10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 27, 2016

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to 

Commission File Number: 1-37830

LAMB WESTON HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	61-1797411
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
599 S. Rivershore Lane Eagle, Idaho	83616
(Address of principal executive offices)	(Zip Code)

(208) 938-1047

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☐     No ☒*

* The registrant became subject to such requirements on October 12, 2016.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer       ☐			Accelerated filer	☐
Non-accelerated filer         ☒		(Do not check if a smaller reporting company)	Smaller reporting company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐    No ☒

As of December 30, 2016, the Registrant had 146,058,934 shares of common stock, par value $1.00 per share, outstanding.

Table of Contents

Part I. FINANCIAL INFORMATION
	Item 1	Financial Statements	3
		Unaudited Condensed Combined and Consolidated Statements of Earnings for the Thirteen and Twenty-Six Weeks ended November 27, 2016 and November 29, 2015	3
		Unaudited Condensed Combined and Consolidated Statements of Comprehensive Income (Loss) for the Thirteen and Twenty-Six Weeks ended November 27, 2016 and November 29, 2015	4
		Unaudited Condensed Combined and Consolidated Balance Sheets as of November 27, 2016 and May 29, 2016	5
		Unaudited Condensed Combined and Consolidated Statements of Cash Flows for the Twenty-Six Weeks ended November 27, 2016 and November 29, 2015	6
		Notes to Condensed Combined and Consolidated Financial Statements	7
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	38
	Item 4	Controls and Procedures	38
Part II. OTHER INFORMATION			38
	Item 1	Legal Proceedings	38
	Item 1A	Risk Factors	38
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	39
	Item 3	Defaults Upon Senior Securities	39
	Item 4	Mine Safety Disclosures	39
	Item 5	Other Information	39
	Item 6	Exhibits	40

All reports we file with the Securities and Exchange Commission (SEC) are available free of charge via the Electronic Data Gathering Analysis and Retrieval (EDGAR) System on the SEC’s website at www.sec.gov. We also provide copies of our SEC filings at no charge upon request and make electronic copies of our reports available through our website at www.lambweston.com as soon as reasonably practicable after filing such material with the SEC.

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Lamb Weston Holdings, Inc.

Condensed Combined and Consolidated Statements of Earnings

(unaudited, dollars in millions, except per-share amounts)

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 29,		November 27,		November 29,
	2016		2015		2016		2015
Net sales	$	790.7	$	740.3	$	1,567.0	$	1,488.1
Cost of sales		591.8		578.5		1,187.5		1,185.0
Gross profit		198.9		161.8		379.5		303.1
Selling, general and administrative expenses		73.4		52.3		129.0		109.0
Income from operations		125.5		109.5		250.5		194.1
Interest expense, net		6.8		1.5		8.3		2.8
Income before income taxes and equity method earnings		118.7		108.0		242.2		191.3
Income tax expense		33.9		38.7		84.9		71.0
Equity method investment earnings		6.2		7.7		16.8		20.2
Net income		91.0		77.0		174.1		140.5
Less: Income attributable to noncontrolling interests		3.8		3.7		7.3		5.2
Net income attributable to Lamb Weston Holdings, Inc.	$	87.2	$	73.3	$	166.8	$	135.3
Earnings per share
Basic	$	0.59	$	0.50	$	1.14	$	0.92
Diluted	$	0.59	$	0.50	$	1.13	$	0.92

See Notes to Condensed Combined and Consolidated Financial Statements.

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Lamb Weston Holdings, Inc.

Condensed Combined and Consolidated Statements of Comprehensive Income (Loss)

(unaudited, dollars in millions)

	Thirteen Weeks Ended						Thirteen Weeks Ended
	November 27, 2016						November 29, 2015
			Tax						Tax
	Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax
	Amount		Benefit		Amount		Amount		Benefit		Amount
Net income	$	124.9	$	(33.9)	$	91.0	$	115.7	$	(38.7)	$	77.0
Other comprehensive income (loss):
Unrealized currency translation gains (losses)		(11.9)		—		(11.9)		(8.6)		—		(8.6)
Comprehensive income (loss)		113.0		(33.9)		79.1		107.1		(38.7)		68.4
Less: Comprehensive income attributable to noncontrolling interests		3.8		—		3.8		3.7		—		3.7
Comprehensive income (loss) attributable to Lamb Weston	$	109.2	$	(33.9)	$	75.3	$	103.4	$	(38.7)	$	64.7

	Twenty-Six Weeks Ended						Twenty-Six Weeks Ended
	November 27, 2016						November 29, 2015
			Tax						Tax
	Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax
	Amount		Benefit		Amount		Amount		Benefit		Amount
Net income	$	259.0	$	(84.9)	$	174.1	$	211.5	$	(71.0)	$	140.5
Other comprehensive income (loss):
Unrealized pension and post-employment benefit obligations		—		—		—		6.7		(1.7)		5.0
Unrealized currency translation gains (losses)		(13.0)		—		(13.0)		(10.4)		—		(10.4)
Comprehensive income (loss)		246.0		(84.9)		161.1		207.8		(72.7)		135.1
Less: Comprehensive income attributable to noncontrolling interests		7.3		—		7.3		5.2		—		5.2
Comprehensive income (loss) attributable to Lamb Weston	$	238.7	$	(84.9)	$	153.8	$	202.6	$	(72.7)	$	129.9

See Notes to Condensed Combined and Consolidated Financial Statements.

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Lamb Weston Holdings, Inc.

Condensed Combined and Consolidated Balance Sheets

(unaudited, dollars in millions except share data)

	November 27,		May 29,
	2016		2016
ASSETS
Current assets:
Cash and cash equivalents	$	69.4	$	36.4
Receivables, less allowance for doubtful accounts of $0.6 and $0.5		232.2		186.5
Inventories		615.9		498.9
Prepaid expenses and other current assets		18.5		58.2
Total current assets		936.0		780.0
Property, plant and equipment, net		1,134.3		1,043.1
Goodwill		131.7		133.9
Intangible assets, net		38.3		39.6
Equity method investments		150.8		155.2
Other assets		9.1		6.5
Total assets	$	2,400.2	$	2,158.3
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Revolving credit facility	$	80.0	$	—
Notes payable		25.2		24.9
Current portion of long-term debt		39.0		13.5
Accounts payable		314.3		238.0
Accrued liabilities		146.6		133.2
Total current liabilities		605.1		409.6
Long-term liabilities:
Long-term debt, excluding current portion		2,382.0		104.6
Deferred income taxes		56.9		144.0
Other noncurrent liabilities		64.8		52.1
Total long-term liabilities		2,503.7		300.7
Commitment and contingencies
Redeemable noncontrolling interest		50.0		47.4
Stockholders' equity:
Common stock of $1.00 par value, 600,000,000 shares authorized; 146,046,395 shares issued		146.0		—
Parent companies' invested equity		—		1,409.8
Additional distributed capital		(897.7)		—
Retained earnings		15.3		—
Accumulated other comprehensive loss		(22.2)		(9.2)
Total stockholders' equity (deficit)		(758.6)		1,400.6
Total liabilities and stockholders’ equity (deficit)	$	2,400.2	$	2,158.3

See Notes to Condensed Combined and Consolidated Financial Statements.

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Lamb Weston Holdings, Inc.

Condensed Combined and Consolidated Statements of Cash Flows

(unaudited, dollars in millions)

	Twenty-Six Weeks Ended
	November 27,		November 29,
	2016		2015
Cash flows from operating activities
Net income	$	174.1	$	140.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangibles and debt issuance costs		52.1		47.9
Share-based compensation expense		5.2		4.3
Earnings of joint ventures in excess of distributions		(2.8)		(12.5)
Other		(0.4)		(3.1)
Change in operating assets and liabilities:
Receivables		(45.8)		(27.4)
Inventories		(117.0)		(96.7)
Deferred income taxes and income taxes payable, net		(8.3)		7.7
Prepaid expenses and other current assets		41.4		43.5
Accounts payable		59.8		72.4
Accrued liabilities		4.1		(3.7)
Net cash provided by operating activities	$	162.4	$	172.9
Cash flows from investing activities
Additions to property, plant and equipment		(127.8)		(66.3)
Proceeds from sale of assets		2.0		2.7
Net cash used for investing activities	$	(125.8)	$	(63.6)
Cash flows from financing activities
Proceeds from short-term borrowings		—		9.8
Borrowings from revolving credit facility		80.0		—
Proceeds from issuance of debt		798.1		—
Debt repayments		(3.4)		(1.4)
Payments of debt issuance costs		(9.6)		—
Net transfers (to) from parent		(38.8)		(121.1)
Cash distribution to parent at Separation		(823.5)		—
Cash distributions paid to noncontrolling interest		(5.6)		(2.8)
Net cash used for financing activities	$	(2.8)	$	(115.5)
Effect of exchange rate changes on cash and cash equivalents		(0.8)		(0.5)
Net increase (decrease) in cash and cash equivalents		33.0		(6.7)
Cash and cash equivalents, beginning of the period		36.4		30.6
Cash and cash equivalents, end of period	$	69.4	$	23.9

See Notes to Condensed Combined and Consolidated Financial Statements.

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Notes to Condensed Combined and Consolidated Financial Statements

1.    NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Lamb Weston Holdings, Inc. (“we,” “us,” “our,” the “Company,” or “Lamb Weston”), along with its joint venture partners, is a leading global producer, distributor, and marketer of value-added frozen potato products and is headquartered in Eagle, Idaho. We have four reportable segments: Global, Foodservice, Retail, and Other. See Note 16, Business Segments and Related Information, for additional information on our reportable segments.

On November 9, 2016, Lamb Weston separated from Conagra Brands, Inc. (formerly, ConAgra Foods, Inc., “Conagra” or “our former parent”) and became an independent publicly traded company through the pro rata distribution by Conagra of 100% of the outstanding common stock of Lamb Weston to Conagra stockholders (which we refer to as the “Separation”). Each Conagra stockholder of record as of 5:00 p.m., New York City time, on November 1, 2016, the “record date,” received one share of Lamb Weston common stock for every three shares of Conagra common stock held on the record date. Approximately 146 million shares of Lamb Weston common stock were distributed on November 9, 2016 to Conagra stockholders. Information related to the Separation and its effect on our financial statements are discussed throughout these Notes to Condensed Combined and Consolidated Financial Statements.  

Basis of Presentation

The unaudited quarterly Condensed Combined and Consolidated Financial Statements present the financial results of Lamb Weston for the thirteen and twenty-six week periods ended November 27, 2016 and November 29, 2015, and have been prepared in accordance with generally accepted accounting principles in the United States of America. The financial statements are unaudited but include all adjustments (consisting only of normal recurring adjustments) that management considers necessary for a fair presentation of such financial statements. The preparation of financial statements involves the use of estimates and accruals. Actual results may vary from those estimates. Results for interim periods should not be considered indicative of results for a full year. The financial statements for periods prior to the Separation may not reflect what our results of operations would have been had we operated as a separate stand-alone company and may not be indicative of our future results of operations. These quarterly financial statements and notes should be read together with the consolidated financial statements and notes filed with the Securities and Exchange Commission (“SEC”) in our registration statement on Form 10, as amended, on October 17, 2016 (the “Form 10”).  

Prior to Separation

Prior to the Separation from Conagra on November 9, 2016 (the “Separation Date”), the combined financial statements were prepared using the specific accounting records of the entities which comprise the business of Lamb Weston. In some cases, principally foreign locations, those business activities were contained within entities that were engaged in other business activities of Conagra. Because a direct ownership relationship did not exist among the various units comprising Lamb Weston, Conagra and its subsidiaries’ equity investment is shown in lieu of stockholders’ equity in the combined financial statements. Intercompany investments, accounts, and transactions between the various legal entities comprising Lamb Weston have been eliminated.

Prior to the Separation Date, Lamb Weston’s financial statements included accounts specifically attributed to Lamb Weston and a portion of Conagra’s shared corporate general and administrative expenses. These shared services included, but were not limited to, legal, finance, internal audit, financial reporting, income tax accounting and advisory, insurance, information technology, treasury, and human resources functions. Shared corporate general and administrative expenses not specifically identifiable to Lamb Weston were allocated to Lamb Weston. The allocations were determined on a basis which we consider being reasonable reflections of the utilization of services provided by Conagra. However, these allocations may not reflect the costs and expenses that Lamb Weston would have incurred as a stand-alone company. A more detailed discussion of the relationship with Conagra, including a description of the costs which have been allocated to Lamb Weston and the methods of cost allocation, is included in Note 3, Related Party Transactions.  

As further described in Note 3, prior to the Separation Date, Lamb Weston engaged in various intercompany transactions with Conagra and its affiliates, including the sale and purchase of certain products, the procurement of certain

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materials and services, cash transfers related to Conagra’s centralized cash management process and expense allocations. As Conagra does not settle intercompany transactions with its businesses on a routine basis, all amounts due to (from) Conagra are classified as “Parent companies’ invested equity” on the May 29, 2016 Condensed Combined and Consolidated Balance Sheet. Changes in parent companies’ equity investment arising from cash transactions are presented as “Net transfers (to) from parent” in financing activities in the accompanying Condensed Combined and Consolidated Statements of Cash Flows, notwithstanding that advances from parent companies were utilized to fund Lamb Weston’s working capital requirements.

After Separation

Subsequent to the Separation Date, the consolidated financial statements include the accounts of Lamb Weston and all of its majority-owned subsidiaries. In addition, the accounts of all variable interest entities for which we are the primary beneficiary are included in our consolidated financial statements from the date such determination was made. Intercompany investments, accounts, and transactions have been eliminated. 

Certain amounts in the prior period combined financial statements have been reclassified to conform with the current period presentation. To conform with the current year presentation, we reclassified theamount associated with theredeemable noncontrolling interest in Lamb Weston BSW, LLC from “Other noncurrent liabilities” to “Redeemable noncontrolling interest” on the May 29, 2016 Condensed Combined and Consolidated Balance Sheet. For additional information, see Note 8, Investments in Joint Ventures.

New and Recently Issued Accounting Standards

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. It is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods, with early adoption permitted. The Company does not expect this ASU to have a material impact on the Company's financial condition, results of operations, or cash flows.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplified the accounting for income taxes, among other changes, related to stock based compensation. Conagra (and therefore Lamb Weston) early adopted ASU 2016-09 in the first quarter of fiscal 2017 with an effective date of May 30, 2016. The adoption of ASU 2016-09 did not have a material impact on our financial statements.

In February 2016, the FASB issued its final lease accounting standard, FASB Accounting Standard Codification (“ASC”) Topic 842, Leases, which requires lessees to reflect most leases on their balance sheet as assets and obligations. The effective date for the standard is for fiscal years beginning after December 15, 2018. Early adoption is permitted. We are evaluating the effect that ASC 842 will have on our financial statements and related disclosures. The standard is to be applied under the modified retrospective method, with elective reliefs, which requires application of the new guidance for all periods presented.

In November 2015, the FASB issued ASU 2015-17 Balance Sheet Classification of Deferred Taxes. This ASU requires entities to present all deferred tax assets and liabilities as noncurrent. Conagra (and therefore Lamb Weston) early adopted ASU 2015-17 effective May 30, 2016, and we have reflected our deferred tax assets and liabilities as noncurrent in our Condensed Combined and Consolidated Balance Sheets.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which addresses the measurement of inventory if its value declines or is impaired. The guidance on determining the cost of inventory is not amended. The effective date for the standard is for fiscal years beginning after December 15, 2016. Early adoption is permitted. We do not expect this ASU to have a material impact on our financial statements. The standard will be applied prospectively.

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In April 2015, the FASB issued ASU 2015-03 (Topic 835): Simplifying the Presentation of Debt Issuance Costs. This ASU conforms the presentation of debt issuance costs with that required for debt discounts under U.S. Generally Accepted Accounting Principles (“GAAP”). Under the ASU, debt issuance costs are presented in the balance sheet as a direct deduction from the related liability rather than as an asset. We applied this guidance retrospectively, as required. No reclassifications of balances at May 29, 2016, were necessary with the adoption of ASU 2015-03. See Note 11, Debt and Financing Obligations for more information.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which amends the guidance for revenue recognition to replace numerous industry specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The ASU also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. In August 2015, the FASB deferred the effective date of the new revenue recognition standard by one year so that it is now effective for us beginning in fiscal year 2019. Early adoption in fiscal year 2018 is permitted. Lamb Weston is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The standard permits the use of either the retrospective or cumulative effect transition method.

There were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.

2.    EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per common share for the periods presented: 

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 29,		November 27,		November 29,
	2016		2015		2016		2015
Numerator:
Net income attributable to Lamb Weston Holdings, Inc.	$	87.2	$	73.3	$	166.8	$	135.3
Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated		0.5		0.4		0.9		0.9
Net income available to Lamb Weston common stockholders	$	86.7	$	72.9	$	165.9	$	134.4
Denominator (a):
Basic weighted average common shares outstanding		146.0		146.0		146.0		146.0
Add: Dilutive effect of stock options, restricted stock units, and other dilutive securities (b)		0.3		—		0.3		—
Diluted weighted average common shares outstanding		146.3		146.0		146.3		146.0
Earnings per share
Basic	$	0.59	$	0.50	$	1.14	$	0.92
Diluted	$	0.59	$	0.50	$	1.13	$	0.92

(a) Earnings per share was calculated based on 146 million shares of Lamb Weston common shares that were distributed to Conagra shareholders on November 9, 2016. 

(b) Diluted earnings per share is calculated using net income available to common shareholders divided by diluted weighted-average shares of common shares outstanding during each period, which includes unvested share-based awards that are dilutive. For the thirteen and twenty-six weeks ended November 27, 2016, 0.3 million share-based awards were excluded from the computation of diluted EPS because they would be antidilutive. Lamb Weston had no share-based awards outstanding prior to the Separation.  

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3.    RELATED PARTY TRANSACTIONS

Prior to the Separation, our business was included in the Commercial Foods segment of Conagra and thus our transactions with Conagra were considered related party transactions. In connection with the Separation, we entered into a separation and distribution agreement, as well as various other agreements that govern our relationships with Conagra going forward, including a transition services agreement, tax matters agreement, employee matters agreement, and trademark license agreement. Under the transition services agreement, Conagra provides a number of corporate staff services to us based on direct and indirect costs associated with rendering those services. These services include information technology, accounting, and human resource services. The thirteen and twenty-six weeks ended November 27, 2016, include $0.4 million of expenses related to the transition services agreement. The transition services agreement expires in March 2018. Information included in the remainder of this Note 3 with respect to Conagra is strictly limited to our related party transactions with Conagra prior to the Separation Date. 

Prior to the Separation Date, Conagra allocated certain selling, general and administrative costs to Lamb Weston based on specific metrics correlated with the cost of services it provided or costs incurred on behalf of the Company (e.g., employee headcount, net sales, and square footage of office space, etc.). Allocations based upon these metrics resulted in $3.4 million and $11.5 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively, of selling, general and administrative costs allocated to Lamb Weston; and $7.7 million and $23.3 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively of selling, general and administrative costs allocated to Lamb Weston. Beginning in fiscal 2017, certain departmental charges, which were previously allocated, are now being directly absorbed by Lamb Weston.

The above allocations were consistent with historical allocations for Lamb Weston; however, Conagra did not historically allocate certain other corporate costs to its various segments. For any remaining indirect corporate costs that supported Lamb Weston, Conagra allocated additional selling, general and administrative costs using an equal weighting between Lamb Weston product contribution margin (net sales less cost of sales and advertising and promotion expenses) and Lamb Weston total assets relative to consolidated Conagra product contribution margin and total assets. Allocations of indirect corporate costs were $8.4 million and $10.7 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively; and $17.3 million and $24.4 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively, of selling, general and administrative costs. Although it is not practicable to estimate what such costs would have been if Lamb Weston had operated as a separate entity, Lamb Weston considers such allocations to have been made on a reasonable basis. The allocations discussed above ceased after the Separation Date.

The Condensed Combined and Consolidated Balance Sheet as of May 29, 2016 and the Condensed Combined and Consolidated Statements of Earnings for the period up to the Separation Date for the thirteen and twenty-six weeks ended November 27, 2016 and November 29, 2015, include only the specific debt and interest expense of the legal entities that make-up Lamb Weston, and do not include any allocated interest expense or third-party debt of Conagra. See Note 11, Debt and Financing Obligations, for a discussion of indebtedness incurred in connection with the Separation. The interest expense included in Lamb Weston’s results of operations was $6.8 million and $1.5 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively; and $8.3 million and $2.8 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively.

Prior to the Separation, Conagra did not settle intercompany transactions with its subsidiaries on a routine basis. As a result, all amounts due to (from) Conagra are classified as “Parent companies’ invested equity” on the Condensed Combined and Consolidated Balance Sheet as of May 29, 2016. It reflects all changes in parent companies’ invested equity for all transactions between Conagra and Lamb Weston, including direct and allocated charges from Conagra to Lamb Weston, intercompany cash transfers, derivative hedging activities performed by Conagra for the benefit of Lamb Weston, sales of potatoes, vegetables, and other products for use by other Conagra affiliates, and net cash management activities. In addition, these financial statements reflect the sale of certain branded products manufactured for distribution by other Conagra affiliates. Income tax payments were made by Conagra on Lamb Weston’s behalf. Income taxes payable were settled in parent companies’ invested equity when payments are made by Conagra.

Included in net sales are sales to Conagra of $4.0 million and $7.5 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively; and $8.4 million and $15.5 million for the twenty-six weeks ended

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November 27, 2016 and November 29, 2015, respectively. The related cost of sales were $3.4 million and $6.3 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively; and $7.0 million and $13.0 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively. Lamb Weston also made purchases from Conagra of $2.6 million and $5.8 million during the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively; and $7.9 million and $10.1 million during the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively.

Conagra guarantees Lamb Weston’s performance under a third-party contract for certain warehousing, handling and transportation services for a portion of its finished goods inventory. The minimum term of the agreement is for a period of 20 years with three five-year renewal options. The costs of these services are adjusted annually, subject to a minimum monthly payment of $1.5 million.

4.    INCOME TAXES

For periods ended on or prior to the Separation Date, we were a member of Conagra’s consolidated group and our U.S. taxable income was included in the consolidated U.S. federal income tax return of Conagra as well as in returns filed by Conagra with certain state and local taxing jurisdictions. Our foreign income tax returns are filed on a separate company basis. For periods prior to the Separation Date, our income tax liability was computed and presented herein under the “separate return method” as if we were a separate tax paying entity.

In connection with the Separation, we entered into various agreements with Conagra that govern the relationship between the parties going forward, including a tax matters agreement. The tax matters agreement was entered into on the Separation Date. Under the tax matters agreement, Conagra is generally responsible for all taxes associated with consolidated federal and state filings (and will be entitled to all related refunds of taxes) imposed on Conagra and its subsidiaries (including subsidiaries that were transferred to Lamb Weston at Separation) with respect to the taxable periods (or portions thereof) ended on or prior to November 9, 2016. Also, pursuant to this agreement, Lamb Weston is generally responsible for all taxes associated with separately filed foreign, state and local tax filings (and will be entitled to all related refunds of taxes) imposed on Lamb Weston and its subsidiaries ended on or prior to November 9, 2016.

In connection with the Separation, Lamb Weston recognized a step-up in tax basis in certain assets, which resulted in a $75.0 million net decrease in deferred tax liabilities and a corresponding increase in equity. The step-up in tax basis related to a deferred intercompany transaction arising in 2008, which until the Distribution Date, was eliminated within Conagra’s consolidated financial statements and federal tax filings. 

Income tax expense for the thirteen weeks ended November 27, 2016 and November 29, 2015, was $33.9 million and $38.7 million, respectively, and for the twenty-six weeks ended November 27, 2016 and November 29, 2015, was $84.9 million and $71.0 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was approximately 27% and 33% for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively, and 33% and 34% for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively. The lower rate in the thirteen weeks ended November 27, 2016, is primarily attributable to an increase in costs determined to be deductible, as well as a discrete benefit arising from a change in estimate relating to fiscal 2016 foreign taxes.

There have been no material changes to the unrecognized tax benefits disclosed in Note 11, Pre-Tax Income and Income Taxes, of the Notes to Combined Financial Statements included in the Form 10. Income taxes paid, net of refunds, were $90.6 million and $61.8 million in the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively.

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5.    INVENTORIES

We value our inventories using lower of cost, as determined by the first-in, first-out method, or market. The major classes of inventories were as follows (dollars in millions):

	November 27,		May 29,
	2016		2016
Raw materials and packaging	$	199.5	$	86.2
Finished goods		379.0		384.3
Supplies and other		37.4		28.4
Inventories	$	615.9	$	498.9

6.    PROPERTY, PLANT AND EQUIPMENT

The components of property, plant, and equipment were as follows (dollars in millions):

	November 27,		May 29,
	2016		2016
Land and land improvements	$	138.9	$	136.5
Buildings, machinery and equipment		1,815.0		1,776.1
Furniture, fixtures, office equipment and other		62.3		53.1
Construction in progress		155.5		68.5
Property, plant and equipment, at cost		2,171.7		2,034.2
Less accumulated depreciation		(1,037.4)		(991.1)
Property, plant and equipment, net	$	1,134.3	$	1,043.1

Depreciation expense was $25.8 million and $23.3 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively, and $50.6 million and $46.4 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively. At November 27, 2016 and May 29, 2016, purchases of property, plant and equipment included in accounts payable were $32.0 million and $15.5 million, respectively.

7.    GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

Changes in the carrying amount of goodwill were as follows (dollars in millions):

	Global		Foodservice		Retail		Other		Total
Balance at May 29, 2016	$	75.7	$	42.8	$	10.9	$	4.5	$	133.9
Foreign currency translation adjustment		(2.2)		—		—		—		(2.2)
Balance at November 27, 2016	$	73.5	$	42.8	$	10.9	$	4.5	$	131.7

Other identifiable intangible assets were as follows (dollars in millions):

	November 27, 2016					May 29, 2016
	Weighted					Weighted
	Average	Gross				Average	Gross
	Useful Life	Carrying		Accumulated		Useful Life	Carrying		Accumulated
	(in years)	Amount		Amortization		(in years)	Amount		Amortization
Non-amortizing intangible assets (a)	n/a	$	18.0	$	—	n/a	$	18.0	$	—
Amortizing intangible assets (b)	14		35.1		14.8	14		35.1		13.5
		$	53.1	$	14.8		$	53.1	$	13.5

(a) Non-amortizing intangible assets are comprised of brands and trademarks.

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(b) Amortizing intangible assets are principally composed of customer relationships, licensing arrangements, and intellectual property. During the thirteen weeks ended November 27, 2016 and November 29, 2015, amortization expense was $0.5 million and $0.7 million, respectively. During the twenty-six weeks ended November 27, 2016 and November 29, 2015, amortization expense was $1.3 million and $1.1 million, respectively.

Total intangible assets, net of amortization, excluding goodwill, as of November 27, 2016 and May 29, 2016, were $38.3 million and $39.6 million, respectively. Estimated intangible asset amortization expense for the remainder of fiscal 2017 and the next five years is as follows (dollars in millions):

	Amortization
2017 remainder	$	1.0
2018		1.9
2019		1.8
2020		1.8
2021		1.8
2022		1.8
Thereafter		10.2
	$	20.3

8.    INVESTMENTS IN JOINT VENTURES

Variable Interest Entity - Consolidated

We hold a 49.99% interest in Lamb Weston BSW, LLC (“Lamb Weston BSW”), a potato processing venture with Ochoa Ag Unlimited Foods, Inc. (“Ochoa”). We provide all sales and marketing services to Lamb Weston BSW. Under certain circumstances, we could be required to compensate Ochoa for lost profits resulting from significant production shortfalls. Commencing on June 1, 2018, or on an earlier date under certain circumstances, Lamb Weston has a contractual right to purchase the remaining equity interest in Lamb Weston BSW from Ochoa (the “call option”). Lamb Weston is currently subject to a contractual obligation to purchase all of Ochoa’s equity investment in Lamb Weston BSW at the option of Ochoa (the “put option”). The purchase prices under the call option and the put option (the “options”) are based on the book value of Ochoa’s equity interest at the date of exercise, as modified by an agreed-upon rate of return for the holding period of the investment balance. The agreed-upon rate of return varies depending on the circumstances under which any of the options are exercised.

Our variable interests in Lamb Weston BSW include an equity investment in the venture, the options, certain fees paid to Lamb Weston by Lamb Weston BSW for sales and marketing services, the contingent obligation related to production shortfalls and the contingent obligation to fund additional equity contributions or purchase the underlying notes associated with certain Lamb Weston BSW financings. Lamb Weston’s maximum exposure to loss as a result of Lamb Weston’s involvement with this venture is equal to Lamb Weston’s equity investment in the venture, the balance of any promissory notes extended to the venture which are subject to Lamb Weston’s purchase obligation, and the amount, if any, by which the put option exercise price exceeds the fair value of the non-controlling interest in Lamb Weston BSW upon its exercise. Also, in the event of a production shortfall, we could be required to compensate Ochoa for lost profits. It is not possible to determine the maximum exposure to losses from the potential exercise of the put option or from potential production shortfalls. However, we do not expect to incur material losses resulting from these potential exposures.

Lamb Weston and Lamb Weston BSW purchase potatoes from a shareholder of Ochoa. The aggregate amount of such purchases were $12.5 million and $11.4 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively; and $36.6 million and $27.8 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively.

Lamb Weston BSW is a variable interest entity and we have determined that we are the primary beneficiary of the entity. We consolidate the financial statements of Lamb Weston BSW. The amounts presented for Lamb Weston BSW in the table below exclude intercompany balances eliminated in consolidation and include the non-controlling interest at redemption value as reported in the Condensed Combined and Consolidated Balance Sheets (dollars in

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millions):  

	November 27,		May 29,
	2016		2016
Cash and equivalents	$	12.0	$	4.3
Receivables, less allowance for doubtful accounts (a)		0.1		0.1
Inventories		1.9		1.2
Prepaid expenses and other current assets		0.1		0.4
Property, plant and equipment, net		50.4		52.2
Goodwill		18.8		18.8
Intangible assets, net		4.8		5.2
Total assets	$	88.1	$	82.2
Notes payable	$	—	$	1.0
Current portion of long-term debt		1.2		0.5
Accounts payable		10.1		10.9
Accrued liabilities		2.5		1.7
Long-term debt, excluding current portion		28.8		29.5
Total liabilities	$	42.6	$	43.6
Redeemable noncontrolling interest (b)	$	50.0	$	47.4

(a) As of November 27, 2016 and May 29, 2016, affiliate receivables of $22.2 million and $25.8 million are not included above as they are eliminated in consolidation.

(b) Represents the amount that our joint venture partner, Ochoa, had the right to put its equity interest to Lamb Weston on November 27, 2016 and May 29, 2016.

The liabilities recognized as a result of consolidating the Lamb Weston BSW entity do not represent additional claims on Lamb Weston’s general assets.  In connection with the Lamb Weston BSW long-term debt, we have entered into an agreement with the financial institution which provides that in the event that Lamb Weston BSW fails to comply with certain financial covenants or repayment terms, we are required to either make certain additional equity contributions to Lamb Weston BSW or to purchase the underlying notes. The assets recognized as a result of consolidating Lamb Weston BSW are the property of the venture and are not available to Lamb Weston for any other purpose.

Variable Interest Entity - Not Consolidated

Lamb Weston holds a 50% interest in Lamb-Weston/RDO Frozen (“Lamb Weston RDO”), a potato processing venture based in the United States. Lamb Weston provides all sales and marketing services to Lamb Weston RDO. Lamb Weston receives a fee for these services based on a percentage of the net sales of the venture. The fees received were $3.4 million and $3.1 million, for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively; and $6.9 million and $6.2 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively. These fees are recorded as a reduction to selling, general, and administrative expense. Our ownership interest in this venture is included in “Equity method investments” in the Condensed Combined and Consolidated Balance Sheets. The balance of Lamb Weston’s investment was $15.8 million and $16.9 million at November 27, 2016 and May 29, 2016, respectively, representing our maximum exposure to loss as a result of our involvement with this venture. The capital structure of Lamb Weston RDO includes owners’ equity of $32.1 million and $33.9 million as of November 27, 2016 and May 29, 2016, respectively; and term borrowings from banks of $39.9 million and $16.9 million as of November 27, 2016 and May 29, 2016, respectively.

Lamb Weston has determined that Lamb Weston RDO is a variable interest entity, but Lamb Weston is not the primary beneficiary. Lamb Weston does not have the power to direct the activities that most significantly impact the economic performance of the joint venture. Accordingly, Lamb Weston does not consolidate the financial statements of this entity. Lamb Weston uses equity method accounting to account for its ownership in Lamb Weston RDO.

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Other Investments

Lamb Weston also holds a 50% ownership interest in Lamb-Weston/Meijer v.o.f. (“Lamb-Weston/Meijer”), a Netherlands joint venture with Meijer Frozen Foods B.V., headquartered in the Netherlands, which manufactures and sells frozen potato products principally in Europe. We account for this investment using equity method accounting.

Transactions with Joint Ventures

The carrying value of our equity method investments, which include Lamb Weston RDO and Lamb-Weston/Meijer, at November 27, 2016 and May 29, 2016, was $150.8 million and $155.2 million, respectively. These amounts are included in “Equity method investments” in our Condensed Combined and Consolidated Balance Sheets. For the thirteen weeks ended November 27, 2016 and November 29, 2015, we had sales and payments to our equity method investments of $7.2 million and $3.6 million, respectively, and $3.4 million and $3.0 million, respectively; and for the twenty-six weeks ended November 27, 2016 and November 29, 2015, we had sales and payments to our equity method investments of $14.7 million and $6.7 million, respectively, and $7.3 million and $5.5 million, respectively. Total dividends from our equity method investments were $5.6 million and $4.7 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively, and $13.9 million and $7.8 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively.

9.   PENSION AND OTHER POST-RETIREMENT BENEFITS

In connection with the Separation, the pension liabilities related to Lamb Weston participants in the Conagra salaried employee pension plan and the vested benefits attributable to Lamb Weston hourly employee plan participants were retained by Conagra. Pension liabilities that transferred to Lamb Weston on the Separation Date were nonqualified pension benefits and Lamb Weston hourly participants’ unvested benefits of $7.4 million. The liabilities were transferred to a new defined benefit pension plan for certain hourly employees that continue to accrue benefits. Qualifying employees continue to receive postretirement benefits that include certain medical and dental benefits. 

For the period after the Separation Date, the components of net periodic benefit cost for our pension and postretirement benefit plans were as follows (dollars in millions):

			Postretirement
	Pension Plan		Plans
Service cost	$	0.4	$	—
Interest cost		—		—
Expected return on plan assets		—		—
Net amortization of unrecognized amounts		—		—
Prior service cost		—		—
Actuarial loss		—		—
Net periodic benefit cost	$	0.4	$	—

We make pension plan contributions that are sufficient to fund our actuarially determined requirements, generally equal to the minimum amounts required by the Employee Retirement Income Security Act. We are required to make only an insignificant amount of required minimum qualified contributions during the remainder of fiscal 2017. 

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Prior to Separation

Prior to the Separation Date, Conagra offered plans that were shared amongst its businesses, including Lamb Weston. The participation of Lamb Weston employees in Conagra’s plans is reflected in these financial statements as though Lamb Weston participated in a multiemployer plan with Conagra. A proportionate share of the service cost associated with these plans is reflected in the Condensed Combined and Consolidated Financial Statements up to the Separation Date. Additionally, the remaining cost elements (e.g. interest) are included in the allocations of indirect costs (see Note 3, Related Party Transactions).

Pension Cost Financial Statement Presentation

Allocated pension costs (benefits) incurred by Conagra prior to November 9, 2016 and pension costs recognized after the Separation Date are included in the Condensed Combined and Consolidated Statements of Earnings as follows (dollars in millions):

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 29,		November 27,		November 29,
	2016		2015		2016		2015
Cost of sales (a)	$	2.6	$	3.0	$	5.5	$	6.0
Selling, general and administrative expenses (a)		(2.8)		(1.4)		(5.5)		(2.8)
Total	$	(0.2)	$	1.6	$	—	$	3.2

(a) Pension, service and interest costs are allocated to operations as reflected in cost of sales above. Expected returns on pension assets are not allocated to operations and are reflected in “Selling, general and administrative expenses” in the Condensed Combined and Consolidated Statements of Earnings.

10.   ACCRUED LIABILITIES

The components of accrued liabilities were as follows (dollars in millions):

	November 27,		May 29,
	2016		2016
Compensation and benefits	$	55.3	$	63.3
Accrued trade promotions		41.7		35.6
Franchise, property, and sales and use taxes		13.5		12.0
Accrued interest		6.5		0.6
Income taxes payable		7.5		—
Other		22.1		21.7
Accrued liabilities	$	146.6	$	133.2

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11.   DEBT AND FINANCING OBLIGATIONS

At November 27, 2016 and May 29, 2016, our debt, including financing obligations was as follows (dollars in millions):

	November 27,		May 29,
	2016		2016
Debt:
Term loan facility, due 2021	$	675.0	$	—
4.625% senior notes, due 2024		833.0		—
4.875% senior notes, due 2026		833.0		—
6.25% installment notes, due 2017		9.8		10.1
LIBOR plus a margin (1.90% to 2.30%) and 4.34%, installment notes due on various dates through June 2031		30.0		30.0
		2,380.8		40.1
Financing obligations:
4.35% lease financing obligation due May 2030		68.9		69.7
2.00% to 3.32% lease financing obligations due on various dates through 2040		8.3		8.3
		77.2		78.0
Long-term debt, including current portion		2,458.0		118.1
Debt issuance costs		(37.0)		—
Current portion of long-term debt		(39.0)		(13.5)
Long-term debt, excluding current portion	$	2,382.0	$	104.6

In November 2016, as part of the Separation, Lamb Weston, as borrower, issued $2,341.0 million of debt, which included $1,666.0 million of aggregate principal amount of 4.625% and 4.875% senior notes (together, the “Senior Notes”) and $675.0 million of borrowings under a five-year senior secured credit agreement (the “Credit Agreement”) with a syndicate of lenders. The Credit Agreement consists of a five-year amortizing $675.0 million term loan facility (the “Term Loan Facility”) and a five-year non-amortizing $500.0 million revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”). The Credit Agreement is secured as long as Lamb Weston remains below investment grade by both Moody’s and Standard & Poor’s. Of the $1,666.0 million of Senior Notes, $1,542.9 million aggregate principal amount of Senior Notes were distributed directly to Conagra and we used  the proceeds of $123.1 million of Senior Notes, together with $700.4 million of borrowings under the Credit Facilities, to fund an $823.5 million cash payment to Conagra at the time of the Separation. The $1,542.9 million of Senior Notes distributed directly to Conagra is a noncash financing activity for Lamb Weston.   

Debt issuances as of November 27, 2016 consisted of the following:

· Revolving Credit Facility:  A five-year nonamortizing $500.0 million revolving credit facility with variable annual interest, under which $80 million is outstanding on November 27, 2016. In addition to paying interest, we pay an annual commitment fee for undrawn amounts at a rate of  0.25% to 0.40% depending on our consolidated net leverage ratio. 

· Term LoanFacility: A five-year $675.0 million term loan amortizing in equal quarterly installments for a total of 5% annually commencing in March 2017 with the balance payable in November 2021. 

· 4.625% Senior Notes: An eight-year $833.0 million senior debt obligation with fixed annual interest.

· 4.875% Senior Notes: A ten-year $833.0 million senior debt obligation with fixed annual interest.

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Credit Facilities

Borrowings under the Credit Facilities bear interest at a floating rate per annum based upon the Base Rate or the Eurocurrency rate, in each case plus an applicable margin which varies based upon our consolidated net leverage ratio. Margins range from 0.500% to 1.250% for Base Rate loans and from 1.500% to 2.250% for Eurocurrency Rate loans. The Base Rate is defined as the highest of (a) Bank of America’s prime rate, (b) the federal funds rate plus 0.500% and (c) the Eurocurrency Rate with a term of one month plus 1.0%.

Additionally, the Revolving Credit Facility is available for the issuance of letters of credit and swingline advances not to exceed $100.0 million and $35.0 million, respectively. Swingline advances will accrue interest at a rate equal to the Base Rate plus the applicable margin. Letters of credit and swingline advances will reduce, on a dollar for dollar basis, the amount available under the Revolving Credit Facility.

Upon the occurrence of an event of default, among other things, amounts outstanding under the Credit Agreement may be accelerated and the commitments may be terminated. Our obligations under the Credit Agreement are guaranteed by certain of our direct and indirect domestic subsidiaries on the terms set forth in the Credit Agreement. The Credit Agreement has a maturity date of November 9, 2021.

At November 27, 2016, we had $80.0 million of borrowings outstanding under our Revolving Credit Facility. At November 27, 2016, we had $420.0 million of availability and no outstanding letters of credit. For the period of November 9, 2016 through November 27, 2016, the average interest rate for our borrowings under the Revolving Credit Facility was 2.5%. 

We are required to maintain the following financial covenant ratios under the Credit Agreement:

· Total net leverage ratio of 5.50 to 1.00, decreasing ratably to 4.50 to 1.00 on August 25, 2019 through maturity

· Interest coverage ratio of 2.75 to 1.00

The obligations of Lamb Weston under our Credit Facilities are guaranteed jointly and severally on a senior secured basis by each of our existing and subsequently acquired or organized direct or indirect wholly owned domestic restricted subsidiaries subject to the exclusion of immaterial subsidiaries.

The Credit Agreement and the indentures governing the Senior Notes contain covenants that, subject to exceptions, limit our ability and the ability of our subsidiaries to, among other things, incur, assume or guarantee additional indebtedness, pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt, make loans and investments, incur or suffer to exist liens, sell, transfer or otherwise dispose of assets, enter into agreements that restrict distributions or other payments from restricted subsidiaries to us, engage in transactions with affiliates, designate subsidiaries as unrestricted or restricted, and consolidate merge, amalgamate or transfer all or substantially all of our assets.   

4.625% and 4.875% Senior Notes

The Senior Notes are senior unsecured obligations and rank equally with all of our present and future senior indebtedness, senior to all our future subordinated indebtedness and effectively subordinated to all of our present and future senior secured indebtedness (including all borrowings with respect to the Credit Facilities to the extent of the value of the assets securing such indebtedness). Interest on the Senior Notes is due semiannually. Upon a change of control, we must offer to repurchase the Senior Notes at 101% of the principal amount, plus accrued and unpaid interest.

We may redeem all or a portion of the 4.625% Senior Notes at any time on or after November 1, 2021, at declining prices starting at 102.313%, plus accrued and unpaid interest. We may redeem all or a portion of the 4.875% Senior Notes at any time on or after November 1, 2021, at declining prices starting at 102.438%, plus accrued and unpaid interest. Prior to November 1, 2021, we may redeem Senior Notes of either series, in whole at any time or in part, from time to time, at a price equal to 100% of the principal amount thereof, plus a make-whole premium, plus accrued and unpaid interest. We may also redeem up to 35% of the aggregate principal amount of either series of Senior Notes on or

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prior to November 1, 2019 in an aggregate amount equal to the net proceeds from certain equity offerings at redemption prices equal to 104.625% for the 4.625% Senior Notes and 104.875% for the 4.875% Senior Notes, plus, in each case, accrued and unpaid interest.

The Senior Notes are jointly and severally guaranteed on a senior unsecured basis by Lamb Weston’s domestic subsidiaries that guarantee its obligations under the Credit Agreement.

Other

The aggregate minimum principal maturities of our long-term debt, including current portion, for the next five fiscal years and thereafter, are as follows (dollars in millions):

	Financing
	Obligations (a)		Debt		Total
2017 remainder	$	3.8	$	18.7	$	22.5
2018		5.6		35.3		40.9
2019		5.4		35.4		40.8
2020		5.0		35.4		40.4
2021		4.9		35.5		40.4
2022		5.2		533.4		538.6
Thereafter		47.3		1,687.1		1,734.4
	$	77.2	$	2,380.8	$	2,458.0

(a) Payments for our lease financing obligations for the next five fiscal years and thereafter include $35.5 million of payments representing interest.

In November 2016, we recorded $37.3 million of debt issuance costs incurred in connection with the debt issuances described above as a reduction of long-term debt. Conagra paid $25.4 million of the debt issuance costs, we paid $9.6 million and have accrued $2.3 million. We amortize the $37.3 million of costs in interest expense using the effective interest method over the life of the loans. For the thirteen and twenty-six weeks ended November 27, 2016, we recorded $0.3 million of amortization expense in “Interest expense” in our Condensed Combined and Consolidated Statements of Earnings. 

Since the Separation, we have paid $0.9 million of interest on debt.

Notes Payable

In 2016, our Tai Mei Potato (Tai Mei Potato Industry Limited) subsidiary increased its credit facility $20.0 million to approximately $58.0 million. The facility consists of an overdraft line, a fixed asset commitment and a working capital facility. Borrowings under the facilities bear interest at either 85%,  95% or 105% of the Peoples Bank of China rate (4.35% at November 27, 2016) and may be prepaid without penalty. We guarantee the full amount of our subsidiary’s obligations to the financial institution up to the maximum amount of the credit facility. As of November 27, 2016, $25.2 million was drawn on the facility and recorded in “Notes payable” in our Condensed Combined and Consolidated Balance Sheet.

For more information on our debt and interest rates on that debt, see Note 5, Notes Payable and Long-Term Debt, of the Notes to Combined Financial Statements included in the Form 10.

12.   SHARE-BASED PAYMENTS

Prior to the Separation Date, Lamb Weston employees participated in Conagra’s equity incentive plans, which issued equity awards, including stock options, restricted stock units and performance-based restricted stock units. In addition, certain Lamb Weston employees participated in Conagra’s employee stock purchase plan. All awards granted under these plans consisted of Conagra common shares. Lamb Weston’s Condensed Combined and Consolidated

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Statements of Earnings reflect compensation expense for these stock-based plans associated with the portion of Conagra’s incentive plans in which Lamb Weston employees participated and an allocation of  stock-based compensation costs of certain Conagra employees who provided general and administrative services on our behalf.

After the Separation Date, outstanding awards granted to Lamb Weston employees under Conagra’s equity incentive plans were converted into Lamb Weston awards under Lamb Weston’s equity incentive plans based on a conversion ratio. The conversion ratio was calculated based on the average of the volume weighted average price (“VWAP”) per share of Conagra common stock for each of the five trading days ending with the second trading day immediately prior to November 9, divided by the VWAP per share of Lamb Weston common stock for the five trading days beginning with the first trading day immediately following the Separation Date, or November 10, 2016.

On November 8, 2016, the Board of Directors adopted the Lamb Weston Holdings, Inc. 2016 Stock Plan (the “Plan”). Under the terms of the Plan, equity awards, including stock options, cash and stock-settled restricted stock units, restricted stock awards, and performance-based restricted stock units, may be granted to our directors, officers, and employees. At November 27, 2016, we had 10.0 million shares authorized under our equity incentive plans, and 8.4 million were available for future grant. Forfeitures are added back to the pool of shares of common stock available to be granted at a future date.

The following table summarizes stock option activity for the twenty-six weeks ended November 27, 2016:

			Weighted-		Weighted-
			Average		Average
			Exercise		Remaining		Aggregate
			Price		Contractual		Intrinsic
	Shares		(per share)		Term (Years)		Value (a)
Outstanding at May 29, 2016		—		—
Converted on November 9, 2016		607,420	$	23.60
Granted		—		—
Exercised		—		—
Forfeited/cancelled		—		—
Outstanding at November 27, 2016		607,420	$	23.60		7.31	$	5.5
Exercisable at November 27, 2016		333,143	$	20.52		6.02	$	4.0

(a) The aggregate intrinsic values represent the total pre-tax intrinsic value (the difference between our closing stock price on the last trading day of our fiscal 2017 second quarter, or November 25, 2016, and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options at the end of the quarter. The amount changes based on the fair market value of our stock.

The following table summarizes restricted stock unit and performance-based restricted stock unit activity for the twenty-six weeks ended November 27, 2016:

	Stock-Settled				Cash-Settled				Performance Units
			Weighted-				Weighted-				Weighted-
			Average				Average				Average
			Grant-				Grant-				Grant-
			Date Fair				Date Fair				Date Fair
	Shares		Value		Shares		Value		Shares		Value
Outstanding at May 29, 2016		—		—		—		—		—		—
Converted on November 9, 2016		449,716	$	25.05		469,837	$	25.33		56,050	$	25.84
Granted		—		—		—		—		—		—
Vested		—		—		—		—		—		—
Forfeited/expired/cancelled		—		—		—		—		—		—
Outstanding at November 27, 2016		449,716	$	25.05		469,837	$	25.33		56,050	$	25.84

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Compensation Expense

Prior to the Separation Date, Conagra charged us for share-based compensation expense related to our direct employees and allocated to us costs (including share-based compensation) of certain employees of Conagra who provided general and administrative services on our behalf (see Note 3, Related Party Transactions). Our share-based compensation expense is recorded in “Selling, general and administrative expenses.” Compensation expense for share-based awards recognized in the Condensed Combined and Consolidated Statements of Earnings, net of forfeitures, was as follows (dollars in millions):

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 29,		November 27,		November 29,
	2016		2015		2016		2015
Stock options	$	0.1	$	0.1	$	0.3	$	0.2
Stock-settled restricted stock units		0.9		0.6		1.6		1.2
Performance-based restricted stock units		(0.3)		—		—		—
Cash-settled restricted stock units (a)		1.8		1.0		3.3		2.9
Total compensation expense		2.5		1.7		5.2		4.3
Income tax benefit		(0.9)		(0.6)		(1.9)		(1.6)
Total compensation expense, net of tax benefit	$	1.6	$	1.1	$	3.3	$	2.7

(a) All cash-settled restricted stock units are marked-to-market and presented within “Accrued liabilities” and “Other noncurrent liabilities” in our Condensed Combined and Consolidated Balance Sheets.

Based on estimates at November 27, 2016, total unrecognized compensation expense, net of estimated forfeitures, related to share-based payments was as follows (dollars in millions):

			Remaining
			Weighted
	Unrecognized		Average
	Compensation		Recognition
	Expense		Period (in years)
Stock options	$	0.8		1.5
Cash-settled restricted stock units		7.8		2.1
Stock-settled restricted stock units		7.3		2.1
Performance units		0.8		2.0
Total unrecognized share-based compensation expense	$	16.7		2.1

13.   STOCKHOLDERS’ EQUITY

In connection with our Separation from Conagra to an independent publicly traded Delaware corporation, we amended and restated our certificate of incorporation to authorize 600,000,000 shares of common stock and 60,000,000 shares of preferred stock. We had 146,046,395 shares of common stock issued and outstanding as of November 27, 2016. Each share of common stock entitles the holder to one vote on matters to be voted on by the stockholders of Lamb Weston. No preferred stock was issued or outstanding on November 27, 2016. 

Dividends

On December 15, 2016, our Board of Directors declared a dividend of $0.1875 per share of common stock. The dividend will be paid on March 1, 2017 to stockholders of record as of the close of business on January 30, 2017.

14.   DERIVATIVE FINANCIAL INSTRUMENTS

Lamb Weston’s operations are exposed to market risks from adverse changes in commodity prices affecting the cost of raw materials and energy, foreign currency exchange rates, and interest rates. In the normal course of business,

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these risks are managed through a variety of strategies, including the use of derivatives. We do not enter into derivative financial instruments for trading or speculative purposes.

Commodity and commodity index futures and option contracts are used from time to time to economically hedge commodity input prices on items such as natural gas, vegetable oils, packaging materials, and electricity. Historically, Conagra economically hedged a portion of Lamb Weston’s anticipated consumption of commodity inputs for periods of up to 36 months.

In order to reduce exposures related to changes in foreign currency exchange rates, Lamb Weston enters into forward exchange, option, or swap contracts from time to time for transactions denominated in a currency other than the applicable functional currency. This includes, but is not limited to, hedging against foreign currency risk in purchasing inventory and capital equipment, sales of finished goods, and future settlement of foreign-denominated assets and liabilities. Prior to the Separation, Conagra exited all derivative instruments that were used to economically hedge portions of Lamb Weston’s foreign currency risk in anticipated transactions. The effect of exiting these positions was insignificant to our second quarter fiscal 2017 results.

Economic Hedges of Forecasted Cash Flows

Lamb Weston does not generally designate commodity derivatives to achieve hedge accounting treatment. We reflect realized and unrealized gains and losses from derivatives used to economically hedge anticipated commodity consumption in earnings immediately within cost of sales.

Prior to the Separation, Conagra entered into certain commodity and foreign exchange derivatives with a diversified group of counterparties on behalf of Lamb Weston. Conagra monitored Lamb Weston’s positions and the credit ratings of the counterparties involved and limited the amount of credit exposure to any one party. We have not incurred a material loss due to nonperformance in any period presented and do not expect to incur any such material loss.

Economic Hedges of Fair Values—Foreign Currency Exchange Rate Risk

Lamb Weston may use options and cross currency swaps to economically hedge the fair value of certain monetary assets and liabilities (including intercompany balances) denominated in a currency other than the functional currency. These derivatives are marked-to-market with gains and losses immediately recognized in selling, general and administrative expenses. These substantially offset the foreign currency transaction gains or losses recognized as values of the monetary assets or liabilities being economically hedged change.

All derivative instruments are recognized in our Condensed Combined and Consolidated Balance Sheets at fair value (refer to Note 15, Fair Value Measurements for additional information related to fair value measurements). The fair value of derivative assets are recognized within “Prepaid expenses and other current assets”, while the fair value of derivative liabilities are recognized within “Accrued liabilities”. In accordance with generally accepted accounting principles, Lamb Weston offsets certain derivative asset and liability balances where master netting agreements provide for legal right of setoff. No collateral was received or pledged in connection with these agreements.

Derivative assets and liabilities were reflected in Lamb Weston’s Consolidated and Combined Balance Sheets as follows (dollars in millions):

	November 27,		May 29,
	2016		2016
Prepaid expenses and other current assets	$	—	$	2.1
Accrued liabilities	$	0.6	$	0.2

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The following table presents Lamb Weston’s derivative assets and liabilities, at November 27, 2016, on a gross basis (dollars in millions):

	Derivative Assets			Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity contracts	Prepaid expenses and other current assets	$	—	Accrued liabilities	$	0.6

The following table presents Lamb Weston’s derivative assets and liabilities, at May 29, 2016, on a gross basis, prior to the setoff of $0.1 million where legal right of setoff existed (dollars in millions):

	Derivative Assets			Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity contracts	Prepaid expenses and other current assets	$	1.5	Accrued liabilities	$	0.2
Foreign exchange contracts	Prepaid expenses and other current assets		0.6	Accrued liabilities		—
		$	2.1		$	0.2

The location and amount of gains (losses) from derivatives in Lamb Weston’s Condensed Combined and Consolidated Statements of Earnings were as follows (dollars in millions):

		Amount of Gain (Loss)
		Recognized on Derivatives in
		Combined Statement of Earnings
	Location in Consolidated	for the Thirteen Weeks Ended
Derivatives Not Designated as Hedging	Statement of Earnings of Gain	November 27,		November 29,
Instruments	(Loss) Recognized on Derivatives	2016		2015
Commodity contracts	Cost of sales	$	(0.5)	$	(1.9)
Foreign exchange contracts	Selling, general and administrative expenses		(0.1)		—
Total loss from derivative instruments not designed as hedging instruments		$	(0.6)	$	(1.9)

		Amount of Gain (Loss)
		Recognized on Derivatives in
		Combined Statement of Earnings
	Location in Consolidated	for the Twenty-Six Weeks Ended
Derivatives Not Designated as Hedging	Statement of Earnings of Gain	November 27,		November 29,
Instruments	(Loss) Recognized on Derivatives	2016		2015
Commodity contracts	Cost of sales	$	(0.1)	$	(5.2)
Foreign exchange contracts	Selling, general and administrative expenses		(0.1)		0.8
Total loss from derivative instruments not designed as hedging instruments		$	(0.2)	$	(4.4)

As of November 27, 2016, Lamb Weston had no open derivative contracts. As of May 29, 2016, Lamb Weston’s open derivative contracts had a notional value of $32.8 million and $13.6 million for purchase and sales contracts, respectively.

15.   FAIR VALUE MEASUREMENTS

FASB guidance establishes a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The three levels of inputs used to measure fair value are as follows:

Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities,

Level 2—Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, and

Level 3—Unobservable inputs reflecting Lamb Weston’s own assumptions and best estimate of what inputs market participants would use in pricing the asset or liability.

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The fair values of Lamb Weston’s Level 2 derivative instruments were determined using valuation models that use market observable inputs including interest rate curves and both forward and spot prices for currencies and commodities. Derivative assets and liabilities included in Level 2 primarily represent commodity and foreign currency option and forward contracts.

The following table presents Lamb Weston’s financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of November 27, 2016 (dollars in millions):  

	As of November 27, 2016
	Level 1		Level 2		Level 3		Total
Assets:
Deferred compensation assets	$	0.7	$	—	$	—	$	0.7
Total assets		0.7		—		—		0.7
Liabilities:
Derivative liabilities		—		0.6		—		0.6
Deferred compensation liabilities		6.8		—		—		6.8
Total liabilities	$	6.8	$	0.6	$	—	$	7.4

The following table presents Lamb Weston’s financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of May 29, 2016 (dollars in millions):

	As of May 29, 2016
	Level 1		Level 2		Level 3		Total
Assets:
Derivative assets	$	1.5	$	0.6	$	—	$	2.1
Deferred compensation assets		0.7		—		—		0.7
Total assets		2.2		0.6		—		2.8
Liabilities:
Derivative liabilities		—		0.2		—		0.2
Deferred compensation liabilities		6.5		—		—		6.5
Total liabilities	$	6.5	$	0.2	$	—	$	6.7

Certain assets and liabilities, including long-lived assets, goodwill, asset retirement obligations, and cost and equity investments are measured at fair value on a non-recurring basis.

At November 27, 2016, we had $1,698.8 million of fixed-rate and $682.0 million of variable-rate long-term debt outstanding. Based on current market rates, the fair value of our fixed-rate debt at November 27, 2016 was estimated to be $1,675.9 million. Any differences between the book value and fair value are due to the difference between the period-end market interest rate and the stated rate of our fixed-rate debt. We estimated the fair value of our fixed-rate debt using quoted market prices (Level 2 inputs) within the fair value hierarchy, that is described above. The fair value of our variable-rate term debt approximates the carrying amount as our cost of borrowing is variable and approximates current market prices.

16.    BUSINESS SEGMENTS AND RELATED INFORMATION

We have four operating segments, each of which are reportable segments: Global, Retail, Foodservice, and Other. Our chief operating decision maker receives periodic management reporting under this structure that generally focuses on the nature and scope of the customers’ business, which enables operating decisions, performance assessment, and resource allocation decisions at the segment level. The reportable segments are each managed by a general manager and supported by a cross functional team assigned to support the segment. We measure our segments’ product contribution margin, which is defined as net sales, less cost of sales and advertising and promotion expenses and excludes general corporate expenses, interest, and taxes. See Note 19, Business Segments and Related Information, of the Notes to Combined Financial Statements included in the Form 10 for more information.

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	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 29,		November 27,		November 29,
(in millions)	2016		2015		2016		2015
Net sales:
Global	$	412.6	$	388.3	$	811.8	$	771.1
Foodservice		250.6		225.2		510.9		471.5
Retail		96.5		91.8		186.1		179.5
Other		31.0		35.0		58.2		66.0
Total net sales		790.7		740.3		1,567.0		1,488.1
Product contribution margin (a):
Global		92.3		78.9		165.9		134.3
Foodservice		80.2		57.8		159.7		118.0
Retail		20.9		15.4		40.5		28.6
Other		(0.4)		2.2		2.8		8.9
Total product contribution margin		193.0		154.3		368.9		289.8
Equity method investment earnings		6.2		7.7		16.8		20.2
Total product contribution margin plus equity method investment earnings		199.2		162.0		385.7		310.0
Other selling, general and administrative expenses (a) (b)		67.5		44.8		118.4		95.7
Interest expense, net		6.8		1.5		8.3		2.8
Income tax expense		33.9		38.7		84.9		71.0
Net income		91.0		77.0		174.1		140.5
Less: Income attributable to noncontrolling interests		3.8		3.7		7.3		5.2
Net income attributable to Lamb Weston Holdings, Inc.	$	87.2	$	73.3	$	166.8	$	135.3

(a) Product contribution margin is defined as net sales, less cost of sales and advertising and promotions expenses. Other selling, general and administrative expenses include all selling, general and administrative expenses other than advertising and promotions expenses.

(b) The thirteen and twenty-six weeks ended November 27, 2016 include $9.0 million and $18.7 million, respectively, of pretax expenses related to the separation of Lamb Weston from Conagra. The expenses related primarily to professional fees.

Assets by Segment

The manufacturing assets of Lamb Weston are shared across all reporting segments. Output from these facilities used by each reporting segment can change from fiscal year to fiscal year. Therefore, it is impracticable to allocate those assets to the reporting segments, as well as disclose total assets by segment.

Other Information

Lamb Weston’s largest customer, McDonald’s Corporation, accounted for approximately 12% of consolidated net sales for both the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively, and approximately 11% of consolidated net sales for both the twenty-six weeks ended November 27, 2016 and November 29, 2015.

17.   COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS

We have financial commitments and obligations that arise in the ordinary course of our business. These include long-term debt (discussed in Note 11, Debt and Financing Obligations), lease obligations, purchase commitments for goods and services, and legal proceedings (discussed below).

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Guarantees and Indemnifications

We provide guarantees, indemnifications, and other assurances to third parties in the normal course of our business. These include tort indemnifications, environmental assurances, and representations and warranties in commercial agreements. At November 27, 2016, we are not aware of any material liabilities arising from any guarantee, indemnification, or financial assurance we have provided. If we determined such a liability was probable and subject to reasonable determination, we would accrue for it at that time.

In certain limited situations, Lamb Weston will guarantee an obligation of an unconsolidated entity. At the time in which Lamb Weston initially provides such a guarantee, Lamb Weston assesses the risk of financial exposure to Lamb Weston under these agreements. Lamb Weston considers the credit-worthiness of the guaranteed party, the value of any collateral pledged against the related obligation, and any other factors that may mitigate Lamb Weston’s risk. Lamb Weston actively monitors market and entity-specific conditions that may result in a change of Lamb Weston’s assessment of the risk of loss under these agreements.

Lamb Weston is a party to various potato purchase supply agreements with growers, under which they deliver their potato crop from the contracted acres to Lamb Weston during the harvest season, and pursuant to the potato supply agreements, pricing for this inventory is determined after delivery, taking into account crop size and quality, among other factors. Lamb Weston paid $104.6 million and $101.8 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively, and $123.1 million and $118.0 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively, under the terms of the potato supply agreements. Amounts paid are initially capitalized in inventory and charged to cost of sales as related inventories are produced and subsequently sold. Under the terms of such potato supply agreements, Lamb Weston has guaranteed repayment of short-term bank loans of the potato suppliers, under certain conditions. At November 27, 2016, the amount of supplier loans Lamb Weston has effectively guaranteed was $27.8 million. Lamb Weston has not established a liability for these guarantees, as Lamb Weston has determined that the likelihood of Lamb Weston’s required performance under the guarantees is remote. Under certain other potato supply agreements, Lamb Weston makes advances to growers prior to the delivery of potatoes. There were no advances at November 27, 2016 and $15.7million at May 29, 2016.

Federal income tax credits were generated related to Lamb Weston’s sweet potato production facility in Delhi, Louisiana. Third parties invested in certain of these income tax credits. Conagra has guaranteed these third parties the face value of these income tax credits over their statutory lives, through fiscal 2017, in the event that the income tax credits are recaptured or reduced. The face value of the income tax credits was $26.7 million at November 27, 2016. Lamb Weston believes the likelihood of the recapture or reduction of the income tax credits is remote, and therefore Lamb Weston has not established a liability in connection with this guarantee.

Lamb-Weston/Meijer, a joint venture (see Note 8, Investments in Joint Ventures for further information), headquartered in the Netherlands, manufactures and sells frozen potato products principally in Europe. Lamb Weston and Lamb Weston’s partner are jointly and severally liable for all legal liabilities of Lamb-Weston/Meijer. As of November 27, 2016 and May 29, 2016, the total liabilities of Lamb-Weston/Meijer were $203.1 million and $203.7 million, respectively. Lamb-Weston/Meijer is well capitalized, with partners’ equity of $266.4 million and $284.5 million as of November 27, 2016 and May 29, 2016, respectively. Lamb Weston has not established a liability on its balance sheets for the obligations of Lamb-Weston/Meijer, as Lamb Weston has determined the likelihood of any required payment by Lamb Weston to settle such liabilities of Lamb-Weston/Meijer is remote.

After taking into account liabilities recognized for all of the foregoing matters, management believes the ultimate resolution of such matters should not have a material adverse effect on Lamb Weston’s financial condition, results of operations, or cash flows. It is reasonably possible that a change in one of the estimates of the foregoing matters may occur in the future.

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Legal proceedings

We are also a party to other legal actions arising in the ordinary course of our business. These legal actions include commercial liability claims, premises liability claims, and employment-related claims, among others. As of the date of this filing, we do not believe it is reasonably possible that any of the legal actions against us will, either individually or in the aggregate, have a material adverse effect on our financial condition, results of operations, or cash flows. Costs of legal services associated with the foregoing matters are recognized in earnings as services are provided.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This report, including Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. We undertake no responsibility for updating these statements. Readers of this report should understand that these statements are not guarantees of performance or results. Many factors could affect our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including those set forth in this report. These risks and uncertainties include, among other things: our ability to successfully execute our long-term value creation strategy; the competitive environment and related market conditions; political and economic conditions of the countries in which we conduct business and other factors related to our international operations; disruption of our access to export mechanisms; our ability to complete proposed acquisitions or integrate acquired businesses or execute on large capital projects; our future debt levels; the availability and prices of raw materials; changes in our relationships with our growers or significant customers; the success of our joint ventures; actions of governments and regulatory factors affecting our businesses; the ultimate outcome of litigation or any product recalls; increased pension, labor and people-related expenses; our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; and other risks described in our reports filed from time to time with the SEC. We caution readers not to place undue reliance on any forward-looking statements included in this report, which speak only as of the date of this report. 

You should read the following Management’s Discussion and Analysis of Financial Condition and Results of Operations in conjunction with the unaudited condensed combined and consolidated financial statements and the related notes that appear elsewhere in this report.   

Overview

Lamb Weston, along with its joint venture partners, 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—the largest market for frozen potato products in the world. We are also 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. French fries represent the majority of our valued-added frozen potato product portfolio.

Unless otherwise expressly stated or the context otherwise requires, references to “we,” “our,” “us,” “the Company” and “Lamb Weston” refer to Lamb Weston Holdings, Inc. and its consolidated subsidiaries or, in the case of information as of dates or for periods prior to the Separation (as defined below), the combined and consolidated entities of the Lamb Weston business of Conagra Brands, Inc. (formerly, ConAgra Foods, Inc., “Conagra” or “our former parent”) and certain other assets and liabilities that had been historically held at the Conagra corporate level but were specifically identifiable and attributable to the Lamb Weston business.

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Management’s discussion and analysis, which we refer to in this filing as “MD&A,” of our results of operations and financial condition is provided as a supplement to the Condensed Combined and Consolidated Financial Statements and related notes included elsewhere herein to help provide an understanding of our financial condition, changes in financial condition and results of our operations. Our MD&A is based on financial data derived from the financial statements prepared in accordance with the United States (“U.S.”) generally accepted accounting principles (“GAAP”) and certain other financial data (Adjusted EBITDA) that is prepared using non-GAAP measures. Refer to “Reconciliations of Non-GAAP Financial Measures to Reported Amounts” below for a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income.

Lamb Weston’s management uses Adjusted EBITDA to evaluate the company’s performance excluding the impact of certain non-cash charges and other special items in order to have comparable financial results to analyze changes in our underlying business between reporting periods. The company includes this non-GAAP financial measure because management believes it is useful to investors in that it provides for greater transparency with respect to supplemental information used by management in its financial and operational decision making. We believe that the presentation of this non-GAAP financial measure, when used in conjunction with GAAP financial measures, is a useful financial analysis tool that can assist investors in assessing the company’s operating performance and underlying prospects. Adjusted EBITDA should not be considered a substitute for net (loss) income.

Separation from Conagra

On November 9, 2016, Lamb Weston separated from Conagra and became an independent publicly traded company through the pro rata distribution by Conagra of 100% of the outstanding common stock of Lamb Weston to Conagra stockholders (which we refer to as the “Separation”). Each Conagra stockholder of record as of 5:00 p.m., New York City time, on November 1, 2016, the “record date” received one share of Lamb Weston common stock for every three shares of Conagra common stock held on the record date. Approximately 146 million shares of Lamb Weston common stock were distributed on November 9, 2016 to Conagra stockholders. Lamb Weston’s common stock began “regular way” trading under the ticker symbol “LW” on the New York Stock Exchange on November 10, 2016.

The Separation was completed pursuant to a separation and distribution agreement and several other agreements with Conagra, including a transition services agreement, tax matters agreement, employee matters agreement, and trademark license agreement, each of which was filed with the SEC as an exhibit to our Current Report on Form 8-K on November 10, 2016. These agreements govern the relationship among Lamb Weston and Conagra following the Separation and provide for the allocation of various assets, liabilities, rights and obligations. These agreements also include arrangements for transition services to be provided by Conagra to Lamb Weston. For a discussion of each agreement see the section entitled “Relationship with Conagra After the Spinoff” in our registration statement on Form 10, as amended, which was filed with the SEC on October 17, 2016 (the “Form 10”). 

In connection with the Separation, Conagra transferred substantially all of the assets and liabilities and operations of Lamb Weston to us. Combined financial statements prior to the Separation were prepared on a stand-alone basis and were derived from Conagra’s consolidated financial statements and accounting records. The combined financial statements contained in this report reflect our financial position, results of operations, comprehensive income and cash flows as our business was operated as part of Conagra prior to the Separation. Following the Separation, our consolidated financial statements include the accounts of Lamb Weston Holdings, Inc. and its wholly-owned subsidiaries. The condensed combined and consolidated financial position, results of operations and cash flows as of dates and for periods prior to the Separation may not be indicative of what our financial position, results of operations and cash flows would have been as a separate stand-alone entity during the periods presented, nor are they indicative of what our financial position, results of operations and cash flows may be in the future. For additional information, see Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the Notes to Condensed Combined and Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report.

Executive Summary

Fiscal 2017 second quarter net sales increased 7% to $790.7 million, compared with $740.3 million in the comparable quarter of the prior year. Sales grew 5% in the first half of fiscal 2017 to $1,567.0 million, compared with

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$1,488.1 million in the comparable prior year period. Net income attributable to Lamb Weston increased 19% to $87.2 million, or $0.59 per diluted share, during the second quarter 2017, compared with $73.3 million of net income, or $0.50 per diluted share, during the same period in fiscal 2016. Net income attributable to Lamb Weston increased 23% to $166.8 million for the first half of fiscal 2017, compared with $135.3 million reported in the same period in the prior year. The second quarter and first half of fiscal 2017 included $5.7 million and $11.8 million, respectively, of after-tax expense for costs (primarily professional fees) related to our Separation from Conagra. Excluding these comparability items, net income increased 27% to $92.9 million, or $0.63 per diluted share, in the second quarter of fiscal 2017, and increased 32% to $178.6 million, or $1.21 per diluted share, compared with the first half in the prior year. The second quarter and first half of fiscal 2017 Adjusted EBITDA including unconsolidated joint ventures, was $168.1 million and $339.9 million, a 19% and 29% increase compared with the same periods in the prior year.

Compared with the second quarter and first half of fiscal 2016, the increase in net income and Adjusted EBITDA including unconsolidated joint ventures was driven primarily by favorable year-over-year pricing and mix and increased sales volume, as well as cost savings related to transportation, warehousing and conversion costs. Partially offsetting these benefits in the second quarter of fiscal 2017, were higher selling, general and administrative expenses related to incremental costs incurred as a stand-alone company and higher incentive compensation costs.

Demand for frozen potato products continues to grow around the world. We are meeting the increase in demand by investing in additional capacity at our Boardman, Oregon and Richland, Washington facilities, which we expect to complete in the third quarter of fiscal 2017 and second quarter of fiscal 2018, respectively. Additionally, through our Lamb-Weston/Meijer joint venture, we have recently expanded capacity in our facility at Bergen op Zoom, The Netherlands, and are participating in a joint venture that is constructing a new production facility in Lipetsk, a special economic zone in south Moscow. The Lipetsk plant is expected to be operational in early 2018.

Outlook

We manage Lamb Weston for sustainable performance as defined by our long-term annual financial targets, including net sales growth in the mid-single digits, Adjusted EBITDA including unconsolidated joint ventures growth in the mid-teen digits and Adjusted Diluted EPS of $2.20 to $2.28. For fiscal 2017, we expect the operating environment to remain favorable for the remainder of our fiscal year given the continued growth in volume demand and high industry manufacturing capacity utilization levels.

Operating Results

We have four reportable segments:  Global, Foodservice, Retail, and Other. For each period presented, we report product contribution margin by segment. Product contribution margin is the primary measure reported to our chief operating decision maker for purposes of allocating resources to our segments and assessing their performance. We define product contribution margin as net sales less cost of sales and advertising and promotion expenses. For additional information on our reportable segments, see Note 16, Business Segments and Related Information, of the Notes to Condensed Combined and Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report. 

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Thirteen Weeks Ended November 27, 2016 compared to Thirteen Weeks Ended November 29, 2015

Net Sales and Product Contribution Margin

(dollars in millions)

	Thirteen Weeks Ended
	Net Sales					Product Contribution Margin
	November 27,		November 29,		% Inc	November 27,		November 29,		% Inc
	2016		2015		(Dec)	2016		2015		(Dec)
Global	$	412.6	$	388.3	6%	$	92.3	$	78.9	17%
Foodservice		250.6		225.2	11%		80.2		57.8	39%
Retail		96.5		91.8	5%		20.9		15.4	36%
Other		31.0		35.0	(11%)		(0.4)		2.2	(118%)
Total	$	790.7	$	740.3	7%	$	193.0	$	154.3	25%

Net Sales

Lamb Weston’s net sales for the second quarter of fiscal 2017 were $790.7 million, an increase of $50.4 million, or 7%, compared to the second quarter of fiscal 2016.

Global net sales increased $24.3 million, or 6%, to $412.6 million, compared with $388.3 million in the second quarter of fiscal 2016. Fiscal 2017 second quarter net sales reflect a 5% increase in sales volume, driven by growth domestically, which included organic growth and new business with major chains, as well as growth in international markets. Additionally, fiscal 2017 second quarter net sales reflect a 1% increase in price associated with domestic and international pricing actions. 

Foodservice net sales increased $25.4 million, or 11%, to $250.6 million, compared with $225.2 million in the second quarter of fiscal 2016. Fiscal 2017 second quarter net sales reflect a 6% increase related to favorable mix and pricing, which reflects the continued implementation of a broad-based price increase announced earlier in the year as well as actions to improve customer and product mix. Sales volume increased 5%, which related to growth of small and mid-sized restaurant chain operators as well as regional and independent food distributors. 

Retail net sales increased $4.7 million, or 5%, to $96.5 million, compared with $91.8 million in the second quarter of fiscal 2016. Fiscal 2017 second quarter net sales reflect a 4% increase in sales volume, reflecting growth of licensed brands and private label. Positive customer mix change due to the increase of licensed brands and trade efficiency drove the remaining increase in net sales.

Net sales in our Other segment decreased $4.0 million, or 11%, to $31.0 million, compared with $35.0 million in the second quarter of fiscal 2016. Compared with fiscal second quarter 2016, the decrease in net sales reflected lower sales in the vegetable business.

Product Contribution Margin

Global product contribution margin increased $13.4 million, or 17%, to $92.3 million in the second quarter of fiscal 2017, as a result of favorable price/mix, supply chain efficiency savings and volume growth. Global cost of sales was $318.9 million, or 4%, higher for the second quarter of fiscal 2017 as compared to the second quarter of fiscal 2016 driven by an increase in sales volumes and commodity input, transportation, warehousing, and conversion costs. Advertising and promotion spending decreased slightly in the second quarter of 2017 as compared to the second quarter of fiscal 2016, driven by the timing of costs related to our global rebranding.

Foodservice product contribution margin increased $22.4 million, or 39%, to $80.2 million in the second quarter of fiscal 2017 as a result of favorable price/mix, supply chain efficiency savings and volume growth. Cost of sales was $168.6 million, or 1%, higher in the second quarter of fiscal 2017 as compared to the second quarter of fiscal 2016.

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Advertising and promotion spending was flat in the second quarter of fiscal 2017 as compared to the second quarter of fiscal 2016.

Retail product contribution margin increased $5.5 million, or 36%, to $20.9 million due to the increase in net sales, as discussed above, as well as supply chain efficiency savings. Cost of sales was $73.3 million, for the second quarter of fiscal 2017, which was flat compared to the second quarter of fiscal 2016. Advertising and promotion spending was down $1.1 million in the second quarter of fiscal 2017 as compared to the second quarter of fiscal 2016, driven by the timing of marketing spend for our Alexia brand products.

Other product contribution margin decreased to a $0.4 million loss, compared with $2.2 million of income in the second quarter of fiscal 2016, due primarily to lower sales in our vegetable business.

Selling, General and Administrative Expenses

Selling, general, and administrative expenses increased $21.1 million, or 40%, to $73.4 million in the second quarter of fiscal 2017 compared with the same period in 2016. The second quarter of fiscal 2017 included $9.0 million of expense for costs related to the Separation. Excluding the costs recorded in connection with the Separation, selling, general and administrative expenses increased 23%, largely due to incremental costs associated with being a stand-alone business as well as higher incentive compensation costs.

Interest Expense, Net

Interest expense, net was $6.8 million for the second quarter of fiscal 2017, an increase of $5.3 million compared with $1.5 million in the same period in fiscal 2016. The increase in interest expense, net was the result of the debt incurred in connection with the Separation. For more information, see Note 11, Debt and Financing Obligations in the Notes to Condensed Combined and Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report and “Obligations and Commitments”  in this MD&A.For the period prior to the Separation from Conagra, interest expense was included for only the legal entities that made-up Lamb Weston, and did not include any allocated interest expense from Conagra.

Income Taxes

Income tax expense for the second quarter of fiscal 2017 and 2016 was $33.9 million and $38.7 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was approximately 27% and 33% for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively. The lower rate in second quarter fiscal 2017 was primarily attributable to an increase in costs determined to be deductible, as well as a discrete benefit related to a change in estimate for prior year foreign taxes.

We expect our effective tax rate for fiscal 2017, exclusive of any unusual transactions or tax events which we cannot predict, to be approximately 34%.

Equity Method Investment Earnings

We conduct meaningful business through unconsolidated joint ventures and include our share of the earnings based on our economic ownership interest in them. Our two most significant joint ventures produce and market value-added frozen potato products for retail and foodservice customers:

· We hold a 50% ownership interest in Lamb-Weston/Meijer, a Netherlands joint venture that manufactures and sells frozen potato products principally in Europe. We and our partner are jointly and severally liable for all legal liabilities of Lamb Weston/Meijer. Lamb-Weston/Meijer and Belaya Dacha (Russian real estate company) have formed a joint venture and have committed approximately EUR100 million to establish a French fry plant in Lipetsk, a special economic zone in south Moscow. Construction on the project began in mid-2016 and the plant is expected to become operational in early fiscal 2018.

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· We hold a 50% ownership interest in Lamb Weston RDO, a potato processing venture. We provide all sales and marketing services to Lamb Weston RDO. We receive a fee for these services based on a percentage of the net sales of the venture.

Lamb Weston’s share of earnings from its equity method investments was $6.2 million and $7.7 million for the second quarter of fiscal 2017 and 2016, respectively. Equity method investment earnings for the second quarter of fiscal 2017 were lower due to higher raw potato costs in Europe and unfavorable currency translation with the strengthening of the U.S. dollar versus the Euro.

Twenty-Six Weeks Ended November 27, 2016 compared to the Twenty-Six Weeks Ended November 29, 2015

Net Sales and Product Contribution Margin

(dollars in millions)

	Twenty-Six Weeks Ended
	Net Sales					Product Contribution Margin
	November 27,		November 29,		% Inc	November 27,		November 29,		% Inc
	2016		2015		(Dec)	2016		2015		(Dec)
Global	$	811.8	$	771.1	5%	$	165.9	$	134.3	24%
Foodservice		510.9		471.5	8%		159.7		118.0	35%
Retail		186.1		179.5	4%		40.5		28.6	42%
Other		58.2		66.0	(12%)		2.8		8.9	(69%)
Total	$	1,567.0	$	1,488.1	5%	$	368.9	$	289.8	27%

Net Sales

Lamb Weston’s net sales for the first half of fiscal 2017 were $1,567.0 million, an increase of $78.9 million, or 5%, compared with the same period in fiscal 2016.

Global net sales increased $40.7 million, or 5%, to $811.8 million, compared with $771.1 million in the first half of fiscal 2016. Net sales in the first half of fiscal 2017 reflect a 4% increase in sales volume, driven by growth domestically, which included organic growth and new business with major restaurant chains, as well as growth in international markets. Additionally, net sales in the first half of fiscal 2017 reflect a 1% increase in price/mix associated with price increases in both domestic and international markets, as well as actions to improve customer and product mix. 

Foodservice net sales increased $39.4 million, or 8%, to $510.9 million, compared with $471.5 million in the first half of fiscal 2016. Net sales in the first half of fiscal 2017 reflect a 5% increase related to favorable customer mix and pricing, which reflects the continued implementation of a broad-based price increase announced earlier in the year as well as actions to improve customer and product mix. Sales volume increased 3%, which related to growth of small and mid-sized restaurant chain operators as well as regional and independent food distributors. 

Retail net sales increased $6.6 million, or 4%, to $186.1 million, compared with $179.5 million in the first half of fiscal 2016. Net sales in the first half of fiscal 2017 reflect a 3% increase related to favorable customer mix changes due to the increase of licensed brands and trade efficiencies. Sales volume increased 1%, reflecting distribution growth of licensed brands and private label.

Net sales in our Other segment decreased $7.8 million, or 12%, to $58.2 million, compared with $66.0 million in the first half of fiscal 2016. The decrease in net sales in the first half of fiscal 2017 is due primarily to lower sales in our vegetable business. 

Product Contribution Margin

Global product contribution margin increased $31.6 million, or 24%, to $165.9 million in the first half of fiscal 2017, as a result of favorable price/mix, supply chain efficiency savings and volume growth. Global cost of sales was

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$643.3 million, or 2% higher, in the first half of fiscal 2017, as compared to the same period in the prior year.  While total costs were higher in connection with increased volumes, as a percent of sales, global cost of sales declined 3% in the first half of fiscal 2017, compared with the first half of fiscal 2016, due to supply chain efficiency savings driven by operational efficiencies. Advertising and promotion spending was $0.8 million lower for the first half of 2017, as compared to the same period in 2016, driven by the timing of costs related to our global rebranding.

Foodservice product contribution margin increased $41.7 million, or 35%, to $159.7 million in the first half of fiscal 2017 as a result of favorable price/mix, supply chain efficiency savings and volume growth. Cost of sales was $347.8 million, or 1%, lower in the first half of fiscal 2017, as compared to the same period in the prior year, driven by operational efficiencies. Advertising and promotion spending was $0.2 million lower in the first half of fiscal 2017, compared with the first half of fiscal 2016.

Retail product contribution margin increased $11.9 million, or 42%, to $40.5 million due to favorable price/mix and volume growth. Cost of sales was $141.6 million, or 3% lower in the first half of fiscal 2017 as compared to the same period in fiscal 2016, driven by supply chain efficiency savings and partially offset by an increase from higher volume. Advertising and promotion spending was $1.5 million lower in the first half of fiscal 2017, compared with the first half of fiscal 2016, due to the timing of marketing and promotional spending related to our Alexia brand.

Other product contribution margin decreased $6.1 million, or 69%, in the first half of fiscal 2017, due primarily to lower sales in our vegetable business as described above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $20.0 million, or 18%, in the first half of fiscal 2017 compared with the same period in 2016. The first half of fiscal 2017 included $18.7 million of expense for costs related to the Separation from Conagra, primarily related to professional fees. Excluding the costs recorded in connection with the Separation, selling, general and administrative expenses increased less than 1%.

Interest Expense, Net

Interest expense, net was $8.3 million in the first half of fiscal 2017, an increase of $5.5 million compared with the same period in fiscal 2016. The increase in interest expense, net was the result of the new debt incurred in connection with the Separation from Conagra on November 9, 2016. For more information, see Note 11, Debt and Financial Obligations in the Notes to Condensed Combined and Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report.For the period prior to the Separation from Conagra, interest expense was included for only the legal entities that made up Lamb Weston, and did not include any allocated interest expense from Conagra.

Income Taxes

Income tax expense for the first half of fiscal 2017 and 2016 was $84.9 million and $71.0 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method earnings) was approximately 33% and 34% for the first half of fiscal 2017 and 2016, respectively. The effective tax rate varies from the U.S. federal statutory tax rate of 35% principally due to the impact of foreign taxes and the domestic manufacturers’ deduction.

Equity Method Investment Earnings

Lamb Weston’s share of earnings from its equity method investments was $16.8 million and $20.2 million for the first half of fiscal 2017 and 2016, respectively. Equity method investment earnings for the first half of fiscal 2017 were lower due to higher raw potato costs in Europe and unfavorable currency translation with the strengthening of the U.S. dollar versus the Euro.

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Liquidity and Capital Resources

Sources and Uses of Cash

Prior to the Separation on November 9, 2016, transfers to and from Conagra’s cash management system were reflected in “Net transfers (to) from parent” on the Condensed Combined and Consolidated Statements of Cash Flows. Conagra funded our cash needs up to the date of the Separation.

We no longer participate in cash management and funding arrangements with Conagra, and we have incurred a significant amount of debt in connection with the Separation. Our primary sources of liquidity are net cash provided by operating activities and borrowings under our revolving credit facility. At November 27, 2016, we had $69.4 million of cash and cash equivalents and $420.0 million of available borrowing capacity. Currently, our primary uses of cash are for operations, capital expenditures, and debt service. We believe that net cash generated from operating activities, cash on hand, available borrowings under our revolving credit facility, and available capital through access to capital markets will be adequate to meet our liquidity and capital requirements, including payment of any dividends declared for at least the next twelve months.

Lamb Weston had cash and cash equivalents of $69.4 million at November 27, 2016 and $36.4 million at May 29, 2016, of which $20.0 million and $33.6 million, respectively, was held in foreign subsidiaries, whose earnings are considered to be indefinitely reinvested. Repatriation of these funds to the United States would subject these funds to United States federal income taxes. Determination of the amount of unrecognized deferred tax liabilities related to investments in these foreign subsidiaries is not practicable.  

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:

	Twenty-Six Weeks Ended
	November 27,		November 29,
	2016		2015			Inc (Dec)
Net cash flows provided by (used for):
Operating activities	$	162.4	$	172.9	$	(10.5)
Investing activities		(125.8)		(63.6)		(62.2)
Financing activities		(2.8)		(115.5)		112.7
		33.8		(6.2)		40.0
Effect of exchange rate changes on cash and cash equivalents		(0.8)		(0.5)		(0.3)
Net increase (decrease) in cash and cash equivalents	$	33.0	$	(6.7)	$	39.7

Operating Activities

In the first half of fiscal 2017 and 2016, operating activities provided $162.4 million and $172.9 million of cash, respectively. Compared with the first half of fiscal 2016, the decrease in cash provided by operations related primarily to $61.6 million more cash used for working capital, compared with the same period in 2016. In the first half of fiscal 2017, the increase in working capital related primarily to an increase in inventories due to the build-up of inventory ahead of upcoming capital projects and an increase in accounts receivable due to higher sales volumes and prices. Partially offsetting this decrease in cash from operations was the increase in income from operations as described in “Operating Results” in this MD&A. 

Investing Activities

Investing activities used $125.8 million in the first half of fiscal 2017, compared with $63.6 million in the same period in the prior year. The increase related to our significant plant expansions and improvements in fiscal 2017 compared with 2016.

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Financing Activities

During the first half of fiscal 2017, cash used for financing activities totaled $2.8 million, compared with cash used for financing activities of $115.5 million during the same period a year ago. The year-over-year change in financing activities primarily related to the Separation from Conagra in fiscal 2017, whereas in the first half of fiscal 2016, cash was primarily used for transfers to Conagra, as we were part of Conagra’s cash management system through the Separation Date. We had $38.8 million of net transfers to Conagra in the first half of fiscal 2017, compared with $121.1 million of net transfers in the first half of fiscal 2016.

In the first half of fiscal 2017, we issued $2,341.0 million of debt in connection with the Separation, of which $1,542.9 million of proceeds were distributed directly to Conagra (including $25.4 million Conagra used to pay debt issuance costs) and is considered a noncash financing activity for Lamb Weston and we received $798.1 million of cash proceeds from the debt issuance. We used the $798.1 million of proceeds, together with borrowings on the revolving credit facility, to fund an $823.5 million cash payment to Conagra on the Separation Date. At November 27, 2016, we had $80.0 million of borrowings outstanding under the revolving credit facility. We paid $9.6 million of debt issuance costs and accrued another $2.3 million in our Condensed Combined and Consolidated Balance Sheet at November 27, 2016. Cash distributions to noncontrolling interests were $5.6 million and $2.8 million in the first half of fiscal 2017 and 2016, respectively and we made $3.4 million and $1.4 million of debt repayments in the first half of fiscal 2017 and 2016, respectively. 

For more information about the debt issued in connection with the Separation, including among other items, interest rates, maturity dates, and covenants, see Note 11, Debt and Financing Obligations of the Notes to Condensed Combined and Consolidated Financial Statements in “Part, Item 1. Financial Statements” of this report. At November 27, 2016, we were in compliance with the financial covenant ratios and other covenants contained in the Credit Agreement.

Obligations and Commitments

There have been no material changes to the contractual obligations table disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Form 10, except as disclosed in Note 11, Debt and Financing Obligations, of the Notes to Condensed Combined and Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report. 

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An updated summary of our debt, interest and financing obligations as of November 27, 2016, was as follows (dollars in millions):

	Payments Due by Period (a)
			Less than						After 5
Contractual Obligations	Total		1 Year		1-3 Years		3-5 Years		Years
Revolving credit facility	$	80.0	$	80.0	$	—	$	—	$	—
Long-term debt, including current portion, excluding financing obligations (b)		2,380.8		18.7		70.7		70.9		2,220.5
Interest on long-term debt (c)		780.0		44.7		183.0		183.4		368.9
Financing obligations (d)		77.2		3.8		11.0		9.9		52.5
Total	$	3,318.0	$	147.2	$	264.7	$	264.2	$	2,641.9

(a) The table assumes amounts included in the “Less than 1 Year” column represent obligations from November 27, 2016 through the end of our fiscal year 2017 on May 28, 2017.  The remaining columns correspond to our fiscal year ends.

(b) The table assumes our long-term debt is held to maturity and includes the current portion of long-term debt.  Amounts are reported gross.

(c) Amounts represent estimated future interest payments as of November 27, 2016, assuming our long-term debt is held to maturity and using interest rates in effect at November 27, 2016. 

(d) Amounts include cash payments on financing obligations as of November 27, 2016.

Reconciliations of Non-GAAP Financial Measures to Reported Amounts

To supplement the financial information, we have presented Adjusted EBITDA including unconsolidated joint ventures, which is considered a non-GAAP financial measure. The non-GAAP financial measure should be viewed in addition to, and not as an alternative for, financial measures prepared in accordance with GAAP. This non-GAAP financial measure may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define this non-GAAP financial measures the same way. The measure is not a substitute for the comparable GAAP financial measure of net income (loss), and there are limitations to using non-GAAP financial measures. 

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The following table reconciles net income to Adjusted EBITDA including unconsolidated joint ventures. 

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 29,		November 27,		November 29,
	2016		2015		2016		2015
Net income attributable to Lamb Weston Holdings, Inc.	$	87.2	$	73.3	$	166.8	$	135.3
Income attributable to noncontrolling interests		3.8		3.7		7.3		5.2
Equity method investment earnings		(6.2)		(7.7)		(16.8)		(20.2)
Interest expense, net		6.8		1.5		8.3		2.8
Income tax expense		33.9		38.7		84.9		71.0
Income from operations		125.5		109.5		250.5		194.1
Depreciation and amortization		26.4		24.1		51.8		47.9
Items impacting comparability (a)
Expenses related to the spinoff		9.0		—		18.7		—
Expenses related to SCAE Plan		—		—		—		0.1
Adjusted EBITDA (b)		160.9		133.6		321.0		242.1
Unconsolidated Joint Ventures
Equity method investment earnings		6.2		7.7		16.8		20.2
Interest expense, income tax expense, and depreciation and amortization
included in equity method investment earnings		5.7		4.1		11.2		9.1
Add: EBITDA from unconsolidated joint ventures		11.9		11.8		28.0		29.3
Consolidated Joint Ventures
Income attributable to noncontrolling interests		(3.8)		(3.7)		(7.3)		(5.2)
Interest expense, income tax expense, and depreciation and amortization
included in income attributable to noncontrolling interests		(0.9)		(0.9)		(1.8)		(1.8)
Subtract: EBITDA from consolidated joint ventures		(4.7)		(4.6)		(9.1)		(7.0)
Adjusted EBITDA including unconsolidated joint ventures	$	168.1	$	140.8	$	339.9	$	264.4

(a) The thirteen and twenty-six weeks ended November 27, 2016, include $9.0 million and $18.7 million, respectively, of expenses related to the separation of Lamb Weston from Conagra. The expenses related primarily to professional fees.

(b) Adjusted EBITDA includes EBITDA from consolidated joint ventures.

Off-Balance Sheet Arrangements

There have been no material changes to the off-balance sheet arrangements disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Form 10. 

Critical Accounting Estimates

A discussion of our critical accounting estimates can be found in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Form 10. There were no material changes to these critical accounting estimates during the first half of fiscal 2017.  

New and Recently Adopted Accounting Standards

For a listing of our new and recently adopted accounting standards, see Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the Notes to Condensed Combined and Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Lamb Weston’s operations are exposed to market risks from adverse changes in commodity prices affecting the cost of raw materials and energy, foreign currency exchange rates, and interest rates. In the normal course of business, we periodically enter into derivatives to minimize these risks, but not for trading purposes.  

Except as it relates to the derivatives Conagra unwound prior to the Separation and the increased interest rate risk we have assumed with the variable-rate debt we issued in connection with the Separation, there have been no material changes in our market risk during the twenty-six weeks ended November 27, 2016. See Note 14, Derivative Financial Instruments, and Note 11, Debt and Financing Obligations, of the Notes to Condensed Combined and Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report. 

The interest rates on approximately 71% of our debt are fixed. A one percent increase in interest rates related to variable-rate debt would have resulted in an increase in interest expense and a corresponding decrease in income before taxes of approximately $7.7 million annually.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company's management carried out an evaluation, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of November 27, 2016. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, evaluated any change in the Company's internal control over financial reporting that occurred during the quarter covered by this report and determined that there was no change in our internal control over financial reporting during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

See Note 17, Commitments, Contingencies, Guarantees and Legal Proceedings, of the Notes to Condensed Combined and Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report for information regarding our legal proceedings.

ITEM 1A. RISK FACTORS

We are subject to various risks and uncertainties in the course of our business. The discussion of such risks and uncertainties may be found under “Risk Factors” in the Form 10. There have been no material changes to such risk factors.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit Number	Exhibit Description
2.1*	Separation and Distribution Agreement, dated as of November 8, 2016, by and between ConAgra Foods, Inc. and Lamb Weston Holdings, Inc., incorporated herein by reference to Exhibit 2.1 of Lamb Weston Holdings, Inc.’s Current Report on Form 8-K filed on November 10, 2016 (File No. 001-37830)
3.1	Amended and Restated Certificate of Incorporation of Lamb Weston Holdings, Inc., incorporated herein by reference to Exhibit 3.1 of Lamb Weston Holdings, Inc.’s Current Report on Form 8-K filed on November 10, 2016 (File No. 001-37830)
3.2	Amended and Restated Bylaws of Lamb Weston Holdings, Inc., incorporated herein by reference to Exhibit 3.2 of Lamb Weston Holdings, Inc.’s Current Report on Form 8-K filed on November 10, 2016 (File No. 001-37830)
4.1	2024 Notes Indenture, dated as of November 9, 2016, by and among Lamb Weston Holdings, Inc., the Guarantors (as defined therein) and Wells Fargo Bank, National Association, as trustee (including form of note relating to the 2024 Notes), incorporated herein by reference to Exhibit 4.1 of Lamb Weston Holdings, Inc.’s Current Report on Form 8-K filed on November 10, 2016 (File No. 001-37830)
4.2	2026 Notes Indenture, dated as of November 9, 2016, by and among Lamb Weston Holdings, Inc., the Guarantors (as defined therein) and Wells Fargo Bank, National Association, as trustee (including form of note relating to the 2026 Notes), incorporated herein by reference to Exhibit 4.2 of Lamb Weston Holdings, Inc.’s Current Report on Form 8-K filed on November 10, 2016 (File No. 001-37830)
10.1	Tax Matters Agreement, dated as of November 8, 2016, by and between ConAgra Foods, Inc. and Lamb Weston Holdings, Inc., incorporated herein by reference to Exhibit 10.1 of Lamb Weston Holdings, Inc.’s Current Report on Form 8-K filed on November 10, 2016 (File No. 001-37830)
10.2	Employee Matters Agreement, dated as of November 8, 2016, by and between ConAgra Foods, Inc. and Lamb Weston Holdings, Inc., incorporated herein by reference to Exhibit 10.2 of Lamb Weston Holdings, Inc.’s Current Report on Form 8-K filed on November 10, 2016 (File No. 001-37830)
10.3	Transition Services Agreement, dated as of November 8, 2016, by and between ConAgra Foods, Inc. and Lamb Weston Holdings, Inc., incorporated herein by reference to Exhibit 10.3 of Lamb Weston Holdings, Inc.’s Current Report on Form 8-K filed on November 10, 2016 (File No. 001-37830)
10.4	Trademark License Agreement, dated as of November 8, 2016, by and between ConAgra Foods, Inc. and Lamb Weston Holdings, Inc., incorporated herein by reference to Exhibit 10.4 of Lamb Weston Holdings, Inc.’s Current Report on Form 8-K filed on November 10, 2016 (File No. 001-37830)
10.5	Credit Agreement, dated as of November 9, 2016, by and among Lamb Weston Holdings, Inc., the guarantors party thereto, the lenders named therein, and Bank of America, N.A., as Administrative Agent, incorporated herein by reference to Exhibit 10.5 of Lamb Weston Holdings, Inc.’s Current Report on Form 8-K filed on November 10, 2016 (File No. 001-37830)

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10.6	Lamb Weston Holdings, Inc. 2016 Stock Plan, incorporated by reference to Exhibit 10.10 to Amendment No. 3 to Lamb Weston Holdings, Inc.’s Registration Statement on Form 10, filed October 5, 2016 (Commission File No. 001-37830)
10.7	Letter Agreement, dated as of August 25, 2016, between ConAgra Foods, Inc. and Micheline C. Carter, incorporated by reference to Exhibit 10.11 to Amendment No. 3 to Lamb Weston Holdings, Inc.’s Registration Statement on Form 10, filed October 5, 2016 (Commission File No. 001-37830)
10.8	Letter Agreement, dated as of September 15, 2016, between ConAgra Foods, Inc. and Eryk J. Spytek, incorporated by reference to Exhibit 10.12 to Amendment No. 3 to Lamb Weston Holdings, Inc.’s Registration Statement on Form 10, filed October 5, 2016 (Commission File No. 001-37830)
10.9	Interim Position and Non-Compete Agreement, dated as of September 28, 2016, by and between ConAgra Foods, Inc. and John Gehring, incorporated by reference to Exhibit 10.13 to Amendment No. 3 to Lamb Weston Holdings, Inc.’s Registration Statement on Form 10, filed October 5, 2016 (Commission File No. 001-37830)
10.10	Letter Agreement, dated as of November 9, 2016, between Lamb Weston Holdings, Inc. and Robert M. McNutt, incorporated herein by reference to Exhibit 10.1 of Lamb Weston Holdings, Inc.’s Current Report on Form 8-K filed on November 11, 2016 (File No. 001-37830)
10.11	Interim Position and Non-Compete Agreement, dated as of November 16, 2016, by and between Lamb Weston Holdings, Inc. and John F. Gehring, incorporated herein by reference to Exhibit 10.2 of Lamb Weston Holdings, Inc.’s Current Report on Form 8-K filed on November 11, 2016 (File No. 001-37830)
10.12	Form of Lamb Weston Holdings, Inc. Restricted Stock Unit Agreement (Cash-settled)
10.13	Form of Lamb Weston Holdings, Inc. Restricted Stock Unit Agreement (Stock-settled)
10.14	Form of Lamb Weston Holdings, Inc. Nonqualified Stock Option Agreement for Employees
10.15	Form of Lamb Weston Holdings, Inc. Restricted Stock Unit Agreement for Non-Employee Directors
31.1	Section 302 Certificate of Chief Executive Officer
31.2	Section 302 Certificate of Chief Financial Officer
32.1	Section 906 Certificate of Chief Executive Officer
32.2	Section 906 Certificate of Chief Financial Officer
101.1	The following materials from Lamb Weston Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 27, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) Notes to Condensed Consolidated Financial Statements, and (vi) document and entity information.

*  Certain exhibits and schedules have been omitted and the Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits and schedules upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LAMB WESTON HOLDINGS, INC.
	By:	/s/ JOHN F. GEHRING
		Senior Vice President and Interim Chief Financial Officer (Authorized Officer and Principal Financial Officer)
Dated this 10th day of January, 2017.

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EX-10.12

Exhibit 10.12

FORM OF

RESTRICTED STOCK UNIT AGREEMENT (CASH-SETTLED)

LAMB WESTON HOLDINGS, INC. 2016 STOCK PLAN

This Restricted Stock Unit Agreement (Cash-Settled), hereinafter referred to as the “Agreement”, is made on the _____ day of __________, 20_____ between Lamb Weston Holdings, Inc., a Delaware corporation (the “Company”), and the undersignedEmployee (the “Participant”).

1.         Award Grant. The Company hereby grants Restricted Stock Units ("RSUs", and each such unit an “RSU”) to the Participant under the Lamb Weston Holdings, Inc. 2016 Stock Plan (the “Plan”), as follows, effective as of __________, 20_____ (the “Date of Grant”):

Participant:
Employee ID:
Number of RSUs:
Date of Grant:
Vesting Date:	(“Vesting Date”)

Dividend Equivalents:  Dividend equivalents on the RSUs will not be paid or accumulated.

The Company has caused this Agreement to be executed effective as of the date first written above (the “Effective Date”).  In the event of any conflict between the terms of this Agreement and the terms of the Plan, the Plan shall control.  Please read this Agreement and the Plan carefully. If you do not wish to receive this award and/or you do not consent and agree to the terms and conditions on which this award is offered, as set forth in this Agreement and the Plan, then you must reject the award (1) online from the "Grant Acceptance" page on the Merrill Lynch Benefits Online website or (2) by contacting the Merrill Lynch call center, in either case, no later than 11:59 p.m., Pacific Time, on the ninetieth calendar day following the Effective Date, in which case the award will be cancelled.  Your failure to notify the Company of your rejection of the award by or before this deadline will constitute your acceptance of the award and your agreement with all terms and conditions of the award, as set forth in this Agreement and the Plan.

LAMB WESTON HOLDINGS, INC.

By:

Date:

2.         Definitions.   Capitalized terms used herein without definition have the meanings set forth in the Plan. The following terms shall have the respective meanings set forth below:

(a)         “Continuous Employment” shall mean the absence of any interruption or termination of employment with the Company and its Subsidiaries and the performance of substantial services.  Continuous Employment shall not be considered interrupted or terminated in the case of sick leave, short-term disability (as defined in the Company’s sole discretion), military leave or any other leave of absence approved by the Company unless and until there is a Separation from Service (as defined in Section 2(e) below).

(b)         “Divestiture” means a permanent disposition to a person other than the Company of a plant or other facility or property at which the Participant performs a majority of the Participant’s services, whether such disposition is effected by means of a sale of assets, a sale of Subsidiary stock or otherwise.

(c)         “Early Retirement” means a Separation from Service with the Company and its Subsidiaries when the Participant (i) is at least age 55, and (ii) has at least ten years of credited service with the Company and its Subsidiaries.

(d)         “Normal Retirement” shall mean a Separation from Service with the Company and its Subsidiaries on or after attaining age 65. 

(e)         “Separation from Service,” “termination of employment” and similar terms means the date that the Participant incurs a “separation from service” within the meaning of Section 409A of the Code.  As used in connection with the definition of “Separation from Service,” Company includes Lamb Weston Holdings, Inc. and any other entity that with Lamb Weston Holdings, Inc. constitutes a controlled group of corporations (as defined in Section 414(b) of the Code), or a group of trades or businesses (whether or not incorporated) under common control (as defined in Section 414(c) of the Code), substituting 25% for the 80% ownership level for purposes of both Sections 414(b) and Section 414(c) of the Code.

(f)         “Settlement Amount” shall mean an amount in cash equal to the closing price of one share of Stock on the New York Stock Exchange.

(g)         “Specified Employee” is as defined under Section 409A of the Code and Treasury Regulation Section 1.409A-1(i).

(h)         “Successors” shall mean the beneficiaries, executors, administrators, heirs, successors and assigns of a person.

3.         Vesting of RSUs.

(a)         Normal Vesting.  Subject to the Plan and this Agreement, if the Participant has been in Continuous Employment through the Vesting Date as set forth in Section 1, then the RSUs subject to such Vesting Date will become nonforfeitable (“Vest” or similar terms).

(b)         Termination of Employment.  If, prior to the Vesting Date set forth in Section 1, the Participant’s employment with the Company and its Subsidiaries shall terminate:

(i)  by reason of death, then all unvested RSUs evidenced by this Agreement shall, to the extent such RSUs have not previously been forfeited, become 100% Vested.

(ii) by reason of Normal Retirement occurring on or after the date that is 12

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months after the Date of Grant, then all RSUs evidenced by this Agreement shall, to the extent such RSUs have not previously been forfeited, become 100% Vested.

(iii)by reason of Early Retirement, involuntary termination due to disability, position elimination, reduction in force (each as defined in the Company's sole discretion), or Divestiture, in each case, on or after the date that is 12 months after the Date of Grant, then the Participant will Vest in a pro rata portion of the RSUs determined by multiplying the number of RSUs evidenced by this Agreement, to the extent not previously forfeited, by a fraction, the numerator of which is the total number of calendar days during which the Participant was employed by the Company or a Subsidiary during the period beginning on the Date of Grant and ending on the Separation from Service and the denominator of which is the total number of calendar days beginning on the Date of Grant and ending on the Vesting Date, rounded to the nearest whole number of RSUs.

(iv)for Cause prior to the Vesting Date, then all RSUs, whether Vested or unvested prior to the Vesting Date, shall be immediately forfeited without further consideration to the Participant.

(c)         Accelerated Vesting in Connection with a Change of Control.

(i)  If a Change of Control occurs prior to the Vesting Date, and the Participant has been in Continuous Employment between the Date of Grant and the date of such Change of Control, then all RSUs evidenced by this Agreement shall become 100% Vested, except (A) to the extent such RSUs have previously been forfeited, or (B) to the extent that a Replacement Award is provided to the Participant to replace, continue or adjust the outstanding RSUs (the “Replaced Award”).  If the Participant’s employment with the Company or a Subsidiary (or any of its or their successors after the Change of Control) (as applicable, the “Successor Company”) is terminated by the Participant for Good Reason or by the Successor Company other than for Cause, in each case within a period of two years after the Change of Control but prior to the Vesting Date, to the extent that the Replacement Award has not previously been forfeited, the Replacement Award will become 100% Vested (and become entitled to settlement as specified in Section 4(b)(ii)).

(ii) For purposes of this Agreement, a “Replacement Award” means an award (A) of the same type (i.e., time-based restricted stock units) as the Replaced Award, (B) that has a value at least equal to the value of the Replaced Award, (C) that relates to publicly traded equity securities of the Successor Company in the Change of Control (or another entity that is affiliated with the Successor Company following the Change of Control), (D) the tax consequences of which for such Participant under the Code, if the Participant is subject to U.S. federal income tax under the Code, are not less favorable to the Participant than the tax consequences of the Replaced Award, and (E) the other terms and conditions of which are not less favorable to the Participant than the terms and conditions of the Replaced Award (including the provisions that would apply in

3

the event of a subsequent change of control).  A Replacement Award may be granted only to the extent it does not result in the Replaced Award or Replacement Award failing to comply with or ceasing to be exempt from Section 409A of the Code.  Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the preceding two sentences are satisfied.  The determination of whether the conditions of this Section 3(c)(ii) are satisfied will be made in good faith by the Committee, as constituted immediately before the Change of Control, in its sole discretion.

(iii)For purposes of this Agreement, “Cause” means: (A) the willful and continued failure by the Participant to substantially perform the Participant’s duties with the Successor Company (other than any such failure resulting from termination by the Participant for Good Reason) after a demand for substantial performance is delivered to the Participant that specifically identifies the manner in which the Successor Company believes that the Participant has not substantially performed the Participant’s duties, and the Participant has failed to resume substantial performance of the Participant’s duties on a continuous basis within five days of receiving such demand; (B) the willful engaging by the Participant in conduct which is demonstrably and materially injurious to the Successor Company, monetarily or otherwise; or (C) the Participant’s conviction of a felony or conviction of a misdemeanor which impairs the Participant’s ability substantially to perform the Participant’s duties with the Successor Company.  For the purposes of this definition, no act, or failure to act, on the Participant’s part shall be deemed “willful” unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Successor Company.

(iv)For purposes of this Agreement, “Good Reason” means: (A) any material failure of the Successor Company to comply with and satisfy any of the terms of any employment or change in control (or similar) agreement between the Successor Company and the Participant pursuant to which the Participant provides services to the Successor Company; (B) any significant involuntary reduction of the authority, duties or responsibilities held by the Participant immediately prior to the Change of Control (and, for the avoidance of doubt, involuntary removal of the Participant from an officer position that the Participant holds immediately prior to the Change of Control will not, by itself, constitute a significant involuntary reduction of the authority, duties or responsibilities held by the Participant immediately prior to the Change of Control); (C) any material involuntary reduction in the aggregate cash remuneration of the Participant as in effect immediately prior to the Change of Control; or (D) requiring the Participant to become based at any office or location more than the minimum number of miles required by the Code for the Participant to claim a moving expense deduction, from the office or location at which the Participant was based immediately prior to such Change

4

of Control, except for travel reasonably required in the performance of the Participant’s responsibilities; provided,  however, that no termination shall be deemed to be for Good Reason unless (x) the Participant provides the Successor Company with written notice setting forth the specific facts or circumstances constituting Good Reason within ninety days after the initial existence of the occurrence of such facts or circumstances, (y) the Successor Company fails to cure such facts or circumstances within thirty days of its receipt of such written notice, and (z) the Participant actually terminates employment within thirty (30) days following the end of the Successor Company’s thirty-day cure period, if such event or circumstance has not been cured.

(v) If a Replacement Award is provided, notwithstanding anything in this Agreement to the contrary, any outstanding RSUs which at the time of the Change of Control are not subject to a "substantial risk of forfeiture" (within the meaning of Section 409A of the Code) will be deemed to be Vested at the time of such Change of Control (and such Vested RSUs shall be settled in accordance with Section 4(b)(iii) below).

(d)       Forfeiture of RSUs.  Subject to Section 3(b)(iv), any RSUs that have not Vested pursuant to Section 3(a),  Section 3(b), or Section 3(c) as of the Vesting Date will be forfeited automatically and without further notice on such date or dates (or earlier if, and on such date that, the Participant cases to be in Continuous Employment prior to the Vesting Date for any reason other than as described in Section 3(b) or Section 3(c)).

4.         Settlement of RSUs.

(a)        Normal.  Subject to Section 4(b), the Company will pay to the Participant the Settlement Amount on or within thirty days after the Vesting Date for each RSU that is a Vested RSU on such Vesting Date to the extent the RSU has not previously been forfeited or settled.

(b)        Other Settlement Events.  Notwithstanding Section 4(a), to the extent the RSUs are Vested RSUs on the dates set forth below and to the extent the Vested RSUs have not previously been forfeited or settled, the Company will settle such Vested RSUs as follows:

(i)  Death.  If there are such Vested RSUs on the Participant's death, within thirty days of the Participant's death, each Vested RSU will be settled for an amount in cash equal to the Settlement Amount for each such Vested RSU. 

(ii) Separation from Service.  If there are such Vested RSUs upon the Participant's Separation from Service, within thirty days of the Participant's Separation from Service, each Vested RSU will be settled for an amount in cash equal to the Settlement Amount for each such Vested RSU.

(iii)Change of Control.  If there are such Vested RSUs upon a Change of Control, each Vested RSU will be settled for an amount in cash equal to the Settlement Amount for each such Vested RSU; provided,  however, that if such Change of Control would not qualify as a permissible date of distribution under Section

5

409A(a)(2)(A) of the Code, and the regulations thereunder, and where Section 409A of the Code applies to such distribution, the Participant is entitled to receive the corresponding payment on the date that would have otherwise applied pursuant to Section 4 as though such Change of Control had not occurred.

(c)        Payment of Taxes Upon Settlement.   As a condition of the payment of the Settlement Amount upon settlement of RSUs hereunder, the Participant agrees that the Company will withhold from the Settlement Amount any taxes required to be withheld by the Company under Federal, State or local law as a result of the settlement of the RSUs in an amount sufficient to satisfy the minimum statutory withholding amount permissible.

(d)        Specified Employee.  Notwithstanding anything (including any provision of the Agreement or the Plan) to the contrary, if a Participant is a Specified Employee and if the RSUs are subject to Section 409A of the Code, payment to the Participant on account of a Separation from Service shall, to the extent required to comply with Treasury Regulation Section 1.409A-3(i)(2), be made to the Participant on the earlier of (i) the Participant’s death or (ii) the first business day (or within 30 days after such first business day) that is more than six months after the date of Separation from Service.  Notwithstanding anything contained herein to the contrary, the Participant shall not be considered to have terminated employment with the Company or any Subsidiary for purposes of any payments under this Agreement which are subject to Section 409A of the Code until the Participant has incurred a Separation from Service.  In the Company’s sole and absolute discretion, interest may be paid due to such delay Further,any interest will be calculated in the manner determined by the Company in its sole and absolute discretion in a manner that qualifies any interest as reasonable earnings under Section 409A of the Code.  Dividend equivalents will not be paid with respect to any dividends that would have been paid during the delay.To the extent required for purposes of Section 409A of the Code, each installment that vests under this Agreement shall be construed as a separate identified payment for purposes of Section 409A of the Code.

5.         Non-Transferability of RSUs.  The RSUs may not be assigned, transferred, pledged or hypothecated in any manner (otherwise than by will or the laws of descent or distribution) nor may the Participant enter into any transaction for the purpose of, or which has the effect of, reducing the market risk of holding the RSUs by using puts, calls or similar financial techniques. The RSUs subject to this Agreement may be settled during the lifetime of the Participant only with the Participant or the Participant’s guardian or legal representative. Upon any attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of the RSUs or any related rights to the RSUs that is contrary to the provisions of this Agreement or the Plan, or upon the levy of any attachment or similar process upon the RSUs or such rights, the RSUs and such rights shall immediately become null and void. The terms of this Agreement shall be binding upon the Successors of the Participant.

6.         Rights as Stockholder.  The Participant or his/her Successors shall have no rights as stockholder with respect to any RSUs covered by this Agreement, and, except as provided in Section 7 or Section 8 of this Agreement, no adjustment shall be made for dividends or distributions or other rights in respect of such RSUs.

6

7.         No Dividend Equivalents.  No dividend equivalents will be paid or accumulated on the RSUs.

8.         Adjustments Upon Changes in Capitalization; Change in Control.  In the event of any change in corporate capitalization, corporate transaction, sale or other disposition of assets or similar corporate transaction or event involving the Company as described in Section 5.5 of the Plan, the Committee shall make equitable adjustment as it determines necessary and appropriate in the number of RSUs subject to this Agreement.  No adjustment shall be made if such adjustment is prohibited by Section 5.5 of the Plan (relating to Section 409A of the Code).

9.         Notices.  Each notice relating to this Agreement shall be deemed to have been given onthe date it is received. Each notice to the Company shall be addressed to its principal Office in Eagle, Idaho, Attention: Compensation. Each notice to the Participant or any other person or persons entitled to receive a Settlement Amount upon settlement of the RSUs shall be addressed to the Participant’s address and may be in written or electronic form. Anyone to whom a notice may be given under this Agreement may designate a new address by giving notice to the effect.

10.       Benefits of Agreement.  This Agreement shall inure to the benefit of and be binding upon each successor of the Company. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be binding upon the Participant's Successors. This Agreement shall be the sole and exclusive source of any and all rights which the Participant or his/her Successors may have in respect to the Plan or this Agreement.

11.       No Right to Continued Employment.  Nothing in this Agreement shall interfere with or affect the rights of the Company or the Participant under any employment agreement or confer upon the Participant any right to continued employment with the Company or a Subsidiary.

12.       Resolution of Disputes.  Any dispute or disagreement which should arise under or as a result of or in any way related to the interpretation, construction or application of this Agreement will be determined by the Committee. Any determination made hereunder shall be final, binding and conclusive for all purposes. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the state of Delaware.

13.       Section 409A of the Code.  To the extent applicable, this Agreement is intended to comply with Section 409A of the Code and any regulations or notices provided thereunder. This Agreement and the Plan shall be interpreted in a manner consistent with this intent. The Company reserves the unilateral right to amend this Agreement on written notice to the Participant in order to comply with Section 409A of the Code.  The Company makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to any such payment.  None of the Company or any Subsidiary, or any of its or their contractors, agents and employees, nor the Board or any member of the Board, shall be liable for any consequences of any failure to follow the requirements of Section 409A of the Code or any guidance or regulations thereunder.

7

14.       Amendment.  Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto.

15.       Severability.  If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances shall not be affected, and the provisions so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.

16.       Electronic Delivery.  The Company may, in its sole discretion, deliver any documents related to the RSUs and the Participant’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or request the Participant’s consent to participate in the Plan by electronic means.  The Participant hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

8

EX-10.13

Exhibit 10.13

FORM OF

RESTRICTED STOCK UNIT AGREEMENT (STOCK-SETTLED)

LAMB WESTON HOLDINGS, INC. 2016 STOCK PLAN

This Restricted Stock Unit Agreement, hereinafter referred to as the “Agreement”, is made on the _____ day of __________, 20_____ between Lamb Weston Holdings, Inc., a Delaware corporation (the “Company”), and the undersigned Employee (the “Participant”).

1.        Award Grant. The Company hereby grants Restricted Stock Units ("RSUs", and each such unit an “RSU”) to the Participant under the Lamb Weston Holdings, Inc. 2016 Stock Plan (the “Plan”), as follows, effective as of __________, 20_____ (the “Date of Grant”):

Participant:
Employee ID:
Number of RSUs:
Date of Grant:
Vesting Dates:	(“Vesting Date”)

Dividend Equivalents:  Dividend equivalents on the RSUs will not be paid or accumulated.

The Company has caused this Agreement to be executed effective as of the date first written above (the “Effective Date”). In the event of any conflict between the terms of this Agreement and the terms of the Plan, the Plan shall control.  Please read this Agreement and the Plan carefully. If you do not wish to receive this award and/or you do not consent and agree to the terms and conditions on which this award is offered, as set forth in this Agreement and the Plan, then you must reject the award (1) online from the "Grant Information" page on the Merrill Lynch Benefits Online website or (2) by contacting the Merrill Lynch call center, in either case, no later than 11:59 p.m., Pacific Time, on the ninetieth calendar day following the Effective Date, in which case the award will be cancelled.  Your failure to notify the Company of your rejection of the award by or before this deadline will constitute your acceptance of the award and your agreement with all terms and conditions of the award, as set forth in this Agreement and the Plan.

LAMB WESTON HOLDINGS, INC.

By:

Date:

2.Definitions. Capitalized terms used herein without definition have the meanings set forth in the Plan. The following terms shall have the respective meanings set forth below:

(a)      “Continuous Employment” shall mean the absence of any interruption or termination of employment with the Company and its Subsidiaries and the performance of substantial services.  Continuous Employment shall not be considered interrupted or terminated in the case of sick leave, short-term disability (as defined in the Company’s sole discretion), military leave or any other leave of absence approved by the Company unless and until there is a Separation from Service (as defined in Section 2(e) below).

(b)       “Divestiture” means a permanent disposition to a person other than the Company of a plant or other facility or property at which the Participant performs a majority of the Participant’s services, whether such disposition is effected by means of a sale of assets, a sale of Subsidiary stock or otherwise.

(c)       “Early Retirement” means Separation from Service with the Company and its Subsidiaries when the Participant (i) is at least age 55, and (ii) has at least ten years of credited service with the Company and its Subsidiaries.

(d)       “Normal Retirement” shall mean a Separation from Service with the Company and its Subsidiaries on or after attaining age 65.

(e)       “Separation from Service,”  “termination of employment” and similar terms means the date that the Participant incurs a “separation from service” within the meaning of Section 409A of the Code.  As used in connection with the definition of “Separation from Service,” Company includes Lamb Weston Holdings, Inc. and any other entity that with Lamb Weston Holdings, Inc. constitutes a controlled group of corporations (as defined in Section 414(b) of the Code), or a group of trades or businesses (whether or not incorporated) under common control (as defined in Section 414(c) of the Code), substituting 25% for the 80% ownership level for purposes of both Sections 414(b) and Section 414(c) of the Code.

(f)       “Specified Employee” is as defined under Section 409A of the Code and Treasury Regulation Section 1.409A-1(i).

(g)       “Successors” shall mean the beneficiaries, executors, administrators, heirs, successors and assigns of a person.

3.        Vesting of RSUs.

(a)       Normal Vesting.  Subject to the Plan and this Agreement, if the Participant has been in Continuous Employment through the respective Vesting Dates as set forth in Section 1, then the RSUs subject to such Vesting Dates will become nonforfeitable (“Vest” or similar terms).

(b)       Termination of Employment.  If, prior to the respective Vesting Dates set forth in Section 1, the Participant’s employment with the Company and its Subsidaries shall terminate:

(i)  by reason of death, then all unvested RSUs evidenced by this Agreement shall, to the extent such RSUs have not previously been forfeited, become 100% Vested;

(ii) by reason of Normal Retirement occurring on or after the date that is 12 months after the Date of Grant, then all unvested RSUs evidenced by this Agreement shall, to the extent such RSUs have not previously been forfeited, become 100% Vested;

2

(iii) by reason of Early Retirement or involuntary termination due to disability, position elimination, reduction in force (each as defined in the Company's sole discretion), or Divestiture, in each case, on or after the date that is 12 months after the Date of Grant, the Participant will Vest in a pro rata portion of the RSUs determined by multiplying the number of RSUs evidenced by this Agreement, to the extent not previously Vested or forfeited, by a fraction, the numerator of which is the total number of calendar days during which the Participant was employed by the Company or a Subsidiary during the period beginning on the Date of Grant and ending on the Separation from Service and the denominator of which is the total number of calendar days beginning on the Date of Grant and ending on the Final Vesting Date, rounded to the nearest whole number of RSUs;

(iv) for Cause prior to the Final Vesting Date, then all RSUs, whether Vested or unvested prior to the Final Vesting Date, shall be immediately forfeited without further consideration to the Participant.

(c)       Accelerated Vesting in Connection with a Change of Control.

(i)   If a Change of Control occurs prior to the Final Vesting Date, and the Participant has been in Continuous Employment between the Date of Grant and the date of such Change of Control, then all unvested RSUs evidenced by this Agreement shall become 100% Vested, except (A) to the extent such RSUs have previously been forfeited, or (B) to the extent that a Replacement Award is provided to the Participant to replace, continue or adjust the outstanding RSUs (the “Replaced Award”).  If the Participant’s employment with the Company or a Subsidiary (or any of its or their successors after the Change of Control) (as applicable, the “Successor Company”) is terminated by the Participant for Good Reason or by the Successor Company other than for Cause, in each case within a period of two years after the Change of Control but prior to the Final Vesting Date, to the extent that the Replacement Award has not previously been Vested or forfeited, the Replacement Award will become 100% Vested (and become entitled to settlement as specified in Section 4(b)(ii)).

(ii)  For purposes of this Agreement, a “Replacement Award” means an award (A) of the same type (i.e., time-based restricted stock units) as the Replaced Award, (B) that has a value at least equal to the value of the Replaced Award, (C) that relates to publicly traded equity securities of the Successor Company in the Change of Control (or another entity that is affiliated with the Successor Company following the Change of Control), (D) the tax consequences of which for such Participant under the Code, if the Participant is subject to U.S. federal income tax under the Code, are not less favorable to the Participant than the tax consequences of the Replaced Award, and (E) the other terms and conditions of which are not less favorable to the Participant than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent change of control).  A Replacement Award

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may be granted only to the extent it does not result in the Replaced Award or Replacement Award failing to comply with or ceasing to be exempt from Section 409A of the Code.  Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the preceding two sentences are satisfied.  The determination of whether the conditions of this Section 3(c)(ii) are satisfied will be made in good faith by the Committee, as constituted immediately before the Change of Control, in its sole discretion.

(iii) For purposes of this Agreement, “Cause” means: (A) the willful and continued failure by the Participant to substantially perform the Participant’s duties with the Successor Company (other than any such failure resulting from termination by the Participant for Good Reason) after a demand for substantial performance is delivered to the Participant that specifically identifies the manner in which the Successor Company believes that the Participant has not substantially performed the Participant’s duties, and the Participant has failed to resume substantial performance of the Participant’s duties on a continuous basis within five days of receiving such demand; (B) the willful engaging by the Participant in conduct which is demonstrably and materially injurious to the Successor Company, monetarily or otherwise; or (C) the Participant’s conviction of a felony or conviction of a misdemeanor which impairs the Participant’s ability substantially to perform the Participant’s duties with the Successor Company.  For the purposes of this definition, no act, or failure to act, on the Participant’s part shall be deemed “willful” unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Successor Company.

(iv) For purposes of this Agreement, “Good Reason” means: (A) any material failure of the Successor Company to comply with and satisfy any of the terms of any employment or change in control (or similar) agreement between the Successor Company and the Participant pursuant to which the Participant provides services to the Successor Company; (B) any significant involuntary reduction of the authority, duties or responsibilities held by the Participant immediately prior to the Change of Control (and, for the avoidance of doubt, involuntary removal of the Participant from an officer position that the Participant holds immediately prior to the Change of Control will not, by itself, constitute a significant involuntary reduction of the authority, duties or responsibilities held by the Participant immediately prior to the Change of Control); (C) any material involuntary reduction in the aggregate remuneration of the Participant as in effect immediately prior to the Change of Control; or (D) requiring the Participant to become based at any office or location more than the minimum number of miles required by the Code for the Participant to claim a moving expense deduction, from the office or location at which the Participant was based immediately prior to such Change of Control, except for travel reasonably required in the performance of the Participant’s

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responsibilities; provided,  however, that no termination shall be deemed to be for Good Reason unless (x) the Participant provides the Successor Company with written notice setting forth the specific facts or circumstances constituting Good Reason within ninety days after the initial existence of the occurrence of such facts or circumstances, (y) the Successor Company fails to cure such facts or circumstances within thirty days of its receipt of such written notice, and (z) the Participant actually terminates employment within thirty (30) days following the end of the Successor Company’s thirty-day cure period, if such event or circumstance has not been cured.

(v) If a Replacement Award is provided, notwithstanding anything in this Agreement to the contrary, any outstanding RSUs which at the time of the Change of Control are not subject to a "substantial risk of forfeiture" (within the meaning of Section 409A of the Code) will be deemed to be Vested at the time of such Change of Control (and such Vested RSUs shall be settled in accordance with Section 4(b)(iii) below).

(d)       Forfeiture of RSUs.  Subject to Section 3(b)(iv), any RSUs that have not Vested pursuant to Section 3(a),  Section 3(b), or Section 3(c) as of the Final Vesting Date will be forfeited automatically and without further notice on such date (or earlier if, and on such date that, the Participant ceases to be in Continuous Employment prior to the Final Vesting Date for any reason other than as described in Section 3(b) or Section 3(c)).

4.        Settlement of RSUs.

(a)       Normal.  Subject to Section 4(b), the Company will issue to the Participant one share of Stock on the respective Vesting Date for each RSU that is a Vested RSU on such Vesting Date to the extent the RSU has not previously been Vested, forfeited or settled.

(b)       Other Settlement Events.  Notwithstanding Section 4(a), to the extent the RSUs are Vested RSUs on the dates set forth below and to the extent the Vested RSUs have not previously been Vested, forfeited or settled, the Company will settle such Vested RSUs as follows:

(i)  Death.  If there are such Vested RSUs on the Participant's death, within thirty days of the Participant's death, one share of Stock will be issued for each such Vested RSU.

(ii) Separation from Service.  If there are such Vested RSUs upon the Participant's Separation from Service, within thirty days of the Participant's Separation from Service, one share of Stock will be issued for each such Vested RSU.

(iii)Change of Control.  If there are such Vested RSUs upon a Change of Control, one share of Stock will be issued for each such Vested RSU; provided,  however, that if such Change of Control would not qualify as a permissible date of distribution under Section 409A(a)(2)(A) of the Code, and the regulations thereunder, and where Section 409A of the Code applies to such distribution, the Participant is entitled to receive the corresponding payment on the date that would have otherwise applied pursuant to Section 4 as though such Change of Control had not occurred.

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(c)       Payment of Taxes Upon Settlement.   As a condition of the issuance of shares of Stock upon settlement of RSUs hereunder, the Participant agrees to remit to the Company at the time of settlement any taxes required to be withheld by the Company under Federal, State or local law as a result of the settlement of the RSUs. As a condition of the issuance of shares of Stock upon settlement of RSUs hereunder, the Participant agrees that the Company will deduct from the total shares to be issued as a result of the Vesting of the RSUs a sufficient number of shares to satisfy the minimum statutory withholding amount permissible.  In addition, the Participant may deliver previously acquired shares of Stock held by the Participant for at least six months in order to satisfy additional tax withholding above the minimum statutory tax withholding amount permissible; provided,  however, the Participant shall not be entitled to deliver such additional shares if it would cause adverse accounting consequences for the Company or a Subsidiary.

(d)       Specified Employee.  Notwithstanding anything (including any provision of the Agreement or the Plan) to the contrary, if a Participant is a Specified Employee and if the RSUs are subject to Section 409A of the Code, payment to the Participant on account of a Separation from Service shall, to the extent required to comply with Treasury Regulation Section 1.409A-3(i)(2), be made to the Participant on the earlier of (i) the Participant’s death or (ii) the first business day (or within 30 days after such first business day) that is more than six months after the date of Separation from Service.  Notwithstanding anything contained herein to the contrary, the Participant shall not be considered to have terminated employment with the Company or any Subsidiary for purposes of any payments under this Agreement which are subject to Section 409A of the Code until the Participant has incurred a Separation from Service.  In the Company’s sole and absolute discretion, interest may be paid due to such delay.  Further,any interest will be calculated in the manner determined by the Company in its sole and absolute discretion in a manner that qualifies any interest as reasonable earnings under Section 409A of the Code.  Dividend equivalents will not be paid with respect to any dividends that would have been paid during the delay if the Stock had been issued.  To the extent required for purposes of Section 409A of the Code, each installment that vests under this Agreement shall be construed as a separate identified payment for purposes of Section 409A of the Code.

5.        Non-Transferability of RSUs. The RSUs may not be assigned, transferred, pledged or hypothecated in any manner (otherwise than by will or the laws of descent or distribution) nor may the Participant enter into any transaction for the purpose of, or which has the effect of, reducing the market risk of holding the RSUs by using puts, calls or similar financial techniques. The RSUs subject to this Agreement may be settled during the lifetime of the Participant only with the Participant or the Participant’s guardian or legal representative. Upon any attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of the RSUs or any related rights to the RSUs that is contrary to the provisions of this Agreement or the Plan, or upon the levy of any attachment or similar process upon the RSUs or such rights, the RSUs and such rights shall immediately become null and void. The terms of this Agreement, shall be binding upon the Successors of the Participant.

6.         Stock Subject to the RSUs; Compliance with Law.  The Company will not be required to issue or deliver any shares of Stock or any certificate or certificates for shares of Stock  with respect to the Participant’s RSUs until such shares have been listed (or authorized for listing

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upon official notice of issuance) upon each stock exchange on which outstanding shares of the same class are then listed and until the Company has taken such steps as may, in the opinion of counsel for the Company, be required by law and applicable regulations, including the rules and regulations of the Securities and Exchange Commission, and state securities laws and regulations, in connection with the issuance of such shares, and the listing of such shares on each such exchange.

7.        Rights as Stockholder.  The Participant or his/her Successors shall have no rights as stockholder with respect to any RSUs or underlying shares covered by this Agreement until the Participant or his/her Successors shall have become the beneficial owner of such shares, and, except as provided in  Section 9 of this Agreement, no adjustment shall be made for dividends or distributions or other rights in respect of such shares for which the record date is prior to the date on which the Participant or his/her Successors shall have become the beneficial owner thereof.

8.        No Dividend Equivalents.  No dividend equivalents will be paid or accumulated on the RSUs.

9.        Adjustments Upon Changes in Capitalization; Change of Control.  In the event of any change in corporate capitalization, corporate transaction, sale or other disposition of assets or similar corporate transaction or event involving the Company as described in Section 5.5 of the Plan, the Committee shall make equitable adjustment as it determines necessary and appropriate in the number and type of shares subject to this Agreement; provided,  however, that no fractional share shall be issued upon subsequent settlement of the RSUs.  No adjustment shall be made if such adjustment is prohibited by Section 5.5 of the Plan (relating to Section 409A of the Code).

10.      Notices.  Each notice relating to this Agreement shall be deemed to have been given onthe date it is received. Each notice to the Company shall be addressed to its principal Office in Eagle, Idaho, Attention: Compensation. Each notice to the Participant or any other person or persons entitled to shares issuable upon settlement of the RSUs shall be addressed to the Participant’s address and may be in written or electronic form. Anyone to whom a notice may be given under this Agreement may designate a new address by giving notice to the effect.

11.      Benefits of Agreement. This Agreement shall inure to the benefit of and be binding upon each successor of the Company. All obligations imposed upon the Participant and all rights granted to the Company under this Agreement shall be binding upon the Participant's Successors. This Agreement shall be the sole and exclusive source of any and all rights which the Participant or his/her Successors may have in respect to the Plan or this Agreement.

12. No Right to Continued Employment.  Nothing in this Agreement shall interfere with or affect the rights of the Company or the Participant under any employment agreement or confer upon the Participant any right to continued employment with the Company or a Subsidiary.

13.      Resolution of Disputes.  Any dispute or disagreement which should arise under or as a result of or in any way related to the interpretation, construction or application of this Agreement will be determined by the Committee. Any determination made hereunder shall be final, binding

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and conclusive for all purposes. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the state of Delaware.

14.      Section 409A of the Code.  To the extent applicable, this Agreement is intended to comply with Section 409A of the Code and any regulations or notices provided thereunder.  This Agreement and the Plan shall be interpreted in a manner consistent with this intent. The Company reserves the unilateral right to amend this Agreement on written notice to the Participant in order to comply with Section 409A of the Code.  The Company makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to any such payment.  None of the Company or any Subsidiary, or any of its or their contractors, agents and employees, nor the Board or any member of the Board, shall be liable for any consequences of any failure to follow the requirements of Section 409A of the Code or any guidance or regulations thereunder.

15.      Amendment.  Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto.

16.Severability.  If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances shall not be affected, and the provisions so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.

17.      Electronic Delivery.  The Company may, in its sole discretion, deliver any documents related to the RSUs and the Participant’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or request the Participant’s consent to participate in the Plan by electronic means.  The Participant hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

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EX-10.14

Exhibit 10.14

FORM OF

NONQUALIFIED STOCK OPTION AGREEMENT FOR EMPLOYEES

LAMB WESTON HOLDINGS, INC. 2016 STOCK PLAN

This Nonqualified Stock Option Agreement for Employees, hereinafter referred to as the “Agreement,” is made on the _____ day of __________, 20_____ between Lamb Weston Holdings, Inc., a Delaware corporation (the “Company”), and __________ (the “Optionee”).

1.Grant of Option.    The Company hereby grants an Option to purchase shares of the Company’s common stock (the “Common Stock”) to the Optionee under the Lamb Weston Holdings, Inc. 2016 Stock Plan (the “Plan”) as follows (the “Option”), effective as of __________, 20_____ (the “Date of Grant”):

Optionee:
Employee ID:
Number of Shares of Common Stock:
Exercise Price Per Share:	$
Date of Grant:
Type of Option:	Nonqualified
Expiration Date:

Except as modified in Section 3(b) or (c), the Option will vest and become exercisable as follows:

# Shares	Portion of the Option	Vest Date
	1/3
	1/3
	1/3

The Option is intended to constitute a nonqualified stock option and shall not be treated as an Incentive Stock Option.

The Company has caused this Agreement to be executed effective as of the date first written above (the “Effective Date”).  In the event of any conflict between the terms of this Agreement and the terms of the Plan, the Plan shall control.  Please read this Agreement and the Plan carefully.  If you do not wish to receive this award and/or you do not consent and agree to the terms and conditions on which this award is offered, as set forth in this Agreement and the Plan, then you must reject the award (1) online from the "Grant Acceptance" page on the Merrill Lynch Benefits Online website or (2) by contacting the Merrill Lynch call center, in either case, no later than 11:59 p.m., Pacific Time, on the ninetieth calendar day following the Effective Date, in which case the award will be cancelled.  Your failure to notify the Company of your rejection of the award by or before this deadline will constitute your acceptance of the award and your agreement with all terms and conditions of the award, as set forth in this Agreement and the Plan.

LAMB WESTON HOLDINGS, INC.

By:

Date:

2.Definitions.  Capitalized terms used herein without definition have the meanings set forth in the Plan.  The following terms shall have the respective meanings set forth below:

a. “Continuous Employment” means the absence of any interruption or termination of employment with the Company and its Subsidiaries.  Continuous Employment shall not be considered interrupted in the case of sick leave, short-term disability (as defined in the Company’s sole discretion), military leave or any other leave of absence approved by the Company.

b. “Divestiture”  means a permanent disposition to a person other than the Company of a plant or other facility or property at which the Optionee performs a majority of the Optionee’s services, whether such disposition is effected by means of a sale of assets, a sale of Subsidiary stock or otherwise.

c. “Early Retirement” means terminating employment with the Company and its Subsidiaries when the Optionee (i) is at least age 55, and (ii) has at least ten years of credited service with the Company and its Subsidiaries.

d. “Exercise Price” means the per share purchase price payable on exercise of the Option.

e. “Normal Retirement” means terminating employment with the Company and its Subsidiaries on or after attaining age 65.

f. “Vest Date” means, with respect to any portion of the Option, the date on which such portion becomes vested and exercisable as set forth in Section 1, except as such Vest Date may be modified in accordance with Section 3(b) or (c).

3.Exercise of Option. 

a. Normal Vesting.  A portion of this Option shall become vested and exercisable, on each Vest Date as set forth in the schedule set forth in Section 1, if the Optionee remains in Continuous Employment until such Vest Date.

b. Termination of Employment.  If, prior to the last Vest Date set forth in Section 1, the Optionee’s employment with the Company and its Subsidiaries shall terminate:

i. by reason of death, then this Option shall, to the extent it has not previously been forfeited, become 100% vested and exercisable;

ii. by reason of Normal Retirement, then this Option shall, to the extent it has not previously been forfeited, become 100% vested and exercisable;

iii. by reason of Early Retirement, involuntary termination due to disability, position elimination, reduction in force (each as defined in the Company’s sole discretion), or Divestiture, in each case, on or after the date that is 12 months after the Date of Grant, then an additional portion of this Option shall vest and become exercisable (the “Additional Portion”), with the number of shares of Common Stock subject to the Additional Portion determined by (A) multiplying the total number of shares of Common Stock that are subject to the Option by a fraction, the numerator of which is the total number of calendar days during which the Optionee was employed by the Company or a Subsidiary during the period beginning on

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the Date of Grant and ending on the date of such termination, and the denominator of which is the total number of calendar days beginning with the Date of Grant and ending on the last vest date set forth in Section 1, rounded to the nearest whole number of shares, and (B) subtracting the number of shares subject to the portion of the Option that is vested pursuant to Section 3(a) (the Additional Portion, together with the portion of the Option that is vested pursuant to Section 3(a), the “Pro Rata Vested Option”), and the Optionee will forfeit all rights to any portions of the Option other than those included in the Pro Rata Vested Option.

c. Accelerated Vesting in Connection with a Change of Control. 

i. Upon a Change of Control occurring prior to the last Vest Date set forth in Section 1, if the Optionee has been in Continuous Employment between the Date of Grant and the date of such Change of Control, to the extent that this Option has not previously been forfeited, this Option will fully vest and become fully exercisable, except to the extent that a Replacement Award is provided to the Optionee to replace, continue or adjust the outstanding Option (the “Replaced Award”).  If the Optionee is provided with a Replacement Award in connection with the Change of Control, then if, upon or after receiving the Replacement Award, the Optionee’s employment with the Company and its Subsidiaries (or any of its or their successors after the Change of Control) (as applicable, the “Successor Company”) is terminated by the Optionee for Good Reason or by the Successor Company other than for Cause, in each case within a period of two years after the Change of Control and prior to the last Vest Date set forth in Section 1, to the extent that the Replacement Award has not previously been forfeited, (A) the Replacement Award will become fully vested and immediately exercisable in full, and (B) the Replacement Award will remain exercisable for a period of 90 days following such termination or until the expiration of the stated term of such Replacement Award, whichever period is shorter.

ii. For purposes of this Agreement, a “Replacement Award” means an award (A) of the same type (i.e., stock option) as the Replaced Award, (B) that has a value at least equal to the value of the Replaced Award, (C) that relates to publicly traded equity securities of the Successor Company in the Change of Control (or another entity that is affiliated with the Successor Company following the Change of Control), (D) the tax consequences of which for such Optionee under the Code, if the Optionee is subject to U.S. federal income tax under the Code, are not less favorable to the Optionee than the tax consequences of the Replaced Award, and (E) the other terms and conditions of which are not less favorable to the Optionee than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent change of control).  A Replacement Award may be granted

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only to the extent it does not result in the Replaced Award or Replacement Award failing to comply with or ceasing to be exempt from Section 409A of the Code.  Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the preceding two sentences are satisfied.  The determination of whether the conditions of this Section 3(c)(ii) are satisfied will be made in good faith by the Committee, as constituted immediately before the Change of Control, in its sole discretion.

iii. For purposes of this Agreement, “Cause” means: (A) the willful and continued failure by the Optionee to substantially perform the Optionee’s duties with the Successor Company (other than any such failure resulting from termination by the Optionee for Good Reason) after a demand for substantial performance is delivered to the Optionee that specifically identifies the manner in which the Successor Company believes that the Optionee has not substantially performed the Optionee’s duties, and the Optionee has failed to resume substantial performance of the Optionee’s duties on a continuous basis within five days of receiving such demand; (B) the willful engaging by the Optionee in conduct which is demonstrably and materially injurious to the Successor Company, monetarily or otherwise; or (C) the Optionee’s conviction of a felony or conviction of a misdemeanor which impairs the Optionee’s ability substantially to perform the Optionee’s duties with the Successor Company.  For the purposes of this definition, no act, or failure to act, on the Optionee’s part shall be deemed “willful” unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief that the Optionee’s action or omission was in the best interest of the Successor Company.

iv. For purposes of this Agreement, “Good Reason” means: (A) any material failure of the Successor Company to comply with and satisfy any of the terms of any employment or change in control (or similar) agreement between the Successor Company and the Optionee pursuant to which the Optionee provides services to the Successor Company; (B) any significant involuntary reduction of the authority, duties or responsibilities held by the Optionee immediately prior to the Change of Control (and, for the avoidance of doubt, involuntary removal of the Optionee from an officer position that the Optionee holds immediately prior to the Change of Control will not, by itself, constitute a significant involuntary reduction of the authority, duties or responsibilities held by the Optionee immediately prior to the Change of Control); (C) any material involuntary reduction in the aggregate remuneration of the Optionee as in effect immediately prior to the Change of Control; or (D) requiring the Optionee to become based at any office or location more than the minimum number of miles required by the Code for the

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Optionee to claim a moving expense deduction, from the office or location at which the Optionee was based immediately prior to such Change of Control, except for travel reasonably required in the performance of the Optionee’s responsibilities; provided,  however, that no termination shall be deemed to be for Good Reason unless (x) the Optionee provides the Successor Company with written notice setting forth the specific facts or circumstances constituting Good Reason within ninety days after the initial existence of the occurrence of such facts or circumstances, (y) the Successor Company has failed to cure such facts or circumstances within thirty days of its receipt of such written notice, and (z) the Optionee actually terminates employment within thirty (30) days following the end of the Successor Company’s thirty-day cure period, if such event or circumstance has not been cured.

d. Right to Exercise.  Each vested portion of this Option shall be exercisable beginning on the applicable Vest Date or vesting event and ending at the conclusion of the applicable Option Expiration Date (as hereinafter defined), all in accordance with the terms of this Agreement and the Plan.  To the extent this Option is exercisable, it may be exercised in whole or in part.  Subject to Section 3(i) below, this Option shall terminate on the earliest of the following dates (such earliest date, the “Option Expiration Date”):

i. subject to the exercise period specified as applicable in Section 3(c) above, 90 days after the date on which the Optionee’s Continuous Employment terminates for any reason other than Early Retirement, Normal Retirement, death or involuntary termination due to disability.  The Option may be exercised as to the portion of the Option that is vested (and not previously exercised) at the time such termination of employment occurs;

ii. three years after the date of the Optionee’s Early Retirement or involuntary termination due to disability (as defined in the Company’s sole discretion);  provided,  however, that the Company, at the sole and absolute discretion of the Committee, may shorten or eliminate such period.  The Option may be exercised as to the portion of the Option that is vested (and not previously exercised) at the time such Early Retirement or involuntary termination due to disability, as applicable, occurs; 

iii. three years after the date of the Optionee’s Normal Retirement;

iv. three years after date of the Optionee’s death if the Optionee should die while in Continuous Employment; and

v. the Expiration Date.

e. Method of Exercise.  This Option shall be exercisable by delivering to the Company a notice (in accordance with Section 8) which shall state the election to exercise the Option, identify the portion of the Option being exercised and be accompanied by such additional information and documents as the Company in its discretion may prescribe.  Such notice shall be accompanied by the payment of the full Exercise Price of the shares then to be purchased, except as provided below.  The Exercise Price of any shares of Common Stock with

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respect to which the Option is being exercised shall be paid by one or any combination of the following:

i.           cash,

ii.          check,

iii.         wire transfer,

iv.         certified or cashier’s check,

v.          subject to the provisions of any applicable [Insider Trading Agreement], by delivering previously owned shares of Common Stock held by the Optionee for at least six months valued at Fair Market Value in accordance with Section 6.4 of the Plan,

vi.         subject to the provisions of any applicable insider trading policy, by electing to have the Company retain shares of Common Stock that would otherwise be issued upon exercise of the Option valued at Fair Market Value in accordance with Section 6.4 of the Plan, or

vii.        subject to the provisions of any applicable insider trading policy and applicable law, by irrevocably authorizing a third party to sell shares of Common Stock (or a sufficient portion thereof) acquired upon exercise of the Option and remitting to the Company a sufficient portion of the sale proceeds to pay both the entire Exercise Price and amounts owed under Section 3(g) of this Agreement.    

f. Restrictions on Exercise.  As a condition to exercise of this Option, the Company may require the person exercising this Option to make any representation and warranty to the Company as may be required by any applicable law or regulation.

g. Payment of Taxes Upon Exercise.  As a condition of the issuance of shares of Common Stock upon exercise hereunder, the Optionee agrees to remit to the Company at the time of exercise of this Option any taxes required to be withheld by the Company under Federal, state or local law (the “Withholding Taxes”) as a result of the exercise.  The Withholding Taxes may be paid by one or any combination of the following:

i.           cash,

ii.          check,

iii.         wire transfer,

iv.         certified or cashier’s check,

v.          subject to the provisions of any applicable insider trading policy, by delivering previously owned shares of Common Stock held by the Optionee for at least six months valued at Fair Market Value in accordance with Section 12.4 of the Plan,

vi.         subject to the provisions of any applicable insider trading policy, by electing to have the Company retain shares of Common Stock that would otherwise be issued upon exercise of the Option valued at Fair Market Value in accordance with Section 12.4 of the Plan, or

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vii.        subject to the provisions of any applicable insider trading policy and subject to applicable law, by irrevocably authorizing a third party to sell shares of Common Stock (or a sufficient portion thereof) acquired upon exercise of the Option and remitting to the Company a sufficient portion of the sale proceeds to pay both the entire Exercise Price and amounts owed under this Section 3(g).

In addition, the Optionee may deliver previously acquired shares of Common Stock held by the Optionee for at least six months in order to satisfy additional tax withholding above the minimum statutory tax withholding amount permissible; provided,  however, that the Optionee shall not be entitled to deliver such additional shares if it would cause adverse accounting consequences for the Company.

h. Cancellation of Option.  Except as set forth in Section 3(a),  Section 3(b), or Section 3(c), upon the Optionee’s termination of employment, any unvested portion of the Option shall immediately terminate and any vested portion of the Option not exercised during the exercise period set forth in Section 3(d) shall automatically terminate at the end of such exercise period.

i. Automatic Exercise.  Notwithstanding anything in this Agreement to the contrary, but subject to applicable law, if and only if, at 4:15 p.m. ET on the applicable Option Expiration Date, (i) the product of (A) the closing sale price of one share of Common Stock on the principal stock exchange on which the Common Stock is then listed (or, if there are no sales of Common Stock on the Option Expiration Date, on the next preceding trading day during which a sale of Common Stock occurred), multiplied by (B) the number of shares of Common Stock subject to the exercisable portion of the Option, exceeds the product of (X) the Exercise Price, multiplied by (Y) the number of shares of Common Stock subject to the exercisable portion of the Option, by at least $500; (ii) to the extent the Option is exercisable and the Optionee has not yet exercised the Option; and (iii) to the extent the Option has not otherwise expired, terminated, or been cancelled or forfeited, then the Company will deem such remaining exercisable portion of the Option to have been exercised by the Optionee on the Option Expiration Date (and prior to the Option’s termination) at such time (“Automatic Exercise”).  Further to such Automatic Exercise, payment of the aggregate Exercise Price for such Automatic Exercise and any applicable withholding taxes in connection with such Automatic Exercise will be deemed to have been made by the Company withholding a number of shares of Common Stock otherwise issuable in connection with such Automatic Exercise that are equal in value to the amount necessary to satisfy such aggregate Exercise Price payment and applicable Withholding Taxes.  To clarify, upon Automatic Exercise, the Company will deliver to the Optionee the number of whole shares of Common Stock resulting from such Automatic Exercise less a number of shares of Common Stock equal in value to (x) the aggregate Exercise Price plus (y) any applicable Withholding Taxes; provided,  however, that any fractional share otherwise deliverable to the Optionee will be cancelled for no consideration.

4.Non-Transferability of Option.  This Option may not be assigned, transferred, pledged or hypothecated in any manner (otherwise than by will or the laws of descent or distribution) nor may the Optionee enter into any transaction for the purpose of, or which has the effect of, reducing the market risk of holding the Option by using puts, calls or similar financial techniques.  This Option may be exercised during the lifetime of the Optionee only by the Optionee or the Optionee’s guardian or legal representative.  Upon any attempt to assign, transfer, pledge,

7

hypothecate, or otherwise dispose of the Option or any related rights to the Option that is contrary to the provisions of this Agreement or the Plan, or upon the levy of any attachment or similar process upon the Option or such rights, the Option and such rights shall immediately become null and void.  The terms of this Option shall be binding upon the beneficiaries, executors, administrators, heirs, successors and assigns (“Successors”) of the Optionee.

5.Stock Subject to the Option.  The Company will not be required to issue or deliver any shares of Common Stock or certificate or certificates for shares of Common Stock to be issued upon exercise of any vested portion of the Option hereunder until such shares have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange on which outstanding shares of the same class are then listed and until the Company has taken such steps as may, in the opinion of counsel for the Company, be required by law and applicable regulations, including the rules and regulations of the Securities and Exchange Commission, and state securities laws and regulations, in connection with the issuance or sale of such shares, and the listing of such shares on each such exchange. 

6.Rights as Stockholder.  The Optionee or his/her Successors shall have no rights as a stockholder with respect to any shares covered by this Option until the Optionee or his/her Successors shall have become the beneficial owner of such shares, and, except as provided in Section 7 of this Agreement, no adjustment shall be made for dividends or distributions or other rights in respect of such shares for which the record date is prior to the date on which the Optionee or his/her Successors shall have become the beneficial owner thereof.

7.Adjustments Upon Changes in Capitalization; Change of Control.  In the event of any change in corporate capitalization, corporate transaction, sale or other disposition of assets or similar corporate transaction or event involving the Company as described in Section 5.5 of the Plan, the Committee shall make such equitable adjustments as it determines necessary and appropriate, including in the number and type of shares subject to this Option and adjustment in the Exercise Price; provided,  however, that no fractional share shall be issued upon subsequent exercise of the Option and the aggregate price paid shall be appropriately reduced on account of any fractional share not issued.  No adjustment shall be made if such adjustment is prohibited by Section 5.5 of the Plan (relating to Section 409A of the Code).

8.Notices.  Each notice relating to this Agreement shall be deemed to have been given on the date it is received. Each notice to the Company shall be addressed to its principal office in Eagle, Idaho, Attention: Compensation. Each notice to the Optionee or any other person or persons entitled to exercise the Option shall be addressed to the Optionee’s address and may be in written or electronic form. Anyone to whom a notice may be given under this Agreement may designate a new address by notice to the effect.

9.Benefits of Agreement.  This Agreement shall inure to the benefit of and be binding upon each successor of the Company.  All obligations imposed upon the Optionee and all rights granted to the Company under this Agreement shall be binding upon the Optionee’s Successors.  This Agreement shall be the sole and exclusive source of any and all rights which the Optionee or his/her Successors may have in respect to the Plan or this Agreement.

8

10.No Right to Continued Employment.  Nothing in this Agreement shall interfere with or affect the rights of the Company or the Optionee under any employment agreement or confer upon the Optionee any right to continued employment with the Company or a Subsidiary.

11.Compliance with Section 409A of the Code.  It is intended that this Agreement comply with or be exempt from the provisions of Section 409A of the Code.  This Agreement shall be administered in a manner consistent with this intent.  Reference to Section 409A of the Code is to Section 409A of the Internal Revenue Code of 1986, as amended, and will also include any regulations or other formal guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

12.Resolution of Disputes.  Any dispute or disagreement which should arise under or as a result of or in any way related to the interpretation, construction or application of this Agreement will be determined by the Committee.  Any determination made hereunder shall be final, binding and conclusive for all purposes.  This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the state of Delaware.

13.Amendment.  Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto.

14.Severability.  If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances shall not be affected, and the provisions so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.

15.Electronic Delivery.  The Company may, in its sole discretion, deliver any documents related to the Option and the Optionee’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or request the Optionee’s consent to participate in the Plan by electronic means.  The Optionee hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

9

EX-10.15

Exhibit 10.15

FORM OF

RESTRICTED STOCK UNIT AGREEMENT

FOR NON-EMPLOYEE DIRECTORS
LAMB WESTON HOLDINGS, INC. 2016 STOCK PLAN

This Restricted Stock Unit Agreement for Non-Employee Directors, hereinafter referred to as the “Agreement”, is made as of the _____ day of __________, 20_____ between Lamb Weston Holdings, Inc., a Delaware corporation (the “Company”), and the undersigned director of the Company (the “Director”).

1.Award Grant.  The Company has granted Restricted Stock Units (“RSUs,” and each such unit an “RSU”) to the Director under the Lamb Weston Holdings, Inc. 2016 Stock Plan (the “Plan”), as follows, effective as of __________, 20_____ (the “Date of Grant”):

Director:

Number of RSUs:

Date of Grant:  

Vesting Date:     _________________(the “Vesting Date”)

Dividend Equivalents:  Dividend equivalents on the RSUs will be accumulated for the benefit of the Director if and when regular cash dividends are declared and paid on the Stock in accordance with Section 7 of this Agreement, and will be paid in shares of Stock to the Director upon settlement of the RSUs.

IN WITNESS WHEREOF, the Company and the Director have caused this Agreement to be executed effective as of the date first written above. The Company and the Director acknowledge that this Agreement includes six pages including this first page. The Director acknowledges reading and agreeing to all six pages and that in the event of any conflict between the terms of this Agreement and the terms of the Plan, the Plan shall control.  Capitalized terms used herein without definition have the meaning set forth in the Plan.

LAMB WESTON HOLDINGS, INC.	DIRECTOR
By:	By:
Date:	Date:

2.Vesting of RSUs.  

(a) Normal Vesting.  Subject to the Plan and this Agreement, if the Director serves continuously as a member of the Board from the Date of Grant through the Vesting Date, then the RSUs will become vested and nonforfeitable (“Vest” or similar terms).

(b) Death or Permanent Disability.  If the Director ceases to serve as a member of the Board before the Vesting Date due to the death or permanent disability (as defined in the Company’s sole discretion) of the Director (with the occurrence of such permanent disability determined in the Company’s sole discretion), then, to the extent the RSUs have not previously been forfeited, the RSUs will Vest upon the date of the Director’s cessation of service as a member of the Board as a result of such death or permanent disability.

(c) Other than Death or Permanent Disability.  If the Director ceases to serve as a member of the Board before the Vesting Date for any reason other than as set forth in Section 2(b) or Section 2(d), then, to the extent the RSUs have not previously been forfeited, the RSUs will Vest upon the date of the Director’s cessation of service as a member of the Board at a rate of 25% of the RSUs for each fiscal quarter during the fiscal year in which the RSU is granted during which the Director served as a member of the Board for at least one (or a portion of one) day (with any RSUs that do not Vest according to this Section 2(c) being forfeited by the Director upon such cessation of service).

(d) Accelerated Vesting in Connection with a Change of Control. 

(i) If a Change of Control occurs after the Date of Grant but prior to the Vesting Date, and the Director has continuously served as a member of the Board between the Date of Grant and the date of such Change of Control, then all RSUs evidenced by this Agreement shall become 100% Vested on the date of such Change of Control, except (A) to the extent such RSUs have previously been forfeited, or (B) to the extent that a Replacement Award is provided to the Director to replace, continue or adjust the outstanding RSUs (the “Replaced Award”).  If the Director is provided with a Replacement Award in connection with the Change of Control, then if, upon or after receiving the Replacement Award, the Director’s service as a member of the Board (or the board of directors of any of the Company’s successors after the Change of Control (as applicable, the “Successor Company”)) ceases, other than at the volition of the Director, within a period of one year after the Change of Control but prior to the Vesting Date, to the extent that the Replacement Award has not previously been forfeited, the Replacement Award will become 100% Vested (and become entitled to settlement as specified in Section 3.

(ii) For purposes of this Agreement, a “Replacement Award” means an award (A) of the same type (i.e., time-based restricted stock units) as the Replaced Award, (B) that has a value at least equal to the value of the Replaced Award, (C) that relates to publicly traded equity securities of the Successor Company in the Change of Control (or another entity that is affiliated with the Successor Company following the Change of Control), (D) the tax consequences of which for such Director under the Code, if the Director is subject to U.S.

2

federal income tax under the Code, are not less favorable to the Director than the tax consequences of the Replaced Award, and (E) the other terms and conditions of which are not less favorable to the Director than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent change in control).  A Replacement Award may be granted only to the extent it does not result in the Replaced Award or Replacement Award failing to comply with or ceasing to be exempt from Section 409A of the Code.  Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the preceding two sentences are satisfied.  The determination of whether the conditions of this Section 2(d)(ii) are satisfied will be made in good faith by the Committee, as constituted immediately before the Change of Control, in its sole discretion.

(iii) If a Replacement Award is provided, notwithstanding anything in this Agreement to the contrary, any outstanding RSUs which at the time of the Change of Control are not subject to a “substantial risk of forfeiture” (within the meaning of Section 409A of the Code) will be deemed to be Vested at the time of such Change of Control.

(e) Forfeiture of RSUs.  Any RSUs that have not become Vested as of (i) the Vesting Date pursuant to Section 2(a) or 2(d), or (ii) if earlier, upon the date of the Director’s cessation of service in accordance with Section 2(b), (c) or (d), will be forfeited automatically and without further notice on such date.

3.Settlement of RSUs. 

(a) Normal.  Subject to Section 3(b), the Company will issue to the Director one share of Stock as soon as administratively practicable after the Vesting Date (but in no event more than thirty days after the Vesting Date) for each RSU that is a Vested RSU on such Vesting Date to the extent the RSU has not been previously forfeited or settled. 

(b) Other Settlement Events.  Notwithstanding Section 3(a), to the extent the RSUs are Vested RSUs on the dates set forth below and to the extent the Vested RSUs have not previously been forfeited or settled, the Company will settle such Vested RSUs on the earliest to occur of the following events:

(i) Separation from Service due to Death or Permanent Disability.  If there are such Vested RSUs at the time of the Director’s cessation of service due to death or permanent disability, within thirty days of the Director’s Separation from Service (within the meaning of Section 409A of the Code and the regulations promulgated thereunder) as a result of such death or permanent disability, one share of Stock will be issued for each such Vested RSU.

(ii) Separation from Service Other than due to Death or Permanent Disability.  If there are such Vested RSUs at the time of the Director’s Separation from Service for any reason other than as set forth in Section 2(b), within thirty days of the Director’s Separation from Service, one share of Stock will be issued for each such Vested RSU.

3

(iii) Change of Control.  If there are such Vested RSUs upon a Change of Control, the Director is entitled to receive payment for such Vested RSUs in the form of one share of Stock for each such Vested RSU on the date of the Change of Control; provided, however, that if such Change of Control would not qualify as a permissible date of distribution under Section 409A(a)(2)(A) of the Code, and the regulations thereunder, and where Section 409A of the Code applies to such distribution, the Director is entitled to receive the corresponding payment on the date that would have otherwise applied pursuant to this Section 3 as though such Change of Control had not occurred.

(c) Deferral of Settlement.  Notwithstanding the foregoing or anything in this Agreement or the Plan to the contrary, a Director may elect to defer receipt of shares of Stock to be received pursuant to this Agreement pursuant to the Company’s Directors’ deferred compensation plan, as may be in effect from time to time.

(d) Specified Employee.  Notwithstanding anything (including any provision of the Agreement or Plan) to the contrary, if the Director becomes a specified employee (as defined in Section 409A of the Code), to the extent required to comply with Section 409A of the Code, payment to the Director of any deferred compensation subject to Section 409A of the Code on account of a Separation from Service (within the meaning of Section 409A of the Code) shall, in accordance with Treasury Regulation Section 1.409A-3(i)(2), be made to the Director on the earlier of (i) the Director’s death or (ii) the first business day (or within 30 days after such first business day) that is more than six months after the date of Separation from Service.  Interest may be paid due to such delay, provided that such interest payments are made at a reasonable rate in accordance with Treasury Regulation Section 1.409A-1(o).  Further, any interest will be calculated in the manner determined by the Company in its sole and absolute discretion. Dividend equivalents will be paid with respect to any dividends that would have been paid during the delay as if the Stock had been issued.

4.Non-Transferability of RSUs.  The RSUs may not be assigned, transferred, pledged or hypothecated in any manner (otherwise than by will or the laws of descent or distribution), nor may the Director enter into any transaction for the purpose of, or which has the effect of, reducing the market risk of holding the RSUs by using puts, calls or similar financial techniques. The RSUs subject to this Agreement may be settled during the lifetime of the Director only with the Director or the Director’s guardian or legal representative. Upon any attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of the RSUs or any related rights to the RSUs that is contrary to the provisions of this Agreement or the Plan, or upon the levy of any attachment or similar process upon the RSUs or such rights, the RSUs and such rights shall immediately become null and void. The terms of this Agreement shall be binding upon the beneficiaries, executors, administrators, heirs, successors and assigns (the “Successors”) of the Director.

5.Stock Subject to the RSUs.  The Company will not be required to issue or deliver any shares of Stock or any certificate or certificates for shares of Stock with respect to the Director’s RSUs until such shares have been listed (or authorized for listing upon official notice of

4

issuance) upon each stock exchange on which outstanding shares of the same class are then listed and until the Company has taken such steps as may, in the opinion of counsel for the Company, be required by law and applicable regulations, including the rules and regulations of the Securities and Exchange Commission, and state securities laws and regulations, in connection with the issuance of such shares, and the listing of such shares on each such exchange.

6.Rights as Stockholder.  The Director or his/her Successors shall have no rights as a stockholder with respect to any shares subject to the RSUs until the Director or his/her Successors shall have become the beneficial owner of such shares, and, except as provided in Section 7 and Section 8 of this Agreement, no adjustment shall be made for dividends or distributions or other rights in respect of such shares for which the record date is prior to the date on which the Director or his/her Successors shall have become the beneficial owner thereof.

7.Payment of Dividend Equivalents.  From and after the Date of Grant and until the earlier of (a) the time when the RSUs become Vested and are settled in accordance with Section 2 and Section 3 of this Agreement or (b) the time when the Director’s right to receive shares of Stock in settlement of the RSUs is forfeited in accordance with Section 2 of this Agreement, on the date that the Company pays a cash dividend (if any) to holders of Stock generally, the Director shall be entitled to a number of additional RSUs determined by dividing (i) the product of (x) the dollar amount of the cash dividend paid per share of Stock on such date and (y) the total number of RSUs (including dividend equivalents paid thereon) previously credited to the Director as of such date, by (ii) the Fair Market Value of the Stock on such date.  Such dividend equivalents (if any) shall be subject to the same terms and conditions and shall be paid, in the aggregate rounded down to the nearest whole number, or forfeited in the same manner and at the same time as the RSUs to which the dividend equivalents were credited.

8.Adjustments Upon Changes in Capitalization; Change in Control.  In the event of any change in corporate capitalization, corporate transaction, sale or other disposition of assets or similar corporate transaction or event involving the Company as described in Section 5.5 of the Plan, the Committee shall make equitable adjustment as it determines necessary and appropriate in the number and type of shares subject to the RSUs and in the other terms of this award; provided,  however, that no fractional share shall be issued upon subsequent settlement of the RSUs.  No adjustment shall be made if such adjustment is prohibited by Section 5.5 of the Plan (relating to Section 409A of the Code).

9.Notices. Each notice relating to this Agreement shall be deemed to have been given on the date it is received. Each notice to the Company shall be addressed to its principal office in Eagle, Idaho, Attention: Compensation. Each notice to the Director or any other person or persons entitled to receive shares issuable upon settlement of the RSUs shall be addressed to the Director’s address and may be in written or electronic form. Anyone to whom a notice may be given under this Agreement may designate a new address by giving notice to that effect.

5

10.Benefits of Agreement.  This Agreement shall inure to the benefit of and be binding upon each successor of the Company. All obligations imposed upon the Director and all rights granted to the Company under this Agreement shall be binding upon the Director’s Successors. This Agreement and the Plan shall be the sole and exclusive source of any and all rights which the Director or his/her Successors may have in respect to the Plan or this Agreement.

11.Resolution of Disputes.  Any dispute or disagreement which should arise under or as a result of or in any way relate to the interpretation, construction or application of this Agreement will be determined by the Board. Any determination made hereunder shall be final, binding and conclusive for all purposes. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the State of Delaware.

12.Section 409A of the Code.  This Agreement is intended to comply with, or be exempt from, Section 409A of the Code and any regulations or notices provided thereunder. This Agreement and the Plan shall be interpreted in a manner consistent with this intent. The Company reserves the unilateral right to amend this Agreement on written notice to the Director in order to comply with Section 409A of the Code. The Company makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to any such payment.  None of the Company, its contractors, agents and employees, the Board and each member of the Board shall be liable for any consequences of any failure to follow the requirements of Section 409A of the Code or any guidance or regulations thereunder.

13.Amendment.  Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto.

14.Severability.  If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances shall not be affected, and the provisions so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.

15.Electronic Delivery.  The Company may, in its sole discretion, deliver any documents related to the RSUs and the Director’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or request the Director’s consent to participate in the Plan by electronic means.  The Director hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

6

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

I, THOMAS P. WERNER, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended November 27, 2016 of Lamb Weston Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: January 10, 2017

/s/ THOMAS P. WERNER

THOMAS P. WERNER

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

I, JOHN F. GEHRING, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended November 27, 2016 of Lamb Weston Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 J

Date:  January 10, 2017

/s/  JOHN F. GEHRING

JOHN F. GEHRING

Senior Vice President and Interim Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, THOMAS P. WERNER, Chief Executive Officer of Lamb Weston Holdings, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge that Lamb Weston Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended November 27, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and that the information contained in such Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Lamb Weston Holdings, Inc. as of and for the periods presented.

January 10, 2017

/s/ THOMAS P. WERNER

THOMAS P. WERNER

Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Lamb Weston Holdings, Inc. and will be retained by Lamb Weston Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, JOHN F. GEHRING, Executive Vice President and Chief Financial Officer of Lamb Weston Holdings, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge that Lamb Weston Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended November 27, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and that the information contained in such Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Lamb Weston Holdings, Inc. as of and for the periods presented.

January 10, 2017

/s/  JOHN F. GEHRING

JOHN F. GEHRING

Senior Vice President and Interim Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Lamb Weston Holdings, Inc. and will be retained by Lamb Weston Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Nov. 27, 2016	Dec. 30, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	Lamb Weston Holdings, Inc.
Entity Central Index Key	0001679273
Document Type	10-Q
Document Period End Date	Nov. 27, 2016
Amendment Flag	false
Current Fiscal Year End Date	--05-28
Entity Current Reporting Status	No
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		146,058,934
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2

XML

Condensed Combined and Consolidated Statements of Earnings - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015
Condensed Combined and Consolidated Statements of Earnings
Net sales	$ 790.7	$ 740.3	$ 1,567.0	$ 1,488.1
Cost of sales	591.8	578.5	1,187.5	1,185.0
Gross profit	198.9	161.8	379.5	303.1
Selling, general and administrative expenses	73.4	52.3	129.0	109.0
Income from operations	125.5	109.5	250.5	194.1
Interest expense, net	6.8	1.5	8.3	2.8
Income before income taxes and equity method earnings	118.7	108.0	242.2	191.3
Income tax expense	33.9	38.7	84.9	71.0
Equity method investment earnings	6.2	7.7	16.8	20.2
Net income	91.0	77.0	174.1	140.5
Less: Income attributable to noncontrolling interests	3.8	3.7	7.3	5.2
Net income attributable to Lamb Weston Holdings, Inc.	$ 87.2	$ 73.3	$ 166.8	$ 135.3
Earnings per share
Basic	$ 0.59	$ 0.50	$ 1.14	$ 0.92
Diluted	$ 0.59	$ 0.50	$ 1.13	$ 0.92

XML

Condensed Combined and Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015
Other comprehensive income (loss) Pre- Tax Amount :
Net income	$ 124.9	$ 115.7	$ 259.0	$ 211.5
Unrealized pension and post-employment benefit obligations				6.7
Unrealized currency translation gains (losses)	(11.9)	(8.6)	(13.0)	(10.4)
Comprehensive income (loss)	113.0	107.1	246.0	207.8
Less: Comprehensive income attributable to noncontrolling interests	3.8	3.7	7.3	5.2
Comprehensive income (loss) attributable to Lamb Weston	109.2	103.4	238.7	202.6
Other comprehensive income (loss) Tax (Expense) Benefit :
Net income	(33.9)	(38.7)	(84.9)	(71.0)
Unrealized pension and post-employment benefit obligations				(1.7)
Comprehensive income (loss)	(33.9)	(38.7)	(84.9)	(72.7)
Comprehensive income (loss) attributable to Lamb Weston	(33.9)	(38.7)	(84.9)	(72.7)
Other comprehensive income (loss) After Tax Amount :
Net income	91.0	77.0	174.1	140.5
Unrealized pension and post-employment benefit obligations				5.0
Unrealized currency translation gains (losses)	(11.9)	(8.6)	(13.0)	(10.4)
Comprehensive income (loss)	79.1	68.4	161.1	135.1
Less: Comprehensive income attributable to noncontrolling interests	3.8	3.7	7.3	5.2
Comprehensive income (loss) attributable to Lamb Weston	$ 75.3	$ 64.7	$ 153.8	$ 129.9

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Condensed Combined and Consolidated Balance Sheets - USD ($) $ in Millions	Nov. 27, 2016	May 29, 2016
Current assets:
Cash and cash equivalents	$ 69.4	$ 36.4
Receivables, less allowance for doubtful accounts of $0.6 and $0.5	232.2	186.5
Inventories	615.9	498.9
Prepaid expenses and other current assets	18.5	58.2
Total current assets	936.0	780.0
Property, plant and equipment, net	1,134.3	1,043.1
Goodwill	131.7	133.9
Intangible assets, net	38.3	39.6
Equity method investments	150.8	155.2
Other assets	9.1	6.5
Total assets	2,400.2	2,158.3
Current liabilities:
Revolving credit facility	80.0
Notes payable	25.2	24.9
Current portion of long-term debt	39.0	13.5
Accounts payable	314.3	238.0
Accrued liabilities	146.6	133.2
Total current liabilities	605.1	409.6
Long-term debt, excluding current portion	2,382.0	104.6
Deferred income taxes	56.9	144.0
Other noncurrent liabilities	64.8	52.1
Total long-term liabilities	2,503.7	300.7
Commitment and contingencies
Redeemable noncontrolling interest	50.0	47.4
Stockholders' equity:
Common stock of $1.00 par value, 600,000,000 shares authorized; 146,046,395 shares issued	146.0
Parent companies' invested equity		1,409.8
Additional distributed capital	(897.7)
Retained earnings	15.3
Accumulated other comprehensive loss	(22.2)	(9.2)
Total stockholders' equity (deficit)	(758.6)	1,400.6
Total liabilities and stockholders' equity (deficit)	$ 2,400.2	$ 2,158.3

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Condensed Combined and Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Nov. 27, 2016	May 29, 2016
Condensed Combined and Consolidated Balance Sheets
Receivables, allowance for doubtful accounts	$ 0.6	$ 0.5
Common stock, par value	$ 1.00
Common stock, authorized shares	600,000,000
Common stock, issued issued	146,046,395

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Condensed Combined and Consolidated Statements of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Nov. 27, 2016	Nov. 29, 2015
Cash flows from operating activities
Net income	$ 174.1	$ 140.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangibles and debt issuance costs	52.1	47.9
Share-based compensation expense	5.2	4.3
Earnings of joint ventures in excess of distributions	(2.8)	(12.5)
Other	(0.4)	(3.1)
Change in operating assets and liabilities:
Receivables	(45.8)	(27.4)
Inventories	(117.0)	(96.7)
Deferred income taxes and income taxes payable, net	(8.3)	7.7
Prepaid expenses and other current assets	41.4	43.5
Accounts payable	59.8	72.4
Accrued liabilities	4.1	(3.7)
Net cash provided by operating activities	162.4	172.9
Cash flows from investing activities
Additions to property, plant and equipment	(127.8)	(66.3)
Proceeds from sale of assets	2.0	2.7
Net cash used for investing activities	(125.8)	(63.6)
Cash flows from financing activities
Proceeds from short-term borrowings		9.8
Borrowings from revolving credit facility	80.0
Proceeds from issuance of debt	798.1
Debt repayments	(3.4)	(1.4)
Payments of debt issuance costs	(9.6)
Net transfers (to) from parent	(38.8)	(121.1)
Cash distribution to parent at Separation	(823.5)
Cash distributions paid to noncontrolling interest	(5.6)	(2.8)
Net cash used for financing activities	(2.8)	(115.5)
Effect of exchange rate changes on cash and cash equivalents	(0.8)	(0.5)
Net increase (decrease) in cash and cash equivalents	33.0	(6.7)
Cash and cash equivalents, beginning of the period	36.4	30.6
Cash and cash equivalents, end of period	$ 69.4	$ 23.9

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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Nov. 27, 2016

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.    NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Lamb Weston Holdings, Inc. (“we,” “us,” “our,” the “Company,” or “Lamb Weston”), along with its joint venture partners, is a leading global producer, distributor, and marketer of value-added frozen potato products and is headquartered in Eagle, Idaho. We have four reportable segments: Global, Foodservice, Retail, and Other. See Note 16, Business Segments and Related Information, for additional information on our reportable segments.

On November 9, 2016, Lamb Weston separated from Conagra Brands, Inc. (formerly, ConAgra Foods, Inc., “Conagra” or “our former parent”) and became an independent publicly traded company through the pro rata distribution by Conagra of 100% of the outstanding common stock of Lamb Weston to Conagra stockholders (which we refer to as the “Separation”). Each Conagra stockholder of record as of 5:00 p.m., New York City time, on November 1, 2016, the “record date,” received one share of Lamb Weston common stock for every three shares of Conagra common stock held on the record date. Approximately 146 million shares of Lamb Weston common stock were distributed on November 9, 2016 to Conagra stockholders. Information related to the Separation and its effect on our financial statements are discussed throughout these Notes to Condensed Combined and Consolidated Financial Statements.  

Basis of Presentation

The unaudited quarterly Condensed Combined and Consolidated Financial Statements present the financial results of Lamb Weston for the thirteen and twenty-six week periods ended November 27, 2016 and November 29, 2015, and have been prepared in accordance with generally accepted accounting principles in the United States of America. The financial statements are unaudited but include all adjustments (consisting only of normal recurring adjustments) that management considers necessary for a fair presentation of such financial statements. The preparation of financial statements involves the use of estimates and accruals. Actual results may vary from those estimates. Results for interim periods should not be considered indicative of results for a full year. The financial statements for periods prior to the Separation may not reflect what our results of operations would have been had we operated as a separate stand-alone company and may not be indicative of our future results of operations. These quarterly financial statements and notes should be read together with the consolidated financial statements and notes filed with the Securities and Exchange Commission (“SEC”) in our registration statement on Form 10, as amended, on October 17, 2016 (the “Form 10”).   

Prior to Separation

Prior to the Separation from Conagra on November 9, 2016 (the “Separation Date”), the combined financial statements were prepared using the specific accounting records of the entities which comprise the business of Lamb Weston. In some cases, principally foreign locations, those business activities were contained within entities that were engaged in other business activities of Conagra. Because a direct ownership relationship did not exist among the various units comprising Lamb Weston, Conagra and its subsidiaries’ equity investment is shown in lieu of stockholders’ equity in the combined financial statements. Intercompany investments, accounts, and transactions between the various legal entities comprising Lamb Weston have been eliminated.

Prior to the Separation Date, Lamb Weston’s financial statements included accounts specifically attributed to Lamb Weston and a portion of Conagra’s shared corporate general and administrative expenses. These shared services included, but were not limited to, legal, finance, internal audit, financial reporting, income tax accounting and advisory, insurance, information technology, treasury, and human resources functions. Shared corporate general and administrative expenses not specifically identifiable to Lamb Weston were allocated to Lamb Weston. The allocations were determined on a basis which we consider being reasonable reflections of the utilization of services provided by Conagra. However, these allocations may not reflect the costs and expenses that Lamb Weston would have incurred as a stand-alone company. A more detailed discussion of the relationship with Conagra, including a description of the costs which have been allocated to Lamb Weston and the methods of cost allocation, is included in Note 3, Related Party Transactions.  

As further described in Note 3, prior to the Separation Date, Lamb Weston engaged in various intercompany transactions with Conagra and its affiliates, including the sale and purchase of certain products, the procurement of certain materials and services, cash transfers related to Conagra’s centralized cash management process and expense allocations. As Conagra does not settle intercompany transactions with its businesses on a routine basis, all amounts due to (from) Conagra are classified as “Parent companies’ invested equity” on the May 29, 2016 Condensed Combined and Consolidated Balance Sheet. Changes in parent companies’ equity investment arising from cash transactions are presented as “Net transfers (to) from parent” in financing activities in the accompanying Condensed Combined and Consolidated Statements of Cash Flows, notwithstanding that advances from parent companies were utilized to fund Lamb Weston’s working capital requirements.

After Separation

Subsequent to the Separation Date, the consolidated financial statements include the accounts of Lamb Weston and all of its majority-owned subsidiaries. In addition, the accounts of all variable interest entities for which we are the primary beneficiary are included in our consolidated financial statements from the date such determination was made. Intercompany investments, accounts, and transactions have been eliminated. 

Certain amounts in the prior period combined financial statements have been reclassified to conform with the current period presentation. To conform with the current year presentation, we reclassified theamount associated with theredeemable noncontrolling interest in Lamb Weston BSW, LLC from “Other noncurrent liabilities” to “Redeemable noncontrolling interest” on the May 29, 2016 Condensed Combined and Consolidated Balance Sheet. For additional information, see Note 8, Investments in Joint Ventures.

New and Recently Issued Accounting Standards

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. It is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods, with early adoption permitted. The Company does not expect this ASU to have a material impact on the Company's financial condition, results of operations, or cash flows.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplified the accounting for income taxes, among other changes, related to stock based compensation. Conagra (and therefore Lamb Weston) early adopted ASU 2016-09 in the first quarter of fiscal 2017 with an effective date of May 30, 2016. The adoption of ASU 2016-09 did not have a material impact on our financial statements.

In February 2016, the FASB issued its final lease accounting standard, FASB Accounting Standard Codification (“ASC”) Topic 842, Leases, which requires lessees to reflect most leases on their balance sheet as assets and obligations. The effective date for the standard is for fiscal years beginning after December 15, 2018. Early adoption is permitted. We are evaluating the effect that ASC 842 will have on our financial statements and related disclosures. The standard is to be applied under the modified retrospective method, with elective reliefs, which requires application of the new guidance for all periods presented.

In November 2015, the FASB issued ASU 2015-17 Balance Sheet Classification of Deferred Taxes. This ASU requires entities to present all deferred tax assets and liabilities as noncurrent. Conagra (and therefore Lamb Weston) early adopted ASU 2015-17 effective May 30, 2016, and we have reflected our deferred tax assets and liabilities as noncurrent in our Condensed Combined and Consolidated Balance Sheets.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which addresses the measurement of inventory if its value declines or is impaired. The guidance on determining the cost of inventory is not amended. The effective date for the standard is for fiscal years beginning after December 15, 2016. Early adoption is permitted. We do not expect this ASU to have a material impact on our financial statements. The standard will be applied prospectively.

In April 2015, the FASB issued ASU 2015-03 (Topic 835): Simplifying the Presentation of Debt Issuance Costs. This ASU conforms the presentation of debt issuance costs with that required for debt discounts under U.S. Generally Accepted Accounting Principles (“GAAP”). Under the ASU, debt issuance costs are presented in the balance sheet as a direct deduction from the related liability rather than as an asset. We applied this guidance retrospectively, as required. No reclassifications of balances at May 29, 2016, were necessary with the adoption of ASU 2015-03. See Note 11, Debt and Financing Obligations for more information.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which amends the guidance for revenue recognition to replace numerous industry specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The ASU also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. In August 2015, the FASB deferred the effective date of the new revenue recognition standard by one year so that it is now effective for us beginning in fiscal year 2019. Early adoption in fiscal year 2018 is permitted. Lamb Weston is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The standard permits the use of either the retrospective or cumulative effect transition method.

There were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.

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EARNINGS PER SHARE

6 Months Ended

Nov. 27, 2016

EARNINGS PER SHARE

EARNINGS PER SHARE

2.    EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per common share for the periods presented: 

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 29,		November 27,		November 29,
	2016		2015		2016		2015
Numerator:
Net income attributable to Lamb Weston Holdings, Inc.	$	87.2	$	73.3	$	166.8	$	135.3
Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated		0.5		0.4		0.9		0.9
Net income available to Lamb Weston common stockholders	$	86.7	$	72.9	$	165.9	$	134.4
Denominator (a):
Basic weighted average common shares outstanding		146.0		146.0		146.0		146.0
Add: Dilutive effect of stock options, restricted stock units, and other dilutive securities (b)		0.3		—		0.3		—
Diluted weighted average common shares outstanding		146.3		146.0		146.3		146.0
Earnings per share
Basic	$	0.59	$	0.50	$	1.14	$	0.92
Diluted	$	0.59	$	0.50	$	1.13	$	0.92

(a) Earnings per share was calculated based on 146 million shares of Lamb Weston common shares that were distributed to Conagra shareholders on November 9, 2016. 

(b) Diluted earnings per share is calculated using net income available to common shareholders divided by diluted weighted-average shares of common shares outstanding during each period, which includes unvested share-based awards that are dilutive. For the thirteen and twenty-six weeks ended November 27, 2016, 0.3 million share-based awards were excluded from the computation of diluted EPS because they would be antidilutive. Lamb Weston had no share-based awards outstanding prior to the Separation.  

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RELATED PARTY TRANSACTIONS

6 Months Ended

Nov. 27, 2016

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

3.    RELATED PARTY TRANSACTIONS

Prior to the Separation, our business was included in the Commercial Foods segment of Conagra and thus our transactions with Conagra were considered related party transactions. In connection with the Separation, we entered into a separation and distribution agreement, as well as various other agreements that govern our relationships with Conagra going forward, including a transition services agreement, tax matters agreement, employee matters agreement, and trademark license agreement. Under the transition services agreement, Conagra provides a number of corporate staff services to us based on direct and indirect costs associated with rendering those services. These services include information technology, accounting, and human resource services. The thirteen and twenty-six weeks ended November 27, 2016, include $0.4 million of expenses related to the transition services agreement. The transition services agreement expires in March 2018. Information included in the remainder of this Note 3 with respect to Conagra is strictly limited to our related party transactions with Conagra prior to the Separation Date. 

Prior to the Separation Date, Conagra allocated certain selling, general and administrative costs to Lamb Weston based on specific metrics correlated with the cost of services it provided or costs incurred on behalf of the Company (e.g., employee headcount, net sales, and square footage of office space, etc.). Allocations based upon these metrics resulted in $3.4 million and $11.5 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively, of selling, general and administrative costs allocated to Lamb Weston; and $7.7 million and $23.3 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively of selling, general and administrative costs allocated to Lamb Weston. Beginning in fiscal 2017, certain departmental charges, which were previously allocated, are now being directly absorbed by Lamb Weston.

The above allocations were consistent with historical allocations for Lamb Weston; however, Conagra did not historically allocate certain other corporate costs to its various segments. For any remaining indirect corporate costs that supported Lamb Weston, Conagra allocated additional selling, general and administrative costs using an equal weighting between Lamb Weston product contribution margin (net sales less cost of sales and advertising and promotion expenses) and Lamb Weston total assets relative to consolidated Conagra product contribution margin and total assets. Allocations of indirect corporate costs were $8.4 million and $10.7 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively; and $17.3 million and $24.4 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively, of selling, general and administrative costs. Although it is not practicable to estimate what such costs would have been if Lamb Weston had operated as a separate entity, Lamb Weston considers such allocations to have been made on a reasonable basis. The allocations discussed above ceased after the Separation Date.

The Condensed Combined and Consolidated Balance Sheet as of May 29, 2016 and the Condensed Combined and Consolidated Statements of Earnings for the period up to the Separation Date for the thirteen and twenty-six weeks ended November 27, 2016 and November 29, 2015, include only the specific debt and interest expense of the legal entities that make-up Lamb Weston, and do not include any allocated interest expense or third-party debt of Conagra. See Note 11, Debt and Financing Obligations, for a discussion of indebtedness incurred in connection with the Separation. The interest expense included in Lamb Weston’s results of operations was $6.8 million and $1.5 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively; and $8.3 million and $2.8 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively.

Prior to the Separation, Conagra did not settle intercompany transactions with its subsidiaries on a routine basis. As a result, all amounts due to (from) Conagra are classified as “Parent companies’ invested equity” on the Condensed Combined and Consolidated Balance Sheet as of May 29, 2016. It reflects all changes in parent companies’ invested equity for all transactions between Conagra and Lamb Weston, including direct and allocated charges from Conagra to Lamb Weston, intercompany cash transfers, derivative hedging activities performed by Conagra for the benefit of Lamb Weston, sales of potatoes, vegetables, and other products for use by other Conagra affiliates, and net cash management activities. In addition, these financial statements reflect the sale of certain branded products manufactured for distribution by other Conagra affiliates. Income tax payments were made by Conagra on Lamb Weston’s behalf. Income taxes payable were settled in parent companies’ invested equity when payments are made by Conagra.

Included in net sales are sales to Conagra of $4.0 million and $7.5 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively; and $8.4 million and $15.5 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively. The related cost of sales were $3.4 million and $6.3 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively; and $7.0 million and $13.0 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively. Lamb Weston also made purchases from Conagra of $2.6 million and $5.8 million during the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively; and $7.9 million and $10.1 million during the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively.

Conagra guarantees Lamb Weston’s performance under a third-party contract for certain warehousing, handling and transportation services for a portion of its finished goods inventory. The minimum term of the agreement is for a period of 20 years with three five-year renewal options. The costs of these services are adjusted annually, subject to a minimum monthly payment of $1.5 million.

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INCOME TAXES

6 Months Ended

Nov. 27, 2016

INCOME TAXES

INCOME TAXES

4.    INCOME TAXES

For periods ended on or prior to the Separation Date, we were a member of Conagra’s consolidated group and our U.S. taxable income was included in the consolidated U.S. federal income tax return of Conagra as well as in returns filed by Conagra with certain state and local taxing jurisdictions. Our foreign income tax returns are filed on a separate company basis. For periods prior to the Separation Date, our income tax liability was computed and presented herein under the “separate return method” as if we were a separate tax paying entity.

In connection with the Separation, we entered into various agreements with Conagra that govern the relationship between the parties going forward, including a tax matters agreement. The tax matters agreement was entered into on the Separation Date. Under the tax matters agreement, Conagra is generally responsible for all taxes associated with consolidated federal and state filings (and will be entitled to all related refunds of taxes) imposed on Conagra and its subsidiaries (including subsidiaries that were transferred to Lamb Weston at Separation) with respect to the taxable periods (or portions thereof) ended on or prior to November 9, 2016. Also, pursuant to this agreement, Lamb Weston is generally responsible for all taxes associated with separately filed foreign, state and local tax filings (and will be entitled to all related refunds of taxes) imposed on Lamb Weston and its subsidiaries ended on or prior to November 9, 2016.

In connection with the Separation, Lamb Weston recognized a step-up in tax basis in certain assets, which resulted in a $75.0 million net decrease in deferred tax liabilities and a corresponding increase in equity. The step-up in tax basis related to a deferred intercompany transaction arising in 2008, which until the Distribution Date, was eliminated within Conagra’s consolidated financial statements and federal tax filings. 

Income tax expense for the thirteen weeks ended November 27, 2016 and November 29, 2015, was $33.9 million and $38.7 million, respectively, and for the twenty-six weeks ended November 27, 2016 and November 29, 2015, was $84.9 million and $71.0 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was approximately 27% and 33% for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively, and 33% and 34% for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively. The lower rate in the thirteen weeks ended November 27, 2016, is primarily attributable to an increase in costs determined to be deductible, as well as a discrete benefit arising from a change in estimate relating to fiscal 2016 foreign taxes.

There have been no material changes to the unrecognized tax benefits disclosed in Note 11, Pre-Tax Income and Income Taxes, of the Notes to Combined Financial Statements included in the Form 10. Income taxes paid, net of refunds, were $90.6 million and $61.8 million in the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively.

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INVENTORIES

6 Months Ended

Nov. 27, 2016

INVENTORIES

INVENTORIES

5.    INVENTORIES

We value our inventories using lower of cost, as determined by the first-in, first-out method, or market. The major classes of inventories were as follows (dollars in millions):

	November 27,		May 29,
	2016		2016
Raw materials and packaging	$	199.5	$	86.2
Finished goods		379.0		384.3
Supplies and other		37.4		28.4
Inventories	$	615.9	$	498.9

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PROPERTY, PLANT, AND EQUIPMENT

6 Months Ended

Nov. 27, 2016

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT, AND EQUIPMENT

6.    PROPERTY, PLANT AND EQUIPMENT

The components of property, plant, and equipment were as follows (dollars in millions):

	November 27,		May 29,
	2016		2016
Land and land improvements	$	138.9	$	136.5
Buildings, machinery and equipment		1,815.0		1,776.1
Furniture, fixtures, office equipment and other		62.3		53.1
Construction in progress		155.5		68.5
Property, plant and equipment, at cost		2,171.7		2,034.2
Less accumulated depreciation		(1,037.4)		(991.1)
Property, plant and equipment, net	$	1,134.3	$	1,043.1

Depreciation expense was $25.8 million and $23.3 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively, and $50.6 million and $46.4 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively. At November 27, 2016 and May 29, 2016, purchases of property, plant and equipment included in accounts payable were $32.0 million and $15.5 million, respectively.

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GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

6 Months Ended

Nov. 27, 2016

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

7.    GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

Changes in the carrying amount of goodwill were as follows (dollars in millions):

	Global		Foodservice		Retail		Other		Total
Balance at May 29, 2016	$	75.7	$	42.8	$	10.9	$	4.5	$	133.9
Foreign currency translation adjustment		(2.2)		—		—		—		(2.2)
Balance at November 27, 2016	$	73.5	$	42.8	$	10.9	$	4.5	$	131.7

Other identifiable intangible assets were as follows (dollars in millions):

	November 27, 2016					May 29, 2016
	Weighted					Weighted
	Average	Gross				Average	Gross
	Useful Life	Carrying		Accumulated		Useful Life	Carrying		Accumulated
	(in years)	Amount		Amortization		(in years)	Amount		Amortization
Non-amortizing intangible assets (a)	n/a	$	18.0	$	—	n/a	$	18.0	$	—
Amortizing intangible assets (b)	14		35.1		14.8	14		35.1		13.5
		$	53.1	$	14.8		$	53.1	$	13.5

(a) Non-amortizing intangible assets are comprised of brands and trademarks.

(b) Amortizing intangible assets are principally composed of customer relationships, licensing arrangements, and intellectual property. During the thirteen weeks ended November 27, 2016 and November 29, 2015, amortization expense was $0.5 million and $0.7 million, respectively. During the twenty-six weeks ended November 27, 2016 and November 29, 2015, amortization expense was $1.3 million and $1.1 million, respectively.

Total intangible assets, net of amortization, excluding goodwill, as of November 27, 2016 and May 29, 2016, were $38.3 million and $39.6 million, respectively. Estimated intangible asset amortization expense for the remainder of fiscal 2017 and the next five years is as follows (dollars in millions):

	Amortization
2017 remainder	$	1.0
2018		1.9
2019		1.8
2020		1.8
2021		1.8
2022		1.8
Thereafter		10.2
	$	20.3

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INVESTMENT IN JOINT VENTURES

6 Months Ended

Nov. 27, 2016

INVESTMENT IN JOINT VENTURES

INVESTMENT IN JOINT VENTURES

8.    INVESTMENTS IN JOINT VENTURES

Variable Interest Entity - Consolidated

We hold a 49.99% interest in Lamb Weston BSW, LLC (“Lamb Weston BSW”), a potato processing venture with Ochoa Ag Unlimited Foods, Inc. (“Ochoa”). We provide all sales and marketing services to Lamb Weston BSW. Under certain circumstances, we could be required to compensate Ochoa for lost profits resulting from significant production shortfalls. Commencing on June 1, 2018, or on an earlier date under certain circumstances, Lamb Weston has a contractual right to purchase the remaining equity interest in Lamb Weston BSW from Ochoa (the “call option”). Lamb Weston is currently subject to a contractual obligation to purchase all of Ochoa’s equity investment in Lamb Weston BSW at the option of Ochoa (the “put option”). The purchase prices under the call option and the put option (the “options”) are based on the book value of Ochoa’s equity interest at the date of exercise, as modified by an agreed-upon rate of return for the holding period of the investment balance. The agreed-upon rate of return varies depending on the circumstances under which any of the options are exercised.

Our variable interests in Lamb Weston BSW include an equity investment in the venture, the options, certain fees paid to Lamb Weston by Lamb Weston BSW for sales and marketing services, the contingent obligation related to production shortfalls and the contingent obligation to fund additional equity contributions or purchase the underlying notes associated with certain Lamb Weston BSW financings. Lamb Weston’s maximum exposure to loss as a result of Lamb Weston’s involvement with this venture is equal to Lamb Weston’s equity investment in the venture, the balance of any promissory notes extended to the venture which are subject to Lamb Weston’s purchase obligation, and the amount, if any, by which the put option exercise price exceeds the fair value of the non-controlling interest in Lamb Weston BSW upon its exercise. Also, in the event of a production shortfall, we could be required to compensate Ochoa for lost profits. It is not possible to determine the maximum exposure to losses from the potential exercise of the put option or from potential production shortfalls. However, we do not expect to incur material losses resulting from these potential exposures.

Lamb Weston and Lamb Weston BSW purchase potatoes from a shareholder of Ochoa. The aggregate amount of such purchases were $12.5 million and $11.4 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively; and $36.6 million and $27.8 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively.

Lamb Weston BSW is a variable interest entity and we have determined that we are the primary beneficiary of the entity. We consolidate the financial statements of Lamb Weston BSW. The amounts presented for Lamb Weston BSW in the table below exclude intercompany balances eliminated in consolidation and include the non-controlling interest at redemption value as reported in the Condensed Combined and Consolidated Balance Sheets (dollars in millions):  

	November 27,		May 29,
	2016		2016
Cash and equivalents	$	12.0	$	4.3
Receivables, less allowance for doubtful accounts (a)		0.1		0.1
Inventories		1.9		1.2
Prepaid expenses and other current assets		0.1		0.4
Property, plant and equipment, net		50.4		52.2
Goodwill		18.8		18.8
Intangible assets, net		4.8		5.2
Total assets	$	88.1	$	82.2
Notes payable	$	—	$	1.0
Current portion of long-term debt		1.2		0.5
Accounts payable		10.1		10.9
Accrued liabilities		2.5		1.7
Long-term debt, excluding current portion		28.8		29.5
Total liabilities	$	42.6	$	43.6
Redeemable noncontrolling interest (b)	$	50.0	$	47.4

(a) As of November 27, 2016 and May 29, 2016, affiliate receivables of $22.2 million and $25.8 million are not included above as they are eliminated in consolidation.

(b) Represents the amount that our joint venture partner, Ochoa, had the right to put its equity interest to Lamb Weston on November 27, 2016 and May 29, 2016.

The liabilities recognized as a result of consolidating the Lamb Weston BSW entity do not represent additional claims on Lamb Weston’s general assets.  In connection with the Lamb Weston BSW long-term debt, we have entered into an agreement with the financial institution which provides that in the event that Lamb Weston BSW fails to comply with certain financial covenants or repayment terms, we are required to either make certain additional equity contributions to Lamb Weston BSW or to purchase the underlying notes. The assets recognized as a result of consolidating Lamb Weston BSW are the property of the venture and are not available to Lamb Weston for any other purpose.

Variable Interest Entity - Not Consolidated

Lamb Weston holds a 50% interest in Lamb-Weston/RDO Frozen (“Lamb Weston RDO”), a potato processing venture based in the United States. Lamb Weston provides all sales and marketing services to Lamb Weston RDO. Lamb Weston receives a fee for these services based on a percentage of the net sales of the venture. The fees received were $3.4 million and $3.1 million, for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively; and $6.9 million and $6.2 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively. These fees are recorded as a reduction to selling, general, and administrative expense. Our ownership interest in this venture is included in “Equity method investments” in the Condensed Combined and Consolidated Balance Sheets. The balance of Lamb Weston’s investment was $15.8 million and $16.9 million at November 27, 2016 and May 29, 2016, respectively, representing our maximum exposure to loss as a result of our involvement with this venture. The capital structure of Lamb Weston RDO includes owners’ equity of $32.1 million and $33.9 million as of November 27, 2016 and May 29, 2016, respectively; and term borrowings from banks of $39.9 million and $16.9 million as of November 27, 2016 and May 29, 2016, respectively.

Lamb Weston has determined that Lamb Weston RDO is a variable interest entity, but Lamb Weston is not the primary beneficiary. Lamb Weston does not have the power to direct the activities that most significantly impact the economic performance of the joint venture. Accordingly, Lamb Weston does not consolidate the financial statements of this entity. Lamb Weston uses equity method accounting to account for its ownership in Lamb Weston RDO.

Other Investments

Lamb Weston also holds a 50% ownership interest in Lamb-Weston/Meijer v.o.f. (“Lamb-Weston/Meijer”), a Netherlands joint venture with Meijer Frozen Foods B.V., headquartered in the Netherlands, which manufactures and sells frozen potato products principally in Europe. We account for this investment using equity method accounting.

Transactions with Joint Ventures

The carrying value of our equity method investments, which include Lamb Weston RDO and Lamb-Weston/Meijer, at November 27, 2016 and May 29, 2016, was $150.8 million and $155.2 million, respectively. These amounts are included in “Equity method investments” in our Condensed Combined and Consolidated Balance Sheets. For the thirteen weeks ended November 27, 2016 and November 29, 2015, we had sales and payments to our equity method investments of $7.2 million and $3.6 million, respectively, and $3.4 million and $3.0 million, respectively; and for the twenty-six weeks ended November 27, 2016 and November 29, 2015, we had sales and payments to our equity method investments of $14.7 million and $6.7 million, respectively, and $7.3 million and $5.5 million, respectively. Total dividends from our equity method investments were $5.6 million and $4.7 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively, and $13.9 million and $7.8 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively.

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ACCRUED LIABILITIES

6 Months Ended

Nov. 27, 2016

ACCRUED LIABILITIES

ACCRUED LIABILITIES

10.   ACCRUED LIABILITIES

The components of accrued liabilities were as follows (dollars in millions):

	November 27,		May 29,
	2016		2016
Compensation and benefits	$	55.3	$	63.3
Accrued trade promotions		41.7		35.6
Franchise, property, and sales and use taxes		13.5		12.0
Accrued interest		6.5		0.6
Income taxes payable		7.5		—
Other		22.1		21.7
Accrued liabilities	$	146.6	$	133.2

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DEBT AND FINANCING OBLIGATION

6 Months Ended

Nov. 27, 2016

DEBT AND FINANCING OBLIGATION

DEBT AND FINANCING OBLIGATIONS

11.   DEBT AND FINANCING OBLIGATIONS

At November 27, 2016 and May 29, 2016, our debt, including financing obligations was as follows (dollars in millions):

	November 27,		May 29,
	2016		2016
Debt:
Term loan facility, due 2021	$	675.0	$	—
4.625% senior notes, due 2024		833.0		—
4.875% senior notes, due 2026		833.0		—
6.25% installment notes, due 2017		9.8		10.1
LIBOR plus a margin (1.90% to 2.30%) and 4.34%, installment notes due on various dates through June 2031		30.0		30.0
		2,380.8		40.1
Financing obligations:
4.35% lease financing obligation due May 2030		68.9		69.7
2.00% to 3.32% lease financing obligations due on various dates through 2040		8.3		8.3
		77.2		78.0
Long-term debt, including current portion		2,458.0		118.1
Debt issuance costs		(37.0)		—
Current portion of long-term debt		(39.0)		(13.5)
Long-term debt, excluding current portion	$	2,382.0	$	104.6

In November 2016, as part of the Separation, Lamb Weston, as borrower, issued $2,341.0 million of debt, which included $1,666.0 million of aggregate principal amount of 4.625% and 4.875% senior notes (together, the “Senior Notes”) and $675.0 million of borrowings under a five-year senior secured credit agreement (the “Credit Agreement”) with a syndicate of lenders. The Credit Agreement consists of a five-year amortizing $675.0 million term loan facility (the “Term Loan Facility”) and a five-year non-amortizing $500.0 million revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”). The Credit Agreement is secured as long as Lamb Weston remains below investment grade by both Moody’s and Standard & Poor’s. Of the $1,666.0 million of Senior Notes, $1,542.9 million aggregate principal amount of Senior Notes were distributed directly to Conagra and we used  the proceeds of $123.1 million of Senior Notes, together with $700.4 million of borrowings under the Credit Facilities, to fund an $823.5 million cash payment to Conagra at the time of the Separation. The $1,542.9 million of Senior Notes distributed directly to Conagra is a noncash financing activity for Lamb Weston.   

Debt issuances as of November 27, 2016 consisted of the following:

· Revolving Credit Facility:  A five-year nonamortizing $500.0 million revolving credit facility with variable annual interest, under which $80 million is outstanding on November 27, 2016. In addition to paying interest, we pay an annual commitment fee for undrawn amounts at a rate of  0.25% to 0.40% depending on our consolidated net leverage ratio. 

· Term LoanFacility: A five-year $675.0 million term loan amortizing in equal quarterly installments for a total of 5% annually commencing in March 2017 with the balance payable in November 2021. 

· 4.625% Senior Notes: An eight-year $833.0 million senior debt obligation with fixed annual interest.

· 4.875% Senior Notes: A ten-year $833.0 million senior debt obligation with fixed annual interest.

Credit Facilities

Borrowings under the Credit Facilities bear interest at a floating rate per annum based upon the Base Rate or the Eurocurrency rate, in each case plus an applicable margin which varies based upon our consolidated net leverage ratio. Margins range from 0.500% to 1.250% for Base Rate loans and from 1.500% to 2.250% for Eurocurrency Rate loans. The Base Rate is defined as the highest of (a) Bank of America’s prime rate, (b) the federal funds rate plus 0.500% and (c) the Eurocurrency Rate with a term of one month plus 1.0%.

Additionally, the Revolving Credit Facility is available for the issuance of letters of credit and swingline advances not to exceed $100.0 million and $35.0 million, respectively. Swingline advances will accrue interest at a rate equal to the Base Rate plus the applicable margin. Letters of credit and swingline advances will reduce, on a dollar for dollar basis, the amount available under the Revolving Credit Facility.

Upon the occurrence of an event of default, among other things, amounts outstanding under the Credit Agreement may be accelerated and the commitments may be terminated. Our obligations under the Credit Agreement are guaranteed by certain of our direct and indirect domestic subsidiaries on the terms set forth in the Credit Agreement. The Credit Agreement has a maturity date of November 9, 2021.

At November 27, 2016, we had $80.0 million of borrowings outstanding under our Revolving Credit Facility. At November 27, 2016, we had $420.0 million of availability and no outstanding letters of credit. For the period of November 9, 2016 through November 27, 2016, the average interest rate for our borrowings under the Revolving Credit Facility was 2.5%. 

We are required to maintain the following financial covenant ratios under the Credit Agreement:

· Total net leverage ratio of 5.50 to 1.00, decreasing ratably to 4.50 to 1.00 on August 25, 2019 through maturity

· Interest coverage ratio of 2.75 to 1.00

The obligations of Lamb Weston under our Credit Facilities are guaranteed jointly and severally on a senior secured basis by each of our existing and subsequently acquired or organized direct or indirect wholly owned domestic restricted subsidiaries subject to the exclusion of immaterial subsidiaries.

The Credit Agreement and the indentures governing the Senior Notes contain covenants that, subject to exceptions, limit our ability and the ability of our subsidiaries to, among other things, incur, assume or guarantee additional indebtedness, pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt, make loans and investments, incur or suffer to exist liens, sell, transfer or otherwise dispose of assets, enter into agreements that restrict distributions or other payments from restricted subsidiaries to us, engage in transactions with affiliates, designate subsidiaries as unrestricted or restricted, and consolidate merge, amalgamate or transfer all or substantially all of our assets.   

4.625% and 4.875% Senior Notes

The Senior Notes are senior unsecured obligations and rank equally with all of our present and future senior indebtedness, senior to all our future subordinated indebtedness and effectively subordinated to all of our present and future senior secured indebtedness (including all borrowings with respect to the Credit Facilities to the extent of the value of the assets securing such indebtedness). Interest on the Senior Notes is due semiannually. Upon a change of control, we must offer to repurchase the Senior Notes at 101% of the principal amount, plus accrued and unpaid interest.

We may redeem all or a portion of the 4.625% Senior Notes at any time on or after November 1, 2021, at declining prices starting at 102.313%, plus accrued and unpaid interest. We may redeem all or a portion of the 4.875% Senior Notes at any time on or after November 1, 2021, at declining prices starting at 102.438%, plus accrued and unpaid interest. Prior to November 1, 2021, we may redeem Senior Notes of either series, in whole at any time or in part, from time to time, at a price equal to 100% of the principal amount thereof, plus a make-whole premium, plus accrued and unpaid interest. We may also redeem up to 35% of the aggregate principal amount of either series of Senior Notes on or prior to November 1, 2019 in an aggregate amount equal to the net proceeds from certain equity offerings at redemption prices equal to 104.625% for the 4.625% Senior Notes and 104.875% for the 4.875% Senior Notes, plus, in each case, accrued and unpaid interest.

The Senior Notes are jointly and severally guaranteed on a senior unsecured basis by Lamb Weston’s domestic subsidiaries that guarantee its obligations under the Credit Agreement.

Other

The aggregate minimum principal maturities of our long-term debt, including current portion, for the next five fiscal years and thereafter, are as follows (dollars in millions):

	Financing
	Obligations (a)		Debt		Total
2017 remainder	$	3.8	$	18.7	$	22.5
2018		5.6		35.3		40.9
2019		5.4		35.4		40.8
2020		5.0		35.4		40.4
2021		4.9		35.5		40.4
2022		5.2		533.4		538.6
Thereafter		47.3		1,687.1		1,734.4
	$	77.2	$	2,380.8	$	2,458.0

(a) Payments for our lease financing obligations for the next five fiscal years and thereafter include $35.5 million of payments representing interest.

In November 2016, we recorded $37.3 million of debt issuance costs incurred in connection with the debt issuances described above as a reduction of long-term debt. Conagra paid $25.4 million of the debt issuance costs, we paid $9.6 million and have accrued $2.3 million. We amortize the $37.3 million of costs in interest expense using the effective interest method over the life of the loans. For the thirteen and twenty-six weeks ended November 27, 2016, we recorded $0.3 million of amortization expense in “Interest expense” in our Condensed Combined and Consolidated Statements of Earnings. 

Since the Separation, we have paid $0.9 million of interest on debt.

Notes Payable

In 2016, our Tai Mei Potato (Tai Mei Potato Industry Limited) subsidiary increased its credit facility $20.0 million to approximately $58.0 million. The facility consists of an overdraft line, a fixed asset commitment and a working capital facility. Borrowings under the facilities bear interest at either 85%,  95% or 105% of the Peoples Bank of China rate (4.35% at November 27, 2016) and may be prepaid without penalty. We guarantee the full amount of our subsidiary’s obligations to the financial institution up to the maximum amount of the credit facility. As of November 27, 2016, $25.2 million was drawn on the facility and recorded in “Notes payable” in our Condensed Combined and Consolidated Balance Sheet.

For more information on our debt and interest rates on that debt, see Note 5, Notes Payable and Long-Term Debt, of the Notes to Combined Financial Statements included in the Form 10.

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SHARE-BASED PAYMENTS

6 Months Ended

Nov. 27, 2016

SHARE-BASED PAYMENTS

SHARE-BASED PAYMENTS

12.   SHARE-BASED PAYMENTS

Prior to the Separation Date, Lamb Weston employees participated in Conagra’s equity incentive plans, which issued equity awards, including stock options, restricted stock units and performance-based restricted stock units. In addition, certain Lamb Weston employees participated in Conagra’s employee stock purchase plan. All awards granted under these plans consisted of Conagra common shares. Lamb Weston’s Condensed Combined and Consolidated Statements of Earnings reflect compensation expense for these stock-based plans associated with the portion of Conagra’s incentive plans in which Lamb Weston employees participated and an allocation of  stock-based compensation costs of certain Conagra employees who provided general and administrative services on our behalf.

After the Separation Date, outstanding awards granted to Lamb Weston employees under Conagra’s equity incentive plans were converted into Lamb Weston awards under Lamb Weston’s equity incentive plans based on a conversion ratio. The conversion ratio was calculated based on the average of the volume weighted average price (“VWAP”) per share of Conagra common stock for each of the five trading days ending with the second trading day immediately prior to November 9, divided by the VWAP per share of Lamb Weston common stock for the five trading days beginning with the first trading day immediately following the Separation Date, or November 10, 2016.

On November 8, 2016, the Board of Directors adopted the Lamb Weston Holdings, Inc. 2016 Stock Plan (the “Plan”). Under the terms of the Plan, equity awards, including stock options, cash and stock-settled restricted stock units, restricted stock awards, and performance-based restricted stock units, may be granted to our directors, officers, and employees. At November 27, 2016, we had 10.0 million shares authorized under our equity incentive plans, and 8.4 million were available for future grant. Forfeitures are added back to the pool of shares of common stock available to be granted at a future date.

The following table summarizes stock option activity for the twenty-six weeks ended November 27, 2016:

			Weighted-		Weighted-
			Average		Average
			Exercise		Remaining		Aggregate
			Price		Contractual		Intrinsic
	Shares		(per share)		Term (Years)		Value (a)
Outstanding at May 29, 2016		—		—
Converted on November 9, 2016		607,420	$	23.60
Granted		—		—
Exercised		—		—
Forfeited/cancelled		—		—
Outstanding at November 27, 2016		607,420	$	23.60		7.31	$	5.5
Exercisable at November 27, 2016		333,143	$	20.52		6.02	$	4.0

(a) The aggregate intrinsic values represent the total pre-tax intrinsic value (the difference between our closing stock price on the last trading day of our fiscal 2017 second quarter, or November 25, 2016, and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options at the end of the quarter. The amount changes based on the fair market value of our stock.

The following table summarizes restricted stock unit and performance-based restricted stock unit activity for the twenty-six weeks ended November 27, 2016:

	Stock-Settled				Cash-Settled				Performance Units
			Weighted-				Weighted-				Weighted-
			Average				Average				Average
			Grant-				Grant-				Grant-
			Date Fair				Date Fair				Date Fair
	Shares		Value		Shares		Value		Shares		Value
Outstanding at May 29, 2016		—		—		—		—		—		—
Converted on November 9, 2016		449,716	$	25.05		469,837	$	25.33		56,050	$	25.84
Granted		—		—		—		—		—		—
Vested		—		—		—		—		—		—
Forfeited/expired/cancelled		—		—		—		—		—		—
Outstanding at November 27, 2016		449,716	$	25.05		469,837	$	25.33		56,050	$	25.84

Compensation Expense

Prior to the Separation Date, Conagra charged us for share-based compensation expense related to our direct employees and allocated to us costs (including share-based compensation) of certain employees of Conagra who provided general and administrative services on our behalf (see Note 3, Related Party Transactions). Our share-based compensation expense is recorded in “Selling, general and administrative expenses.” Compensation expense for share-based awards recognized in the Condensed Combined and Consolidated Statements of Earnings, net of forfeitures, was as follows (dollars in millions):

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 29,		November 27,		November 29,
	2016		2015		2016		2015
Stock options	$	0.1	$	0.1	$	0.3	$	0.2
Stock-settled restricted stock units		0.9		0.6		1.6		1.2
Performance-based restricted stock units		(0.3)		—		—		—
Cash-settled restricted stock units (a)		1.8		1.0		3.3		2.9
Total compensation expense		2.5		1.7		5.2		4.3
Income tax benefit		(0.9)		(0.6)		(1.9)		(1.6)
Total compensation expense, net of tax benefit	$	1.6	$	1.1	$	3.3	$	2.7

(a) All cash-settled restricted stock units are marked-to-market and presented within “Accrued liabilities” and “Other noncurrent liabilities” in our Condensed Combined and Consolidated Balance Sheets.

Based on estimates at November 27, 2016, total unrecognized compensation expense, net of estimated forfeitures, related to share-based payments was as follows (dollars in millions):

			Remaining
			Weighted
	Unrecognized		Average
	Compensation		Recognition
	Expense		Period (in years)
Stock options	$	0.8		1.5
Cash-settled restricted stock units		7.8		2.1
Stock-settled restricted stock units		7.3		2.1
Performance units		0.8		2.0
Total unrecognized share-based compensation expense	$	16.7		2.1

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STOCKHOLDERS' EQUITY

6 Months Ended

Nov. 27, 2016

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

13.   STOCKHOLDERS’ EQUITY

In connection with our Separation from Conagra to an independent publicly traded Delaware corporation, we amended and restated our certificate of incorporation to authorize 600,000,000 shares of common stock and 60,000,000 shares of preferred stock. We had 146,046,395 shares of common stock issued and outstanding as of November 27, 2016. Each share of common stock entitles the holder to one vote on matters to be voted on by the stockholders of Lamb Weston. No preferred stock was issued or outstanding on November 27, 2016. 

Dividends

On December 15, 2016, our Board of Directors declared a dividend of $0.1875 per share of common stock. The dividend will be paid on March 1, 2017 to stockholders of record as of the close of business on January 30, 2017.

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DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Nov. 27, 2016

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

14.   DERIVATIVE FINANCIAL INSTRUMENTS

Lamb Weston’s operations are exposed to market risks from adverse changes in commodity prices affecting the cost of raw materials and energy, foreign currency exchange rates, and interest rates. In the normal course of business, these risks are managed through a variety of strategies, including the use of derivatives. We do not enter into derivative financial instruments for trading or speculative purposes.

Commodity and commodity index futures and option contracts are used from time to time to economically hedge commodity input prices on items such as natural gas, vegetable oils, packaging materials, and electricity. Historically, Conagra economically hedged a portion of Lamb Weston’s anticipated consumption of commodity inputs for periods of up to 36 months.

In order to reduce exposures related to changes in foreign currency exchange rates, Lamb Weston enters into forward exchange, option, or swap contracts from time to time for transactions denominated in a currency other than the applicable functional currency. This includes, but is not limited to, hedging against foreign currency risk in purchasing inventory and capital equipment, sales of finished goods, and future settlement of foreign-denominated assets and liabilities. Prior to the Separation, Conagra exited all derivative instruments that were used to economically hedge portions of Lamb Weston’s foreign currency risk in anticipated transactions. The effect of exiting these positions was insignificant to our second quarter fiscal 2017 results.

Economic Hedges of Forecasted Cash Flows

Lamb Weston does not generally designate commodity derivatives to achieve hedge accounting treatment. We reflect realized and unrealized gains and losses from derivatives used to economically hedge anticipated commodity consumption in earnings immediately within cost of sales.

Prior to the Separation, Conagra entered into certain commodity and foreign exchange derivatives with a diversified group of counterparties on behalf of Lamb Weston. Conagra monitored Lamb Weston’s positions and the credit ratings of the counterparties involved and limited the amount of credit exposure to any one party. We have not incurred a material loss due to nonperformance in any period presented and do not expect to incur any such material loss.

Economic Hedges of Fair Values—Foreign Currency Exchange Rate Risk

Lamb Weston may use options and cross currency swaps to economically hedge the fair value of certain monetary assets and liabilities (including intercompany balances) denominated in a currency other than the functional currency. These derivatives are marked-to-market with gains and losses immediately recognized in selling, general and administrative expenses. These substantially offset the foreign currency transaction gains or losses recognized as values of the monetary assets or liabilities being economically hedged change.

All derivative instruments are recognized in our Condensed Combined and Consolidated Balance Sheets at fair value (refer to Note 15, Fair Value Measurements for additional information related to fair value measurements). The fair value of derivative assets are recognized within “Prepaid expenses and other current assets”, while the fair value of derivative liabilities are recognized within “Accrued liabilities”. In accordance with generally accepted accounting principles, Lamb Weston offsets certain derivative asset and liability balances where master netting agreements provide for legal right of setoff. No collateral was received or pledged in connection with these agreements.

Derivative assets and liabilities were reflected in Lamb Weston’s Consolidated and Combined Balance Sheets as follows (dollars in millions):

	November 27,		May 29,
	2016		2016
Prepaid expenses and other current assets	$	—	$	2.1
Accrued liabilities	$	0.6	$	0.2

The following table presents Lamb Weston’s derivative assets and liabilities, at November 27, 2016, on a gross basis (dollars in millions):

	Derivative Assets			Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity contracts	Prepaid expenses and other current assets	$	—	Accrued liabilities	$	0.6

The following table presents Lamb Weston’s derivative assets and liabilities, at May 29, 2016, on a gross basis, prior to the setoff of $0.1 million where legal right of setoff existed (dollars in millions):

	Derivative Assets			Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity contracts	Prepaid expenses and other current assets	$	1.5	Accrued liabilities	$	0.2
Foreign exchange contracts	Prepaid expenses and other current assets		0.6	Accrued liabilities		—
		$	2.1		$	0.2

The location and amount of gains (losses) from derivatives in Lamb Weston’s Condensed Combined and Consolidated Statements of Earnings were as follows (dollars in millions):

		Amount of Gain (Loss)
		Recognized on Derivatives in
		Combined Statement of Earnings
	Location in Consolidated	for the Thirteen Weeks Ended
Derivatives Not Designated as Hedging	Statement of Earnings of Gain	November 27,		November 29,
Instruments	(Loss) Recognized on Derivatives	2016		2015
Commodity contracts	Cost of sales	$	(0.5)	$	(1.9)
Foreign exchange contracts	Selling, general and administrative expenses		(0.1)		—
Total loss from derivative instruments not designed as hedging instruments		$	(0.6)	$	(1.9)

		Amount of Gain (Loss)
		Recognized on Derivatives in
		Combined Statement of Earnings
	Location in Consolidated	for the Twenty-Six Weeks Ended
Derivatives Not Designated as Hedging	Statement of Earnings of Gain	November 27,		November 29,
Instruments	(Loss) Recognized on Derivatives	2016		2015
Commodity contracts	Cost of sales	$	(0.1)	$	(5.2)
Foreign exchange contracts	Selling, general and administrative expenses		(0.1)		0.8
Total loss from derivative instruments not designed as hedging instruments		$	(0.2)	$	(4.4)

As of November 27, 2016, Lamb Weston had no open derivative contracts. As of May 29, 2016, Lamb Weston’s open derivative contracts had a notional value of $32.8 million and $13.6 million for purchase and sales contracts, respectively.

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FAIR VALUE MEASUREMENTS

6 Months Ended

Nov. 27, 2016

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

15.   FAIR VALUE MEASUREMENTS

FASB guidance establishes a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The three levels of inputs used to measure fair value are as follows:

Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities,

Level 2—Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, and

Level 3—Unobservable inputs reflecting Lamb Weston’s own assumptions and best estimate of what inputs market participants would use in pricing the asset or liability.

The fair values of Lamb Weston’s Level 2 derivative instruments were determined using valuation models that use market observable inputs including interest rate curves and both forward and spot prices for currencies and commodities. Derivative assets and liabilities included in Level 2 primarily represent commodity and foreign currency option and forward contracts.

The following table presents Lamb Weston’s financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of November 27, 2016 (dollars in millions):  

	As of November 27, 2016
	Level 1		Level 2		Level 3		Total
Assets:
Deferred compensation assets	$	0.7	$	—	$	—	$	0.7
Total assets		0.7		—		—		0.7
Liabilities:
Derivative liabilities		—		0.6		—		0.6
Deferred compensation liabilities		6.8		—		—		6.8
Total liabilities	$	6.8	$	0.6	$	—	$	7.4

The following table presents Lamb Weston’s financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of May 29, 2016 (dollars in millions):

	As of May 29, 2016
	Level 1		Level 2		Level 3		Total
Assets:
Derivative assets	$	1.5	$	0.6	$	—	$	2.1
Deferred compensation assets		0.7		—		—		0.7
Total assets		2.2		0.6		—		2.8
Liabilities:
Derivative liabilities		—		0.2		—		0.2
Deferred compensation liabilities		6.5		—		—		6.5
Total liabilities	$	6.5	$	0.2	$	—	$	6.7

Certain assets and liabilities, including long-lived assets, goodwill, asset retirement obligations, and cost and equity investments are measured at fair value on a non-recurring basis.

At November 27, 2016, we had $1,698.8 million of fixed-rate and $682.0 million of variable-rate long-term debt outstanding. Based on current market rates, the fair value of our fixed-rate debt at November 27, 2016 was estimated to be $1,675.9 million. Any differences between the book value and fair value are due to the difference between the period-end market interest rate and the stated rate of our fixed-rate debt. We estimated the fair value of our fixed-rate debt using quoted market prices (Level 2 inputs) within the fair value hierarchy, that is described above. The fair value of our variable-rate term debt approximates the carrying amount as our cost of borrowing is variable and approximates current market prices.

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BUSINESS SEGMENTS AND RELATED INFORMATION

6 Months Ended

Nov. 27, 2016

BUSINESS SEGMENTS AND RELATED INFORMATION

BUSINESS SEGMENTS AND RELATED INFORMATION

16.    BUSINESS SEGMENTS AND RELATED INFORMATION

We have four operating segments, each of which are reportable segments: Global, Retail, Foodservice, and Other. Our chief operating decision maker receives periodic management reporting under this structure that generally focuses on the nature and scope of the customers’ business, which enables operating decisions, performance assessment, and resource allocation decisions at the segment level. The reportable segments are each managed by a general manager and supported by a cross functional team assigned to support the segment. We measure our segments’ product contribution margin, which is defined as net sales, less cost of sales and advertising and promotion expenses and excludes general corporate expenses, interest, and taxes. See Note 19, Business Segments and Related Information, of the Notes to Combined Financial Statements included in the Form 10 for more information.

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 29,		November 27,		November 29,
(in millions)	2016		2015		2016		2015
Net sales:
Global	$	412.6	$	388.3	$	811.8	$	771.1
Foodservice		250.6		225.2		510.9		471.5
Retail		96.5		91.8		186.1		179.5
Other		31.0		35.0		58.2		66.0
Total net sales		790.7		740.3		1,567.0		1,488.1
Product contribution margin (a):
Global		92.3		78.9		165.9		134.3
Foodservice		80.2		57.8		159.7		118.0
Retail		20.9		15.4		40.5		28.6
Other		(0.4)		2.2		2.8		8.9
Total product contribution margin		193.0		154.3		368.9		289.8
Equity method investment earnings		6.2		7.7		16.8		20.2
Total product contribution margin plus equity method investment earnings		199.2		162.0		385.7		310.0
Other selling, general and administrative expenses (a) (b)		67.5		44.8		118.4		95.7
Interest expense, net		6.8		1.5		8.3		2.8
Income tax expense		33.9		38.7		84.9		71.0
Net income		91.0		77.0		174.1		140.5
Less: Income attributable to noncontrolling interests		3.8		3.7		7.3		5.2
Net income attributable to Lamb Weston Holdings, Inc.	$	87.2	$	73.3	$	166.8	$	135.3

(a) Product contribution margin is defined as net sales, less cost of sales and advertising and promotions expenses. Other selling, general and administrative expenses include all selling, general and administrative expenses other than advertising and promotions expenses.

(b) The thirteen and twenty-six weeks ended November 27, 2016 include $9.0 million and $18.7 million, respectively, of pretax expenses related to the separation of Lamb Weston from Conagra. The expenses related primarily to professional fees.

Assets by Segment

The manufacturing assets of Lamb Weston are shared across all reporting segments. Output from these facilities used by each reporting segment can change from fiscal year to fiscal year. Therefore, it is impracticable to allocate those assets to the reporting segments, as well as disclose total assets by segment.

Other Information

Lamb Weston’s largest customer, McDonald’s Corporation, accounted for approximately 12% of consolidated net sales for both the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively, and approximately 11% of consolidated net sales for both the twenty-six weeks ended November 27, 2016 and November 29, 2015.

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COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS

6 Months Ended

Nov. 27, 2016

COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS

COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS

17.   COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS

We have financial commitments and obligations that arise in the ordinary course of our business. These include long-term debt (discussed in Note 11, Debt and Financing Obligations), lease obligations, purchase commitments for goods and services, and legal proceedings (discussed below).

Guarantees and Indemnifications

We provide guarantees, indemnifications, and other assurances to third parties in the normal course of our business. These include tort indemnifications, environmental assurances, and representations and warranties in commercial agreements. At November 27, 2016, we are not aware of any material liabilities arising from any guarantee, indemnification, or financial assurance we have provided. If we determined such a liability was probable and subject to reasonable determination, we would accrue for it at that time.

In certain limited situations, Lamb Weston will guarantee an obligation of an unconsolidated entity. At the time in which Lamb Weston initially provides such a guarantee, Lamb Weston assesses the risk of financial exposure to Lamb Weston under these agreements. Lamb Weston considers the credit-worthiness of the guaranteed party, the value of any collateral pledged against the related obligation, and any other factors that may mitigate Lamb Weston’s risk. Lamb Weston actively monitors market and entity-specific conditions that may result in a change of Lamb Weston’s assessment of the risk of loss under these agreements.

Lamb Weston is a party to various potato purchase supply agreements with growers, under which they deliver their potato crop from the contracted acres to Lamb Weston during the harvest season, and pursuant to the potato supply agreements, pricing for this inventory is determined after delivery, taking into account crop size and quality, among other factors. Lamb Weston paid $104.6 million and $101.8 million for the thirteen weeks ended November 27, 2016 and November 29, 2015, respectively, and $123.1 million and $118.0 million for the twenty-six weeks ended November 27, 2016 and November 29, 2015, respectively, under the terms of the potato supply agreements. Amounts paid are initially capitalized in inventory and charged to cost of sales as related inventories are produced and subsequently sold. Under the terms of such potato supply agreements, Lamb Weston has guaranteed repayment of short-term bank loans of the potato suppliers, under certain conditions. At November 27, 2016, the amount of supplier loans Lamb Weston has effectively guaranteed was $27.8 million. Lamb Weston has not established a liability for these guarantees, as Lamb Weston has determined that the likelihood of Lamb Weston’s required performance under the guarantees is remote. Under certain other potato supply agreements, Lamb Weston makes advances to growers prior to the delivery of potatoes. There were no advances at November 27, 2016 and $15.7million at May 29, 2016.

Federal income tax credits were generated related to Lamb Weston’s sweet potato production facility in Delhi, Louisiana. Third parties invested in certain of these income tax credits. Conagra has guaranteed these third parties the face value of these income tax credits over their statutory lives, through fiscal 2017, in the event that the income tax credits are recaptured or reduced. The face value of the income tax credits was $26.7 million at November 27, 2016. Lamb Weston believes the likelihood of the recapture or reduction of the income tax credits is remote, and therefore Lamb Weston has not established a liability in connection with this guarantee.

Lamb-Weston/Meijer, a joint venture (see Note 8, Investments in Joint Ventures for further information), headquartered in the Netherlands, manufactures and sells frozen potato products principally in Europe. Lamb Weston and Lamb Weston’s partner are jointly and severally liable for all legal liabilities of Lamb-Weston/Meijer. As of November 27, 2016 and May 29, 2016, the total liabilities of Lamb-Weston/Meijer were $203.1 million and $203.7 million, respectively. Lamb-Weston/Meijer is well capitalized, with partners’ equity of $266.4 million and $284.5 million as of November 27, 2016 and May 29, 2016, respectively. Lamb Weston has not established a liability on its balance sheets for the obligations of Lamb-Weston/Meijer, as Lamb Weston has determined the likelihood of any required payment by Lamb Weston to settle such liabilities of Lamb-Weston/Meijer is remote.

After taking into account liabilities recognized for all of the foregoing matters, management believes the ultimate resolution of such matters should not have a material adverse effect on Lamb Weston’s financial condition, results of operations, or cash flows. It is reasonably possible that a change in one of the estimates of the foregoing matters may occur in the future.

Legal proceedings

We are also a party to other legal actions arising in the ordinary course of our business. These legal actions include commercial liability claims, premises liability claims, and employment-related claims, among others. As of the date of this filing, we do not believe it is reasonably possible that any of the legal actions against us will, either individually or in the aggregate, have a material adverse effect on our financial condition, results of operations, or cash flows. Costs of legal services associated with the foregoing matters are recognized in earnings as services are provided.

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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Nov. 27, 2016

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation

The unaudited quarterly Condensed Combined and Consolidated Financial Statements present the financial results of Lamb Weston for the thirteen and twenty-six week periods ended November 27, 2016 and November 29, 2015, and have been prepared in accordance with generally accepted accounting principles in the United States of America. The financial statements are unaudited but include all adjustments (consisting only of normal recurring adjustments) that management considers necessary for a fair presentation of such financial statements. The preparation of financial statements involves the use of estimates and accruals. Actual results may vary from those estimates. Results for interim periods should not be considered indicative of results for a full year. The financial statements for periods prior to the Separation may not reflect what our results of operations would have been had we operated as a separate stand-alone company and may not be indicative of our future results of operations. These quarterly financial statements and notes should be read together with the consolidated financial statements and notes filed with the Securities and Exchange Commission (“SEC”) in our registration statement on Form 10, as amended, on October 17, 2016 (the “Form 10”).    

New and Recently Issued Accounting Standards

New and Recently Issued Accounting Standards

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. It is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods, with early adoption permitted. The Company does not expect this ASU to have a material impact on the Company's financial condition, results of operations, or cash flows.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplified the accounting for income taxes, among other changes, related to stock based compensation. Conagra (and therefore Lamb Weston) early adopted ASU 2016-09 in the first quarter of fiscal 2017 with an effective date of May 30, 2016. The adoption of ASU 2016-09 did not have a material impact on our financial statements.

In February 2016, the FASB issued its final lease accounting standard, FASB Accounting Standard Codification (“ASC”) Topic 842, Leases, which requires lessees to reflect most leases on their balance sheet as assets and obligations. The effective date for the standard is for fiscal years beginning after December 15, 2018. Early adoption is permitted. We are evaluating the effect that ASC 842 will have on our financial statements and related disclosures. The standard is to be applied under the modified retrospective method, with elective reliefs, which requires application of the new guidance for all periods presented.

In November 2015, the FASB issued ASU 2015-17 Balance Sheet Classification of Deferred Taxes. This ASU requires entities to present all deferred tax assets and liabilities as noncurrent. Conagra (and therefore Lamb Weston) early adopted ASU 2015-17 effective May 30, 2016, and we have reflected our deferred tax assets and liabilities as noncurrent in our Condensed Combined and Consolidated Balance Sheets.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which addresses the measurement of inventory if its value declines or is impaired. The guidance on determining the cost of inventory is not amended. The effective date for the standard is for fiscal years beginning after December 15, 2016. Early adoption is permitted. We do not expect this ASU to have a material impact on our financial statements. The standard will be applied prospectively.

In April 2015, the FASB issued ASU 2015-03 (Topic 835): Simplifying the Presentation of Debt Issuance Costs. This ASU conforms the presentation of debt issuance costs with that required for debt discounts under U.S. Generally Accepted Accounting Principles (“GAAP”). Under the ASU, debt issuance costs are presented in the balance sheet as a direct deduction from the related liability rather than as an asset. We applied this guidance retrospectively, as required. No reclassifications of balances at May 29, 2016, were necessary with the adoption of ASU 2015-03. See Note 11, Debt and Financing Obligations for more information.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which amends the guidance for revenue recognition to replace numerous industry specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The ASU also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. In August 2015, the FASB deferred the effective date of the new revenue recognition standard by one year so that it is now effective for us beginning in fiscal year 2019. Early adoption in fiscal year 2018 is permitted. Lamb Weston is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The standard permits the use of either the retrospective or cumulative effect transition method.

There were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.

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EARNINGS PER SHARE (Tables)

6 Months Ended

Nov. 27, 2016

EARNINGS PER SHARE

Schedule of computation of basic and diluted earnings per common

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 29,		November 27,		November 29,
	2016		2015		2016		2015
Numerator:
Net income attributable to Lamb Weston Holdings, Inc.	$	87.2	$	73.3	$	166.8	$	135.3
Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated		0.5		0.4		0.9		0.9
Net income available to Lamb Weston common stockholders	$	86.7	$	72.9	$	165.9	$	134.4
Denominator (a):
Basic weighted average common shares outstanding		146.0		146.0		146.0		146.0
Add: Dilutive effect of stock options, restricted stock units, and other dilutive securities (b)		0.3		—		0.3		—
Diluted weighted average common shares outstanding		146.3		146.0		146.3		146.0
Earnings per share
Basic	$	0.59	$	0.50	$	1.14	$	0.92
Diluted	$	0.59	$	0.50	$	1.13	$	0.92

(a) Earnings per share was calculated based on 146 million shares of Lamb Weston common shares that were distributed to Conagra shareholders on November 9, 2016. 

Diluted earnings per share is calculated using net income available to common shareholders divided by diluted weighted-average shares of common shares outstanding during each period, which includes unvested share-based awards that are dilutive. For the thirteen and twenty-six weeks ended November 27, 2016, 0.3 million share-based awards were excluded from the computation of diluted EPS because they would be antidilutive. Lamb Weston had no share-based awards outstanding prior to the Separation.

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INVENTORIES (Tables)

6 Months Ended

Nov. 27, 2016

INVENTORIES

Schedule of major classes of inventories

	November 27,		May 29,
	2016		2016
Raw materials and packaging	$	199.5	$	86.2
Finished goods		379.0		384.3
Supplies and other		37.4		28.4
Inventories	$	615.9	$	498.9

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PROPERTY, PLANT AND EQUIPMENT (Tables)

6 Months Ended

Nov. 27, 2016

PROPERTY, PLANT AND EQUIPMENT

Schedule of components of property, plant and equipment

	November 27,		May 29,
	2016		2016
Land and land improvements	$	138.9	$	136.5
Buildings, machinery and equipment		1,815.0		1,776.1
Furniture, fixtures, office equipment and other		62.3		53.1
Construction in progress		155.5		68.5
Property, plant and equipment, at cost		2,171.7		2,034.2
Less accumulated depreciation		(1,037.4)		(991.1)
Property, plant and equipment, net	$	1,134.3	$	1,043.1

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GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS (Tables)

6 Months Ended

Nov. 27, 2016

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

Schedule of changes in the carrying amount of goodwill

	Global		Foodservice		Retail		Other		Total
Balance at May 29, 2016	$	75.7	$	42.8	$	10.9	$	4.5	$	133.9
Foreign currency translation adjustment		(2.2)		—		—		—		(2.2)
Balance at November 27, 2016	$	73.5	$	42.8	$	10.9	$	4.5	$	131.7

Schedule of other identifiable intangible assets

	November 27, 2016					May 29, 2016
	Weighted					Weighted
	Average	Gross				Average	Gross
	Useful Life	Carrying		Accumulated		Useful Life	Carrying		Accumulated
	(in years)	Amount		Amortization		(in years)	Amount		Amortization
Non-amortizing intangible assets (a)	n/a	$	18.0	$	—	n/a	$	18.0	$	—
Amortizing intangible assets (b)	14		35.1		14.8	14		35.1		13.5
		$	53.1	$	14.8		$	53.1	$	13.5

(a) Non-amortizing intangible assets are comprised of brands and trademarks.

(b) Amortizing intangible assets are principally composed of customer relationships, licensing arrangements, and intellectual property. During the thirteen weeks ended November 27, 2016 and November 29, 2015, amortization expense was $0.5 million and $0.7 million, respectively. During the twenty-six weeks ended November 27, 2016 and November 29, 2015, amortization expense was $1.3 million and $1.1 million, respectively.

Schedule of estimated intangible asset amortization expense

	Amortization
2017 remainder	$	1.0
2018		1.9
2019		1.8
2020		1.8
2021		1.8
2022		1.8
Thereafter		10.2
	$	20.3

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INVESTMENTS IN JOINT VENTURES (Tables)

6 Months Ended

Nov. 27, 2016

INVESTMENT IN JOINT VENTURES

Schedule of condensed combined and consolidated balance sheets

Lamb Weston BSW is a variable interest entity and we have determined that we are the primary beneficiary of the entity. We consolidate the financial statements of Lamb Weston BSW. The amounts presented for Lamb Weston BSW in the table below exclude intercompany balances eliminated in consolidation and include the non-controlling interest at redemption value as reported in the Condensed Combined and Consolidated Balance Sheets (dollars in millions):  

	November 27,		May 29,
	2016		2016
Cash and equivalents	$	12.0	$	4.3
Receivables, less allowance for doubtful accounts (a)		0.1		0.1
Inventories		1.9		1.2
Prepaid expenses and other current assets		0.1		0.4
Property, plant and equipment, net		50.4		52.2
Goodwill		18.8		18.8
Intangible assets, net		4.8		5.2
Total assets	$	88.1	$	82.2
Notes payable	$	—	$	1.0
Current portion of long-term debt		1.2		0.5
Accounts payable		10.1		10.9
Accrued liabilities		2.5		1.7
Long-term debt, excluding current portion		28.8		29.5
Total liabilities	$	42.6	$	43.6
Redeemable noncontrolling interest (b)	$	50.0	$	47.4

(a) As of November 27, 2016 and May 29, 2016, affiliate receivables of $22.2 million and $25.8 million are not included above as they are eliminated in consolidation.

Represents the amount that our joint venture partner, Ochoa, had the right to put its equity interest to Lamb Weston on November 27, 2016 and May 29, 2016.

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PENSION AND OTHER POST-RETIREMENT BENEFITS (Tables)

6 Months Ended

Nov. 27, 2016

PENSION AND OTHER POST-RETIREMENT BENEFITS

Schedule of components of net periodic benefit cost for our pension and postretirement benefit plans

			Postretirement
	Pension Plan		Plans
Service cost	$	0.4	$	—
Interest cost		—		—
Expected return on plan assets		—		—
Net amortization of unrecognized amounts		—		—
Prior service cost		—		—
Actuarial loss		—		—
Net periodic benefit cost	$	0.4	$	—

Schedule of Pension costs incurred included in the Condensed Combined and Consolidated statements of earnings

Allocated pension costs (benefits) incurred by Conagra prior to November 9, 2016 and pension costs recognized after the Separation Date are included in the Condensed Combined and Consolidated Statements of Earnings as follows (dollars in millions):

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 29,		November 27,		November 29,
	2016		2015		2016		2015
Cost of sales (a)	$	2.6	$	3.0	$	5.5	$	6.0
Selling, general and administrative expenses (a)		(2.8)		(1.4)		(5.5)		(2.8)
Total	$	(0.2)	$	1.6	$	—	$	3.2

(a) Pension, service and interest costs are allocated to operations as reflected in cost of sales above. Expected returns on pension assets are not allocated to operations and are reflected in “Selling, general and administrative expenses” in the Condensed Combined and Consolidated Statements of Earnings.

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ACCRUED LIABILITIES (Tables)

6 Months Ended

Nov. 27, 2016

ACCRUED LIABILITIES

Schedule of components of accrued liabilities

	November 27,		May 29,
	2016		2016
Compensation and benefits	$	55.3	$	63.3
Accrued trade promotions		41.7		35.6
Franchise, property, and sales and use taxes		13.5		12.0
Accrued interest		6.5		0.6
Income taxes payable		7.5		—
Other		22.1		21.7
Accrued liabilities	$	146.6	$	133.2

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DEBT AND FINANCING OBLIGATION (Tables)

6 Months Ended

Nov. 27, 2016

DEBT AND FINANCING OBLIGATION

Schedule of debt, including financing obligations

	November 27,		May 29,
	2016		2016
Debt:
Term loan facility, due 2021	$	675.0	$	—
4.625% senior notes, due 2024		833.0		—
4.875% senior notes, due 2026		833.0		—
6.25% installment notes, due 2017		9.8		10.1
LIBOR plus a margin (1.90% to 2.30%) and 4.34%, installment notes due on various dates through June 2031		30.0		30.0
		2,380.8		40.1
Financing obligations:
4.35% lease financing obligation due May 2030		68.9		69.7
2.00% to 3.32% lease financing obligations due on various dates through 2040		8.3		8.3
		77.2		78.0
Long-term debt, including current portion		2,458.0		118.1
Debt issuance costs		(37.0)		—
Current portion of long-term debt		(39.0)		(13.5)
Long-term debt, excluding current portion	$	2,382.0	$	104.6

Schedule of aggregate minimum principal maturities of long term debt

	Financing
	Obligations (a)		Debt		Total
2017 remainder	$	3.8	$	18.7	$	22.5
2018		5.6		35.3		40.9
2019		5.4		35.4		40.8
2020		5.0		35.4		40.4
2021		4.9		35.5		40.4
2022		5.2		533.4		538.6
Thereafter		47.3		1,687.1		1,734.4
	$	77.2	$	2,380.8	$	2,458.0

Payments for our lease financing obligations for the next five fiscal years and thereafter include $35.5 million of payments representing interest.

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SHARE-BASED PAYMENTS (Tables)

6 Months Ended

Nov. 27, 2016

SHARE-BASED PAYMENTS

Schedule of stock option, restricted stock units and performance-based restricted stock unit activity

			Weighted-		Weighted-
			Average		Average
			Exercise		Remaining		Aggregate
			Price		Contractual		Intrinsic
	Shares		(per share)		Term (Years)		Value (a)
Outstanding at May 29, 2016		—		—
Converted on November 9, 2016		607,420	$	23.60
Granted		—		—
Exercised		—		—
Forfeited/cancelled		—		—
Outstanding at November 27, 2016		607,420	$	23.60		7.31	$	5.5
Exercisable at November 27, 2016		333,143	$	20.52		6.02	$	4.0

(a) The aggregate intrinsic values represent the total pre-tax intrinsic value (the difference between our closing stock price on the last trading day of our fiscal 2017 second quarter, or November 25, 2016, and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options at the end of the quarter. The amount changes based on the fair market value of our stock.

The following table summarizes restricted stock unit and performance-based restricted stock unit activity for the twenty-six weeks ended November 27, 2016:

	Stock-Settled				Cash-Settled				Performance Units
			Weighted-				Weighted-				Weighted-
			Average				Average				Average
			Grant-				Grant-				Grant-
			Date Fair				Date Fair				Date Fair
	Shares		Value		Shares		Value		Shares		Value
Outstanding at May 29, 2016		—		—		—		—		—		—
Converted on November 9, 2016		449,716	$	25.05		469,837	$	25.33		56,050	$	25.84
Granted		—		—		—		—		—		—
Vested		—		—		—		—		—		—
Forfeited/expired/cancelled		—		—		—		—		—		—
Outstanding at November 27, 2016		449,716	$	25.05		469,837	$	25.33		56,050	$	25.84

Schedule of compensation expenses for share-based awards recognized, net of forfeitures

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 29,		November 27,		November 29,
	2016		2015		2016		2015
Stock options	$	0.1	$	0.1	$	0.3	$	0.2
Stock-settled restricted stock units		0.9		0.6		1.6		1.2
Performance-based restricted stock units		(0.3)		—		—		—
Cash-settled restricted stock units (a)		1.8		1.0		3.3		2.9
Total compensation expense		2.5		1.7		5.2		4.3
Income tax benefit		(0.9)		(0.6)		(1.9)		(1.6)
Total compensation expense, net of tax benefit	$	1.6	$	1.1	$	3.3	$	2.7

(a) All cash-settled restricted stock units are marked-to-market and presented within “Accrued liabilities” and “Other noncurrent liabilities” in our Condensed Combined and Consolidated Balance Sheets.

Schedule of total unrecognized compensation expense, net of estimated forfeitures, related to share-based payments

			Remaining
			Weighted
	Unrecognized		Average
	Compensation		Recognition
	Expense		Period (in years)
Stock options	$	0.8		1.5
Cash-settled restricted stock units		7.8		2.1
Stock-settled restricted stock units		7.3		2.1
Performance units		0.8		2.0
Total unrecognized share-based compensation expense	$	16.7		2.1

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Nov. 27, 2016

DERIVATIVE FINANCIAL INSTRUMENTS

Schedule of derivative assets and liabilities

	November 27,		May 29,
	2016		2016
Prepaid expenses and other current assets	$	—	$	2.1
Accrued liabilities	$	0.6	$	0.2

Schedule of derivative assets and liabilities - Gross basis

The following table presents Lamb Weston’s derivative assets and liabilities, at November 27, 2016, on a gross basis (dollars in millions):

	Derivative Assets			Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity contracts	Prepaid expenses and other current assets	$	—	Accrued liabilities	$	0.6

The following table presents Lamb Weston’s derivative assets and liabilities, at May 29, 2016, on a gross basis, prior to the setoff of $0.1 million where legal right of setoff existed (dollars in millions):

	Derivative Assets			Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity contracts	Prepaid expenses and other current assets	$	1.5	Accrued liabilities	$	0.2
Foreign exchange contracts	Prepaid expenses and other current assets		0.6	Accrued liabilities		—
		$	2.1		$	0.2

Schedule of location and amount of gains (losses) from derivatives not designated as hedging instruments

		Amount of Gain (Loss)
		Recognized on Derivatives in
		Combined Statement of Earnings
	Location in Consolidated	for the Thirteen Weeks Ended
Derivatives Not Designated as Hedging	Statement of Earnings of Gain	November 27,		November 29,
Instruments	(Loss) Recognized on Derivatives	2016		2015
Commodity contracts	Cost of sales	$	(0.5)	$	(1.9)
Foreign exchange contracts	Selling, general and administrative expenses		(0.1)		—
Total loss from derivative instruments not designed as hedging instruments		$	(0.6)	$	(1.9)

		Amount of Gain (Loss)
		Recognized on Derivatives in
		Combined Statement of Earnings
	Location in Consolidated	for the Twenty-Six Weeks Ended
Derivatives Not Designated as Hedging	Statement of Earnings of Gain	November 27,		November 29,
Instruments	(Loss) Recognized on Derivatives	2016		2015
Commodity contracts	Cost of sales	$	(0.1)	$	(5.2)
Foreign exchange contracts	Selling, general and administrative expenses		(0.1)		0.8
Total loss from derivative instruments not designed as hedging instruments		$	(0.2)	$	(4.4)

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Nov. 27, 2016

FAIR VALUE MEASUREMENTS

Schedule of financial assets and liabilities measured at fair value on recurring basis

	As of November 27, 2016
	Level 1		Level 2		Level 3		Total
Assets:
Deferred compensation assets	$	0.7	$	—	$	—	$	0.7
Total assets		0.7		—		—		0.7
Liabilities:
Derivative liabilities		—		0.6		—		0.6
Deferred compensation liabilities		6.8		—		—		6.8
Total liabilities	$	6.8	$	0.6	$	—	$	7.4

The following table presents Lamb Weston’s financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of May 29, 2016 (dollars in millions):

	As of May 29, 2016
	Level 1		Level 2		Level 3		Total
Assets:
Derivative assets	$	1.5	$	0.6	$	—	$	2.1
Deferred compensation assets		0.7		—		—		0.7
Total assets		2.2		0.6		—		2.8
Liabilities:
Derivative liabilities		—		0.2		—		0.2
Deferred compensation liabilities		6.5		—		—		6.5
Total liabilities	$	6.5	$	0.2	$	—	$	6.7

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BUSINESS SEGMENTS AND RELATED INFORMATION (Tables)

6 Months Ended

Nov. 27, 2016

BUSINESS SEGMENTS AND RELATED INFORMATION

Schedule of segment information

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 29,		November 27,		November 29,
(in millions)	2016		2015		2016		2015
Net sales:
Global	$	412.6	$	388.3	$	811.8	$	771.1
Foodservice		250.6		225.2		510.9		471.5
Retail		96.5		91.8		186.1		179.5
Other		31.0		35.0		58.2		66.0
Total net sales		790.7		740.3		1,567.0		1,488.1
Product contribution margin (a):
Global		92.3		78.9		165.9		134.3
Foodservice		80.2		57.8		159.7		118.0
Retail		20.9		15.4		40.5		28.6
Other		(0.4)		2.2		2.8		8.9
Total product contribution margin		193.0		154.3		368.9		289.8
Equity method investment earnings		6.2		7.7		16.8		20.2
Total product contribution margin plus equity method investment earnings		199.2		162.0		385.7		310.0
Other selling, general and administrative expenses (a) (b)		67.5		44.8		118.4		95.7
Interest expense, net		6.8		1.5		8.3		2.8
Income tax expense		33.9		38.7		84.9		71.0
Net income		91.0		77.0		174.1		140.5
Less: Income attributable to noncontrolling interests		3.8		3.7		7.3		5.2
Net income attributable to Lamb Weston Holdings, Inc.	$	87.2	$	73.3	$	166.8	$	135.3

(a) Product contribution margin is defined as net sales, less cost of sales and advertising and promotions expenses. Other selling, general and administrative expenses include all selling, general and administrative expenses other than advertising and promotions expenses.

(b) The thirteen and twenty-six weeks ended November 27, 2016 include $9.0 million and $18.7 million, respectively, of pretax expenses related to the separation of Lamb Weston from Conagra. The expenses related primarily to professional fees.

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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) shares in Millions		6 Months Ended
	Nov. 09, 2016 shares	Nov. 27, 2016 segment
Number of reportable segments | segment		4
Conagra
Ownership interest (as a percent)		100.00%
Common stock held on the record date | shares	146

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EARNINGS PER SHARE - Computation of basic and diluted earnings per common share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015
Numerator:
Net income attributable to Lamb Weston Holdings, Inc	$ 87.2	$ 73.3	$ 166.8	$ 135.3
Less: Increase in redemption value of noncontrolling interests in excess of earnings allocated	0.5	0.4	0.9	0.9
Net income available to Lamb Weston common stockholders	$ 86.7	$ 72.9	$ 165.9	$ 134.4
Denominator:
Basic weighted average common shares outstanding	146.0	146.0	146.0	146.0
Add: Dilutive effect of stock options, restricted stock units, and other dilutive securities	0.3		0.3
Diluted weighted average common shares outstanding	146.3	146.0	146.3	146.0
Earning per share
Basic	$ 0.59	$ 0.50	$ 1.14	$ 0.92
Diluted	$ 0.59	$ 0.50	$ 1.13	$ 0.92

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EARNINGS PER SHARE - Additional information (Details) - shares		6 Months Ended
	Nov. 09, 2016	Nov. 27, 2016
Shares that were excluded from the computation		300,000
Share-based awards outstanding prior to the separation	0
Conagra
Common stock held on the record date	146,000,000

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RELATED PARTY TRANSACTIONS (Details) - Conagra $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Nov. 27, 2016 USD ($)	Nov. 29, 2015 USD ($)	Nov. 27, 2016 USD ($)	Nov. 29, 2015 USD ($)	May 29, 2016 USD ($) item
Related Party Transaction [Line Items]
Interest expense	$ 6.8	$ 1.5	$ 8.3	$ 2.8
Net sales	4.0	7.5	8.4	15.5
Cost of sales	3.4	6.3	7.0	13.0
Purchases	2.6	5.8	7.9	10.1
Term of agreement					20 years
Number of renewal term | item					3
Renewal term					5 years
Minimum monthly payment					$ 1.5
Transition services agreement
Related Party Transaction [Line Items]
Related party transaction expenses	0.4		0.4
Allocations based upon certain metrics
Related Party Transaction [Line Items]
Selling, general and administrative costs	3.4	11.5	7.7	23.3
Allocations based upon indirect corporate costs
Related Party Transaction [Line Items]
Selling, general and administrative costs	$ 8.4	$ 10.7	$ 17.3	$ 24.4

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INCOME TAXES (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015
Income tax expense	$ 33.9	$ 38.7	$ 84.9	$ 71.0
Effective tax rate	27.00%	33.00%	33.00%	34.00%
Income taxes paid, net of refunds			$ 90.6	$ 61.8
Conagra
Deferred tax liabilities	$ 75.0		$ 75.0

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INVENTORIES (Details) - USD ($) $ in Millions	Nov. 27, 2016	May 29, 2016
Major classes of inventories
Raw materials and packaging	$ 199.5	$ 86.2
Finished goods	379.0	384.3
Supplies and other	37.4	28.4
Total	$ 615.9	$ 498.9

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PROPERTY, PLANT, AND EQUIPMENT (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015	May 29, 2016
Property, Plant and Equipment [Line Items]
Property, plant, and equipment, at cost	$ 2,171.7		$ 2,171.7		$ 2,034.2
Less accumulated depreciation	(1,037.4)		(1,037.4)		(991.1)
Property, plant, and equipment, net	1,134.3		1,134.3		1,043.1
Depreciation	25.8	$ 23.3	50.6	$ 46.4
Accounts payable
Property, Plant and Equipment [Line Items]
Purchases of property, plant, and equipment included in accounts payable			32.0		15.5
Land and land improvements
Property, Plant and Equipment [Line Items]
Property, plant, and equipment, at cost	138.9		138.9		136.5
Buildings, machinery, and equipment
Property, Plant and Equipment [Line Items]
Property, plant, and equipment, at cost	1,815.0		1,815.0		1,776.1
Furniture, fixtures, office equipment and other
Property, Plant and Equipment [Line Items]
Property, plant, and equipment, at cost	62.3		62.3		53.1
Construction in progress
Property, Plant and Equipment [Line Items]
Property, plant, and equipment, at cost	$ 155.5		$ 155.5		$ 68.5

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GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Carrying amount of goodwill (Details) $ in Millions	6 Months Ended
	Nov. 27, 2016 USD ($)
Goodwill [Roll Forward]
Balance at the beginning	$ 133.9
Foreign currency translation adjustment	(2.2)
Balance at the end	131.7
Global
Goodwill [Roll Forward]
Balance at the beginning	75.7
Foreign currency translation adjustment	(2.2)
Balance at the end	73.5
Foodservice
Goodwill [Roll Forward]
Balance at the beginning	42.8
Balance at the end	42.8
Retail
Goodwill [Roll Forward]
Balance at the beginning	10.9
Balance at the end	10.9
Other.
Goodwill [Roll Forward]
Balance at the beginning	4.5
Balance at the end	$ 4.5

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GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Other identifiable intangible assets (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015	May 29, 2016
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS
Weighted Average Useful Life, amortizing intangible assets (in years)			14 years		14 years
Gross Carrying Amount, amortizing intangible assets	$ 35.1		$ 35.1		$ 35.1
Accumulated Amortization, amortizing intangible assets	14.8		14.8		13.5
Gross Carrying Amount, non-amortizing intangible assets	18.0		18.0		18.0
Total intangible assets, excluding goodwill	53.1		53.1		$ 53.1
Amortization expense	$ 0.5	$ 0.7	$ 1.3	$ 1.1

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GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Estimated intangible assets amortization expense (Details) - USD ($) $ in Millions	Nov. 27, 2016	May 29, 2016
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Intangible assets, net	$ 38.3	$ 39.6
Estimated intangible asset amortization expense
2017 remainder	1.0
2018	1.9
2019	1.8
2020	1.8
2021	1.8
2022	1.8
Thereafter	10.2
Total	$ 20.3

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INVESTMENT IN JOINT VENTURES - Variable Interest Entity (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015	May 29, 2016	May 31, 2015
Condensed Combined and Consolidated Balance Sheets
Cash and equivalents	$ 69.4	$ 23.9	$ 69.4	$ 23.9	$ 36.4	$ 30.6
Inventories	615.9		615.9		498.9
Prepaid expenses and other current assets	18.5		18.5		58.2
Property, plant and equipment, net	1,134.3		1,134.3		1,043.1
Goodwill	131.7		131.7		133.9
Intangible assets, net	38.3		38.3		39.6
Notes payable	25.2		25.2		24.9
Current portion of long-term debt	39.0		39.0		13.5
Accounts payable	314.3		314.3		238.0
Long-term debt, excluding current portion	2,382.0		2,382.0		104.6
Redeemable noncontrolling interest (b)	50.0		$ 50.0		47.4
Lamb Weston BSW
Schedule of Equity Method Investments [Line Items]
Ownership interest (as a percent)			49.99%
Purchases	12.5	11.4	$ 36.6	27.8
Condensed Combined and Consolidated Balance Sheets
Cash and equivalents	12.0		12.0		4.3
Receivables, less allowance for doubtful accounts (a)	0.1		0.1		0.1
Inventories	1.9		1.9		1.2
Prepaid expenses and other current assets	0.1		0.1		0.4
Property, plant and equipment, net	50.4		50.4		52.2
Goodwill	18.8		18.8		18.8
Intangible assets, net	4.8		4.8		5.2
Total assets	88.1		88.1		82.2
Notes payable					1.0
Current portion of long-term debt	1.2		1.2		0.5
Accounts payable	10.1		10.1		10.9
Accrued liabilities	2.5		2.5		1.7
Long-term debt, excluding current portion	28.8		28.8		29.5
Total liabilities	42.6		42.6		43.6
Redeemable noncontrolling interest (b)	50.0		50.0		$ 47.4
Lamb Weston BSW | Eliminated in consolidation
Condensed Combined and Consolidated Balance Sheets
Receivables, less allowance for doubtful accounts (a)	$ 22.2	$ 25.8	$ 22.2	$ 25.8
Lamb Weston RDO
Schedule of Equity Method Investments [Line Items]
Ownership interest (as a percent)			50.00%

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INVESTMENT IN JOINT VENTURES - Variable Interests Entity Not Consolidated (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015	May 29, 2016
Variable Interest Entity [Line Items]
Equity method investments	$ 150.8		$ 150.8		$ 155.2
Stockholders' equity	(758.6)		$ (758.6)		1,400.6
Lamb Weston BSW
Variable Interest Entity [Line Items]
Ownership interest (as a percent)			49.99%
Lamb Weston RDO
Variable Interest Entity [Line Items]
Ownership interest (as a percent)			50.00%
Equity method investments	15.8		$ 15.8		16.9
Term borrowings from banks	39.9		39.9		16.9
Selling, general and administrative expense | Lamb Weston RDO
Variable Interest Entity [Line Items]
Fees received	3.4	$ 3.1	6.9	$ 6.2
Lamb Weston RDO
Variable Interest Entity [Line Items]
Stockholders' equity	$ 32.1		$ 32.1		$ 33.9

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INVESTMENT IN JOINT VENTURES - Other Investments and Transactions with Ventures (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015	May 29, 2016
Schedule of Equity Method Investments [Line Items]
Carrying value of equity method investments	$ 150.8		$ 150.8		$ 155.2
Dividends received from equity method investments			13.9	$ 7.8
Lamb Weston RDO and Lamb Weston Meijer
Schedule of Equity Method Investments [Line Items]
Carrying value of equity method investments	150.8		150.8		$ 155.2
Sales	7.2	$ 3.6	3.4	3.0
Purchases	14.7	6.7	$ 7.3	$ 5.5
Dividends received from equity method investments	$ 5.6	$ 4.7
Lamb Weston/Meijer
Schedule of Equity Method Investments [Line Items]
Ownership interest (as a percent)	50.00%		50.00%

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PENSION AND OTHER POST-RETIREMENT BENEFITS (Details) - Pension Plan $ in Millions	3 Months Ended
	Nov. 27, 2016 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Pension liabilities	$ 7.4
Components of net periodic benefit cost for our pension and postretirement benefit plans
Service cost	0.4
Net periodic benefit cost	$ 0.4

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PENSION AND OTHER POST-RETIREMENT BENEFITS - Condensed Combined and Consolidated statements of earnings (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015
Defined Benefit Plan Disclosure [Line Items]
Pension cost incurred	$ (0.2)	$ 1.6		$ 3.2
Cost of sales
Defined Benefit Plan Disclosure [Line Items]
Pension cost incurred	2.6	3.0	$ 5.5	6.0
Selling, general and administrative expense
Defined Benefit Plan Disclosure [Line Items]
Pension cost incurred	$ (2.8)	$ (1.4)	$ (5.5)	$ (2.8)

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ACCRUED LIABILITIES (Details) - USD ($) $ in Millions	Nov. 27, 2016	May 29, 2016
ACCRUED LIABILITIES
Compensation and benefits	$ 55.3	$ 63.3
Accrued trade promotions	41.7	35.6
Franchise, property, and sales and use taxes	13.5	12.0
Accrued interest	6.5	0.6
Income taxes payable	7.5
Other	22.1	21.7
Total accrued liabilities	$ 146.6	$ 133.2

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DEBT AND FINACING OBLIGATION - Debt ,including financing obligations (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Nov. 27, 2016	May 29, 2016	Nov. 30, 2016
Debt Instrument [Line Items]
Debt:	$ 2,380.8	$ 40.1
Financing obligations:	77.2	78.0
Long-term debt, including current portion	2,458.0	118.1
Debt issuance costs	(37.0)		$ (37.3)
Current portion of long-term debt	(39.0)	(13.5)
Long-term debt, excluding current portion	2,382.0	104.6
6.25% instalment notes, due 2017
Debt Instrument [Line Items]
Debt:	$ 9.8	$ 10.1
Interest rate (as a percent)	6.25%	6.25%
4.34%, installment notes due 2031
Debt Instrument [Line Items]
Debt:	$ 30.0	$ 30.0
4.34%, installment notes due 2031 | LIBOR
Debt Instrument [Line Items]
Interest rate (as a percent)	4.34%	4.34%
4.34%, installment notes due 2031 | LIBOR | Minimum
Debt Instrument [Line Items]
Variable interest rate (as a percent)	(1.90%)	(1.90%)
4.34%, installment notes due 2031 | LIBOR | Maximum
Debt Instrument [Line Items]
Variable interest rate (as a percent)	2.30%	2.30%
4.35% lease financing obligation due May 2030
Debt Instrument [Line Items]
Financing obligations:	$ 68.9	$ 69.7
Interest rate (as a percent)	4.35%	4.35%
2.00% to 3.32% lease financing obligations due on various dates through 2040
Debt Instrument [Line Items]
Financing obligations:	$ 8.3	$ 8.3
2.00% to 3.32% lease financing obligations due on various dates through 2040 | Minimum
Debt Instrument [Line Items]
Interest rate (as a percent)	2.00%	2.00%
2.00% to 3.32% lease financing obligations due on various dates through 2040 | Maximum
Debt Instrument [Line Items]
Interest rate (as a percent)	3.32%	3.32%
Senior notes | 4.625% senior notes, due 2024
Debt Instrument [Line Items]
Debt:	$ 833.0
Interest rate (as a percent)	4.625%	4.625%
Senior notes | 4.875% senior notes, due 2026
Debt Instrument [Line Items]
Debt:	$ 833.0
Interest rate (as a percent)	4.875%	4.875%
Term loan facility, due 2021
Debt Instrument [Line Items]
Debt:	$ 675.0

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DEBT AND FINANCING OBLIGATIONS - Credit facilities (Details) $ in Millions			1 Months Ended	6 Months Ended
	Aug. 25, 2019	Nov. 30, 2016 USD ($)	Nov. 30, 2016 USD ($)	Nov. 27, 2016 USD ($)	May 29, 2016
Debt Instrument [Line Items]
Face amount		$ 2,341.0	$ 2,341.0
Federal Fund Rate
Debt Instrument [Line Items]
Variable interest rate (as a percent)				0.50%
One month Eurocurrency Rate
Debt Instrument [Line Items]
Variable interest rate (as a percent)				1.00%
Conagra
Debt Instrument [Line Items]
Cash payment to former parent			823.5
Senior notes
Debt Instrument [Line Items]
Face amount		1,666.0	1,666.0
Proceeds from senior notes		1,666.0
Percentage of principal amount redeemed				101.00%
Senior notes | Prior to November 1, 2021
Debt Instrument [Line Items]
Percentage of principal amount redeemed				100.00%
Senior notes | Conagra
Debt Instrument [Line Items]
Related party noncash financing activity		1,542.9
Proceeds from senior notes, remaining amount			123.1
Senior notes | 4.625% senior notes, due 2024
Debt Instrument [Line Items]
Debt term (in years)				8 years
Interest rate (as a percent)				4.625%	4.625%
Senior notes | 4.625% senior notes, due 2024 | On or after November 1, 2021
Debt Instrument [Line Items]
Redemption prices (as a percent)				102.313%
Senior notes | 4.625% senior notes, due 2024 | On or prior to November 1, 2019
Debt Instrument [Line Items]
Redemption prices (as a percent)				104.625%
Senior notes | 4.875% senior notes, due 2026
Debt Instrument [Line Items]
Debt term (in years)				10 years
Interest rate (as a percent)				4.875%	4.875%
Senior notes | 4.875% senior notes, due 2026 | On or after November 1, 2021
Debt Instrument [Line Items]
Redemption prices (as a percent)				102.438%
Senior notes | 4.875% senior notes, due 2026 | On or prior to November 1, 2019
Debt Instrument [Line Items]
Redemption prices (as a percent)				104.875%
Term loan facility, due 2021
Debt Instrument [Line Items]
Borrowing capacity		$ 675.0	675.0	$ 675.0
Debt term (in years)		5 years		5 years
Periodic amortization rate (as a percent)				5.00%
Total net leverage ratio				5.50
Interest coverage rate				2.75
Term loan facility, due 2021 | Forecast
Debt Instrument [Line Items]
Total net leverage ratio	4.50
Revolving credit facilities
Debt Instrument [Line Items]
Borrowing capacity		$ 500.0	$ 500.0	$ 500.0
Debt term (in years)			5 years	5 years
Borrowing outstanding				$ 80.0
Available amount				420.0
Letter of credit outstanding				$ 0.0
Average interest rate				2.50%
Revolving credit facilities | Conagra
Debt Instrument [Line Items]
Cash payment to former parent			$ 700.4
Borrowing outstanding				$ 80.0
Minimum | Base Rate
Debt Instrument [Line Items]
Variable interest rate (as a percent)				0.50%
Minimum | Eurocurrency rate
Debt Instrument [Line Items]
Variable interest rate (as a percent)				1.50%
Minimum | Revolving credit facilities
Debt Instrument [Line Items]
Commitment fee for undrawn amount (as a percent)				0.25%
Maximum | Base Rate
Debt Instrument [Line Items]
Variable interest rate (as a percent)				1.25%
Maximum | Eurocurrency rate
Debt Instrument [Line Items]
Variable interest rate (as a percent)				2.25%
Maximum | Senior notes | On or prior to November 1, 2019
Debt Instrument [Line Items]
Percentage of principal amount redeemed				35.00%
Maximum | Revolving credit facilities
Debt Instrument [Line Items]
Commitment fee for undrawn amount (as a percent)				0.40%
Maximum | Letters of credit
Debt Instrument [Line Items]
Letter of credit outstanding				$ 100.0
Maximum | swingline advances
Debt Instrument [Line Items]
Letter of credit outstanding				$ 35.0

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DEBT AND FINANCING OBLIGATIONS - Aggregate minimum principal maturities (Details) - USD ($) $ in Millions	6 Months Ended
	Nov. 27, 2016	May 29, 2016
Financing Obligations (a)
2017 remainder	$ 3.8
2018	5.6
2019	5.4
2020	5.0
2021	4.9
2022	5.2
Thereafter	47.3
Total	77.2
Debt
2017 reminder	18.7
2018	35.3
2019	35.4
2020	35.4
2021	35.5
2022	533.4
Thereafter	1,687.1
Total	2,380.8
Total
2017 remainder	22.5
2018	40.9
2019	40.8
2020	40.4
2021	40.4
2022	538.6
Thereafter	1,734.4
Total	2,458.0	$ 118.1
Interest on lease finance	$ 35.5

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DEBT AND FINANCING OBLIGATIONS - Other and Notes payable (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		6 Months Ended
	Nov. 30, 2016	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015	May 29, 2016
Net interest expense
Debt issuance costs	$ 37.3	$ 37.0		$ 37.0
Accrued Expenses		6.8	$ 1.5	8.3	$ 2.8
Interest Expenses	37.3	(6.8)	$ (1.5)	(8.3)	$ (2.8)
Amortization expense		0.3		0.3
Interest on debt				0.9
Notes payable		25.2		25.2		$ 24.9
Notes payable | Tai Mei Potato
Net interest expense
Increased credit facility		58.0		58.0		$ 20.0
Notes payable		$ 25.2		$ 25.2
China rate | Notes payable | Tai Mei Potato
Net interest expense
Interest rate option one				85.00%
Interest rate option two				95.00%
Interest rate option three				105.00%
Conagra
Net interest expense
Debt issuance costs	25.4
Interest paid	9.6
Accrued Expenses	$ 2.3

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SHARE-BASED PAYMENTS - Stock option activity (Details) $ / shares in Units, $ in Millions	1 Months Ended	6 Months Ended
	Nov. 27, 2016 USD ($) $ / shares shares	Nov. 27, 2016 USD ($) item $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of threshold days | item		5
Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized under our equity incentive plans (in shares)	10,000,000	10,000,000
Available for future grant (in shares)	8,400,000	8,400,000
Stock options
Shares
Converted (in shares)	607,420
Outstanding at end of the period (in shares)	607,420	607,420
Exercisable at end of year (in shares)	333,143	333,143
Weighted - Average Exercise Price (Per share)
Converted (in dollars per share) | $ / shares	$ 23.60
Outstanding at end of the period (in dollars per share) | $ / shares	23.60	$ 23.60
Exercisable at end of year (in dollars per share) | $ / shares	$ 20.52	$ 20.52
Weighted- Average Remaining Contractual Term (Years)
Outstanding (in years)		7 years 3 months 22 days
Exercisable (in years)		6 years 7 days
Exercisable aggregate intrinsic value | $	$ 5.5	$ 5.5
Outstanding aggregate intrinsic value | $	$ 4.0	$ 4.0

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SHARE-BASED PAYMENTS - Restricted stock unit and performance-based restricted stock unit (Details)	1 Months Ended
	Nov. 27, 2016 $ / shares shares
Stock Settled
Shares
Converted (in shares) | shares	449,716
Outstanding at end of the period (in shares) | shares	449,716
Weighted-Average Grant-Date Fair Value
Converted (in dollars per share) | $ / shares	$ 25.05
Outstanding at end of the period (in dollars per share) | $ / shares	$ 25.05
Cash-settled restricted stock units
Shares
Converted (in shares) | shares	469,837
Outstanding at end of the period (in shares) | shares	469,837
Weighted-Average Grant-Date Fair Value
Converted (in shares) | $ / shares	$ 25.33
Outstanding at end of the period (in dollars per share) | $ / shares	$ 25.33
Performance Units
Shares
Converted (in shares) | shares	56,050
Outstanding at end of the period (in shares) | shares	56,050
Weighted-Average Grant-Date Fair Value
Converted (in shares) | $ / shares	$ 25.84
Outstanding at end of the period (in dollars per share) | $ / shares	$ 25.84

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SHARE-BASED PAYMENTS - Compensation Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015
Compensation expense
Total compensation expense	$ 2.5	$ 1.7	$ 5.2	$ 4.3
Income tax benefit	(0.9)	(0.6)	(1.9)	(1.6)
Total compensation expense, net of tax benefit	1.6	1.1	3.3	2.7
Stock options
Compensation expense
Total compensation expense	0.1	0.1	0.3	0.2
Stock-settled restricted stock units
Compensation expense
Total compensation expense	0.9	0.6	1.6	1.2
Performance Units
Compensation expense
Total compensation expense	(0.3)
Cash-settled restricted stock units
Compensation expense
Total compensation expense	$ 1.8	$ 1.0	$ 3.3	$ 2.9

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SHARE-BASED PAYMENTS - Unrecognized compensation expense, net of estimated forfeitures (Details) $ in Millions	6 Months Ended
	Nov. 27, 2016 USD ($)
Unrecognized compensation expense, net of estimated forfeitures
Unrecognized Compensation Expense	$ 16.7
Remaining Weighted Average Recognition Period (in years)	2 years 1 month 6 days
Stock options
Unrecognized compensation expense, net of estimated forfeitures
Unrecognized Compensation Expense	$ 0.8
Remaining Weighted Average Recognition Period (in years)	1 year 6 months
Cash-settled restricted stock units
Unrecognized compensation expense, net of estimated forfeitures
Unrecognized Compensation Expense	$ 7.8
Remaining Weighted Average Recognition Period (in years)	2 years 1 month 6 days
Stock-settled restricted stock units
Unrecognized compensation expense, net of estimated forfeitures
Unrecognized Compensation Expense	$ 7.3
Remaining Weighted Average Recognition Period (in years)	2 years 1 month 6 days
Performance Units
Unrecognized compensation expense, net of estimated forfeitures
Unrecognized Compensation Expense	$ 0.8
Remaining Weighted Average Recognition Period (in years)	2 years

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STOCKHOLDERS' EQUITY - Common and preferred stock (Details)	Dec. 15, 2016 $ / shares	Nov. 27, 2016 Vote shares
STOCKHOLDERS' EQUITY
Common stock, authorized shares		600,000,000
Preferred stock, authorized shares		60,000,000
Common stock, issued shares		146,046,395
Common stock, outstanding shares		146,046,395
Number of votes that each share holder is entitled | Vote		1
Preferred stock, issued shares		0
Preferred stock, outstanding shares		0
Cash dividends declared per common share | $ / shares	$ 0.1875

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DERIVATIVE FINANCIAL INSTRUMENTS - Derivative assets and liabilities (Details) - USD ($) $ in Millions	6 Months Ended
	Nov. 27, 2016	May 29, 2016
DERIVATIVE FINANCIAL INSTRUMENTS
Period for anticipated consumption of commodity inputs	36 months
Prepaid expenses and other current assets		$ 2.1
Accrued liabilities	$ 0.6	$ 0.2

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DERIVATIVE FINANCIAL INSTRUMENTS - Derivative assets and liabilities on gross basis (Details) - USD ($) $ in Millions	Nov. 27, 2016	May 29, 2016
DERIVATIVE FINANCIAL INSTRUMENTS
Setoff of derivative liabilities		$ 0.1
Derivative assets		2.1
Derivative liabilities		0.2
Commodity contracts | Prepaid expenses and other current assets
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative assets		1.5
Commodity contracts | Accrued Liabilities
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative liabilities	$ 0.6	0.2
Foreign exchange contracts | Prepaid expenses and other current assets
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative assets		$ 0.6

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DERIVATIVE FINANCIAL INSTRUMENTS - Gains (losses) from derivatives not designated as hedging instruments (Details) - Derivatives not designated as hedging instruments - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015
Derivative Instruments, Gain (Loss)
Amount of Gain or (Loss) Recognized on Derivative	$ (0.6)	$ (1.9)	$ (0.2)	$ (4.4)
Commodity contracts | Cost of sales
Derivative Instruments, Gain (Loss)
Amount of Gain or (Loss) Recognized on Derivative	(0.5)	$ (1.9)	(0.1)	(5.2)
Foreign exchange contracts | Selling, general and administrative expense
Derivative Instruments, Gain (Loss)
Amount of Gain or (Loss) Recognized on Derivative	$ (0.1)		$ (0.1)	$ 0.8

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DERIVATIVE FINANCIAL INSTRUMENTS - (Details) - USD ($) $ in Millions	Nov. 27, 2016	May 29, 2016
Open commodity purchase contracts
DERIVATIVE FINANCIAL INSTRUMENTS
Notional amount	$ 0.0	$ 32.8
Open commodity sale contracts
DERIVATIVE FINANCIAL INSTRUMENTS
Notional amount	$ 0.0	$ 13.6

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FAIR VALUE MEASUREMENTS - Financial assets and liabilities, recurring basis (Details) - USD ($) $ in Millions	Nov. 27, 2016	May 29, 2016
Assets:
Derivative assets		$ 2.1
Liabilities
Derivative liabilities	$ 0.6	0.2
Fixed rate debt
Liabilities
Long-term Debt	1,698.8
Long-term Debt, Fair Value	1,675.9
Variable rate debt
Liabilities
Long-term Debt	682.0
Recurring | Total
Assets:
Derivative assets		0.7
Deferred compensation assets	0.7	2.8
Total assets	0.7
Liabilities
Derivative liabilities	0.6	6.5
Deferred compensation liabilities	6.8	6.7
Total liabilities	7.4
Recurring | Level 1 | Total
Assets:
Derivative assets		0.7
Deferred compensation assets	0.7	2.2
Total assets	0.7
Liabilities
Derivative liabilities		6.5
Deferred compensation liabilities	6.8	6.5
Total liabilities	6.8
Recurring | Level 2 | Total
Assets:
Deferred compensation assets		0.6
Liabilities
Derivative liabilities	0.6
Deferred compensation liabilities		$ 0.2
Total liabilities	$ 0.6

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BUSINESS SEGMENTS AND RELATED INFORMATION (Details) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 27, 2016 USD ($)	Nov. 29, 2015 USD ($)	Nov. 27, 2016 USD ($) segment	Nov. 29, 2015 USD ($)
BUSINESS SEGMENTS AND RELATED INFORMATION
Number of operating segments | segment			4
Revenue information
Total net sales	$ 790.7	$ 740.3	$ 1,567.0	$ 1,488.1
Product contribution margin	193.0	154.3	368.9	289.8
Equity method investment earnings	6.2	7.7	16.8	20.2
Total product contribution margin plus equity method investment earnings	199.2	162.0	385.7	310.0
Other selling, general and administrative expenses	67.5	44.8	118.4	95.7
Interest expense, net	6.8	1.5	8.3	2.8
Income tax expense	33.9	38.7	84.9	71.0
Net income	91.0	77.0	174.1	140.5
Less: Income attributable to noncontrolling interests	3.8	3.7	7.3	5.2
Net income attributable to Lamb Weston Holdings, Inc.	87.2	73.3	166.8	135.3
Pretax professional fees expenses	9.0		18.7
Global
Revenue information
Total net sales	412.6	388.3	811.8	771.1
Product contribution margin	92.3	78.9	165.9	134.3
Foodservice
Revenue information
Total net sales	250.6	225.2	510.9	471.5
Product contribution margin	80.2	57.8	159.7	118.0
Retail
Revenue information
Total net sales	96.5	91.8	186.1	179.5
Product contribution margin	20.9	15.4	40.5	28.6
Other
Revenue information
Total net sales	31.0	35.0	58.2	66.0
Product contribution margin	$ (0.4)	$ 2.2	$ 2.8	$ 8.9

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BUSINESS SEGMENTS AND RELATED INFORMATION -Oher Information (Details)	3 Months Ended		6 Months Ended
	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015
Net Sales | Customer | McDonald's corporation
Other information
Concentration risk, percentage	12.00%	12.00%	11.00%	11.00%

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COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 27, 2016	Nov. 29, 2015	Nov. 27, 2016	Nov. 29, 2015	May 29, 2016
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS
Total liabilities	$ 2,503.7		$ 2,503.7		$ 300.7
Lamb-Weston Meijer
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS
Total liabilities	203.1		203.1		203.7
Partners' equity	266.4		266.4		284.5
Potato supply agreements
COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS
Payments made under the agreement	104.6	$ 101.8	123.1	$ 118.0
Guaranteed amount	27.8		27.8
Aggregate amount of advances	$ 0.0		0.0		$ 15.7
Face value of income tax credits			$ 26.7