements to ensure the most cost-effective manufacturing of our products and to utilize company-owned production facilities most effectively. ​ International Operations ​ At May 28, 2023, we had operations in 31 countries, with sales support in each of these countries and production and processing facilities in 8 countries.
International Operations At May 26, 2024, we had operations in 33 countries, with sales support in each of these countries and production and processing facilities in eight countries. See Note 13, Segments, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
French fries represent most of our value-added frozen potato product portfolio. ​ We were organized as a Delaware corporation in July 2016. Our common stock trades under the ticker symbol “LW” on the New York Stock Exchange. ​ 3 Table of Contents Segments ​ In July 2022, we acquired an additional 40 percent interest in Lamb Weston Alimentos Modernos S.A.
We were organized as a Delaware corporation in July 2016. Our common stock trades under the ticker symbol “LW” on the New York Stock Exchange. Segments We have two reportable segments: North America and International. For segment financial information, see “Part II, Item 7.
This resulted in a change from four reportable segments to two (North America and International), effective the beginning of fiscal 2024. ​ Global ​ Our Global segment includes frozen potato products sold in North America and international markets generally to the top 100 North American based restaurant chains and international customers comprised of global and regional quick service and full-service restaurant chains, foodservice distributors, and retailers.
North America Our North America segment primarily includes frozen potato products sold in the United States, Canada, and Mexico to quick service and full-service restaurants and chains, foodservice distributors, non-commercial channels, and retailers.
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Financial Statements and Supplementary Data” of this Form 10-K. ​ Effective May 29, 2023, in connection with our recent acquisitions and to align with our expanded global footprint, our management, including our chief executive officer, who is our chief operating decision maker, began managing our operations as two business segments based on management’s change to the way it monitors performance, aligns strategies, and allocates resources.
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Joint Venture Relationships We hold a 50% ownership interest in Lamb-Weston/RDO Frozen (“Lamb Weston RDO”), a joint venture with RDO Frozen Co., that operates a single potato processing facility in the U.S.
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We have included foodservice and retail customers outside of North America in the Global segment due to efficiencies associated with coordinating sales to all customer types within specific markets, as well as due to these customers’ smaller scale and dependence on local economic conditions.
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We believe that the grower networks to which we have access provide a sufficient source of raw potato inputs year-to-year. We source edible oils through strategic relationships with key suppliers, and we source packaging and energy inputs through multiple suppliers under a variety of agreement types.
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The Foodservice segment’s primary products are frozen potatoes, commercial ingredients, and appetizers sold under the Lamb Weston brand, as well as many customer labels. ​ Retail ​ Our Retail segment includes consumer-facing frozen potato products sold primarily to grocery, mass merchants, club, and specialty retailers.
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In general, net sales and cash flows tend to be higher in our fiscal fourth quarter, reflecting customer and consumer buying patterns. In fiscal 2024, the number of days of inventory on hand exceeded typical levels due to inventory pre-build ahead of the ERP transition in the third quarter and subsequent decline in restaurant traffic trends.
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We accounted for our investments in LW EMEA and LWAMSA under the equity method of accounting until February 2023 and July 2022, respectively, when we acquired the majority ownership of these entities and began consolidating their respective financial results in our consolidated financial statements. In addition, LW EMEA owns a 75 percent interest in a joint venture in Austria.
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Total Rewards Our compensation and benefits are designed to support the financial, mental, and physical well-being of our employees. We are committed to equal pay for equal work, regardless of gender, race, ethnicity, or other personal characteristics.
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The prices of raw materials can fluctuate as a result of these factors. ​ During fiscal 2023, we continued to face increased costs for our primary raw materials, including potatoes, edible oils, packaging, grains, starches, and energy inputs.
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We have three business resource groups centered on women, multiculture and young professionals. We have also introduced a DEI learning and development platform to our global workforce to support team members’ DEI learning.
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The markets in which we operate are expected to remain highly competitive for the foreseeable future. See also “Item 1A.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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We must continue to reformulate our products, introduce new products and create product extensions without a loss of the taste, texture, and appearance that consumers demand in value-added potato products. All of these efforts require significant research and development and marketing investments.
We must continue to reformulate our products, introduce new products and create product extensions without a loss of the taste, texture, and appearance that consumers demand in value-added potato products. All these efforts require significant research and development and marketing investments.
Our failure to comply with applicable laws and regulations could subject us to additional costs, product detentions, substantial delays or a temporary shutdown in manufacturing, lawsuits, administrative penalties, and civil remedies, including fines, injunctions, and recalls of our products. ​ Our operations are also subject to extensive and increasingly stringent regulations administered by foreign government agencies, the U.S.
Our failure to comply with applicable laws and regulations could subject us to additional costs, product detentions, substantial delays or a temporary shutdown in manufacturing, lawsuits, administrative penalties, and civil remedies, including fines, injunctions, and recalls or withdrawals of our products. Our operations are also subject to extensive and increasingly stringent regulations administered by foreign government agencies, the U.S.
A significant product liability judgment or a widespread product recall may negatively impact our sales and profitability for a period of time depending on the costs of the recall, the destruction of product inventory, product availability, competitive reaction, customer reaction, and consumer attitudes.
A significant product liability judgment or a widespread product recall or withdrawal may negatively impact our sales and profitability for a period of time depending on the costs of the recall or withdrawal, the destruction of product inventory, product availability, competitive reaction, customer reaction, and consumer attitudes.
Our attempts to offset these cost pressures, such as through increases in the selling prices of some of our products, may not be successful. Higher product prices may result in reductions in sales volume.
Our attempts to offset these cost pressures, such as through increases in the selling prices of some of our products, may not continue to be successful. Higher product prices may result in reductions in sales volume.
Despite careful security and controls design, implementation and updating, monitoring and routine testing, independent third-party verification, and annual training of employees on information security and data protection, our information technology systems, some of which are dependent on services provided by third parties, may be vulnerable to, among other things, damage, invasions, disruptions, or shutdowns due to any number of causes such as catastrophic events, natural disasters, infectious disease outbreaks and other public health crises, fires, power outages, systems failures, telecommunications failures, security breaches, computer viruses, ransomware and malware, hackers, employee error or malfeasance, potential failures in the incorporation of artificial intelligence, and other causes.
Despite careful security and controls design, implementation and updating, monitoring and routine testing, independent third-party verification, and annual training of employees on information security and data protection, our information technology 19 Table of Contents systems, some of which are dependent on services provided by third parties, may be vulnerable to, among other things, damage, invasions, disruptions, or shutdowns due to any number of causes such as catastrophic events, natural disasters, infectious disease outbreaks and other public health crises, fires, power outages, systems failures, telecommunications failures, security breaches, computer viruses, ransomware and malware, hackers, employee error or malfeasance, potential failures in the incorporation of artificial intelligence, and other causes.
Any delay or failure to achieve our goals with respect to reducing our impact on the environment or perception of a delay or failure to act responsibly with respect to the environment or to effectively respond to regulatory requirements concerning climate change can lead to adverse publicity, which could damage our reputation, as well as expose us to enforcement actions and litigation.
Any delay or failure (perceived or actual) to achieve our goals with respect to reducing our impact on the environment or perception of a delay or failure to act responsibly with respect to the environment or to effectively respond to regulatory requirements concerning climate change can lead to adverse publicity, which could damage our reputation, as well as expose us to enforcement actions and litigation.
In addition, the financial condition of our significant customers, including restaurants, distributors and retailers, are affected by events that are largely beyond our control, such as the impacts of the COVID-19 pandemic and possible future pandemics or other contagious outbreaks, and political or military conflicts, such as the war in Ukraine.
In addition, the financial condition of our significant customers, including restaurants, distributors and retailers, are affected by events that are largely beyond our control, such as the impacts of the COVID-19 pandemic and possible future pandemics or other contagious outbreaks, and political or military conflicts, such as the war in Ukraine or conflicts in the Middle East.
This damage or disruption could result from execution issues, as well as factors that are difficult to predict or beyond our control such as increased temperatures due to climate change, water stress, extreme weather events, natural disasters, product or raw material scarcity, fire, terrorism, pandemics (such as the COVID-19 pandemic), armed hostilities (including the ongoing war in Ukraine), strikes, labor shortages, cybersecurity breaches, governmental restrictions or mandates, disruptions in logistics, supplier capacity constraints, or other events.
This damage or disruption could result from execution issues, as well as factors that are difficult to predict or beyond our control such as increased temperatures due to climate change, water stress, extreme weather events, natural disasters, product or raw material scarcity, fire, terrorism, pandemics (such as the COVID-19 pandemic), armed hostilities (including the ongoing war in Ukraine and conflicts in the Middle East), strikes, labor shortages, cybersecurity breaches, governmental restrictions or mandates, disruptions in logistics, supplier capacity constraints, or other events.
As additional industry capacity comes online, or market demand otherwise decreases, including as a result of inflation or pandemics such as the COVID-19 pandemic or other contagious outbreaks, we may face competitive pressures that would restrict our ability to increase or maintain prices, or we may lose market share.
As additional industry capacity comes online, restaurant traffic declines, or market demand otherwise decreases, including as a result of inflation or pandemics such as the COVID-19 pandemic or other contagious outbreaks, we may face competitive pressures that would restrict our ability to increase or maintain prices, or we may lose market share.
Competitors include large North American and European frozen potato product companies that compete globally, local and regional companies, and retailers and foodservice distributors with their own branded and private label products. Some of our competitors are larger and have substantial financial, sales and marketing, and other resources.
Competitors include large North American and European frozen potato product companies that compete globally, local and regional companies, and retailers and foodservice distributors with their own branded and private label products. Some of our competitors are larger 16 Table of Contents and have substantial financial, sales and marketing, and other resources.
Misuse, leakage, or falsification of information could result in violations of data privacy laws and regulations, potentially significant fines and penalties, damage to our reputation and credibility, loss of strategic opportunities, and loss of ability to commercialize products developed through research and development efforts and, therefore, could have a negative impact on net sales.
Misuse, leakage, or falsification of information could result in violations of data privacy laws and regulations (including federal, state and international), potentially significant fines and penalties, damage to our reputation and credibility, loss of strategic opportunities, and loss of ability to commercialize products developed through research and development efforts and, therefore, could have a negative impact on net sales.
During each of fiscal 2023, 2022 and 2021, net sales outside the U.S., primarily in Australia, Canada, China, Europe, Japan, Korea, Mexico, and Taiwan, accounted for approximately 23%, 17%, and 17% of our net sales, respectively.
During each of fiscal 2024, 2023, and 2022, net sales outside the U.S., primarily in Australia, Canada, China, Europe, Japan, Korea, Mexico, and Taiwan, accounted for approximately 34%, 23%, and 17% of our net sales, respectively.
If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure and associated 23 Table of Contents automated and manual control processes, we could be subject to billing and collection errors, business disruptions, or damage resulting from security breaches.
If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure and associated automated and manual control processes, we could be subject to billing and collection errors, business disruptions, or damage resulting from security breaches.
We may also be subject to litigation, requests for indemnification from our customers, or liability if 24 Table of Contents the consumption or inadequate preparation of any of our products causes injury, illness, or death.
We may also be subject to litigation, requests for indemnification from our customers, or liability if the consumption or inadequate preparation of any of our products causes injury, illness, or death.
The labor market has become increasingly tight and competitive, and we may face sudden and unforeseen challenges in the availability of labor, such as we have experienced during fiscal 2022 and 2023 at some of our production facilities, which reduced our production run-rates and increased our manufacturing costs.
The labor market has been increasingly tight and competitive, and we may face sudden and unforeseen challenges in the availability of labor, such as we experienced in fiscal 2022 and 2023 at some of our production facilities, which reduced our production run-rates and increased our manufacturing costs.
The amounts for fiscal 2022 and 2021 do not include any impact of unconsolidated net sales associated with LWAMSA and LW EMEA, which are also subject to risks associated with international operations. In fiscal 2023, we acquired additional equity interests in LWAMSA and LW EMEA, thereby increasing our ownership in LWAMSA and LW EMEA to 90% and 100%, respectively.
The amount for fiscal 2022 does not include any impact of unconsolidated net sales associated with LWAMSA and LW EMEA, which are also subject to risks associated with international operations. In fiscal 2023, we acquired additional equity interests in LWAMSA and LW EMEA, thereby increasing our ownership in LWAMSA and LW EMEA to 90% and 100%, respectively.
A change in consumer preferences could also cause us to increase capital, marketing, and other expenditures, which could materially and adversely affect our business, financial condition, and results of operations. ​ Financial and Economic Risks ​ Our substantial debt may limit cash flow available to invest in the ongoing needs of our business and could prevent us from fulfilling our debt obligations. ​ We have incurred substantial indebtedness.
A change in consumer preferences could also cause us to increase capital, marketing, and other expenditures, which could materially and adversely affect our business, financial condition, and results of operations. 17 Table of Contents Financial and Economic Risks Our substantial debt may limit cash flow available to invest in the ongoing needs of our business and could prevent us from fulfilling our debt obligations.
It is possible that events beyond our control, such as operational failures, labor issues, heightened inflation, recession, financial and credit market disruptions, or other economic conditions, cybersecurity events, global geopolitical conflict, such as the war in Ukraine, pandemics or other health issues, such as COVID-19, or other issues could impact our third parties.
It is possible that events beyond our control, such as operational failures, labor issues, heightened inflation, recession, financial and credit market disruptions, or other economic conditions, cybersecurity events, global geopolitical conflict, such as the war in Ukraine and conflicts in the Middle East, pandemics or other health issues, such as was the case with the COVID-19 pandemic, or other issues could impact our third parties.
During an economic downturn, factors such as increased unemployment, decreases in disposable income, inflation, and declines in consumer confidence could cause a decrease in demand for our overall product offerings, particularly higher priced products, which could materially and adversely affect our business, financial condition, and results of operations.
During an economic downturn, some of the effects of which are present in our current environment, factors such as increased unemployment, decreases in disposable income, inflation, and declines in consumer confidence could cause a decrease in demand for our overall product offerings, particularly higher priced products, which could materially and adversely affect our business, financial condition, and results of operations.
If this occurs, we may be unable to adequately supply all our existing customers’ needs and new customer opportunities, which could adversely affect our business, financial condition, and results of operations. ​ Our operations are dependent on a wide array of third parties. ​ The success of our end-to-end supply chain relies on the continued performance of a wide array of third parties.
If this occurs, we may be unable to adequately supply all our existing customers’ needs and new customer opportunities, which could adversely affect our business, financial condition, and results of operations. Our operations are dependent on a wide array of third parties.
Our financial condition and ability to meet the needs of our customers could be materially and adversely affected if strikes or work stoppages or interruptions occur as a result of delayed negotiations with union-represented employees within or outside the U.S. ​ Changes in our relationships with our growers could adversely affect us. ​ We expend considerable resources to develop and maintain relationships with many potato growers.
Our financial condition and ability to meet the needs of our customers could be materially and adversely affected if strikes or work stoppages or interruptions occur as a result of delayed negotiations with union-represented employees within or outside the U.S. Changes in our relationships with our growers could adversely affect us.
Damage to either could reduce demand for our products or cause production and delivery disruptions. ​ Our reputation could also be adversely impacted by any of the following, or by adverse publicity (whether or not valid) relating thereto: the failure to maintain high ethical, social, and environmental standards for our operations and activities, including the health, safety, and security of our employees; our research and development efforts; our environmental impact, including use of agricultural materials, packaging, energy use, and waste management, and the failure to achieve any stated goals with respect to such matters; our failure to comply with local laws and regulations; our failure to maintain an effective system of internal controls; or our failure to provide accurate and timely financial information.
Our reputation could also be adversely impacted by any of the following, or by adverse publicity (whether or not valid) relating thereto: the failure to maintain high ethical, social, and environmental standards for our operations and activities, including the health, safety, and security of our employees and our supply chain; our research and development efforts; our environmental impact, including use of agricultural materials, packaging, energy and water use, and waste management, and the failure to set certain goals, or to achieve any stated goals, with respect to such matters; our failure to comply with local laws and regulations; our failure to maintain an effective system of internal controls; or our failure to provide accurate and timely financial information.
In particular, changes in U.S. trade programs and trade relations with other countries, including the imposition of trade protection measures by foreign countries in favor of their local producers of competing products, such as governmental subsidies, tax benefits, and other measures giving local producers a competitive advantage over Lamb Weston, may adversely affect our business and results of operations in those countries; ● changes in capital controls, including currency exchange controls, government currency policies or other limits on our ability to import raw materials or finished products into various countries or repatriate cash from outside the United States; ● negative economic developments in economies around the world and the instability of governments, including the actual or threat of wars, terrorist attacks, epidemics or civil unrest, including the war in Ukraine; ● earthquakes, tsunamis, droughts, floods or other major disasters that may limit the supply of raw materials that are purchased abroad for use in our international operations or domestically; ● volatile commodity prices and increased costs of raw and packaging materials, labor, energy and transportation, disruptions in shipping or reduced availability of freight transportation and warehousing, such as the reduced availability of shipping containers that we encountered in fiscal 2022; ● differing employment practices and labor standards in the international markets in which we operate; ● differing levels of protection of intellectual property across the international markets in which we operate; ● difficulties and costs associated with complying with U.S. laws and regulations applicable to entities with overseas operations, including the Foreign Corrupt Practices Act; ● the threat that our operations or property could be subject to nationalization and expropriation; ● varying regulatory, tax, judicial and administrative practices in the international markets in which we operate; ● difficulties associated with operating under a wide variety of complex foreign laws, treaties and regulations; and ● potentially burdensome taxation. ​ 16 Table of Contents The nature and degree of the various risks we face can differ significantly among our regions and businesses.
In particular, changes in U.S. trade programs and trade relations with other countries, including the imposition of trade protection measures by foreign countries in favor of their local producers of competing products, such as governmental subsidies, tax benefits, and other measures giving local producers a competitive advantage over Lamb Weston, may adversely affect our business and results of operations in those countries; • changes in capital controls, including currency exchange controls, government currency policies or other limits on our ability to import raw materials or finished products into various countries or repatriate cash from outside the United States; • negative economic developments in economies around the world and the instability of governments, including the actual or threat of wars, terrorist attacks, epidemics or civil unrest, including the war in Ukraine and conflicts in the Middle East; • currency devaluations or fluctuations in currency values, including in developed and emerging markets, such as the highly inflationary environment in Argentina; • earthquakes, tsunamis, droughts, floods or other major disasters that may limit the supply of raw materials that are purchased abroad for use in our international operations or domestically; • volatile commodity prices and increased costs of raw and packaging materials, labor, energy and transportation, disruptions in shipping or reduced availability of freight transportation and warehousing, such as the reduced availability of shipping containers that we encountered in fiscal 2022; • pandemics and other public health crises, which may lead, and in the case of the COVID-19 pandemic, have led, to measures that decrease revenues, disrupt our supply chain or otherwise increase our storage, production or distribution costs and adversely affect our workforce, local suppliers, customers and consumers of our products; • differing employment practices and labor standards in the international markets in which we operate; • differing levels of protection of intellectual property across the international markets in which we operate; • difficulties and costs associated with complying with U.S. laws and regulations applicable to entities with overseas operations, including the Foreign Corrupt Practices Act; • the threat that our operations or property could be subject to nationalization and expropriation; • varying regulatory, tax, judicial and administrative practices in the international markets in which we operate; • difficulties associated with operating under a wide variety of complex foreign laws, treaties and regulations; and • potentially burdensome taxation. 13 Table of Contents The nature and degree of the various risks we face can differ significantly among our regions and businesses.
If our products fail to meet consumer preferences or customer requirements, or we fail to introduce new and improved products on a timely basis, then the return on those investments will be less than anticipated, which could materially and adversely affect our business, financial condition, and results of operations. ​ In addition, we compete against branded products as well as private label products.
If our products fail to meet consumer preferences or customer requirements, or we fail to introduce new and improved products on a timely basis, then the return on those investments will be less than anticipated, which could materially and adversely affect our business, financial condition, and results of operations.
On the other hand, too much water, such as in times of prolonged heavy rainfalls or flooding, can promote harmful crop conditions like mildew growth and increase risks of diseases, as well as affect our ability to harvest the potatoes.
On the other hand, too much water, such as in times of prolonged heavy rainfalls or flooding, can promote harmful crop conditions like mildew growth and increase risks of diseases, as well as delay planting or affect our ability to harvest the potatoes. For example, wet conditions in Europe delayed planting in 2024.
The importance of such networks and systems has increased due to our adoption of flexible work-from-home policies for some of our functional support areas, which in turn has heightened our vulnerability to cyberattacks or other disruptions.
The importance of such networks and systems has increased due to our adoption of flexible work-from-home policies for some of our functional support areas, which in turn has heightened our vulnerability to cyberattacks or other disruptions as a result of team members accessing our networks and systems from off-site.
We cannot provide assurance that we will continue to be in compliance with these ratios and tests. Our ability to continue to meet those financial ratios and tests will depend on our ongoing financial and operating performance, which, in turn, will be subject to economic conditions and to financial, market, and competitive factors, many of which are beyond our control.
Our ability to continue to meet those financial ratios and tests will depend on our ongoing financial and operating performance, which, in turn, will be subject to economic conditions and to financial, market, and competitive factors, many of which are beyond our control.
In addition, if consumer perception regarding the safety of our products is negatively impacted due to regulation, sales of our products could decrease. ​ If we fail to comply with the many laws and regulations applicable to our business, we may face lawsuits or incur significant fines and penalties. ​ Our facilities and products are subject to many laws and regulations administered by the U.S.
In addition, if consumer perception regarding the safety of our products is negatively impacted due to regulation, sales of our products could decrease. 21 Table of Contents If we fail to comply with the many laws and regulations applicable to our business, we may face lawsuits or incur significant fines and penalties.
Circumstances beyond our control, such as a labor dispute at a port, or workforce disruption, including those due to pandemics such as the COVID-19 pandemic or other contagious outbreaks, could prevent us from exporting our products in sufficient quantities to meet customer opportunities. During the latter half of fiscal 2022, limited shipping container availability along the U.S.
Circumstances beyond our control, such as a labor dispute at a port, or workforce disruptions (such as disruptions that occurred due to the COVID-19 pandemic), could prevent us from exporting our products in sufficient quantities to meet customer opportunities. For example, during the latter half of fiscal 2022, limited shipping container availability along the U.S.
Product contamination or tampering, the failure to maintain high standards for product quality, safety, and integrity, or allegations of product quality issues, mislabeling or contamination, even if untrue, may damage the reputation of our customers, and ultimately our reputation as a trusted industry partner.
Our customers rely on us and our co-manufacturers to manufacture safe, high quality food products. Product contamination or tampering, the failure to maintain high standards for product quality, safety, and integrity, or allegations of product quality issues, mislabeling or contamination, even if untrue, may damage the reputation of our customers, and ultimately our reputation as a trusted industry partner.
Our inability to enter into satisfactory co-packing agreements could limit our ability to implement our business plan or meet customer demand. ​ Damage to our reputation as a trusted partner to customers and good corporate citizen could have a material adverse effect on our business, financial condition, and results of operations. ​ Our customers rely on us and our co-manufacturers to manufacture safe, high quality food products.
Our inability to enter into satisfactory co-packing agreements could limit our ability to implement our business plan or meet customer demand. 14 Table of Contents Damage to our reputation as a trusted partner to customers and good corporate citizen could have a material adverse effect on our business, financial condition, and results of operations.
Upon the occurrence of an event of default under our credit facilities, the lenders could elect to declare all amounts outstanding thereunder to be immediately due and payable and terminate all commitments to extend further credit.
Upon the occurrence of an event of default under our credit facilities, the lenders could elect to declare all amounts outstanding thereunder to be immediately due and payable and terminate all commitments to extend further credit. Such action by the lenders could cause cross-defaults under our senior notes indentures.
These commodities are subject to price volatility and fluctuations in availability caused by many factors, including: changes in global supply and demand, weather conditions (including any potential effects of climate change), fire, natural disasters (such as a hurricane, tornado, earthquake, wildfire or flooding), disease or pests, agricultural uncertainty, water stress, health epidemics or pandemics or other contagious outbreaks, such as the COVID-19 pandemic, governmental incentives and controls (including import/export restrictions, such as new or increased tariffs, sanctions, quotas or trade barriers including the financial and economic sanctions imposed by the U.S. and certain foreign governments in response to the war in Ukraine), limited or sole sources of supply, inflation, political uncertainties, acts of terrorism, governmental instability, war, or currency exchange rates. ​ 12 Table of Contents During fiscal 2023, we experienced significantly elevated commodity and supply chain costs, including the costs of labor, raw materials, energy, fuel, packaging materials, and other inputs necessary for the production and distribution of our products.
These commodities are subject to price volatility and fluctuations in availability caused by many factors, including: changes in global supply and demand, weather conditions (including any potential effects of climate change), fire, natural disasters (such as a hurricane, tornado, earthquake, wildfire or flooding), disease or pests, agricultural uncertainty, water stress, health epidemics or pandemics or other contagious outbreaks, such as the COVID-19 pandemic, governmental incentives and controls (including import/export restrictions, such as new or increased tariffs, sanctions, quotas or trade barriers including the financial and economic sanctions imposed by the U.S. and certain foreign governments in response to the war in Ukraine), limited or sole sources of supply, inflation, political uncertainties, acts of terrorism, governmental instability, war or other conflicts (such as the war in Ukraine and conflicts in the Middle East), or currency exchange rates.
To the extent that price increases are not sufficient to offset these increased costs adequately or in a timely manner, and/or if they result in significant decreases in sales volume, our business, financial condition, or results of operations may be adversely affected. ​ We also may not be successful in mitigating the effects of these cost increases through productivity initiatives or through our commodity hedging activity.
To the extent that price increases are not sufficient to offset these increased costs adequately or in a timely manner, and/or if they result in significant decreases in sales volume, our business, financial condition, or results of operations may be adversely affected.
If our third parties fail to deliver on their commitments, introduce unplanned risk to our operations (e.g., through cyber activity), or are unable to fulfill their obligations, we could experience manufacturing challenges, shipment delays, increased costs, or lost revenue, which could also impact our relationships with customers and our brand image. ​ In addition to our own production facilities, we source a portion of our products under co-packing agreements.
If our third parties fail to deliver on their commitments, introduce unplanned risk to our operations (e.g., through cyber activity), or are unable to fulfill their obligations, we could experience manufacturing challenges, shipment delays, increased costs, or lost revenue, which could also impact our relationships with customers and our brand image.
Further, continued geopolitical turmoil, including the ongoing war in Ukraine, has heightened the risk of cyberattacks. Sophisticated cybersecurity threats, including potential cyberattacks from Russia targeted against the U.S., pose a potential risk to the security and viability of our information technology systems, as well as the confidentiality, integrity, and availability of the data stored on those systems, including cloud-based platforms.
Sophisticated cybersecurity threats, including potential cyberattacks from China or Russia targeted against the U.S., pose a potential risk to the security and viability of our information technology systems, as well as the confidentiality, integrity, and availability of the data stored on those systems, including cloud-based platforms.
Although we have experience in hedging against commodity price increases, these practices and experience reduce, but do not eliminate, the risk of negative profit impacts from commodity price increases. As a result, the risk management procedures that we use may not always work as we intend.
In addition, there is currently no active derivatives market for potatoes in the U.S. Although we have experience in hedging against commodity price increases, these practices and experience reduce, but do not eliminate, the risk of negative profit impacts from commodity price increases. As a result, the risk management procedures that we use may not always work as we intend.
An overall labor shortage, lack of skilled labor, increased turnover, or labor inflation, caused by COVID-19 or as a result of general macroeconomic factors, could have a material adverse impact on our business, financial condition, and results of operations. ​ In addition, health care and workers’ compensation costs are increasing.
An overall labor shortage, lack of skilled labor, increased turnover, or labor inflation could have a material adverse impact on our business, financial condition, and results of operations. In addition, health care and workers’ compensation costs have been increasing.
As of May 28, 2023, we had approximately $3.5 billion of debt, including current portion, and short-term borrowings, recorded on our Consolidated Balance Sheet. Our level of debt could have important consequences.
We have incurred substantial indebtedness. As of May 26, 2024, we had approximately $3.8 billion of debt, including current portion, and short-term borrowings, recorded on our Consolidated Balance Sheet. Our level of debt could have important consequences.
While we have experienced threats to our data and systems, to date, we are not aware that we have experienced a material breach to our systems.
While we have experienced threats to our data and systems, to date, we are not aware that we have experienced a breach that had a material impact on our operations or business.
Department of Agriculture, the FDA, the Occupational Safety and Health Administration, and other federal, state, local, and foreign governmental agencies relating to the processing, packaging, storage, distribution, advertising, labeling, quality, and safety of food products, and the health and safety of our employees.
Our facilities and products are subject to many laws and regulations administered by the U.S. Department of Agriculture, the FDA, the Occupational Safety and Health Administration, and other federal, state, local, and foreign governmental agencies relating to the processing, packaging, storage, distribution, advertising, labeling, quality, and safety of food products, and the health and safety of our employees.
In some instances, we have entered into long-term agreements with growers; however, a portion of our potato needs are sourced on an annual contracted basis.
We expend considerable resources to develop and maintain relationships with many potato growers. In some instances, we have entered into long-term agreements with growers; however, a portion of our potato needs are sourced on an annual contracted basis.
Risk Factors below. ​ The sophistication and buying power of some of our customers could have a negative impact on profits. ​ Some of our customers are large and sophisticated, with buying power and negotiating strength. These customers may be more capable of resisting price increases and more likely to demand lower pricing, increased promotional programs, or specialty tailored products.
Some of our customers are large and sophisticated, with buying power and negotiating strength. These customers may be more capable of resisting price increases and more likely to demand lower pricing, increased promotional programs, or specialty tailored products.
We may be required to expend significant resources to meet these goals and commitments, which could significantly increase our operational costs. There can be no assurance of the extent to which any of our goals or commitments will be achieved, or that any future investments we make in furtherance of achieving these goals will meet customer or investor expectations.
There can be no assurance of the extent to which any of our goals or commitments will be achieved, or that any future investments we make in furtherance of achieving these goals will meet customer or investor expectations.
We have experienced, and may continue to experience, disruptions in our supply chain, including as a result of temporary workforce disruptions, labor shortages, increased transportation and warehousing costs, and other factors related to the effects of the COVID-19 pandemic and the ongoing war in Ukraine.
We have experienced, and may continue to experience, disruptions in our supply chain, including as a result of temporary systems disruptions, labor shortages, increased transportation and warehousing costs, longer shipping times, and other factors related to the effects of pandemics or other public health crisis, such as the COVID-19 pandemic, the ongoing war in Ukraine and the conflicts in the Middle East.
In addition, the occurrence of a significant supply chain disruption or the inability to access or deliver products that meet requisite quality and safety standards in a timely and efficient manner, could lead to increased warehouse and other storage costs or otherwise adversely affect our profitability and weaken our competitive position or harm our business. ​ Labor shortages or stoppages, an inability to attract and retain key personnel, increased turnover or increases in labor costs could adversely affect our business, financial condition, and results of operations. ​ Labor is a primary component of operating our business.
In addition, the occurrence of a significant supply chain disruption or the inability to access or deliver products that meet requisite quality and safety standards in a timely and efficient manner, could lead to increased warehouse and other storage costs or otherwise adversely affect our profitability and weaken our competitive position or harm our business.
We may also experience decreases in productivity as our personnel implement and become familiar with new systems and processes. Any disruptions, delays, or deficiencies in the transition, design, and implementation of a new ERP system, particularly any disruptions, delays, or deficiencies that impact our operations, could have a material adverse effect on our business, financial condition, and results of operations.
Any disruptions, delays, or deficiencies in the transition, design, and implementation of a new ERP system, particularly any disruptions, delays, or deficiencies that impact our operations, could have a material adverse effect on our business, financial condition, and results of operations.
Moreover, the growing use of social and digital media by consumers and other stakeholders has greatly increased the speed and extent that information or misinformation and opinions can be shared.
Moreover, the growing use of social and digital media by consumers and other stakeholders has greatly increased the speed and extent that information or misinformation and opinions can be shared. Negative posts or comments about us, our brands, or our products on social or digital media could damage our reputation and our brands.
Our profits would decrease as a result of a reduction in prices or sales volume. ​ 20 Table of Contents We must identify changing consumer preferences and consumption trends and develop and offer food products to our customers that help meet those preferences and trends. ​ Consumer preferences evolve over time and our success depends on our ability to identify the tastes and dietary habits of consumers and offer products that appeal to those preferences.
We must identify changing consumer preferences and consumption trends and develop and offer food products to our customers that help meet those preferences and trends. Consumer preferences evolve over time and our success depends on our ability to identify the priorities, tastes and dietary habits of consumers and offer products that appeal to those preferences.
Further, we may experience significant increases in our compliance costs, capital expenditures, and other financial obligations to adapt our business and operations to meet new regulations and standards. ​ Even if we make changes to align ourselves with such legal or regulatory requirements, we may still be subject to significant penalties or potential litigation if such laws and regulations are interpreted and applied in a manner inconsistent with our practices.
Even if we make changes to align ourselves with such legal or regulatory requirements, we may still be subject to significant penalties or potential litigation if such laws and regulations are interpreted and applied in a manner inconsistent with our practices.
Such action by the lenders could cause cross-defaults under our senior notes indentures. ​ Any failure to meet required payments on our debt, or failure to comply with any covenants in the instruments governing our debt, could result in a downgrade to our credit ratings.
Any failure to meet required payments on our debt, or failure to comply with any covenants in the instruments governing our debt, could result in a downgrade to our credit ratings.
We began consolidating the financial results of LWAMSA and LW EMEA in our consolidated financial statements in the first quarter and fourth quarter of fiscal 2023, respectively. ​ Factors relating to our domestic and international sales and operations, many of which are outside of our control, have had, and could continue to have, a material adverse impact on our business, financial condition, and results of operations, including: ● pandemics and other public health crises, such as the flu, which may lead, and in the case of the COVID-19 pandemic, have led, to measures that decrease revenues, disrupt our supply chain or otherwise increase our storage, production or distribution costs and adversely affect our workforce, local suppliers, customers and consumers of our products; ● foreign exchange rates, foreign currency exchange and transfer restrictions, which may unpredictably and adversely impact our combined operating results, asset and liability balances, and cash flow in our consolidated financial statements, even if their value has not changed in their original currency; ● our consolidated financial statements are presented in U.S. dollars, and we must translate the assets, liabilities, revenue and expenses into U.S. dollars for external reporting purposes; ● changes in trade, monetary and fiscal policies of the U.S. and foreign governments, including modification or termination of existing trade agreements or treaties (e.g., the U.S. – Mexico – Canada Agreement), creation of new trade agreements or treaties, trade regulations, and increased or new tariffs, sanctions, quotas, import or export licensing requirements, and other trade barriers imposed by governments.
Factors relating to our domestic and international sales and operations, many of which are outside of our control, have had, and could continue to have, a material adverse impact on our business, financial condition, and results of operations, including: • foreign exchange rates, foreign currency exchange and transfer restrictions, which may unpredictably and adversely impact our combined operating results, asset and liability balances, and cash flow in our Consolidated Financial Statements, even if their value has not changed in their original currency; • our consolidated financial statements are presented in U.S. dollars, and we must translate the assets, liabilities, revenue and expenses into U.S. dollars for external reporting purposes; • changes in trade, monetary and fiscal policies of the U.S. and foreign governments, including modification or termination of existing trade agreements or treaties, creation of new trade agreements or treaties, trade regulations, and increased or new tariffs, sanctions, quotas, import or export licensing requirements, and other trade barriers imposed by governments.
Potential risks also include: ​ ● the inability to integrate acquired businesses into our existing operations in a timely and cost-efficient manner, including our recent acquisition of the remaining equity interests in LW EMEA; ● diversion of management's attention from other business concerns; ● potential loss of key employees, suppliers and/or customers of acquired businesses; ● assumption of unknown risks and liabilities; ● the inability to achieve anticipated benefits, including revenues or other operating results; ● operating costs of acquired businesses may be greater than expected; ● difficulties integrating personnel and financial and other systems; ● inaccurate estimates of fair value made in the accounting for acquisitions and amortization of acquired intangible assets, which would reduce future reported earnings; ● indemnities and potential disputes with the sellers; and ● the inability to promptly implement an effective control environment. ​ If we are unable to complete or realize the projected benefits of recent or future acquisitions, including our acquisition of LW EMEA, divestitures or other strategic transactions, our business or financial results may be adversely impacted. ​ Industry Risks ​ Our business is affected by potato crop performance. ​ Our primary input is potatoes and every year, we must procure potatoes that meet the quality standards for processing into value-added products.
Potential risks also include: • the inability to integrate acquired businesses into our existing operations in a timely and cost-efficient manner; • diversion of management's attention from other business concerns; • potential loss of key employees, suppliers and/or customers of acquired businesses; • assumption of unknown risks and liabilities; • the inability to achieve anticipated benefits, including revenues or other operating results; • operating costs of acquired businesses may be greater than expected; • difficulties integrating personnel and financial and other systems; • inaccurate estimates of fair value made in the accounting for acquisitions and amortization of acquired intangible assets, which would reduce future reported earnings; • indemnities and potential disputes with the sellers; and • the inability to promptly implement an effective control environment.
We have access to production outside of the U.S. through our facilities in Australia, Austria, Canada, China, the Netherlands, the United Kingdom, and a joint venture in Argentina, but we may be unsuccessful in mitigating any future disruption to export mechanisms.
West Coast and disruptions to ocean freight networks across the Pacific Ocean resulted in lower export volumes in our International segment. We have access to production outside of the U.S. through our facilities in Argentina, Australia, Austria, Canada, China, the Netherlands, and the United Kingdom, but we may be unsuccessful in mitigating any future disruption to export mechanisms.
Our products must provide higher value and/or quality to our customers and consumers than alternatives, particularly during periods of economic uncertainty. Consumers may not buy our products if relative differences in value and/or quality between our products and private label products change in favor of competitors’ products or if consumers perceive this type of change.
Consumers may not buy our products if relative differences in value and/or quality between our products and private label products change in favor of competitors’ products or if consumers perceive this type of change.
Changes in applicable laws or regulations or evolving interpretations thereof, including increased government regulations to limit the emissions of toxic air pollutants and carbon dioxide and other greenhouse gas emissions as a result of concern over climate change, may result in increased compliance costs, capital expenditures, and other financial obligations for us, which could affect our profitability or impede the production or distribution of our products, which could adversely affect our business, financial condition, and results of operations. 25 Table of Contents ​ Climate change, or legal, regulatory, or market measures to address climate change, may negatively affect our business and operations. ​ There is growing concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters.
Changes in applicable laws or regulations or evolving interpretations thereof, including increased government regulations to limit the emissions of toxic air pollutants and carbon dioxide and other greenhouse gas emissions as a result of concern over climate change, may result in increased compliance costs, capital expenditures, and other financial obligations for us, which could affect our profitability or impede the production or distribution of our products, which could adversely affect our business, financial condition, and results of operations.
To obtain sufficient potato supply, we may be required to purchase potatoes at prices substantially higher than expected, or forgo sales to some market segments, which would reduce our profitability.
To obtain sufficient 12 Table of Contents potato supply, we may be required to purchase potatoes at prices substantially higher than expected, or forgo sales to some market segments, which would reduce our profitability. If we forgo sales to such market segments, we may lose customers and may not be able to regain or replace them later.
While we believe we have identified and discussed below the material risks affecting our business, there may be additional risks and uncertainties that we do not presently know or that we do not currently believe to be material that may adversely affect our business, financial condition, or results of operations in the future. ​ Business and Operating Risks ​ We may not be able to offset cost increases due to inflationary pressures on inputs necessary for the production and distribution of our products, such as labor, raw materials, energy, fuel, and packaging materials. ​ A significant portion of our cost of goods comes from commodities such as raw potatoes, edible oil, grains, starches, and energy.
Business and Operating Risks We may not be able to offset cost increases due to inflationary pressures on inputs necessary for the production and distribution of our products, such as labor, raw materials, energy, fuel, and packaging materials. A significant portion of our cost of goods comes from commodities such as raw potatoes, edible oil, grains, starches, and energy.
A sustained labor shortage or increased turnover rates within our workforce, caused by COVID-19 or as a result of general macroeconomic factors, have led and could in the future lead to production or shipping delays, increased costs, such as increased overtime to meet demand and increased 13 Table of Contents wage rates to attract and retain employees, and could negatively affect our ability to efficiently operate our production and distribution facilities and overall business.
As we experienced with the COVID-19 pandemic, sustained labor shortages or increased turnover rates within our workforce, could lead to production or shipping delays, increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, and could negatively affect our ability to efficiently operate our production and distribution facilities and overall business.
Suppliers, co-packers, third-party outsourcers, warehousing partners, and transportation providers are among our critical partners. Although we take steps to qualify and audit third parties with whom we do business, we cannot guarantee that all third parties will perform dependably or at all.
Although we take steps to qualify and audit third parties with whom we do business, we cannot guarantee that all third parties will perform dependably or at all.
Further, the inability of any supplier, logistics service provider, or independent distributor to deliver or perform for us in a timely or cost-effective manner could cause our operating costs to increase and our profit margins to decrease.
Further, the inability of any supplier, including, but not limited to, those that supply our packaging, ingredients, equipment and other necessary operating materials, co-manufacturer, independent contractor, logistics service provider, or independent distributor to 11 Table of Contents deliver or perform for us in a timely or cost-effective manner could cause our operating costs to increase and our profit margins to decrease.
Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our corporate and brand image. ​ Additionally, as a manufacturer and marketer of food products, we are subject to extensive regulation by the FDA and other national, state and local government agencies.
Even if a product liability or labeling claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our corporate and brand image.
We have experienced, and may continue to experience, difficulties as we transition to new upgraded systems and business processes. These difficulties have or may include loss of data; difficulty in making payments to third-parties; difficulty in completing financial reporting and filing reports with the SEC in a timely manner; or challenges in otherwise running our business.
Other difficulties may include loss of data; difficulty in completing financial reporting and filing reports with the SEC in a timely manner; or challenges in otherwise running our business. We may also experience decreases in productivity as our personnel implement and become familiar with new systems and processes.
In addition, if the U.S. economy enters a recession in fiscal 2024, we may experience sales declines and may have to decrease prices, all of which could have a material adverse impact on our business, financial condition, and results of operations. ​ 22 Table of Contents Similarly, disruptions in financial and/or credit markets may impact our ability to manage normal commercial relationships with our customers, suppliers, and creditors and might cause us to not be able to continue to have access to preferred sources of liquidity when needed or on terms we find acceptable, and our borrowing costs could increase.
Similarly, disruptions in financial and/or credit markets may impact our ability to manage normal commercial relationships with our customers, suppliers, and creditors and might cause us to not be able to continue to have access to preferred sources of liquidity when needed or on terms we find acceptable, and our borrowing costs could increase.
Risk Factors above. ​ 26 Table of Contents Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products and brands. ​ We consider our intellectual property rights to be a significant and valuable aspect of our business.
See also “Industry Risks – Our business is affected by potato crop performance,” in this Item 1A. Risk Factors above. Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products and brands. We consider our intellectual property rights to be a significant and valuable aspect of our business.
While the incident impacted our business and we were unable to ship to certain customers for a short period of time, it did not have a material adverse impact on our business. ​ As evidenced by the attacks on Kronos and Americold, cyber threats are constantly evolving, are becoming more frequent and more sophisticated and are being made by groups of individuals with a wide range of expertise and motives, which increases the difficulty of detecting and successfully defending against them.
As evidenced by the attacks on Kronos and Americold, cyber threats are constantly evolving, are becoming more frequent and more sophisticated and are being made by groups of individuals with a wide range of expertise and motives, which increases the difficulty of detecting and successfully defending against them.
The pandemic has resulted in significant disruption of global financial markets, labor shortages, supply chain interruptions, increased commodity costs, inflation, and economic uncertainty, which has adversely impacted our business and may continue to do so. ​ 15 Table of Contents Our business, financial condition, and results of operations could be adversely affected by the political and economic conditions of the countries in which we conduct business and other factors related to our international operations, including foreign currency risks and trade barriers. ​ We conduct a substantial and growing amount of business with customers located outside the U.S., including through our joint ventures.
Our business, financial condition, and results of operations could be adversely affected by the political and economic conditions of the countries in which we conduct business and other factors related to our international operations, including foreign currency risks and trade barriers. We conduct a substantial and growing amount of business with customers located outside the U.S.
Various risks, uncertainties, and events beyond our control could affect our ability to comply with these covenants. Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions.
Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions. A default would permit lenders to accelerate the maturity of the debt under these agreements and to foreclose upon any collateral securing the debt.
To the extent we are unable to offset present and future cost increases, our business, financial condition, and results of operations could be materially and adversely affected. ​ Disruption to our supply chain could adversely affect our business . ​ Our ability to manufacture or sell our products may be impaired by damage or disruption to our manufacturing, warehousing or distribution capabilities, or to the capabilities of our suppliers, logistics service providers, or independent distributors.
To the extent we are unable to offset present and future cost increases, our business, financial condition, and results of operations could be materially and adversely affected. Disruption to our supply chain could adversely affect our business .
If we fail to comply with applicable laws and regulations, we may be subject to civil remedies, including fines, injunctions, recalls, or seizures, as well as criminal sanctions, any of which could have a material adverse effect on our business, financial condition, and results of operations. ​ New regulations imposed by the FDA or EFSA around acrylamide formation in potato products could adversely affect us. ​ The regulation of food products, both within the U.S. and internationally, continues to be a focus for governmental scrutiny.
If we fail to comply with applicable laws and regulations, we may be subject to civil remedies, including fines, injunctions, recalls, withdrawals, or seizures, as well as criminal sanctions, any of which could have a material adverse effect on our business, financial condition, and results of operations.
Damage to our reputation or loss of customer confidence in our products for any of these or other reasons could result in decreased demand for our products and could have a material adverse effect on our business, financial condition, and results of operations, as well as require additional resources to rebuild our reputation. ​ If we are unable to execute on large capital projects, our business, financial condition, and results of operations could be materially and adversely affected. ​ Demand for frozen potato products is growing, and we believe that this demand will continue to grow over the long-term.
Damage to our reputation or loss of customer confidence in our products for any of these or other reasons could result in decreased demand for our products and could have a material adverse effect on our business, financial condition, and results of operations, as well as require additional resources to rebuild our reputation.
See also “- Legal and Regulatory Risks - Climate change, or legal, regulatory, or market measures to address climate change, may negatively affect our business and operations,” in this Item 1A.
See also “- Legal and Regulatory Risks - Climate change, or legal, regulatory, or market measures to address climate change, may negatively affect our business and operations,” in this Item 1A. Risk Factors below. The sophistication and buying power of some of our customers could have a negative impact on profits.
Deterioration in the financial condition of significant customers could materially and adversely affect our business, financial condition, and results of operations. ​ Disruption of our access to export mechanisms could have an adverse impact on our business, financial condition, and results of operations. ​ To serve our customers globally, we rely in part on our international joint venture and operations, but also on exports from the U.S.
Specifically, in 2022, some customers, including McDonald’s Corporation, exited from Russia. Deterioration in the financial condition of significant customers could materially and adversely affect our business, financial condition, and results of operations. Disruption of our access to export mechanisms could have an adverse impact on our business, financial condition, and results of operations.
Further, in the event our suppliers or customers experience a breach or system failure, their businesses could be disrupted or otherwise negatively affected, which may result in a disruption in our supply chain or reduced customer orders, which would adversely affect our business and financial results. ​ In addition, if we are unable to prevent security breaches or unauthorized disclosure of non-public information, we may suffer financial and reputational damage, litigation or remediation costs, fines, or penalties because of the unauthorized disclosure of confidential information belonging to us or to our partners, customers, or suppliers.
Further, in the event our suppliers or customers experience a breach or system failure, their businesses could be disrupted or otherwise negatively affected, which may result in a disruption in our supply chain or reduced customer orders, which would adversely affect our business and financial results.
Further, a decrease in the availability of water in certain regions caused by droughts or other factors could increase competition for land and resources in areas that have more favorable growing conditions, and thereby increase costs for such land and resources. ​ The increasing concern over climate change also may result in more regional, federal, and/or global legal and regulatory requirements to reduce or mitigate the effects of greenhouse gases, as well as more stringent regulation of water rights.
Further, a decrease in the availability of water in certain regions caused by droughts or other factors could increase competition for land and resources in areas that have more favorable growing conditions, and thereby increase costs for such land and resources.
We may voluntarily recall or withdraw products from the market in certain circumstances, which would cause us to incur associated costs; those costs could be meaningful.
We sell food products for human consumption, which involves risks such as product contamination or spoilage, product tampering, other adulteration of food products, mislabeling, and misbranding. We may voluntarily recall or withdraw products from the market in certain circumstances, which would cause us to incur associated costs; those costs could be meaningful.
Competitive pressures may restrict our ability to increase prices, including in response to commodity and other input cost increases or additional improvements in product quality.
Competitive pressures may restrict our ability to increase prices, including in response to commodity and other input cost increases or additional improvements in product quality. Our profits could decrease if a reduction in prices or increased costs are not counterbalanced with increased sales volume. Increased industry capacity may result in reduced sales or profits.
The Food, Drug & Cosmetic Act, the Food Safety Modernization Act, other laws and their respective regulations govern, among other things, the manufacturing, composition and ingredients, packaging, and safety of food products. Some aspects of these laws use a strict liability standard for imposing sanctions on corporate behavior, meaning that no intent is required to be established.
Some aspects of these laws use a strict liability standard for imposing sanctions on corporate behavior, meaning that no intent is required to be established.
These initiatives are focused on cost-saving opportunities in procurement, manufacturing, logistics, and customer service, as well as general and administrative functions. However, gaining additional efficiencies may become more difficult over time. In addition, there is currently no active derivatives market for potatoes in the U.S.
We continue to implement profit-enhancing initiatives that improve the efficiency of our supply chain and general and administrative functions. These initiatives are focused on cost-saving opportunities in procurement, manufacturing, logistics, and customer service, as well as general and administrative functions. However, gaining additional efficiencies may become more difficult over time.
The success of our business depends, in part, on maintaining a strong sourcing and manufacturing platform.
In addition to our own production facilities, we source a portion of our products under co-packing agreements. The success of our business depends, in part, on maintaining a strong sourcing and manufacturing platform.

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Item 2. Properties

Properties — owned and leased real estate

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Our facilities vary in age and condition, and each of them has an active maintenance program to ensure a safe operating environment and to keep the facilities in good condition. We believe all our buildings are in satisfactory operating condition to conduct our business as intended.
Overall, our facilities vary in age and condition, and each of them has an active maintenance program to ensure a safe operating environment and to keep the facilities in good condition. We believe all our buildings are in satisfactory operating condition to conduct our business as intended.
For more information, see Note 13, Segments, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K. ​ ​
For more information, see Note 13, Segments, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K. 25 Table of Contents
The following table sets forth our principal production and processing facilities as of May 28, 2023: ​ ​ ​ ​ ​ ​ Location ​ Type of Facility and Number ​ Owned/ Leased Domestic: ​ ​ ​ ​ American Falls, ID ​ Production Facility and Cold Storage ​ Owned (1) Boardman, OR ​ Production Facility (2), Production Facility and Cold Storage ​ Owned (3) Connell, WA ​ Production Facility, Cold Storage ​ Owned (1), Leased (1) Delhi, LA ​ Production Facility, Cold Storage, Farm ​ Owned (1), Leased (2) Hermiston, OR ​ Production Facility ​ Owned (1) Park Rapids, MN (a) ​ Production Facility and Cold Storage ​ Owned (1) Pasco, WA ​ Production Facility (2) ​ Owned (2) Paterson, WA ​ Production Facility, Farm (4) ​ Owned (2), Leased (3) Quincy, WA ​ Production Facility ​ Owned (1) Richland, WA ​ Production Facility, Innovation Center ​ Owned (2) Twin Falls, ID ​ Production Facility ​ Owned (1) Warden, WA ​ Production Facility ​ Owned (1) ​ ​ ​ ​ ​ International: ​ ​ ​ ​ Bergen-op-Zoom, The Netherlands ​ Production Facility ​ Owned (1) Broekhuizenvorst, The Netherlands ​ Production Facility ​ Owned (1) Buenos Aires, Argentina ​ Production Facility ​ Owned (1) Hallam, Australia ​ Production Facility and Cold Storage (2) ​ Leased (2) Hollabrunn, Austria (b) ​ Production Facility ​ Owned (1) Kruiningen, The Netherlands ​ Production Facility ​ Owned (1) Oosterbierum, The Netherlands ​ Production Facility ​ Owned (1) Shangdu, China ​ Production Facility ​ Owned (1) Taber, Canada ​ Production Facility and Cold Storage ​ Owned (1) Wisbech, The United Kingdom ​ Production Facility ​ Owned (1) (a) We own a 50 percent interest in this facility through our Lamb Weston RDO joint venture. ​ (b) LW EMEA owns a 75 percent interest in a joint venture in Austria.
The following table sets forth our principal production and processing facilities as of May 26, 2024: Location Type of Facility and Number Owned/ Leased (Number of Facilities) Domestic: American Falls, ID Production Facility and Cold Storage Owned (1) Boardman, OR Production Facility (2), Production Facility and Cold Storage Owned (3) Connell, WA Production Facility, Cold Storage Owned (1), Leased (1) Delhi, LA Production Facility, Cold Storage, Farm Owned (1), Leased (2) Hermiston, OR Production Facility Owned (1) Park Rapids, MN (a) Production Facility and Cold Storage Owned (1) Pasco, WA Production Facility (2) Owned (2) Paterson, WA Production Facility, Farm (4) Owned (2), Leased (3) Quincy, WA Production Facility Owned (1) Richland, WA Production Facility, Innovation Center Owned (2) Twin Falls, ID Production Facility Owned (1) Warden, WA Production Facility Owned (1) International: Bergen-op-Zoom, The Netherlands Production Facility Owned (1) Broekhuizenvorst, The Netherlands Production Facility Owned (1) Buenos Aires, Argentina Production Facility Owned (1) Hallam, Australia Production Facility and Cold Storage (2) Leased (2) Hollabrunn, Austria (b) Production Facility Owned (1) Kruiningen, The Netherlands Production Facility Owned (1) Oosterbierum, The Netherlands Production Facility Owned (1) Shangdu, China Production Facility Owned (1) Taber, Canada Production Facility and Cold Storage Owned (1) Ulanqab, China Production Facility and Cold Storage Owned (1) Wisbech, The United Kingdom Production Facility Owned (1) _____________________________________________________ (a) We own a 50% interest in this facility through our Lamb Weston RDO joint venture.
This joint venture’s financial results are consolidated in our financial statements. ​ We use our farms as a source of raw materials, to better understand the costs of growing potatoes, and to deploy agronomic research.
(b) LW EMEA owns a 75% interest in a joint venture in Austria that owns this facility. This joint venture’s financial results are consolidated in our financial statements. We use our farms as a source of raw materials, to better understand the costs of growing potatoes, and to deploy agronomic research.
ITEM 2. PROPERTIE S ​ We are headquartered in Eagle, Idaho.
ITEM 2. PROPERTIES We are headquartered in Eagle, Idaho.
We also own and lease general office/support facilities in the regions in which we operate, including Argentina, Australia, Austria, Canada, China, Mexico, Japan, Singapore, the Netherlands, the United Kingdom and the U.S. ​ Our manufacturing assets are shared across all reportable segments. Therefore, we do not identify or allocate assets by reportable segment.
We also own and lease general office/support facilities in the regions in which we operate, including North America, Latin America, Europe, the Middle East, and Asia. Our manufacturing assets are shared across all reportable segments. Therefore, we do not identify or allocate assets by reportable segment.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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ITEM 3. LEGAL PROCEEDINGS ​ For information regarding our legal proceedings, see 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 this Form 10-K. ​ 28 Table of Contents
ITEM 3. LEGAL PROCEEDINGS For information regarding our legal proceedings, see 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 this Form 10-K.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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On December 17, 2021, we announced that our Board of Directors had authorized the repurchase of an additional $250.0 million of our common stock under this program, bringing the total amount authorized under the program to $500.0 million of our common stock.
On December 17, 2021, we announced that our Board had authorized the repurchase of an additional $250.0 million of our common stock under this program, bringing the total amount authorized under the program to $500.0 million of our common stock.
Repurchases under the program may be made at our discretion from time to time on the open market, subject to applicable laws, including pursuant to a repurchase plan administered in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, or through privately negotiated transactions. 30 Table of Contents Performance Graph ​ The following graph and table compare the cumulative total return on our common stock with the cumulative total return of the Standard & Poor’s (“S&P”) 500 Index, the S&P 400 Packaged Foods Index, which we consider to be our peer group, and the S&P 500 Packaged Foods Index for the five years ended May 26, 2023 (the last trading day of our fiscal year).
Repurchases under our share repurchase program may be made at our discretion from time to time on the open market, subject to applicable laws, including pursuant to a repurchase plan administered in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, or through privately negotiated transactions. 27 Table of Contents Performance Graph The following graph and table compare the cumulative total return on our common stock with the cumulative total return of the Standard & Poor’s (“S&P”) 500 Index, the S&P 400 Packaged Foods Index, which we consider to be our peer group, and the S&P 500 Packaged Foods Index for the five years ended May 24, 2024 (the last trading day of our fiscal year).
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ Our common stock is listed on the New York Stock Exchange under the ticker symbol “LW.” At July 17, 2023, there were 10,490 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange under the ticker symbol “LW.” At July 17, 2024, there were 9,930 holders of record of our common stock.
The majority of holders of Lamb Weston common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. ​ Dividends ​ Our Board of Directors intends to continue to consider declaring and paying dividends on Lamb Weston common stock based on our financial condition and results of operations, as well as applicable covenants under our debt agreements.
Dividends Our Board intends to continue to consider declaring and paying dividends on Lamb Weston common stock based on our financial condition and results of operations, as well as applicable covenants under our debt agreements.
The graph and table assume that $100 was invested in our common stock, the S&P 500 Index, the S&P 400 Packaged Foods Index, and the S&P 500 Packaged Foods Index on May 25, 2018, and that all dividends were reinvested .
The graph and table assume that $100 was invested in our common stock, the S&P 500 Index, the S&P 400 Packaged Foods Index, and the S&P 500 Packaged Foods Index on May 24, 2019, and that all dividends were reinvested . The cumulative total return shown below are based on the last trading day in Lamb Weston’s fiscal year.
The cumulative total return shown below are based on the last trading day in Lamb Weston’s fiscal year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ May 25, ​ May 24, ​ May 29, ​ May 28, ​ May 27, ​ May 26, ​ 2018 ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ 2023 Lamb Weston ​ $ 100 ​ $ 96 ​ $ 94 ​ $ 131 ​ $ 109 ​ $ 178 S&P 500 Index ​ $ 100 ​ $ 106 ​ $ 116 ​ $ 163 ​ $ 164 ​ $ 169 S&P 400 Packaged Foods Index ​ $ 100 ​ $ 125 ​ $ 119 ​ $ 140 ​ $ 134 ​ $ 138 S&P 500 Packaged Foods Index ​ $ 100 ​ $ 111 ​ $ 119 ​ $ 141 ​ $ 148 ​ $ 164 ​ The above performance graph and other information furnished under this Part II, Item 5 of this Form 10-K shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the provisions of Section 18, of the Securities Exchange Act of 1934, as amended. ​
May 24, 2019 May 29, 2020 May 28, 2021 May 27, 2022 May 26, 2023 May 24, 2024 Lamb Weston $ 100 $ 98 $ 136 $ 114 $ 186 $ 153 S&P 500 Index $ 100 $ 110 $ 154 $ 155 $ 159 $ 204 S&P 400 Packaged Foods Index $ 100 $ 95 $ 112 $ 108 $ 111 $ 119 S&P 500 Packaged Foods Index $ 100 $ 107 $ 127 $ 134 $ 148 $ 133 The above performance graph and other information furnished under this Part II, Item 5 of this Form 10-K shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the provisions of Section 18, of the Securities Exchange Act of 1934, as amended.
Our Board of Directors has no obligation under Delaware law or our amended and restated certificate of incorporation to declare or pay dividends, and dividends on Lamb Weston common stock are limited to legally available funds. ​ Purchases of Equity Securities by the Issuer ​ The following table presents information related to total shares purchased during the periods presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Dollar ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Value of Maximum ​ ​ Total Number ​ Average ​ Shares (or Units) ​ Number of Shares that ​ ​ of Shares (or ​ Price Paid ​ Purchased as Part of ​ May Yet be Purchased ​ ​ Units) ​ Per Share ​ Publicly Announced ​ Under Plans or Programs Period Purchased (a) (or Unit) Plans or Programs (b) (in millions) (b) February 27, 2023 through March 26, 2023 ​ ​ 1 ​ $ 101.98 ​ ​ — ​ $ 228.4 March 27, 2023 through April 23, 2023 ​ ​ 27,496 ​ $ 109.07 ​ ​ 27,496 ​ $ 225.4 April 24, 2023 through May 28, 2023 ​ ​ 13,035 ​ $ 110.01 ​ ​ 13,035 ​ $ 223.9 Total ​ ​ 40,532 ​ ​ ​ ​ ​ ​ ​ ​ ​ (a) Represents repurchased shares of our common stock under our publicly announced share repurchase program, which were repurchased at a weighted average price of $109.37 per share, and shares withheld from employees to cover income and payroll taxes on equity awards that vested during the period. ​ (b) On December 20, 2018, we announced that our Board of Directors had authorized a $250.0 million share repurchase program with no expiration date.
Purchases of Equity Securities by the Issuer The following table presents information related to total shares purchased during the periods presented below: Period Total Number of Shares (or Units) Purchased (a) Average Price Paid Per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (b) Approximate Dollar Value of Maximum Number of Shares that May Yet be Purchased Under Plans or Programs (in millions) (b) February 26, 2024 through March 24, 2024 17 $ 102.05 — $ 450.0 March 25, 2024 through April 21, 2024 248,661 $ 80.66 247,962 $ 430.0 April 22, 2024 through May 26, 2024 483,621 $ 82.91 482,341 $ 390.0 Total 732,299 _____________________________________________________ (a) Represents repurchased shares of our common stock under our publicly announced share repurchase program, which were repurchased at a weighted average price of $82.15 per share, and shares withheld from employees to cover income and payroll taxes on equity awards that vested during the period.
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The majority of holders of Lamb Weston common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions.
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However, our Board has no obligation under Delaware law or our amended and restated certificate of incorporation to declare or pay dividends, and dividends on Lamb Weston common stock are limited to legally available funds.
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(b) On December 20, 2018, we announced that our Board had authorized a $250.0 million share repurchase program with no expiration date.
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On October 11, 2023, we announced that our Board had increased our share repurchase authorization under the program to an aggregate of $500.0 million of our common stock, including $123.9 million of previously authorized but unused capacity under the program. As of May 26, 2024, $390.0 million remained authorized and available for repurchase under this program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to our trade promotions, income taxes, and impairment, among others.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to our trade promotions, income taxes, and impairment, among others.
We believe we have sufficient liquidity to meet our business requirements for at least the next 12 months. Cash generated by operations, supplemented by our total cash and availability under our revolving credit facilities, is our primary source of liquidity for funding business requirements.
We believe we have sufficient liquidity to meet our business requirements for at least the next 12 months. Cash generated by operations, supplemented by our total cash and availability under our credit facilities, is our primary source of liquidity for funding business requirements.
While we believe the judgments and estimates discussed above and made by management are appropriate and reasonable under the circumstances, actual resolution of these matters may differ from recorded estimated amounts. Further information on income taxes is provided in Note 5, Income Taxes, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
While we believe the judgments and estimates discussed above and made by management are appropriate and reasonable under the circumstances, actual resolution of these matters may differ from recorded estimated amounts. Further information on income taxes is provided in Note 3, Income Taxes, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
Changes in valuation allowances from period to period are included in the tax provision. ​ 40 Table of Contents ● We establish accruals for unrecognized tax benefits when, despite the belief that our tax return positions are fully supported, we believe that an uncertain tax position does not meet the recognition threshold of Accounting Standards Codification (“ASC”) 740, Income Taxes .
Changes in valuation allowances from period to period are included in the tax provision. • We establish accruals for unrecognized tax benefits when, despite the belief that our tax return positions are fully supported, we believe that an uncertain tax position does not meet the recognition threshold of Accounting Standards Codification (“ASC”) 740, Income Taxes .
While it is difficult to predict the final outcome or timing of resolution for any particular matter, we believe that the accruals for unrecognized tax benefits at May 28, 2023, reflect the estimated outcome of known tax contingencies as of such date in accordance with accounting for uncertainty in income taxes under ASC 740. ​ ● We recognize the tax impact of including certain foreign earnings in U.S. taxable income as a period cost.
While it is difficult to predict the final outcome or timing of resolution for any particular matter, we believe that the accruals for unrecognized tax benefits at May 26, 2024, reflect the estimated outcome of known tax contingencies as of such date in accordance with accounting for uncertainty in income taxes under ASC 740. • We recognize the tax impact of including certain foreign earnings in U.S. taxable income as a period cost.
Discussions of fiscal 2021 items and fiscal year comparisons between fiscal 2022 and 2021 that are not included in this Form 10-K can be found in “Part II, Item 7.
Discussions of fiscal 2022 items and fiscal year comparisons between fiscal 2023 and 2022 that are not included in this Form 10-K can be found in “Part II, Item 7.
The estimates for sales incentives are based principally on historical sales and redemption rates, influenced by judgments about current market conditions such as competitive activity in specific product categories. ​ Trade promotion programs include introductory marketing funds such as slotting fees, cooperative marketing programs, temporary price reductions, and other activities conducted by our customers to promote our products.
The estimates for sales incentives are based principally on historical sales and redemption rates, influenced by judgments about current market conditions such as competitive activity in specific product categories. 36 Table of Contents Trade promotion programs include introductory marketing funds such as slotting fees, cooperative marketing programs, temporary price reductions, and other activities conducted by our customers to promote our products.
Financial Statements and Supplementary Data” of this Form 10-K. ​ New and Recently Issued Accounting Standards ​ For a listing of new and recently issued accounting standards, see Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
Financial Statements and Supplementary Data” of this Form 10-K. 37 Table of Contents New and Recently Issued Accounting Standards For a listing of new and recently issued accounting standards, see Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
See Note 9, Leases, for more information on our operating and finance lease obligations and timing of expected future payments. ● Purchase obligations and capital commitments .
See Note 7, Leases, for more information on our operating and finance lease obligations and timing of expected future payments. • Purchase obligations and capital commitments .
At May 28, 2023, we were in compliance with all covenants contained in our credit agreements. ​ Obligations and Commitments ​ As part of our ongoing operations, we enter into arrangements that obligate us to make future payments under contracts such as debt agreements, lease agreements, potato supply agreements, and unconditional purchase obligations.
At May 26, 2024, we were in compliance with all covenants contained in our credit agreements. Obligations and Commitments As part of our ongoing operations, we enter into arrangements that obligate us to make future payments under contracts such as debt agreements, lease agreements, potato supply agreements, and unconditional purchase obligations.
Our 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. ​ For further information on income taxes, see Note 5, Income Taxes, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
Our effective tax rate varies from the U.S. statutory tax rate of 21% primarily due to the impact of U.S. state taxes, foreign taxes, permanent differences, and discrete items. For further information on income taxes, see Note 3, Income Taxes, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
Financial Statements and Supplementary Data” of this Form 10-K for more information. ​ ● Short-term borrowings and long-term debt, including current portion . See Note 8, Debt and Financing Obligations, for more information on debt payments and the timing of expected future payments. 38 Table of Contents ● Leases .
Financial Statements and Supplementary Data” of this Form 10-K for more information. • Short-term borrowings and long-term debt, including current portion . See Note 6, Debt and Financing Obligations, for more information on debt payments and the timing of expected future payments. • Leases .
We base our estimates on historical experiences combined with management’s understanding of current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
We base our estimates on historical experiences combined with management’s understanding of current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
These measures are not substitutes for their comparable GAAP financial measures, such as gross profit, income from operations, net income, diluted earnings per share, or other measures prescribed by GAAP, and there are limitations to using non-GAAP financial measures.
These measures are not substitutes for their comparable GAAP financial measures, such as net income, gross profit, SG&A, income from operations, equity method investment earnings, diluted EPS, or other measures prescribed by GAAP, and there are limitations to using non-GAAP financial measures.
At May 28, 2023 and May 29, 2022, we had $86.1 million and $41.2 million, respectively, of accrued trade promotions payable recorded in “Accrued liabilities” on our Consolidated Balance Sheets.
At May 26, 2024 and May 28, 2023, we had $90.0 million and $86.1 million, respectively, of accrued trade promotions payable recorded in “Accrued liabilities” on our Consolidated Balance Sheets.
Management believes that presenting these non-GAAP financial measures provides investors with useful supplemental information because they (i) provide meaningful supplemental information regarding financial performance by excluding certain items affecting comparability between periods, (ii) permit investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provide supplemental information that may be useful to investors in evaluating our results.
Management believes that presenting these non-GAAP financial measures provide investors with useful supplemental information because they (i) provide meaningful supplemental information regarding financial performance by excluding impacts of foreign currency exchange rates and unrealized mark-to-market derivative gains and losses and other items affecting comparability between periods, (ii) permit investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate our core operating performance across periods, and (iii) otherwise provide supplemental information that may be useful to investors in evaluating our financial results.
The increase from May 29, 2022 is primarily due to the LW EMEA Acquisition. ​ Income Taxes ​ We compute the provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards.
Income Taxes We compute the provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards.
Estimates made by management in accounting for these costs are based primarily on our historical experience with marketing programs, with consideration given to current circumstances and industry trends and include the following: quantity of customer sales, timing of promotional activities, current and past trade-promotion spending patterns, the interpretation of historical spending trends by customer and category, and forecasted costs for activities within the promotional programs. ​ The determination of sales incentive and trade promotion costs requires judgment and may change in the future as a result of changes in customer demand for our products, promotion participation, particularly for new programs related to the introduction of new products.
Estimates made by management in accounting for these costs are based primarily on our historical experience with marketing programs, with consideration given to current circumstances and industry trends and include the following: quantity of customer sales, timing of promotional activities, current and past trade-promotion spending patterns, the interpretation of historical spending trends by customer and category, and forecasted costs for activities within the promotional programs.
These expenditures could increase or decrease as a result of a number of factors, including our financial results, future economic conditions, supply chain constraints for equipment, and our regulatory compliance requirements.
These expenditures could increase or decrease as a result of a number of factors, including our financial results, future economic conditions, supply chain constraints for equipment, and our regulatory compliance requirements. At May 26, 2024, we had commitments for capital expenditures of $402.7 million.
At May 28, 2023, we had commitments for capital expenditures of $623.9 million. ​ Cash Flows ​ Below is a summary table of our cash flows, followed by a discussion of the sources and uses of cash through operating, investing, and financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May (in millions) 2023 2022 Net cash flows provided by (used for): ​ ​ Operating activities ​ $ 761.7 ​ $ 418.6 Investing activities ​ (1,340.9) ​ (310.5) Financing activities ​ 340.8 ​ (363.4) ​ ​ (238.4) ​ (255.3) Effect of exchange rate changes on cash and cash equivalents ​ 18.2 (3.2) Net decrease in cash and cash equivalents ​ ​ (220.2) ​ ​ (258.5) Cash and cash equivalents, beginning of period ​ ​ 525.0 ​ ​ 783.5 Cash and cash equivalents, end of period ​ $ 304.8 ​ $ 525.0 ​ Operating Activities ​ During fiscal 2023, cash provided by operating activities increased $343.1 million to $761.7 million, compared to $418.6 million for fiscal 2022.
Cash Flows Below is a summary table of our cash flows, followed by a discussion of the sources and uses of cash through operating, investing, and financing activities: For the Fiscal Years Ended May (in millions) 2024 2023 Net cash flows provided by (used for): Operating activities $ 798.2 $ 761.7 Investing activities (984.1) (1,340.9) Financing activities (48.0) 340.8 (233.9) (238.4) Effect of exchange rate changes on cash and cash equivalents 0.5 18.2 Net decrease in cash and cash equivalents (233.4) (220.2) Cash and cash equivalents, beginning of period 304.8 525.0 Cash and cash equivalents, end of period $ 71.4 $ 304.8 Operating Activities During fiscal 2024, cash provided by operating activities increased $36.5 million to $798.2 million, compared to $761.7 million for fiscal 2023.
In addition, we believe that the presentation of these non-GAAP financial measures, when considered together with the most directly comparable GAAP financial measures and the reconciliations to those GAAP financial measures, provides investors with additional tools to understand the factors and trends affecting our underlying business than could be obtained absent these disclosures. ​ 41 Table of Contents The non-GAAP financial measures provided in this report should be viewed in addition to, and not as alternatives for, financial measures prepared in accordance with GAAP that are presented in this report.
In addition, we believe that the presentation of these non-GAAP financial measures, when considered together with their most directly comparable GAAP financial measure and the reconciliations to those GAAP financial measures, provides investors with additional tools to understand the factors and trends affecting our underlying business than could be obtained absent these disclosures.
We acquired the remaining interest in LW EMEA (the “LW EMEA Acquisition”) for consideration consisting of €531.6 million ($564.0 million) in cash, which excludes settlement of pre-existing relationships and cash held by LW EMEA, and 1,952,421 shares of our common stock. We used $42.3 million of cash to acquire the additional equity interest in LWAMSA.
We acquired the remaining interest in LW EMEA for consideration consisting of €531.6 million ( $564.0 million ) in cash, which excludes settlement of pre-existing relationships and cash held by LW EMEA, and 1,952,421 shares of our common stock (valued at $197.3 million as of the acquisition closing date) .
If we are required to retroactively adjust provisional amounts that we have recorded for the fair values of assets and liabilities in connection with acquisitions, these adjustments could have a material impact on our financial condition and results of operations. ​ 39 Table of Contents Significant estimates and assumptions in determining the fair value of brands and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets.
If we are required to retroactively adjust provisional amounts that we have recorded for the fair values of assets and liabilities in connection with acquisitions, these adjustments could have a material impact on our financial condition and results of operations.
Our management also uses Adjusted Income from Operations, Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures. Management uses these non-GAAP financial measures to assist in analyzing what management views as our core operating performance for purposes of business decision making.
Management uses these non-GAAP financial measures to assist in analyzing what management views as our core operating performance for purposes of business decision-making.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended May 29, 2022, which we filed with the SEC on July 27, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended May 28, 2023, which we filed with the SEC on July 25, 2023. Results for the fiscal year ended May 26, 2024 are not necessarily indicative of results that may be attained in the future.
(“LW EMEA”), and in July 2022, we acquired an additional 40 percent interest in Lamb Weston Alimentos Modernos S.A. (“LWAMSA”). With the completion of the transactions, we own 100 percent and 90 percent of the equity interests in LW EMEA and LWAMSA (the “Acquisitions”), respectively.
In addition, in July 2022, we acquired an additional 40% interest in LWAMSA (together with the LW EMEA Acquisition, the “Acquisitions”). With the completion of the Acquisitions, we own 100% and 90% of the equity interests in LW EMEA and LWAMSA, respectively.
We began consolidating LW EMEA’s and LWAMSA’s results in our consolidated financial statements following the respective acquisitions. The results are included in our Global segment. We discuss the Acquisitions in more detail in Note 3, Acquisitions, in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K.
We used $42.3 million of cash to acquire the additional equity interest in LWAMSA. We began consolidating LW EMEA’s and LWAMSA’s results in our Consolidated Financial Statements following the respective acquisitions. The results are included in our International segment. We discuss the Acquisitions in more detail in Note 11, Acquisitions, in “Part II, Item 8.
Financial Statements and Supplementary Data” in this Form 10-K. ​ Equity Method Investment Earnings (Loss) ​ We conducted meaningful business through unconsolidated joint ventures until we acquired the remaining interest of LW EMEA in February 2023.
Financial Statements and Supplementary Data” in this Form 10-K. Equity Method Investment Earnings We conducted business through unconsolidated joint ventures during fiscal 2024 and 2023.
Actual results may differ from these estimates under different assumptions or conditions. ​ Critical accounting estimates are those that are most important to the portrayal of our financial condition and operating results. These estimates require management’s most difficult, subjective, or complex judgments.
Critical accounting estimates are those that are most important to the portrayal of our financial condition and operating results. These estimates require management’s most difficult, subjective, or complex judgments. We review the development, selection, and disclosure of our critical accounting estimates with the Audit Committee of our Board.
The unconditional purchase obligation arrangements are entered into in the normal course of business to ensure adequate levels of sourced product are available. ​ A summary of our material cash requirements for our known contractual obligations as of May 28, 2023 are as follows: ​ ​ ​ ​ ​ ​ ​ (in millions) ​ Total ​ Payable within 12 Months Short-term borrowings and long-term debt, including current portion (a) $ 3,479.8 $ 214.4 Interest on long-term debt (b) ​ ​ 960.3 ​ ​ 169.3 Leases (a) ​ ​ 200.5 ​ ​ 34.8 Purchase obligations and capital commitments (a) ​ ​ 1,233.9 ​ ​ 717.1 Total $ 5,874.5 $ 1,135.6 (a) See the below Notes to the Consolidated Financial Statements included in “Part II, Item 8.
A summary of our material cash requirements for our known contractual obligations as of May 26, 2024 are as follows: (in millions) Total Payable within 12 Months Short-term borrowings and long-term debt, including current portion (a) $ 3,836.7 $ 381.0 Interest on long-term debt (b) 935.7 180.8 Leases (a) 180.9 34.9 Purchase obligations and capital commitments (a) 1,148.4 591.0 Total $ 6,101.7 $ 1,187.7 _____________________________________________________ (a) See the below Notes to the Consolidated Financial Statements included in “Part II, Item 8.
With the completion of the Acquisitions, we own 90 percent and 100 percent of the equity interests in LWAMSA and LW EMEA, respectively . We recorded the assets acquired and the liabilities assumed at their estimated acquisition date fair values with the excess purchase price recorded as goodwill.
We recorded the assets acquired and the liabilities assumed at their estimated acquisition date fair values with the excess purchase price recorded as goodwill.
If our estimates of the economic lives change, depreciation or amortization expenses could increase or decrease. ​ Sales Incentives and Trade Promotion Allowances ​ We promote our products with advertising, consumer incentives, and trade promotions. Sales promotions include, but are not limited to, discounts, coupons, rebates, and volume-based incentives.
In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could increase or decrease. Sales Incentives and Trade Promotion Allowances We promote our products with advertising, consumer incentives, and trade promotions.
We are the number one supplier of value-added frozen potato products in North America and are a leading supplier of value-added frozen potato products internationally, with a strong and growing presence in high-growth emerging markets. We offer a broad product portfolio to a diverse channel and customer base in over 100 countries.
Overview Lamb Weston is a leading global producer, distributor, and marketer of value-added frozen potato products. We are the number one supplier of value-added frozen potato products in North America and are a leading supplier of value-added frozen potato products internationally, with a strong and growing presence in high-growth emerging markets.
Excluding $34.3 million of net tax expense and a $4.6 million benefit from items impacting comparability in fiscal 2023 and 2022, respectively, our effective tax rate was 21.8% for fiscal 2023 and 21.4% in fiscal 2022.
Income Taxes Our effective tax rate was 24.1% for fiscal 2024, compared to 18.2% in fiscal 2023. Excluding a $4.8 million tax benefit and a $28.5 million of net tax expense from items impacting comparability in fiscal 2024 and 2023, respectively, our effective tax rate was 24.1% for fiscal 2024 and 22.0% in fiscal 2023.
Our funding requirements include capital expenditures for announced manufacturing expansions in China, Idaho, the Netherlands, and Argentina, as well as capital investments to upgrade information systems and ERP infrastructure, working capital requirements, and dividends. We expect capital investments in fiscal 2024 to be approximately $800 million to $900 million, depending on timing of projects and excluding acquisitions, if any.
Our funding requirements include capital expenditures for announced manufacturing expansions in the Netherlands and Argentina, as well as capital investments to upgrade information systems and ERP infrastructure, working capital requirements, and dividends.
Higher income from operations drove the increase in net income and diluted EPS. ​ In fiscal 2023, we generated net cash from operating activities of $761.7 million, up $343.1 million versus the prior year, due to higher earnings, partially offset by increased working capital.
In fiscal 2024, we generated net cash from operating activities of $798.2 million, up $36.5 million versus the prior year, due to higher net income, adjusted for non-cash income and expenses, partially offset by increased working capital needs.
For additional information on our reportable segments and product contribution margin, see “Non-GAAP Financial Measures” below and Note 13, Segments, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
Net sales and Segment Adjusted EBITDA are the primary measures reported to our chief operating decision maker for purposes of allocating resources to our segments and assessing their performance. For additional information on our reportable segments, see “Non-GAAP Financial Measures” below and Note 13, Segments, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
In addition, in fiscal 2023, we used $610.4 million to purchase the remaining equity interest in LW EMEA and an additional 40 percent equity interest in LWAMSA. ​ Financing Activities ​ During fiscal 2023, financing activities provided net proceeds of $340.8 million, compared with $363.4 million used in during fiscal 2022.
The decrease primarily relates to $610.4 million of cash used to purchase the remaining equity interest in LW EMEA and an additional 40% equity interest in LWAMSA during fiscal 2023.
Financial Statements and Supplementary Data” of this Form 10-K. ​ Non-GAAP Financial Measures ​ To supplement the financial information included in this report, we have presented product contribution margin on a consolidated basis, Adjusted EBITDA, Adjusted EBITDA including unconsolidated joint ventures, Adjusted Income from Operations, Adjusted Net Income, and Adjusted Diluted EPS, each of which is considered a non-GAAP financial measure. ​ Product contribution margin is one of the primary measures reported to our chief operating decision maker for purposes of allocating resources to our segments and assessing their performance.
Financial Statements and Supplementary Data” of this Form 10-K. Non-GAAP Financial Measures To supplement the financial information included in this report, we have presented Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A, Adjusted Income from Operations, Adjusted Equity Method Investment Earnings, Adjusted Net Income, and Adjusted Diluted EPS, each of which is considered a non-GAAP financial measure.
Refer to “Non-GAAP Financial Measures” below for the definitions of product contribution margin, Adjusted EBITDA, Adjusted EBITDA including unconsolidated joint ventures, Adjusted Income from Operations, Adjusted Net Income, and Adjusted Diluted EPS, and a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, gross profit, income from operations, net income, or diluted EPS, as applicable. ​ Acquisitions of Joint Venture Interests ​ In February 2023, we completed the acquisition of the remaining 50 percent equity interest in Lamb-Weston/Meijer v.o.f.
Refer to “Non-GAAP Financial Measures” below for the definitions of Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A, Adjusted Income from Operations, Adjusted Equity Method Investment Earnings, Adjusted Net Income, and Adjusted Diluted EPS, and a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, net income, gross profit, SG&A, income from operations, equity method investment earnings, and diluted EPS, as applicable.
Excluding these mark-to-market adjustments, product contribution margin increased $6.9 million, largely due to higher prices in our vegetable business. ​ Selling, General and Administrative Expenses ​ SG&A expenses in fiscal 2023 increased $162.4 million, or 42%, to $550.0 million, and included a net $21.8 million gain ($12.2 million after-tax, or $0.08 per share) related to actions taken to mitigate the effect of changes in currency rates on the purchase price of LW EMEA, net of other acquisition-related costs.
The prior fiscal year included a net $21.8 million ($12.2 million after-tax, or $0.08 per share) of gain related to actions taken to mitigate the effect of changes in currency rates on the purchase price of LW EMEA, net of other acquisition-related costs; $4.2 million ($3.1 million after-tax, or $0.02 per share) of unrealized loss related to mark-to-market adjustments associated with currency hedging contracts; and $5.5 million ($4.1 million after-tax, or $0.03 per share) of foreign currency exchange losses.
If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges. In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense.
Significant estimates and assumptions in determining the fair value of brands and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges.
French fries represent most of our value-added frozen potato product portfolio. ​ During fiscal 2023, we operated our business in four reportable segments: Global, Foodservice, Retail, and Other. We report net sales and product contribution margin by segment and on a consolidated basis. Product contribution margin, when presented on a consolidated basis, is a non-GAAP financial measure.
We offer a broad product portfolio to a diverse channel and customer base in over 100 countries. French fries represent most of our value-added frozen potato product portfolio. During fiscal 2024, we operated our business in two reportable segments: North America and International. We report net sales and adjusted EBITDA by segment and on a consolidated basis.
To the extent there are differences between these estimates and actual results, our consolidated financial statements may be affected. ​ Acquisitions ​ From time to time, we may enter into business combinations. In July 2022 and February 2023, we acquired an additional 40 percent interest in LWAMSA and the remaining equity interest in LW EMEA, respectively.
We have made appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are differences between these estimates and actual results, our Consolidated Financial Statements may be affected. Acquisitions From time to time, we may enter into business combinations.
Equity method investment earnings for fiscal 2022 included a non-cash impairment charge of $62.7 million (before and after-tax, or $0.43 per share) related to LW EMEA’s withdrawal from its joint venture in Russia. ​ 42 Table of Contents The following table reconciles income from operations to Adjusted Income from Operations, net income to Adjusted Net Income, and diluted EPS to Adjusted Diluted EPS: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May ​ ​ 2023 ​ 2022 ​ 2023 ​ 2022 ​ 2023 (a) ​ 2022 (a) (in millions, except per share amounts) ​ Income from Operations ​ Net Income ​ Diluted EPS As reported ​ $ 882.1 ​ $ 444.4 ​ $ 1,008.9 ​ $ 200.9 ​ $ 6.95 ​ $ 1.38 Items impacting comparability: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ LW EMEA acquisition-related items: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain on acquisitions (b) ​ ​ — ​ ​ — ​ ​ (364.4) ​ ​ — ​ ​ (2.52) ​ ​ — Inventory step-up (c) ​ ​ 27.0 ​ ​ — ​ ​ 20.0 ​ ​ — ​ ​ 0.14 ​ ​ — Acquisition expenses, net (c) ​ ​ (21.8) ​ ​ — ​ ​ (12.2) ​ ​ — ​ ​ (0.08) ​ ​ — Total LW EMEA acquisition-related items impacting comparability ​ ​ 5.2 ​ ​ — ​ ​ (356.6) ​ ​ — ​ ​ (2.46) ​ ​ — Gain on acquisition of interest in LWAMSA (b) ​ ​ — ​ ​ — ​ ​ (15.1) ​ ​ — ​ ​ (0.10) ​ ​ — Impact of LW EMEA natural gas and electricity derivatives (c) ​ ​ 18.7 ​ ​ — ​ ​ 41.9 ​ ​ (23.5) ​ ​ 0.29 ​ ​ (0.16) Loss on extinguishment of debt (d) ​ ​ — ​ ​ — ​ ​ — ​ ​ 40.5 ​ ​ — ​ ​ 0.27 Write-off of net investment in Russia (e) ​ ​ — ​ ​ — ​ ​ — ​ ​ 62.7 ​ ​ — ​ ​ 0.43 Total items impacting comparability ​ ​ 23.9 ​ ​ — ​ ​ (329.8) ​ ​ 79.7 ​ ​ (2.27) ​ ​ 0.54 Adjusted ​ $ 906.0 ​ $ 444.4 ​ $ 679.1 ​ $ 280.6 ​ $ 4.68 ​ $ 1.92 (a) Diluted weighted average common shares were 145.2 million and 145.9 million in fiscal 2023 and 2022, respectively. ​ (b) See footnote (b) to the reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures above for a discussion of the item impacting comparability. ​ (c) See footnote (a) to the reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures above for a discussion of the item impacting comparability. ​ (d) The fiscal year ended May 29, 2022, includes a loss on the extinguishment of debt of $53.3 million ($40.5 million after-tax, or $0.27 per share), which consists of a call premium of $39.6 million related to the redemption of our senior notes due 2024 and 2026 and the write-off of $13.7 million of debt issuance costs associated with those notes. ​ (e) See footnote (b) to the reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures above for a discussion of the item impacting comparability. ​ 43 Table of Contents
(d) Included in Adjusted EBITDA is a gain on acquisition interest in joint ventures of $425.8 million ($379.5 million, or $2.62 per share) of non-cash gains related to the remeasurement of our initial equity interests to fair value, including a $410.7 million non-cash gain ($364.4 million after-tax, or $2.52 per share) for LW EMEA and a $15.1 million non-cash gain (before and after-tax, or $0.10 per share) for LWAMSA. 39 Table of Contents The following tables reconcile gross profit to Adjusted Gross Profit, SG&A to Adjusted SG&A, income from operations to Adjusted Income from Operations, equity method investment earnings to Adjusted Equity Method Investment Earnings, net income to Adjusted Net Income, and diluted EPS to Adjusted Diluted EPS: Fiscal Year Ended May 26, 2024 Gross Profit SG&A Income From Operations Equity Method Investment Earnings (Loss) Net Income Diluted EPS (a) As reported $ 1,766.7 $ 701.4 $ 1,065.3 $ 26.0 $ 725.5 $ 4.98 Unrealized derivative gains and losses (28.7) (3.8) (24.9) — (18.6) (0.13) Foreign currency exchange losses — (10.6) 10.6 — 8.0 0.05 Items impacting comparability: Inventory step-up from acquisition 20.7 — 20.7 — 15.4 0.11 Integration and acquisition-related items, net — (12.8) 12.8 — 9.6 0.07 Total adjustments (8.0) (27.2) 19.2 — 14.4 0.10 Adjusted (b) $ 1,758.7 $ 674.2 $ 1,084.5 $ 26.0 $ 739.9 $ 5.08 Fiscal Year Ended May 28, 2023 As reported $ 1,432.1 $ 550.0 $ 882.1 $ 460.6 $ 1,008.9 $ 6.95 Unrealized derivative losses 37.5 (4.2) 41.7 32.7 55.4 0.38 Foreign currency exchange losses — (5.5) 5.5 — 4.1 0.03 Items impacting comparability: Gain on acquisition of interest in joint ventures — — — (425.8) (379.5) (2.62) Inventory step-up from acquisition 27.0 — 27.0 — 20.0 0.14 Integration and acquisition-related items, net — 21.8 (21.8) — (12.2) (0.08) Total adjustments 64.5 12.1 52.4 (393.1) (312.2) (2.15) Adjusted (b) $ 1,496.6 $ 562.1 $ 934.5 $ 67.5 $ 696.7 $ 4.80 _____________________________________________________ (a) Diluted weighted average common shares were 145.6 million and 145.2 million at the end of fiscal 2024 and 2023, respectively.
In addition, we used $158.4 million of cash to repurchase 2,407,184 shares of our common stock at an average price of $62.59 per share and withheld 118,204 shares from employees to cover income and payroll taxes on equity awards that vested during the year. ​ For more information about our debt, including among other items, interest rates, maturity dates, and covenants, see Note 8, Debt and Financing Obligations, of the Notes to the Consolidated Financial Statements in “Part II, Item 8.
We used $225.3 million of cash to repurchase 2,294,654 shares of our common stock at an average price of $91.51 per share, and we withheld 146,259 shares from employees to cover income and payroll taxes on equity awards that vested during the year. In addition, we paid $174.0 million in cash dividends to common stockholders.
Incremental earnings from the consolidation of the financial results of LW EMEA beginning in the fiscal fourth quarter also contributed to the increase. The higher costs per pound primarily reflected double-digit cost inflation for key inputs, including: raw potatoes, edible oils, ingredients such as grains and starches used in product coatings, labor, and energy.
We expect to incur an additional $20 million to $30 million of pre-tax losses associated with the voluntary product withdrawal in the first quarter of fiscal 2025. The higher manufacturing costs per pound largely reflected mid-single-digit cost inflation, in aggregate, for key inputs, including: raw potatoes, ingredients such as grains and starches used in product coatings, and labor.
The increase related to a $306.8 million increase in net income, adjusted for non-cash income and expenses, in addition to an increase of $36.3 million of cash provided by favorable changes in working capital. See “Results of Operations” in this MD&A for more information related to the increase in income from operations.
See “Results of Operations” in this MD&A for more information related to the increase in income from operations. Investing Activities Investing activities used $984.1 million of cash in fiscal 2024, compared with $1,340.9 million in fiscal 2023.
Equity method investment gains in fiscal 2022 included a $26.5 million unrealized gain related to mark-to-market adjustments associated with currency and commodity hedging contracts, of which $31.7 million ($23.5 million after-tax, or $0.16 per share) related to gains in natural gas and electricity derivatives .
A $24.9 million unrealized gain ($18.6 million after-tax, or $0.13 per share) and a $74.4 million unrealized loss ($55.4 million after-tax, or $0.38 per share) related to mark-to-market adjustments associated with commodity and currency hedging contracts for fiscal 2024 and 2023, respectively; and iv.
In fiscal 2023 and 2022, our share of earnings (loss) from our equity method investments was $460.6 million of earnings and a $10.7 million loss, respectively. The fiscal 2023 results include a $425.8 million ($379.5 million after-tax, or $2.62 per share) non-cash gain related to remeasuring our initial 50 percent equity interests in LW EMEA and LWAMSA to fair value.
The results in the prior year include non-cash gains on the acquisitions of interests in our LW EMEA and LWAMSA joint ventures of $425.8 million ($379.5 million after-tax or $2.62 per share), as well as a $32.7 million ($24.3 million after-tax, or $0.17 per share) unrealized loss related to mark-to-market adjustments associated with currency and commodity hedging contracts at LW EMEA.
Excluding this loss, interest expense, net increased $1.5 million due primarily to additional interest expense associated with debt incurred for the LW EMEA Acquisition. For more information, see Note 8, Debt and Financing Obligations, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
The increase in our total debt reflected increased borrowing under our credit facilities, predominantly to finance working capital requirements and capital projects. For more information, see Note 6, Debt and Financing Obligations, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
Changes in our fiscal 2023 financial results compared to fiscal 2022 were primarily driven by the consolidation of the financial results of LW EMEA in fiscal 2023. ​ Overview ​ Lamb Weston is a leading global producer, distributor, and marketer of value-added frozen potato products.
Financial Statements and Supplementary Data” of this Form 10-K. Changes in our fiscal 2024 financial results compared to fiscal 2023 were primarily driven by the consolidation of the financial results of LW EMEA for the full year as compared to only the fourth quarter of fiscal 2023.
To a lesser extent, in late fiscal 2023, inventory destocking by certain customers in international markets as well as in select U.S. retail channels contributed to the volume decline. ​ Global net sales increased $870.2 million, or 42%, to $2,934.4 million, and included $421.0 million of incremental sales attributable to the consolidation of the financial results of LW EMEA and LWAMSA.
International segment net sales increased $1,003.2 million, or 91%, to $2,104.4 million, and included $1,107.4 million of incremental sales attributable to the consolidation of the financial results of LW EMEA and LWAMSA.
For more information about the LW EMEA Acquisition, see Note 3, Acquisitions, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K. ​ Liquidity and Capital Resources ​ We ended fiscal 2023 with $304.8 million of cash and cash equivalents and a $1.0 billion undrawn U.S. revolving credit facility.
For more information about our debt, including among other items, our new global revolving credit agreement and term loan facilities, interest rates, maturity dates, and covenants, see Note 6, Debt and Financing Obligations, of the Notes to the Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K.
For example, the non-GAAP financial measures presented in this report may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures the same way we do. ​ See “Results of Operations – Fiscal Year Ended May 28, 2023 Compared to Fiscal Year Ended May 29, 2022 – Net Sales, Gross Profit, and Product Contribution Margin” above for a reconciliation of product contribution margin on a consolidated basis to gross profit. ​ The following table reconciles net income to Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended May (in millions) 2023 2022 Net income ​ $ 1,008.9 ​ $ 200.9 Equity method investment (earnings) loss ​ ​ (460.6) ​ ​ 10.7 Interest expense, net ​ ​ 109.2 ​ ​ 161.0 Income tax expense ​ ​ 224.6 ​ ​ 71.8 Income from operations ​ ​ 882.1 ​ ​ 444.4 Depreciation and amortization ​ ​ 218.3 ​ ​ 187.3 Items impacting comparability ​ ​ ​ ​ ​ ​ Acquisition expenses, net (a) ​ ​ (21.8) ​ ​ — LW EMEA derivative losses (gains) (a) ​ ​ 18.7 ​ ​ — Inventory step-up (a) ​ ​ 27.0 ​ ​ — Adjusted EBITDA ​ ​ 1,124.3 ​ ​ 631.7 ​ ​ ​ ​ ​ ​ ​ Unconsolidated Joint Ventures ​ ​ ​ ​ ​ ​ Equity method investment earnings (loss) ​ ​ 460.6 ​ ​ (10.7) Interest expense, income tax expense, and depreciation and ​ ​ ​ ​ ​ ​ amortization included in equity method investment earnings ​ ​ 29.1 ​ ​ 42.0 Items impacting comparability ​ ​ ​ ​ ​ ​ LW EMEA derivative losses (gains) (b) ​ ​ 37.8 ​ ​ (31.7) Gain on acquisitions (b) ​ ​ (425.8) ​ ​ — Write-off of net investment in Russia (b) ​ ​ — ​ ​ 62.7 Add: Adjusted EBITDA from unconsolidated joint ventures ​ ​ 101.7 ​ ​ 62.3 ​ ​ ​ ​ ​ ​ ​ Adjusted EBITDA including unconsolidated joint ventures ​ $ 1,226.0 ​ $ 694.0 (a) I ncome from operations for fiscal 2023 included a net $21.8 million gain ($12.2 million after-tax, or $0.08 per share) related to actions taken to mitigate the effect of changes in currency rates on the purchase of the remaining equity interest in LW EMEA, net of other acquisition-related costs.
For the Fiscal Years Ended May 2024 (a) 2023 Net income (b) $ 725.5 $ 1,008.9 Interest expense, net 135.8 109.2 Income tax expense 230.0 224.6 Income from operations including equity method investment earnings (c) 1,091.3 1,342.7 Depreciation and amortization 306.2 247.4 Unrealized derivative (gains) and losses (24.9) 41.7 Unconsolidated joint venture unrealized derivative losses — 32.7 Foreign currency exchange losses 10.6 5.5 Items impacting comparability: Inventory step-up from acquisition 20.7 27.0 Integration and acquisition-related items, net 12.8 (21.8) Gain on acquisition of interest in joint venture (d) — (425.8) Adjusted EBITDA $ 1,416.7 $ 1,249.4 _____________________________________________________ (a) Fiscal 2024 included the consolidated financial statements of LW EMEA whereas in the first three quarters of fiscal 2023, LW EMEA’s financial results were recorded in “Equity method investment earnings.” For more information about the LW EMEA Acquisition, see Note 11, Acquisitions, of the Notes to Consolidated Financial Statements. 38 Table of Contents (b) Net income for fiscal 2024 included the following: i.
Fiscal 2023 also includes an $18.7 million unrealized loss ($13.9 million after-tax, or $0.10 per share) related to mark-to-market adjustments associated with natural gas and electricity hedging contracts at our European operations as the market experienced significant volatility, and a $27.0 million ($20.0 million after-tax, or $0.14 per share) charge related to the step-up and sale of inventory acquired in the LW EMEA Acquisition. ​ (b) Equity method investment earnings for fiscal 2023 included $425.8 million ($379.5 million, or $2.62 per share) of non-cash gains related to the remeasurement of our initial equity interests to fair value, including a $410.7 million non-cash gain ($364.4 million after-tax, or $2.52 per share) for LW EMEA and a $15.1 million non-cash gain (before and after-tax, or $0.10 per share ) for LWAMSA.
The prior fiscal year included $27.0 million of costs ($20.0 million after-tax, or $0.14 per share) associated with the sale of inventory stepped-up to fair value following completion of the LW EMEA Acquisition and a $37.5 million ($28.0 million after-tax, or $0.19 per share impact) unrealized loss related to mark-to-market adjustments associated with commodity hedging contracts.
See Note 14, Commitments, Contingencies, Guarantees, and Legal Proceedings, for more information on our purchase obligations and the timing of future payments and capital commitments in connection with the expansion and replacement of existing facilities and equipment. ​ (b) Amounts represent estimated future interest payments assuming our long-term debt is held to maturity and using interest rates in effect as of May 28, 2023. ​ Off-Balance Sheet Arrangements ​ We do not have any off-balance sheet arrangements as of May 28, 2023 that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources. ​ Critical Accounting Estimates ​ Management’s discussion and analysis of financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with U.S.
This does not reflect a reduction for future estimated capitalized interest amounts. 35 Table of Contents Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements as of May 26, 2024 that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.
Our net sales growth was driven primarily by pricing actions across each of our core business segments, as well as incremental sales attributable to the acquisitions of additional equity interests in LW EMEA and LWAMSA. Sales volume declined, largely reflecting our efforts to strategically manage customer and product mix by exiting certain lower-priced and lower-margin business.
Volume excluding the incremental sales attributable to the Acquisitions declined 10%. Approximately 3.5 percentage points of the volume decline reflects the carryover effect of our decision to exit certain lower-priced and lower-margin business in the prior year to strategically manage customer and product mix.
Excluding this item, product contribution margin increased $370.3 million, or 147%, to $622.5 million. Pricing actions, incremental earnings from the consolidation of the financial results of LW EMEA, and favorable mix drove the increase, which was partially offset by higher costs per pound.
Adjusted Gross Profit increased $262.1 million, or 17.5%, to $1,758.7 million, driven primarily by incremental earnings from the consolidation of the financial results of LW EMEA, and benefits from inflation-driven pricing actions.
The increase was driven by higher gross profit (as described above), partially offset by a $15.5 million increase in advertising and promotion (“A&P”) expenses. ​ Global product contribution margin increased $343.3 million, or 136%, to $595.5 million, and included $27.0 million ($20.0 million after-tax, or $0.14 per share) of costs associated with the sale of inventory stepped-up in the LW EMEA Acquisition.
Price/mix increased 6% as the carryover benefit of inflation-driven pricing actions taken in fiscal 2023 and pricing actions taken in fiscal 2024 was partially offset by lower customer transportation charges and investments in trade support. 31 Table of Contents Gross Profit Gross profit in fiscal 2024 increased $334.6 million, or 23%, to $1,766.7 million, and included $20.7 million of costs ($15.4 million after-tax, or $0.11 per share) associated with the sale of inventory stepped-up to fair value following completion of the LW EMEA Acquisition, and a $28.7 million ($21.4 million after-tax, or $0.15 per share) unrealized gain related to mark-to-market adjustments associated with commodity hedging contracts.
Excluding this net gain, SG&A increased $184.2 million to $571.8 million, primarily due to higher compensation and benefits expense, incremental expenses attributable to the consolidation of the financial results of LW EMEA in the fiscal fourth quarter, higher expenses related to improving our information systems and ERP infrastructure, and a $15.5 million increase in A&P expenses. ​ Interest Expense, Net ​ Interest expense, net in fiscal 2023 declined $51.8 million to $109.2 million.
Adjusted SG&A increased $112.1 million, or 20%, to $674.2 million, primarily due to incremental expenses attributable to the consolidation of the financial results of LW EMEA, and higher expenses associated with information technology investments, including an incremental $11.5 million of non-cash amortization related to the new ERP system.
Removed
Results for the fiscal year ended May 28, 2023 are not necessarily indicative of results that may be attained in the future. ​ Our MD&A is based on financial data derived from the financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and certain other financial data (including product contribution margin on a consolidated basis, Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”), Adjusted EBITDA including unconsolidated joint ventures, Adjusted Income from Operations, Adjusted Net Income, and Adjusted Diluted earnings per share (“EPS”)) that is prepared using non-GAAP financial measures.
Added
Our MD&A is based on financial data derived from the financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
Removed
Product contribution margin represents net sales less cost of sales and advertising and promotion (“A&P”) expenses. Product contribution margin includes A&P expenses because those expenses are directly associated with the performance of our segments.
Added
We have also presented Adjusted EBITDA, Adjusted Gross Profit, Adjusted Selling, General and Administrative expenses (“SG&A”), Adjusted Income from Operations, Adjusted Equity Method Investment Earnings, Adjusted Net Income, and Adjusted Diluted EPS, each of which is considered a non-GAAP financial measure, to supplement the financial information included in this report.
Removed
Net sales and product contribution margin are the primary measures reported to our chief operating decision maker for purposes of allocating resources to our segments and assessing their performance.
Added
For more information, refer to the “Results of Operations” and “Non-GAAP Financial Measures” sections below. Acquisitions of Joint Venture Interests In February 2023, we completed the acquisition of the remaining 50% equity interest in LW EMEA (the “LW EMEA Acquisition”).
Removed
Financial Statements and Supplementary Data” in this Form 10-K. ​ 32 Table of Contents Effective May 29, 2023, in connection with our recent acquisitions and to align with our expanded global footprint, our management, including our chief executive officer, who is our chief operating decision maker, began managing our operations as two business segments based on management’s change to the way it monitors performance, aligns strategies, and allocates resources.
Added
Financial Statements and Supplementary Data” in this Form 10-K. 29 Table of Contents Executive Summary The following highlights our financial results for fiscal 2024. For more information, refer to the “Results of Operations” and “Non-GAAP Financial Measures” sections below.
Removed
This resulted in a change from four reportable segments to two (North America and International), effective the beginning of fiscal 2024.
Added
In fiscal 2024, our net sales increased 21% as compared to the prior year, primarily driven by incremental sales related to the LW EMEA Acquisition, and to a significantly lesser extent, an incremental 40% interest in LWAMSA.
Removed
All summary financial information on a prospective basis will be presented under the new reportable segments beginning with the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ending August 27, 2023. ​ Executive Summary ​ The following highlights our financial results for fiscal 2023.
Added
Excluding the incremental sales from the Acquisitions, our net sales increased modestly as inflation-driven pricing actions in each of our business segments were essentially offset by a decline in sales volume.
Removed
For more information, refer to the “Results of Operations” and “Non-GAAP Financial Measures” sections below. ​ In fiscal 2023, we delivered record net sales and earnings through a combination of improved pricing and supply chain productivity savings, while we continued to operate in a significant input cost inflation environment.
Added
The sales volume decline primarily reflected the carryover impact of our decisions to strategically manage customer and product mix by exiting certain lower-priced and lower-margin business, customer share losses, and soft restaurant traffic and frozen potato demand trends across our key markets as consumers continued to adjust to higher menu prices.
Removed
To a lesser extent, sales volumes towards the end of fiscal 2023 were also negatively affected by softening traffic in casual dining and full-service restaurant channels (which largely impacted our Foodservice segment), certain international customers reverting to pre-Covid inventory practices (impacted our Global segment), and certain customers in select U.S. retail channels temporarily lowering prices to reduce private label inventories (impacted our Retail segment).
Added
In addition, sales volumes were negatively affected by lower order fulfillment rates related to the transition to a new ERP system in North America during our fiscal third quarter, as well as a voluntary product withdrawal during our fiscal fourth quarter.
Removed
Outside of North America, frozen potato demand varied, although restaurant traffic trends in our key markets, including Europe, generally softened as customers and consumers both faced similar or more severe macroeconomic environments, including persistent inflation and rising interest rates, than in the U.S. ​ Gross profit in fiscal 2023 increased as favorable price/mix more than offset higher manufacturing costs on a per pound basis and the impact of lower sales volumes.
Added
Our net income in fiscal 2024 declined 28% as compared to the prior year, largely reflecting a non-cash gain in the prior year related to the LW EMEA Acquisition.
Removed
Incremental earnings from the consolidation of the financial results of LW EMEA beginning in the fiscal fourth quarter also contributed to the increase. Increased gross profit was partially offset by higher selling, general and administrative (“SG&A”) expenses, resulting in the increase in income from operations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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It should be noted that any change in the fair value of the contracts, real or hypothetical, would be substantially offset by an inverse change in the value of the underlying hedged item. ​ Foreign Currency Exchange Rate Risk ​ We are subject to currency exchange rate risk through investments and businesses owned and operated in foreign countries.
It should be noted that any change in the fair value of the contracts, real or hypothetical, likely would be substantially offset by an inverse change in the value of the underlying hedged item. Foreign Currency Exchange Rate Risk We are subject to currency exchange rate risk through investments and businesses owned and operated in foreign countries.
All of the following potential changes are based on sensitivity analyses performed on our financial positions as of May 28, 2023 and May 29, 2022. Actual results may differ materially. ​ Commodity Price Risk ​ The objective of our commodity exposure management is to minimize volatility in earnings due to large fluctuations in the price of commodities.
All of the following potential changes are based on sensitivity analyses performed on our financial positions as of May 26, 2024 and May 28, 2023. Actual results may differ materially. Commodity Price Risk The objective of our commodity exposure management is to minimize volatility in earnings due to large fluctuations in the price of commodities.
Based on our open commodity contract hedge positions as of May 28, 2023, a hypothetical 10 percent decline in market prices applied to the fair value of the instruments would result in a charge to “Cost of sales” of $9.0 million ($6.8 million after-tax).
Based on our open commodity hedge positions as of May 28, 2023, a hypothetical 10% decline in market prices applied to the fair value of the instruments would have resulted in a charge to “Cost of sales” of $9.0 million ($6.8 million after-tax).
Based on monetary assets and liabilities denominated in foreign currencies, we estimate that a hypothetical 10 percent adverse change in exchange rates versus the U.S. dollar would result in losses of $48.8 million ($37.1 million after-tax) and $6.5 million ($5.0 million after-tax) as of May 28, 2023 and May 29, 2022, respectively.
Based on monetary assets and liabilities denominated in foreign currencies, we estimate that a hypothetical 10% adverse change in exchange rates versus the U.S. dollar would result in losses of $63.3 million ($48.1 million after-tax) and $48.8 million ($37.1 million after-tax) as of May 26, 2024 and May 28, 2023, respectively.
Based on our open commodity hedge positions as of May 29, 2022, a hypothetical 10 percent decline in market prices applied to the fair value of the instruments would have resulted in a charge to “Cost of sales” of $4.5 million ($3.5 million after-tax) and a charge to “Equity method investment earnings” of $6.1 million ($4.6 million after-tax).
Based on our open commodity contract hedge positions as of May 26, 2024, a hypothetical 10% decline in market prices applied to the fair value of the instruments would result in a charge to “Cost of sales” of $9.2 million ($6.9 million after-tax).
A one percent increase in interest rates related to variable-rate debt would result in an annual increase in interest expense and a corresponding decrease in income before taxes of $13.3 million annually ($10.3 million after-tax) and $5.8 million annually ($4.5 million after-tax) at May 28, 2023 and May 29, 2022, respectively. ​ For more information about our debt, see Note 8, Debt and Financing Obligations, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
A one percent increase in interest rates related to variable-rate debt would result in an annual increase in interest expense and a corresponding decrease in income before taxes of $13.6 million annually ($10.6 million after-tax) and $13.3 million annually ($10.3 million after-tax) at May 26, 2024 and May 28, 2023, respectively.
At May 28, 2023, we had $2,170.0 million of fixed-rate and $1,309.8 million of variable-rate debt outstanding. At May 29, 2022, we had $2,170.0 million of fixed-rate and $575.0 million of variable-rate debt outstanding.
Interest Rate Risk We issue fixed and floating rate debt in a proportion that management deems appropriate based on current and projected market conditions. At May 26, 2024, we had $2,495.0 million of fixed-rate and $1,341.7 million of variable-rate debt outstanding. At May 28, 2023, we had $2,170.0 million of fixed-rate and $1,309.8 million of variable-rate debt outstanding.
Financial Statements and Supplementary Data” of this Form 10-K. 44 Table of Contents
For more information about our debt, see Note 6, Debt and Financing Obligations, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K. 41 Table of Contents
Removed
The increased hypothetical risk from May 29, 2022 is primarily related to the increase in our non-U.S. assets and liabilities. ​ Interest Rate Risk ​ We issue fixed and floating rate debt in a proportion that management deems appropriate based on current and projected market conditions.

Other LW 10-K year-over-year comparisons