ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management’s discussion and analysis of our results of operations and financial condition, which we refer to in this filing as “MD&A,” should be read in conjunction with the audited financial statements and the notes thereto. Discussions of fiscal 2024 items and fiscal year comparisons between fiscal 2025 and 2024 that are not included in this Form 10-K can be found in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended May 25, 2025, which we filed with the SEC on July 23, 2025. Results for the fiscal year ended May 31, 2026 are not necessarily indicative of results that may be attained in the future.
Our MD&A is based on financial data derived from the financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). We have also presented Adjusted EBITDA, Adjusted Gross Profit, Adjusted Selling, General and Administrative expenses (“SG&A”), Adjusted Income Tax Expense (Benefit), and Adjusted Equity Method Investment Earnings, each of which is considered a non-GAAP financial measure, to supplement the financial information included in this report. We also present net sales excluding FX and net sales excluding FX and extra week. Refer to “Non-GAAP Financial Measures” below for the definitions of Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A, Adjusted Income Tax Expense (Benefit), Adjusted Equity Method Investment Earnings, net sales excluding FX, and net sales excluding FX and extra week, and a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, net income, gross profit, SG&A, and equity method investment earnings and net sales, as applicable. For more information, refer to the “Results of Operations” and “Non-GAAP Financial Measures” sections below.
Overview
Lamb Weston is a leading global producer, distributor, and marketer of value-added frozen potato products. We are the number one supplier of value-added frozen potato products in North America and are a leading supplier of value-added frozen potato products internationally, with a strong and growing presence in high-growth emerging markets. We offer a broad product portfolio to a diverse channel and customer base in over 100 countries. French fries represent most of our value-added frozen potato product portfolio.
During fiscal 2026, we operated our business in two reportable segments: North America and International. We report net sales and adjusted EBITDA by segment and on a consolidated basis. Net sales and Segment Adjusted EBITDA are the primary measures reported to our chief operating decision maker for purposes of allocating resources to our segments and assessing their performance. For additional information on our reportable segments, see “Non-GAAP Financial Measures” below and Note 13, Segments, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
Executive Summary
The following highlights our financial results for fiscal 2026. For more information, refer to the “Results of Operations” and “Non-GAAP Financial Measures” sections below.
In fiscal 2026, we delivered a solid year, led by strong volume and share growth in North America, while making meaningful progress in executing our Focus to Win strategy.
Internationally, volume grew in Asia Pacific, and Latin America, which more than offset volume losses in EMEA. Increased competition, softer demand and the disruption of shipments in the Middle East due to the conflict in Iran resulted in a challenging year for the EMEA region. We continue to actively manage these issues.
We are encouraged by our momentum with customers, including new wins and continued strengthening of existing relationships, notably in North America. The quality and depth of our relationships combined with our focus on service, consistent delivery and exceptional product quality are contributing to share gains in North America.
We advanced our executing with excellence strategic pillar through supply chain and manufacturing operating improvements. The significant productivity gains lowered our cost per pound and generated cost savings to offset inflation and unexpected costs.
Our Cost Savings Program exceeded its first year milestone of $100 million in savings. Based on the success of the program to date in delivering structural savings to supply chain and reducing SG&A, we will continue to pursue additional opportunities to improve our cost structure and capital efficiency.
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Our disciplined approach to working capital resulted in $942.9 million in cash provided by operating activities. We have completed our capital growth initiatives, opening our new facility in Argentina to serve the growing Latin America market, and reduced structural capital intensity, lowering capital expenditures by $240.6 million from the prior year, to $410.1 million. Finally, we returned a total of $320.7 million to shareholders through $207.5 million in cash dividends and $113.2 million in repurchases of common stock.
We have additional strategic work underway to focus our resources on our goal of generating sustainable long-term value for shareholders.
Outlook
In fiscal 2027, we believe customers and consumers will continue to prioritize french fries as a menu and at home item. Our outlook assumes global restaurant traffic will be flat. We expect low single-digit sales volume growth and a low single-digit decline in price/mix for the full year. Net sales are expected to be flat to up slightly on a comparable weeks basis. As a result of cost savings, improved efficiencies and lapping one-time items, earnings growth is expected to outpace sales growth. Fiscal 2027 is a 52-week period versus a 53-week period in fiscal 2026.
With growth investments behind us, cash used for capital expenditures, excluding acquisitions if any, is expected to be approximately $380 million to $410 million and cash from operations is expected in the range of $750 million to $800 million.
Results of Operations
53-Week Fiscal Year Ended May 31, 2026 Compared to 52-Week Fiscal Year Ended May 25, 2025
Fiscal Year Ended
Segment net sales
Segment Adjusted EBITDA
Net Sales
Net sales for fiscal 2026 increased $161.0 million, or 2%, to $6,612.3 million compared to the prior year. Fiscal 2026 benefited from a favorable foreign currency (“FX”) impact of $123.1 million or 1%. Sales volume increased 7% driven by volume increases in North America, APAC, and Latin America. Price/mix declined 6% driven by continued price and trade support for our customers and volume wins in lower priced, highly competitive channels. Fiscal 2026 also benefited $127.1 million from the 53rd week in the fiscal year.
North America segment net sales for fiscal 2026, which includes all sales to customers in the U.S., Canada, and Mexico, increased $130.0 million, or 3%, to $4,395.2 million compared to fiscal 2025. Sales volume increased 9% compared to the prior year driven by strong customer retention and contract wins in fiscal 2026. Price/mix declined 6%, reflecting new contract prices and the carryover impact of fiscal 2025 customer support. Fiscal 2026 also benefited $86.4 million from the 53rd week in the fiscal year.
International segment net sales for fiscal 2026, which includes all sales to customers outside of North America, increased $31.0 million, or 1%, to $2,217.1 million year-over-year, including a favorable $115.3 million, or 5%, impact from FX. Sales volume increased 2%, as growth in Asia Pacific and Latin America offset losses in EMEA driven by challenging market conditions. Price/mix declined 6%, reflecting increased competitive pricing across the segment. Fiscal 2026 also benefited $40.7 million from the 53rd week in the fiscal year.
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Gross Profit
Gross profit declined $38.9 million versus fiscal 2025 to $1,359.7 million.
Adjusted Gross Profit declined $123.3 million versus the prior year to $1,337.2 million primarily reflecting unfavorable global price/mix, as well as an incremental $33.1 million pre-tax charge related to the write-offs of excess raw potatoes in our International segment due to lower than planned sales volumes. These costs were partially offset by higher volumes, lower manufacturing costs per pound, and improved operational efficiencies across the organization.
Selling, General and Administrative Expenses
SG&A increased $31.1 million versus fiscal 2025 to $664.6 million.
Adjusted SG&A declined $6.0 million versus the prior year to $598.4 million. Cost savings associated with our Focus to Win strategy were partially offset by higher operating expenses and $18.8 million of write-offs related to previously capitalized costs associated with projects no longer under development.
Net Income, Adjusted EBITDA and Segment Adjusted EBITDA
Net income declined $67.2 million from fiscal 2025 to $290.0 million.
Adjusted EBITDA declined $112.8 million versus fiscal 2025 to $1,147.2 million. Adjusted EBITDA benefited $28.9 million from the 53rd week in fiscal 2026.
North America Segment Adjusted EBITDA increased $32.9 million to $1,142.3 million in fiscal 2026. Higher sales volumes, along with lower manufacturing costs per pound and the benefit of cost savings more than offset inflation and customer investments. North America Segment Adjusted EBITDA benefited $25.5 million from the 53rd week in fiscal 2026.
International Segment Adjusted EBITDA declined $142.9 million to $114.7 million. The decrease primarily reflects lower sales excluding FX, price/mix and higher manufacturing costs per pound, driven by a an incremental $33.1 million charge related to the write-offs of excess raw potatoes, lower utilization of our international production facilities, and start-up expenses for our new plant in Argentina. These were partially offset by benefits from cost savings initiatives. International Segment Adjusted EBITDA benefited $4.0 million from the 53rd week in fiscal 2026.
Interest Expense, Net
Interest expense, net increased $0.5 million, versus fiscal 2025, to $180.5 million. For more information, see Note 8, Debt and Financing Obligations, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
Income Taxes
Income tax expense for fiscal 2026 was $128.1 million compared to $143.1 million in the prior year period. The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 30.6% and 28.6% for fiscal 2026 and 2025, respectively.
For further information on income taxes, see Note 3, Income Taxes, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
Equity Method Investment Earnings
Equity method investment earnings from unconsolidated joint ventures were $7.5 million and $15.2 million for fiscal 2026 and 2025, respectively. Adjusted Equity Method Investment Earnings were $7.5 million and $25.7 million for fiscal 2026 and 2025, respectively. The decline of $18.2 million in earnings was primarily the result of lower gross profit, with higher volumes more than offset by unfavorable price/mix. The results for the current and prior year reflect earnings associated with our 50% interest in Lamb Weston/RDO Frozen.
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Fiscal 2026 Compared to Fiscal 2025 Balance Sheet Changes
Changes to our Consolidated Balance Sheet compared with May 25, 2025, were driven by a decline in inventories as we continued to align our global supply chain organization and our focus on optimizing inventory levels globally to meet customer needs, a decline in outstanding debt, including a reduction in the use of our revolving credit facility and long-term debt, and an increase in our treasury stock related to our stock repurchase program. These were mostly offset by an increase in accrued liabilities and deferred tax liabilities.
Liquidity and Capital Resources
As of May 31, 2026, we had $68.2 million of cash and cash equivalents, with $1,284.3 million additional amounts available for borrowing under our revolving credit facility. We believe we have sufficient liquidity to meet our business requirements for the next 12 months and the foreseeable future thereafter. Cash generated by operations, supplemented by our cash and cash equivalents and availability under our revolving credit facility, are our primary sources of liquidity for funding our business requirements. Our funding requirements include capital expenditures, changes in working capital, and returning cash to stockholders in the form of cash dividends and share repurchases.These expenditures could increase or decrease as a result of our financial results, future economic conditions, supply chain constraints for equipment, our regulatory compliance requirements, and other factors. At May 31, 2026, we had commitments for capital expenditures of $152.8 million.
Cash Flows
Below is a summary table of our cash flows, followed by a discussion of the sources and uses of cash through operating, investing, and financing activities:
For the Fiscal Years Ended May
(in millions, except percentages) 2026 2025
Net cash flows provided by (used for):
Effect of exchange rate changes on cash and cash equivalents 3.9 4.0
Net decrease in cash and cash equivalents (2.5) (0.7)
Cash and cash equivalents, beginning of period 70.7 71.4
Cash and cash equivalents, end of period 68.2 70.7
Operating Activities
During fiscal 2026, cash provided by operating activities increased $74.6 million to $942.9 million. The increase largely relates to $55.1 million of favorable changes in working capital, led by higher accrued liabilities tied to compensation and benefit accruals due to better performance achievement, lower inventories, and a $19.5 million increase in net income, adjusted for non-cash items. See “Results of Operations” in this MD&A for more information related to the increase in income from operations.
Investing Activities
Investing activities used $380.2 million of cash in fiscal 2026, compared with $648.0 million in fiscal 2025. Expenditures in fiscal 2026 primarily related to our investments to expand our french fry capacity in Argentina and other production facility modernization efforts. Expenditures in fiscal 2025 primarily related to our investments to expand our french fry capacity in the Netherlands, the U.S., and Argentina. The expansion in the U.S. was completed during the fourth quarter of fiscal 2024, the expansion in the Netherlands was completed during the second quarter of fiscal 2025, and the expansion in Argentina was completed in the first quarter of fiscal 2026. In addition, we had $26.0 million of proceeds from the sale of property, plant and equipment in fiscal 2026, an increase of $24.0 million over fiscal 2025. The prior year also included $21.1 million of gains from Argentina blue chip swap transactions.
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Financing Activities
During fiscal 2026, we used $569.1 million of cash for financing activities. We had net repayments of $240.7 million related to short-term and long-term debt. In addition, we paid $207.5 million in cash dividends to common stockholders. We used $113.2 million to repurchase 2,344,468 shares of our common stock at a weighted-average price of $48.28 per share.
During fiscal 2025, we used $225.0 million of net cash for financing activities. We had net proceeds of $42.8 million from our revolving credit facility and other short-term credit facilities held by subsidiaries and $500 million of proceeds from our amended term loan facility that was used primarily to repay an existing term loan facility and outstanding borrowings under our revolving credit facility. We used $294.4 million to repurchase an aggregate of 4,867,449 shares at a weighted-average price of $57.94 per share and withheld 216,317 shares from employees to cover income and payroll taxes on equity awards that vested during the period. In addition, we paid $206.9 million in cash dividends to common stockholders.
For more information about our debt, including among other items, our revolving credit facility, term loan facilities, interest rates, maturity dates, and covenants, see Note 8, Debt and Financing Obligations, of the Notes to the Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K. At May 31, 2026, we were in compliance with all covenants contained in our credit agreements.
Obligations and Commitments
As part of our ongoing operations, we enter into arrangements that obligate us to make future payments under contracts such as debt agreements, lease agreements, potato supply agreements, and unconditional purchase obligations. The unconditional purchase obligations are enforceable and legally binding arrangements entered into in the normal course of business to ensure adequate levels of sourced product are available.
A summary of our material cash requirements for our known contractual obligations as of May 31, 2026 are as follows:
(in millions) Total Payable within 12 Months
Total debt and financing obligations (a) $ 3,928.7 $ 320.0
Interest on long-term debt (b) 691.1 174.7
Purchase obligations and capital commitments (a) 1,179.0 363.5
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(a)See the below Notes to the Consolidated Financial Statements included in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K for more information.
•Total debt and financing obligations. See Note 8, Debt and Financing Obligations, for more information on debt payments and the timing of expected future payments.
•Leases. See Note 9, Leases, for more information on our operating and finance lease obligations and timing of expected future payments.
•Purchase obligations and capital commitments. See Note 14, Commitments, Contingencies, Guarantees, and Legal Proceedings, for more information on our purchase obligations and the timing of future payments and capital commitments in connection with the expansion and replacement of existing facilities and equipment.
(b)Amounts represent estimated future interest payments assuming our long-term debt is held to maturity and using interest rates in effect as of May 31, 2026. This does not reflect a reduction for future estimated capitalized interest amounts.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as of May 31, 2026 that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.
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Critical Accounting Estimates
Management’s discussion and analysis of financial condition and results of operations are based upon the Company’s Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to our trade promotions, income taxes, and impairment, among others. We base our estimates on historical experiences combined with management’s understanding of current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Critical accounting estimates are those that are most important to the portrayal of our financial condition and operating results. These estimates require management’s most difficult, subjective, or complex judgments. We review the development, selection, and disclosure of our critical accounting estimates with the Audit Committee of our Board.
We have made appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are differences between these estimates and actual results, our Consolidated Financial Statements may be affected.
Sales Incentives and Trade Promotion Allowances
We promote our products with advertising, consumer incentives, and trade promotions. Sales incentives include, but are not limited to, discounts, coupons, rebates, and volume-based incentives. The estimates for sales incentives are based principally on historical sales and redemption rates, influenced by judgments about current market conditions such as competitive activity in specific product categories.
Trade promotion programs include introductory marketing funds such as slotting fees, cooperative marketing programs, temporary price reductions, and other activities conducted by our customers to promote our products. The costs of these programs are recognized as a reduction to revenue with a corresponding accrued liability. The estimate of trade promotions is inherently difficult due to information limitations as the products move beyond distributors and through the supply chain to operators. Estimates made by management in accounting for these costs are based primarily on our historical experience with marketing programs, with consideration given to current circumstances and industry trends and include the following: quantity of customer sales, timing of promotional activities, current and past trade-promotion spending patterns, the interpretation of historical spending trends by customer and category, and forecasted costs for activities within the promotional programs.
The determination of sales incentive and trade promotion costs requires judgment and may change in the future as a result of changes in customer demand for our products and promotion participation, particularly for new programs related to the introduction of new products. Final determination of the total cost of promotion is dependent upon customers providing information about proof of performance and other information related to the promotional event. Because of the complexity of some of these trade promotions, the ultimate resolution may result in payments that are different from our estimates. As additional information becomes known, we may change our estimates. At May 31, 2026 and May 25, 2025, we had $100.3 million and $88.2 million, respectively, of accrued trade promotions payable recorded in “Accrued liabilities” on our Consolidated Balance Sheets.
Income Taxes
We compute the provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. We measure deferred tax assets and liabilities using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled.
Inherent in determining the annual tax rate are judgments regarding business plans, planning opportunities, and expectations about future outcomes. Management judgments are required for the following items:
•Management reviews deferred tax assets for realizability. Valuation allowances are established when management believes that it is more likely than not that some portion of the deferred tax assets will not be realized. Changes in valuation allowances from period to period are included in the tax provision.
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•We establish accruals for unrecognized tax benefits when, despite the belief that our tax return positions are fully supported, we believe that an uncertain tax position does not meet the more-likely-than-not recognition threshold of Accounting Standards Codification (“ASC”) 740, Income Taxes. These contingency accruals are adjusted in light of changing facts and circumstances, such as the progress of tax audits, the expiration of the statute of limitations for the relevant taxing authority to examine a tax return, case law and emerging legislation. While it is difficult to predict the final outcome or timing of resolution for any particular matter, we believe that the accruals for unrecognized tax benefits at May 31, 2026, reflect the estimated outcome of known tax contingencies as of such date in accordance with accounting for uncertainty in income taxes under ASC 740.
•We recognize the tax impact of including certain foreign earnings in U.S. taxable income as a period cost. We have not recognized deferred income taxes for local country income and withholding taxes that could be incurred on distributions of certain non-U.S. earnings or for outside basis differences in our subsidiaries, because we plan to indefinitely reinvest such earnings and basis differences. Remittances of non-U.S. earnings are based on estimates and judgments of projected cash flow needs, as well as the working capital and investment requirements of our non-U.S. and U.S. operations. Material changes in our estimates of cash, working capital, and investment needs in various jurisdictions could require repatriation of indefinitely reinvested non-U.S. earnings, which could be subject to applicable non-U.S. income and withholding taxes. While we believe the judgments and estimates discussed above and made by management are appropriate and reasonable under the circumstances, actual resolution of these matters may differ from recorded estimated amounts. Further information on income taxes is provided in Note 3, Income Taxes, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K.
Goodwill
As of May 31, 2026, we had $1,130.1 million of goodwill recorded on our consolidated balance sheet. Goodwill is not amortized but is tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Our annual impairment test is typically performed in the fourth quarter of each fiscal year.
We perform goodwill impairment tests at the reporting unit level, which represents an operating segment or a component of an operating segment. Our reporting units align with our operating segments. The impairment test may involve either a qualitative assessment or a quantitative assessment. In a qualitative assessment, we evaluate various factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If the qualitative assessment indicates a potential impairment, or if we elect to bypass the qualitative assessment, we proceed to a quantitative test.
For quantitative goodwill impairment tests, we determine the fair value of our reporting units using an income approach. Under the income approach, we calculate the fair value of each reporting unit based on the present value of estimated future cash flows. Considerable management judgment is necessary to evaluate the impact of operating and macroeconomic changes to estimate the future cash flows used to determine the fair value of each reporting unit. Management’s estimates rely on various assumptions, including: future cash flows, projections of revenue growth rates, operating margins, capital expenditures, and working capital requirements. These are based on historical performance, current market conditions, our internal operating plans and strategies, discount rates, and a weighted-average cost of capital (WACC) that reflects the risk inherent in the projected cash flows. This rate is derived from market data for comparable companies and adjusted for specific reporting unit risk, country risk, or asset risks.
The key assumptions used in our impairment tests are inherently uncertain and require a high degree of estimation. Changes in economic and operating conditions, industry trends, competitive pressures, or our ability to execute strategic initiatives could materially impact these assumptions and, consequently, the estimated fair values. Variations between actual operating results and our forecasts, or unfavorable changes in market factors such as interest rates or comparable company earnings multiples, could lead to future impairment charges.
As of May 31, 2026, we performed a quantitative impairment test for the International reporting unit and a qualitative assessment for the North America reporting unit. The International reporting unit’s estimated fair value exceeded its carrying value; however, its fair value is more sensitive to changes in projected operating results and key assumptions, including discount rates. In a future period, lower-than-expected sales or profitability and/or an increase in the WACC could reduce the International reporting unit’s estimated fair value and result in a goodwill impairment. Our qualitative assessment indicated that it is more likely than not that the North America reporting unit’s fair value exceeded its carrying value as of May 31, 2026.
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New and Recently Issued Accounting Standards
For a listing of new and recently issued accounting standards, see Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K.
Non-GAAP Financial Measures
To supplement the financial information included in this report, we have presented Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A, Adjusted Income Tax Expense (Benefit), and Adjusted Equity Method Investment Earnings, each of which is considered a non-GAAP financial measure. We also present net sales excluding FX and net sales excluding FX and extra week, which provide information on net sales as if foreign currency exchange rates had remained constant between the current and prior-year periods, and as if there were only fifty-two weeks in the current fiscal year. Management uses these non-GAAP financial measures to assist in analyzing what management views as our core operating performance for purposes of business decision making. Management believes that presenting these non-GAAP financial measures provides investors with useful supplemental information because they (i) provide meaningful supplemental information regarding financial performance by excluding impacts of foreign currency exchange translation and unrealized mark-to-market derivative gains and losses and other items affecting comparability between periods, (ii) permit investors to view our operating and financial performance using the same tools that management uses to evaluate performance across periods and to make budgeting, operating and strategic decisions, and (iii) otherwise provide supplemental information that may be useful to investors in evaluating our operating and financial performance. In addition, we believe that the presentation of these non-GAAP financial measures, when considered together with their most directly comparable GAAP financial measure and corresponding reconciliations to those GAAP financial measures, provides investors with additional tools to understand the factors and trends affecting our underlying business than could be obtained absent these disclosures.
The non-GAAP financial measures presented in this report should be viewed in addition to, and not as alternatives for, financial measures prepared in accordance with GAAP that are also presented in this report. These measures are not substitutes for their comparable GAAP financial measures, such as net income, gross profit, SG&A, income tax expense, equity method investment earnings, net sales, or other measures prescribed by GAAP, and there are limitations to using non-GAAP financial measures. For example, the non-GAAP financial measures presented in this report may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures the same way we do.
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The following table reconciles net income to Adjusted EBITDA.
For the Fiscal Years Ended May
Income from operations including equity method investment earnings 598.6 680.3
Depreciation and amortization (b) 400.9 378.2
Unrealized derivative gains (20.1) (23.1)
Foreign currency exchange (gains) losses (8.2) 15.2
Blue chip swap transaction gains — (21.1)
Stock based compensation 46.2 39.5
Items impacting comparability:
Cost Savings Program, Restructuring Plan, and other expenses 111.6 185.8
Shareholder activism expense 4.0 5.2
Pension termination 14.2 —
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(a)Net income included the following:
i.Fiscal 2026 included Cost Savings Program, Restructuring Plan, and other expenses of $111.6 million ($98.1 million after-tax, or $0.71 per share) related to the Cost Savings Program announced on July 23, 2025 and the Restructuring Plan announced on October 1, 2024. Fiscal 2025 included $185.8 million ($143.7 million after-tax, or $1.01 per share) of expenses related to the Cost Savings Program, Restructuring Plan, and other expenses;
ii.Unrealized gains of $20.1 million ($15.2 million after-tax, or $0.11 per share) and $23.1 million ($17.2 million after-tax, or $0.12 per share) related to mark-to-market adjustments associated with commodity and currency hedging contracts for fiscal 2026 and 2025, respectively;
iii.Foreign currency exchange losses of $8.2 million ($5.7 million after-tax, or $0.05 per share) and gains of $15.2 million ($10.9 million after-tax, or $0.07 per share) for fiscal 2026 and 2025, respectively;
iv.Fiscal 2025 included blue chip swap transaction gains of $21.1 million ($20.0 million after-tax or $0.14 per share);
v.Stock-based compensation expense of $46.2 million ($38.5 million after-tax, or $0.28 per share) and $39.5 million ($33.4 million after-tax, or $0.23 per share) for fiscal 2026 and 2025, respectively;
vi.Advisory fees related to shareholder activism matters of $4.0 million ($3.1 million after-tax, or $0.02 per share) and $5.2 million ($4.0 million after-tax, or $0.03 per share) for for fiscal 2026 and 2025, respectively;
vii.Fiscal 2026 included pension settlement charges of $14.2 million ($11.0 million after-tax, or $0.08 per share) to fully fund the Company’s defined benefit pension plan, enabling lump sum payments to participants and transferring the remaining obligations and related plan assets to an insurer through a group annuity contract; and
viii.Fiscal 2025 included an estimated $31 million loss related to the voluntary product withdrawal that occurred in the fourth quarter of fiscal 2024. The total charge to reporting segments was approximately $19 million to the North America segment and approximately $12 million to the International segment.
(b)Depreciation and amortization included interest expense, income tax expense, and depreciation and amortization from equity method investments of $8.8 million and $8.2 million for fiscal 2026 and 2025, respectively.
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The following tables reconcile gross profit to Adjusted Gross Profit, SG&A to Adjusted SG&A, income tax expense (benefit) to Adjusted Income Tax Expense (Benefit), and equity method investment earnings to Adjusted Equity Method Investment Earnings:
Unrealized derivative gains and losses (b) (30.1) (10.0) (4.9) —
Foreign currency exchange gains (b) — 8.2 (2.5) —
Stock-based compensation (b) — (46.2) 7.7 —
Items impacting comparability: (b)
Cost Savings Program, Restructuring Plan, and other expenses 7.6 — 13.5 —
Shareholder activism expense — (4.0) 0.9 —
Pension settlement — (14.2) 3.2 —
Unrealized derivative gains (b) (13.4) 9.7 (5.9) —
Foreign currency exchange losses (b) — (15.2) 4.3 —
Blue chip swap transaction gains (b) — 21.1 (1.1) —
Stock-based compensation (b) — (39.5) 6.1 —
Items impacting comparability: (b)
Shareholder activism expense — (5.2) 1.2 —
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(a)Items are tax effected at the marginal rate based on the applicable tax jurisdiction.
(b)See footnotes in the reconciliation of net income to Adjusted EBITDA above for further discussion.
The following table reconciles net sales to net sales excluding FX and net sales excluding FX and extra week.
The following table reconciles Segment Adjusted EBITDA to Segment Adjusted EBITDA excluding extra week.
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(a)Foreign currency impact on Segment Adjusted EBITDA is immaterial as favorable net sales impact is offset by unfavorable operating expense impact.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our operations are exposed to market risks from adverse changes in commodity prices affecting the cost of raw materials and energy, changes in currency rates, and interest rates. In the normal course of business, we may periodically enter into derivatives to minimize these risks, but not for trading purposes. All of the following potential changes are based on sensitivity analyses performed on our financial positions as of May 31, 2026 and May 25, 2025. Actual results may differ materially.
Commodity Price Risk
The objective of our commodity exposure management is to minimize volatility in earnings due to large fluctuations in the price of commodities. We may use commodity swap or forward purchase contracts, in addition to sourcing from multiple providers, to manage risks associated with market fluctuations in oil and energy prices. Based on our open commodity contract hedge positions as of May 31, 2026, a hypothetical 10% decline in market prices applied to the fair value of the instruments would result in a charge to “Cost of sales” of $8.8 million ($6.7 million after-tax). Based on our open commodity hedge positions as of May 25, 2025, a hypothetical 10% decline in market prices applied to the fair value of the instruments would have resulted in a charge to “Cost of sales” of $6.8 million ($5.1 million after-tax). It should be noted that any change in the fair value of the contracts, real or hypothetical, likely would be substantially offset by an inverse change in the value of the underlying hedged item.
Foreign Currency Exchange Rate Risk
We are subject to currency exchange rate risk through investments and businesses owned and operated in foreign countries. Our operations in foreign countries export to, and compete with imports from, other regions. As such, currency movements can have a number of direct and indirect impacts on our financial statements. Direct impacts include the translation of international operations’ local currency financial statements into U.S. dollars and the remeasurement impact associated with non-functional currency financial assets and liabilities. Indirect impacts include the change in competitiveness of exports out of the United States (and the impact on local currency pricing of products that are traded internationally). The currency that has the most impact is the Euro. From time to time, we may economically hedge currency risk with foreign currency contracts, such as forward contracts. Based on monetary assets and liabilities denominated in foreign currencies, we estimate that a hypothetical 10% adverse change in exchange rates versus the U.S. dollar would result in losses of $67.3 million ($51.1 million after-tax) and $68.5 million ($52.1 million after-tax) as of May 31, 2026 and May 25, 2025, respectively.
Interest Rate Risk
We issue fixed and floating rate debt in a proportion that management deems appropriate based on current and projected market conditions. At May 31, 2026, we had $2,935.4 million of fixed-rate and $989.3 million of variable-rate debt outstanding. At May 25, 2025, we had $2,976.6 million of fixed-rate and $1,166.4 million of variable-rate debt outstanding. A one percent increase in interest rates related to variable-rate debt would result in an annual increase in interest expense and a corresponding decrease in income before taxes of $10.0 million annually ($7.9 million after-tax) and $11.8 million annually ($9.2 million after-tax) at May 31, 2026 and May 25, 2025, respectively.
For more information about our debt, see Note 8, Debt and Financing Obligations, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Notes to Consolidated Financial Statements 49
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Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Lamb Weston Holdings, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Lamb Weston Holdings, Inc. and subsidiaries (the Company) as of May 31, 2026 and May 25, 2025, the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended May 31, 2026, and the related notes and consolidated financial statement schedule (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2026 and May 25, 2025, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended May 31, 2026, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of May 31, 2026, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated July 24, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Sufficiency of audit evidence over the finished goods inventory held at third-party warehouse locations
As discussed in Note 1 to the consolidated financial statements, the Company has recognized finished goods inventory of $704.2 million as of May 31, 2026, the majority of which is held at third-party warehouse locations. The tracking of the existence and completeness of finished goods inventory quantities held at third-party warehouse locations is reliant upon manual processes and automated processes within the Company’s enterprise resource planning system.
We identified the evaluation of the sufficiency of audit evidence obtained related to the quantities of finished goods inventory held at third-party warehouse locations as a critical audit matter. Challenging auditor judgment was required to determine the nature and extent of procedures to be performed over the quantity of finished goods inventory held at third-party warehouse locations, including the determination of third-party warehouse locations at which to observe physical inventory counts and the need to involve information technology (IT) professionals with specialized skills and knowledge to assess the IT system involved.
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The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over the quantities of finished goods inventory held at third-party warehouse locations by evaluating:
•homogeneity of the locations
•historical results of physical counts of inventory
•inventory quantities by location.
We evaluated the design and tested the operating effectiveness of certain internal controls within the Company’s inventory process, including controls over finished goods inventory quantities held at third-party warehouse locations. We involved IT professionals with specialized skills and knowledge, who assisted in testing certain general IT and application controls related to the Company’s process of recording finished goods inventory quantities held at third-party warehouse locations. We tested the existence and completeness of finished goods inventory by observing a sample of physical inventory counts near year-end. We also obtained external confirmation of inventory quantities held at certain third-party warehouse locations for a sample of locations. In addition, we evaluated the overall sufficiency of audit evidence obtained over finished goods inventory quantities held at third-party warehouse locations by assessing the results of procedures performed including the appropriateness of such evidence.
We have served as the Company’s auditor since 2016.
/s/ KPMG LLP
Boise, Idaho
July 24, 2026
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors
Lamb Weston Holdings, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Lamb Weston Holdings, Inc. and subsidiaries' (the Company) internal control over financial reporting as of May 31, 2026, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 31, 2026, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of May 31, 2026 and May 25, 2025, the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended May 31, 2026, and the related notes and consolidated financial statement schedule (collectively, the consolidated financial statements), and our report dated July 24, 2026 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Boise, Idaho
July 24, 2026
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Lamb Weston Holdings, Inc.
Consolidated Statements of Earnings
(dollars in millions, except per share amounts)
For the Fiscal Years Ended May
Selling, general and administrative expenses 664.6 633.5 701.4
Cost Savings Program and Restructuring expenses, net 104.0 100.0 —
Income before income taxes and equity method earnings 410.6 485.1 929.5
Equity method investment earnings 7.5 15.2 26.0
Earnings per share:
Weighted average common shares outstanding:
See Notes to Consolidated Financial Statements.
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Lamb Weston Holdings, Inc.
Consolidated Statements of Comprehensive Income
(dollars in millions)
For the Fiscal Years Ended May
Other comprehensive income (loss):
See Notes to Consolidated Financial Statements.
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Lamb Weston Holdings, Inc.
Consolidated Balance Sheets
(dollars in millions, except share data)
ASSETS
Current assets:
Cash and cash equivalents $ 68.2 $ 70.7
Prepaid expenses and other current assets 198.6 145.0
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and financing obligations 70.6 77.8
Long-term liabilities:
Commitments and contingencies
Stockholders’ equity:
Additional distributed capital (426.9) (479.1)
Accumulated other comprehensive income 131.8 54.5
Total liabilities and stockholders’ equity $ 7,380.1 $ 7,392.6
See Notes to Consolidated Financial Statements.
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Lamb Weston Holdings, Inc.
Consolidated Statements of Stockholders’ Equity
(dollars in millions, except share and per share data)
Dividends declared, $1.28 per share — — — — (184.9) — (184.9)
Stock-settled, stock-based compensation expense — — — 46.8 — — 46.8
Dividends declared, $1.46 per share — — — — (206.9) — (206.9)
Stock-settled, stock-based compensation expense — — — 39.4 — — 39.4
Dividends declared, $1.50 per share — — — — (208.0) — (208.0)
Stock-settled, stock-based compensation expense — — — 46.2 — — 46.2
See Notes to Consolidated Financial Statements.
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Lamb Weston Holdings, Inc.
Consolidated Statements of Cash Flows
(dollars in millions)
For Fiscal Year
Cash flows from operating activities
Stock-settled, stock-based compensation expense 46.2 39.5 46.8
Equity method investment (earnings) loss, net of distributions (2.5) 11.9 (15.5)
Deferred income taxes 40.5 0.6 (1.3)
Cost Savings Program and Restructuring expenses 37.8 48.7 —
Blue chip swap transaction gains — (21.1) (18.0)
Changes in operating assets and liabilities:
Income taxes payable/receivable, net (41.9) (10.3) 20.1
Prepaid expenses and other current assets (2.6) 9.5 9.7
Net cash provided by operating activities $ 942.9 $ 868.3 $ 798.2
Cash flows from investing activities
Additions to property, plant and equipment (402.7) (638.2) (929.5)
Additions to other long-term assets (7.4) (33.6) (62.3)
Acquisition of business, net of cash acquired — — (10.5)
Proceeds from sale of property, plant and equipment 26.0 2.0 —
Proceeds from blue chip swap transactions, net of purchases — 21.1 18.0
Net cash used for investing activities $ (380.2) $ (648.0) $ (984.1)
Cash flows from financing activities
Repayments of debt and financing obligations (217.1) (276.6) (401.1)
Net cash used for financing activities $ (569.1) $ (225.0) $ (48.0)
Effect of exchange rate changes on cash and cash equivalents 3.9 4.0 0.5
Net decrease in cash and cash equivalents (2.5) (0.7) (233.4)
Cash and cash equivalents, beginning of period 70.7 71.4 304.8
Cash and cash equivalents, end of period $ 68.2 $ 70.7 $ 71.4
See Notes to Consolidated Financial Statements.
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Notes to 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”) is a leading global producer, distributor, and marketer of value-added frozen potato products and is headquartered in Eagle, Idaho. We have two reportable segments: North America and International.
Basis of Presentation
These Consolidated Financial Statements present the financial results of Lamb Weston for the fiscal years ended May 31, 2026, May 25, 2025, and May 26, 2024 (“fiscal 2026, 2025, and 2024”), and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America (“U.S.”). The fiscal year of Lamb Weston ends the last Sunday in May. The fiscal years for the Consolidated Financial Statements presented consist of a 53-week period for fiscal 2026 and 52-week periods for fiscal 2025 and 2024.
The financial statements include all adjustments (consisting only of normal recurring adjustments) that we consider necessary for a fair presentation of such financial statements. Our Consolidated Financial Statements include the accounts of Lamb Weston and all of our majority-owned subsidiaries. Intercompany investments, accounts, and transactions have been eliminated.
Certain amounts in the prior year period consolidated financial statements have been reclassified to conform with the current period presentation. These reclassifications had no financial impact on previously reported net income, cash flows, or stockholders’ equity.
The equity method of accounting is applied for investments when the Company has significant influence over the investee’s operations, or when the investee is structured with separate capital accounts and our investment is considered more than minor. Our equity method investments are described in Note 6, Other Assets.
Use of Estimates
The preparation of the Consolidated Financial Statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the amounts reported in our Consolidated Financial Statements and the accompanying notes. On an ongoing basis, we evaluate our estimates, including but not limited to those related to the measurement of assets acquired and the liabilities assumed based on the fair value at the acquisition date, provisions for income taxes, estimates of sales incentives and trade promotion allowances, and valuation of goodwill and intangible assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the Consolidated Financial Statements in future periods.
Revenue from Contracts with Customers
Generally, we recognize revenue on a point-in-time basis when the customer takes title to the product and assumes the risks and rewards for the product. However, for customized products, which are products manufactured to customers’ unique specifications, we recognize revenue over time, utilizing an output method, which is generally as the products are produced. This is because once a customized product is manufactured pursuant to a purchase order, we have an enforceable right to payment for that product. Conversely, for non-customized products, revenue is generally recognized upon shipment. As a result, the timing of the receipt of a purchase order may create quarterly fluctuations.
The nature of our contracts varies based on the business, customer type, and region; however, in all instances it is our customary business practice to receive a valid order from the customer, in which each party’s rights and related payment terms are clearly identifiable. Our payment terms are consistent with industry standards and generally include early pay discounts. Amounts billed and due from customers are short-term in nature and are classified as receivables, since payments are unconditional and only the passage of time is required before payments are due. As of May 31, 2026 and May 25, 2025, we had $134.2 million and $132.7 million, respectively, of unbilled receivables for customized products for which we have recognized revenue and recorded the amounts in “Receivables” on our Consolidated Balance Sheets. We generally do not offer financing to our customers. We also do not provide a general right of return. However, customers may seek to return defective or non-conforming products. Following a customer return, we may offer remedies, including cash refunds, credit towards future purchases, or product replacement. As a result, customers’ right of return and related refund or product liabilities are estimated and recorded as reductions in revenue.
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We have contract terms that give rise to variable consideration including, but not limited to, discounts, coupons, rebates, and volume-based incentives. We estimate volume rebates based on the most likely amount method outlined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. We estimate early payment discounts and other customer trade incentives based principally on historical sales and coupon utilization and redemption rates, influenced by judgments about current market conditions such as competitive activity in specific product categories, which is consistent with the expected value method outlined in ASC 606. We have concluded that these methods result in the best estimate of the consideration we are entitled to from our customers. Because of the complexity of some of these trade promotions, however, the ultimate resolution may result in payments that are materially different from our estimates. As additional information becomes known, we may change our estimates.
We have elected to present all sales taxes on a net basis, account for shipping and handling activities as fulfillment activities, recognize the incremental costs of obtaining a contract as expense when incurred if the amortization period of the asset we would recognize is one year or less, and not record interest income or interest expense when the difference in timing of control or transfer and customer payment is one year or less.
Advertising and Promotion
Advertising and promotion expenses totaled $36.6 million, $35.8 million, and $49.7 million in fiscal 2026, 2025, and 2024, respectively, and are included in “Selling, general and administrative expenses” in the Consolidated Statements of Earnings as the expenses are incurred.
Research and Development
Research and development costs are expensed as incurred and totaled $18.9 million, $22.0 million, and $26.4 million in fiscal 2026, 2025, and 2024, respectively, and are included in “Selling, general and administrative expenses” in the Consolidated Statements of Earnings.
Stock-Based Compensation
Compensation expense resulting from all stock-based compensation transactions is measured and recorded in the Consolidated Financial Statements based on the grant date fair value of the equity instruments issued. Compensation expense is recognized over the period the employee or non-employee director provides service in exchange for the award. See Note 10, Stock-Based Compensation, for additional information.
Pension and Post-Retirement Benefits
Certain U.S. employees were covered by a defined benefit pension plan (the “Pension Plan”) which was terminated for all participants in fiscal 2026. During fiscal 2024, the Employee Benefit Investment Committee (“EBIC”) approved a resolution to terminate the Pension Plan, and in July 2024, the Pension Plan was formally amended to approve the termination. On July 1, 2025, the Pension Plan began paying benefits via lump-sum payments to eligible participants electing that option totaling $27.4 million and the Pension Plan purchased annuity contracts from an insurance company during the second and third quarters of fiscal 2026, which irrevocably transferred $9.9 million of the Pension Plan’s obligations and related assets to the selected insurance company. As a result of the Pension Plan termination, we recorded a $14.2 million pre-tax non-cash pension settlement charge in fiscal 2026.
As part of the termination process, in fiscal 2026 we contributed $14.6 million to fully fund the Pension Plan for required lump-sum payments, the purchase of annuity contracts, and payment to the Pension Benefit Guaranty Corporation for participants who did not elect one of the other two options. In fiscal 2025, we contributed $0.6 million. Prior to the Pension Plan’s termination, we made pension plan contributions that were sufficient to fund our actuarial determined costs, generally equal to the minimum amounts required by the Employee Retirement Income Security Act of 1974, as amended.
We also have a nonqualified defined benefit pension plan that provides unfunded supplemental retirement benefits to certain U.S. executives. This plan is closed to new participants and pension benefit accruals are frozen for active participants.
U.S. employees are eligible to participate in a defined contribution savings plan with employer matching provisions. Eligible employees participate in a contributory defined contribution plan (“the 401(k) Plan”), which permits participants to make contributions by salary reduction pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended. Regardless of employee participation level, we generally provide a 3% contribution to the 401(k) Plan. In addition to this, we will generally match 100% of the first 6% of the participating employee’s contribution election to the 401(k) Plan. The Plan’s matching contributions have a five-year graded vesting with 20% vesting each year. We made employer contributions of $41.2 million, $41.5 million, and $48.1 million in fiscal 2026, 2025, and 2024, respectively.
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We sponsor a non-qualified deferred compensation savings plan that permits eligible U.S. employees to continue to make deferrals and receive company matching contributions when their contributions to the 401(k) Plan are stopped due to limitations under U.S. tax law. In addition, we sponsor a non-qualified deferred compensation plan for non-employee directors that allow directors to defer their cash compensation and stock awards. Both deferred compensation plans are unfunded non-qualified defined contribution plans. Participant deferrals and company matching contributions (for the employee deferred compensation plan only) are not invested in separate trusts, but are paid directly from our general assets at the time benefits become due and payable. At May 31, 2026 and May 25, 2025, we had $25.5 million and $27.0 million, respectively, of liabilities attributable to participation in our deferred compensation plans recorded on our Consolidated Balance Sheets.
Cash and Cash Equivalents
Cash and all highly liquid investments with an original maturity of three months or less at the date of acquisition are classified as cash and cash equivalents and stated at cost, which approximates market value. We maintain various banking relationships with high quality financial institutions, and we invest available cash in money market funds that are backed by U.S. Treasury securities and can be redeemed without notice.
Trade Accounts Receivable and Allowance for Doubtful Accounts
Trade accounts receivable are stated at the amount we expect to collect based on our past experience, as well as reliance on the Perishable Agricultural Commodities Act, which was enacted to help promote fair trade in the fruit and vegetable industry by establishing a code of fair business practices. The collectability of our accounts receivable is based upon a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations (e.g., bankruptcy filings, substantial downgrading of credit sources), a specific reserve for bad debts is recorded against amounts due to the Company to reduce the net recorded receivable to the amount that we reasonably believe will be collected. For all other customers, reserves for bad debts are recognized based on forward-looking information to assess expected credit losses. If collection experience deteriorates, the estimate of the recoverability of amounts due could be reduced. We periodically review our allowance for doubtful accounts and adjustments to the valuation allowance are recorded as income or expense in “Selling, general and administrative expenses” in our Consolidated Statements of Earnings. Trade accounts receivable balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.
Inventories
Inventories are valued at the lower of cost (determined using the first-in, first-out method) or net realizable value and include all costs directly associated with manufacturing products: materials, labor, and manufacturing overhead. Inventories are reduced to net realizable value after consideration of excess, obsolete, and unsaleable inventories based on quantities on hand and estimated future usage and sales. The majority of our finished goods inventories are held at third-party warehouses not owned or leased by the Company.The components of inventories were as follows:
Raw materials and packaging $ 145.8 $ 171.5
Leased Assets
Leases consist of real property and machinery and equipment. Operating lease assets and liabilities are recognized at the commencement date of the lease based on the present value of the lease payments over the lease term. Our leases may include options to extend or terminate. Options to extend are included in the lease term when it is reasonably certain that we will exercise the option. Some leases have variable payments, however, because they are not based on an index or rate, they are not included in lease assets and liabilities. Variable payments for leases of land and buildings primarily relate to common area maintenance, insurance, taxes, and utilities. Variable payments for equipment, vehicles, and leases within supply agreements primarily relate to usage, repairs, and maintenance. As the implicit rate is not readily determinable for most of our leases, we use an incremental borrowing rate to determine the initial present value of lease payments over the lease terms on a collateralized basis over a similar term, which is based on market and company specific information. Assets and liabilities related to leases having a lease term of twelve months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the term of the lease. In addition, we account for lease and non-lease components as a single lease component for all of our leases. See Note 9, Leases, for more information.
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Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Cost includes expenditures for major improvements and replacements and the amount of interest cost associated with significant capital additions. The amount of interest capitalized from construction in progress was $12.5 million, $25.9 million, and $49.5 million in fiscal 2026, 2025, and 2024, respectively. Construction in progress does not include deposits made on equipment, materials, and services yet to be received; refer to Note 6, Other Assets in these Notes to Consolidated Financial Statements for more information. Repairs and maintenance costs are expensed as incurred.The components of property, plant and equipment were as follows:
Land and land improvements $ 221.2 $ 191.6
Furniture, fixtures, office equipment and other 144.0 161.9
Property, plant and equipment, at cost 6,381.5 6,041.5
Property, plant and equipment, net $ 3,690.0 $ 3,687.9
Depreciation is computed on a straight-line basis over the estimated useful lives of the respective classes of assets as follows:
Land improvements 1-20 years
Buildings and building improvements 10-40 years
Machinery and equipment 5-20 years
Furniture, fixtures, office equipment, and other 3-15 years
Below is a breakout between Cost of sales (“COS”) and Selling, general and administrative expenses (“SG&A”) for depreciation and total amortization for fiscal 2026, 2025, and 2024 :
At May 31, 2026 and May 25, 2025, purchases of property, plant and equipment included in accounts payable were $76.5 million and $85.4 million, respectively.
Long-Lived Asset Impairment
We review long-lived assets for impairment upon the occurrence of events or changes in circumstances which indicate that the carrying amount of the assets may not be fully recoverable, measured by comparing their net book value to the undiscounted projected future cash flows generated by their use. Impaired assets are recorded at their estimated fair value.
Goodwill and Other Identifiable Intangible Assets
We perform an annual impairment assessment of goodwill at the reporting unit level in the fourth quarter of each year, or more frequently if indicators of potential impairment exist. We have an option to evaluate goodwill for impairment by first performing a qualitative assessment of events and circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amounts, then a quantitative goodwill impairment test is not required to be performed. For quantitative goodwill impairment tests, we determine the fair value of our reporting units using an income approach. Under the income approach, we calculate the fair value of each reporting unit based on the present value of estimated future cash flows. If the carrying amount of the reporting units is in excess of their estimated fair value, the reporting unit will record an impairment charge by the amount that the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to the reporting unit.
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We amortize intangible assets with finite lives over their estimated useful life. We perform a review of significant finite-lived identified intangible assets to determine whether facts and circumstances indicate that the carrying amount may not be recoverable. These reviews can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for our products lines.
See Note 5, Goodwill and Other Identifiable Intangible Assets, for additional information.
Fair Values of Financial Instruments
When determining fair value, we consider the principal or most advantageous market in which we would transact, as well as assumptions that market participants would use when pricing the asset or liability.
The three levels of inputs that may be used to measure fair value are:
Level 1—Quoted market prices in active markets for identical assets or liabilities. We evaluate security-specific market data when determining whether a market is active.
Level 2—Observable market-based 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.
Level 3—Unobservable inputs for the asset or liability reflecting our own assumptions and best estimate of what inputs market participants would use in pricing the asset or liability.
See Note 11, Fair Value Measurements, for additional information.
Foreign Currency
Most of our foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets and liabilities are translated at exchange rates prevailing at the balance sheet dates. Revenues and expenses are translated into U.S. dollars using daily and monthly average exchange rates. Gains and losses resulting from the translation of Consolidated Balance Sheets are recorded as a component of “Accumulated other comprehensive income (loss).”
Foreign currency transactions resulted in a gain of $8.2 million in fiscal 2026 and losses of $15.2 million and $28.6 million for fiscal 2025 and 2024, respectively. These amounts were recorded in “Selling, general and administrative expenses” in the Consolidated Statements of Earnings.
Derivative Financial Instruments
We use derivatives and other financial instruments to hedge a portion of our commodity, currency and interest rate risks. We do not hold or issue derivatives and other financial instruments for trading purposes. Derivative instruments are reported in our Consolidated Balance Sheets at their fair values, unless the derivative instruments qualify for the normal purchase normal sale exception (“NPNS”) under GAAP and such exception has been elected. If the NPNS exception is elected, the fair values of such contracts are not recognized. Changes in derivative instrument values are recognized in “Cost of sales” and “Selling, general and administrative expenses” in our Consolidated Statements of Earnings. We do not designate commodity or interest rate derivatives to achieve hedge accounting treatment.
Income Taxes
We recognize current tax liabilities and assets based on an estimate of taxes payable or refundable in the current year for each of the jurisdictions in which we transact business. As part of the determination of our current tax liability, management exercises judgment in evaluating positions taken in the tax returns. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than a 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
We also recognize deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences (e.g., the difference in book basis versus tax basis of fixed assets resulting from differing depreciation methods). Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets and liabilities are remeasured to reflect new tax rates in the periods rate changes are enacted. If appropriate, we recognize valuation allowances to reduce deferred tax assets to amounts that are more likely than not to be ultimately realized, based on our assessment of estimated future taxable income.
See Note 3, Income Taxes, for more information.
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New and Recently Issued Accounting Pronouncements
In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance transparency and decision usefulness of income tax disclosures, particularly around rate reconciliations and income taxes paid information. We have prospectively adopted ASU 2023-09 for our Annual Report on Form 10-K for fiscal 2026 and additional required disclosures have been included within Note 3, Income Taxes.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which requires disaggregated disclosure of income statement expenses in public business entities. ASU 2024-03 is effective for our Annual Report on Form 10-K for the fiscal year ending May 28, 2028, and for our Quarterly Reports beginning fiscal year 2029, on a prospective basis, with early adoption permitted. We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal - Use Software (Subtopic 350-40): Targeted Improvements to Accounting for Internal-Use Software. This guidance provides criteria that must be met for entities to capitalize software development costs and factors to consider if there is significant uncertainty associated with the development activities of software. This guidance is effective for interim periods beginning in our fiscal year 2029. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.
In May 2026, the FASB issued ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818). This ASU provides recognition, measurement, presentation, and disclosure requirements for all entities that generate, purchase, or receive environmental credits or have a regulatory compliance obligation that may be settled with environmental credits. This guidance is effective for interim periods beginning in our fiscal year 2029. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.
There were no other accounting pronouncements recently issued that had or are expected to have a material impact on our Consolidated Financial Statements.
2. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per common share for the periods presented:
For the Fiscal Years Ended May
Numerator:
Denominator:
Basic weighted average common shares outstanding 138.9 142.2 144.9
Add: Dilutive effect of employee incentive plans (a) 0.2 0.5 0.8
Diluted weighted average common shares outstanding 139.1 142.7 145.6
Earnings per share:
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(a)Potential dilutive shares of common stock from employee incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options and the assumed vesting of outstanding restricted stock units and performance share awards. As of May 31, 2026 and May 25, 2025, we excluded 5.7 million and 0.8 million, respectively, of shares of stock-based awards from the computation of diluted earnings per share because they would be antidilutive. As of May 26, 2024, an insignificant number of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive.
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3. INCOME TAXES
Pre-tax income (loss), inclusive of equity method investment earnings, consisted of the following:
For the Fiscal Years Ended May
The provision for income taxes included the following:
For the Fiscal Years Ended May
Current
Deferred
Total deferred provision for taxes $ 40.7 $ 0.4 $ (1.4)
The following table reconciles the U.S. statutory tax rate of 21% on income before taxes, including equity method earnings, with the actual provision for income taxes:
For the Fiscal Year Ended May
Amount ($) Percent
Provision computed at U.S. Federal statutory rate $ 87.8 21.0 %
Domestic federal tax effects:
Tax credits (0.4) (0.1) %
Effects of cross-border tax laws (2.3) (0.6) %
Non-taxable or non-deductible items 6.2 1.5 %
Other 0.2 — %
Domestic state and local income taxes, net of federal effect (a) 7.0 1.7 %
Foreign tax effects:
Argentina
Tax rate differential (5.9) (1.4) %
Non-deductible FX translation 9.9 2.4 %
Change in valuation allowance 6.8 1.6 %
Australia
Change in valuation allowance 8.9 2.1 %
Netherlands (5.6) (1.3) %
Other foreign jurisdictions 2.0 0.5 %
Worldwide changes in unrecognized tax benefits 12.6 3.0 %
Effective income tax rate (b) $ 128.1 30.6 %
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(a)Oregon, Illinois, and Texas are the primary jurisdictions contributing to this category, with their state taxes accounting for more than 50 percent of the total tax effect.
(b)The effective income tax rate is calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings.
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As previously disclosed for fiscal years 2025 and 2024, prior to our adoption of ASU 2023-09, the effective income tax rate differed from the statutory federal income tax rate as follows:
For the Fiscal Years Ended May
Provision computed at U.S. statutory rate $ 105.1 $ 200.7
Increase (decrease) in rate resulting from:
State and local taxes, net of federal benefit 5.1 20.1
Non-U.S. operations (a) 19.0 5.5
Change in valuation allowance (b) 14.7 3.6
Effective income tax rate (c) 28.6 % 24.1 %
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(a)We derive the effective tax rate detriment or (benefit) attributed to non-U.S. income taxed at different rates, including the impact of permanent items. The statutory tax rates range from 8.25% to 35%.
(b)The predominant change in the valuation allowance and effective income tax rate in fiscal 2025 is attributable to the establishment of a valuation allowance against certain international deferred tax assets and international permanent differences.
(c)The effective income tax rate is calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings.
Income Taxes Paid
The details of fiscal 2026 cash payments net of refunds are set forth below:
For the Fiscal Year Ended May
US federal $ 83.2
US state and local 7.7
Foreign:
Netherlands 11.0
Other foreign jurisdictions 16.9
Total foreign 27.9
Total cash taxes paid, net of refunds $ 118.8
As previously disclosed prior to our adoption of ASU 2023-09, income taxes paid net of refunds were $149.7 million and $188.8 million in fiscal 2025 and 2024 respectively.
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Deferred Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Significant components of our deferred income tax assets and liabilities were as follows:
(in millions) Assets Liabilities Assets Liabilities
Property, plant and equipment $ — $ 298.5 $ — $ 297.9
Goodwill and other intangible assets 17.7 — 17.1 —
Compensation and benefit related liabilities 20.4 — 26.3 —
Net operating loss and credit carryforwards (a) 47.8 — 34.1 —
Accrued expenses and other liabilities 9.7 — 12.2 —
Inventory and inventory reserves 10.0 — 8.7 —
Lease obligations 28.4 — 28.9 —
Operating lease assets — 25.9 — 26.6
R&D expenditures capitalization 2.3 — 18.4 —
Equity method investments — 7.2 — 5.7
Less: Valuation allowance (b) (83.6) — (65.7) —
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(a)At May 31, 2026, Lamb Weston had approximately $109.3 million of gross ($30.0 million after-tax) non-U.S. net operating loss carryforwards, of which $8.1 million (after-tax) will expire by fiscal 2032. The remaining $21.9 million (after-tax) non-U.S. net operating loss carryforwards will not expire. Lamb Weston also had a non-U.S. tax credit carryforward of $2.3 million, which will expire by fiscal 2034, a state business credit carryforward of $14.5 million (net of federal benefit), which will expire by fiscal 2040, and $1.0 million foreign tax credit.
(b)$48.3 million of the valuation allowance is related to non-amortizable intangible assets in the United States, and $35.3 million is attributable to valuation allowances against certain international deferred tax assets.
(c)Deferred tax assets of $2.4 million and $1.1 million, as of May 31, 2026 and May 25, 2025, respectively, were presented in “Other assets.” Deferred tax liabilities of $297.5 million and $253.5 million as of May 31, 2026 and May 25, 2025, respectively, were presented in “Deferred income taxes” as "Long-term liabilities" on the Consolidated Balance Sheets. The deferred tax asset and liability net position is determined by tax jurisdiction.
The accounting standards allow companies to adopt an accounting policy to either recognize deferred taxes for global intangible low-taxed income (“GILTI”) or treat them as a tax cost in the year incurred. We have elected to recognize the tax on GILTI as a period expense in the period the tax is incurred. Under this policy, we have not provided deferred taxes on temporary differences that upon their reversal would affect the amount of income subject to GILTI in the period.
We have not established deferred income taxes on accumulated undistributed earnings and other basis differences for operations outside the U.S., as such earnings and basis differences are indefinitely reinvested. Determining the unrecognized deferred tax liability for these earnings is not practicable. Generally, no significant U.S. federal income taxes will be imposed on future distributions of non-U.S. earnings under the current law. However, distributions to the U.S. or other jurisdictions could be subject to withholding and other local taxes, and these taxes would not be material.
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Uncertain Tax Positions
The aggregate changes in the gross amount of unrecognized tax benefits, excluding interest and penalties consisted of the following:
For the Fiscal Years Ended May
Decreases from positions established during prior fiscal years (1.1) (1.5) (3.6)
Decreases relating to settlements with taxing authorities — (1.7) (0.5)
Expiration of statute of limitations (12.7) (10.4) (5.3)
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(a)If we were to prevail on the unrecognized tax benefits recorded as of May 31, 2026 and May 25, 2025, it would result in a tax benefit of $83.4 million and $71.4 million, respectively, and a reduction in the effective tax rate. The ending balances exclude $19.5 million and $17.8 million of gross interest and penalties in fiscal 2026 and 2025, respectively. We accrue interest and penalties associated with uncertain tax positions as part of income tax expense.
Lamb Weston conducts business and files tax returns in numerous countries, states, and local jurisdictions. We do not have any significant open tax audits. Major jurisdictions where we conduct business generally have statutes of limitations ranging from three to five years.
4. COST SAVINGS PROGRAM AND RESTRUCTURING
We announced a cost savings program (the “Cost Savings Program”) in July 2025 and a restructuring plan (the “Restructuring Plan”) in October 2024. During fiscal 2026, we also undertook additional restructuring actions, including the permanent closure of certain production facilities to improve asset utilization in our International segment, and completed sales of certain non-core assets as part of our Focus to Win strategy, a strategic plan we announced in July 2025 to focus on four pillars including (1) prioritizing markets and channels, (2) strengthening customer partnerships, (3) achieving executional excellence and (4) setting the pace for industry-leading innovation. This strategic plan includes our Cost Savings Program. The restructuring activities undertaken in connection with our initiatives, including the Cost Savings Program and Restructuring Plan, are referred to collectively as the “Plans”.
Amounts classified as “Cost Savings Program and Restructuring expenses” on our Consolidated Statement of Earnings for fiscal 2026 primarily relate to costs associated with the Cost Savings Program, restructuring activities related to facility closures to improve asset utilization, and net gains related to certain non-core asset sales. Expenses recorded in fiscal 2025 relate solely to the Restructuring Plan.
We expect to recognize approximately $20 million to $30 million of pre-tax charges in fiscal 2027 in connection with the Plans.
For the fifty-three weeks ended May 31, 2026, we recorded $111.6 million of pre-tax charges, of the total charges, $63.3 million were cash and $48.3 million were non-cash.
For the Fiscal Years Ended May
Cost Savings Program and Restructuring Plan expenses related to:
Retirement of assets and other plant charges (a) $ 53.1 $ 55.3
Potato contract terminations (b) — 59.3
Inventory write-off (b) 8.0 26.5
Employee-related costs (c) 15.8 17.5
Professional services and other 45.3 27.2
Sale of non-core assets (a) (10.6) —
___________________________________________
(a)Includes charges related to the write-off of assets at permanently closed production facilities under the Plans, impairments of certain non-core assets, and plant charges. The gain on the sale of non-core assets was $1.3 million.
(b)Includes the cost of contracted raw potatoes that were not used due to curtailed production under the Restructuring Plan and the write-off of inventories, including spare parts, related to production curtailments under the Plans.
(c)Includes employee severance and other one-time termination benefits related to reductions in headcount.
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The following amounts related to the Plans are included in the Company’s Consolidated Statements of Earnings:
For the Fiscal Years Ended May
Cost Savings Program and Restructuring Plan expense included in:
Cost of sales $ 7.6 $ 75.3
Cost Savings Program and Restructuring expenses, net 104.0 100.0
Equity method investment earnings — 10.5
Accruals remaining under the Plans are recorded in current liabilities within “Accounts payable” and “Accrued liabilities” in the accompanying Consolidated Balance Sheet for the fiscal year ended May 31, 2026 and relate primarily to Professional services and other expenses. The following is a roll-forward of accrued restructuring liabilities related to the Plans:
(in millions)
Accrued restructuring liability, May 25, 2025 $ 21.5
Accrued restructuring liability, May 31, 2026 $ 8.0
5. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS
The following table presents changes in goodwill balances, by segment, for fiscal years 2026 and 2025:
(in millions) North America International Total
Foreign currency translation adjustment 24.4 5.9 30.3
Foreign currency translation adjustment 27.1 12.8 39.9
Other identifiable intangible assets were as follows:
Non-amortizing intangible assets (b) n/a 19.6 — 19.6 n/a 18.0 — 18.0
_____________________________________________________
(a)Amortizing intangible assets are primarily comprised of licensing agreements, brands, and customer relationships. Foreign intangible assets are affected by foreign currency translation.
(b)Non-amortizing intangible assets represent brands, trademarks, and carbon credit purchases that are held and applied to settle environmental credit obligations within compliance periods. As of May 31, 2026 and May 25, 2025, we held $1.6 million and zero, respectively, of carbon credits to be applied in future periods.
Based on current intangible assets subject to amortization, we expect intangible asset amortization expense, excluding developed technology, will be approximately:
(in millions) Amortization
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Impairment Testing
During the annual goodwill impairment test we performed in the fourth quarter of fiscal 2026, we assessed qualitative and quantitative factors to determine whether it was more likely than not that the fair value of each reporting unit was less than its carrying value. Based on the results of the qualitative assessment, we determined it was not more likely than not that the fair value was less than the carrying value of the North America reporting unit. Based on the qualitative assessment for the International reporting unit, we could not determine that the fair value was less than the carrying value of the reporting unit, and thus performed a quantitative assessment. After performing the quantitative assessment for the International reporting unit, we determined that it was not more likely than not that the fair value of the reporting unit was less than the carrying value, thus no impairment of the International reporting unit goodwill was realized. Additionally, we completed our tests of our non-amortizing intangibles in the fourth quarter of fiscal 2026 and there was no indication of intangible asset impairment.
6. OTHER ASSETS
The components of other assets were as follows:
Capitalized software costs (a) $ 175.8 $ 208.7
Equity method investments (b) 51.1 47.5
Property, plant, and equipment deposits 33.9 30.3
_____________________________________________________
(a)Capitalized software costs are generally amortized over three to seven years once implemented.
(b)Equity method investments include our 50% ownership in Lamb-Weston/RDO Frozen (“Lamb Weston RDO”), our joint venture with RDO Frozen Co., which is included in our North America segment.
Summarized financial information for our equity method investments are as follows:
For the Fiscal Years Ended May
Noncurrent liabilities 43.6 46.7
We made the following sales to and purchases from our equity method investments, primarily for finished products sold to or purchased from our joint ventures. We also provided services, such as sales and marketing services, to our equity method investments that are recorded as a reduction to “Selling, general and administrative expenses” in our Consolidated Statements of Earnings. We also received dividends. The following table summarizes the activity with our equity method investments:
For the Fiscal Years Ended May
As of May 31, 2026 and May 25, 2025, we had receivables included in “Receivables” on our Consolidated Balance Sheets from our equity method investments of $3.7 million and $6.2 million, respectively. As of May 31, 2026 and May 25, 2025, we had payables included in “Accounts Payable” on our Consolidated Balance Sheets to our equity method investments of $23.4 million and $21.1 million, respectively,
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7. ACCRUED LIABILITIES
The components of accrued liabilities were as follows:
Compensation and benefits $ 162.4 $ 104.5
Dividends payable to shareholders 52.2 51.7
Current portion of operating lease obligations 27.7 23.9
Derivative liabilities and payables 4.1 7.0
8. DEBT AND FINANCING OBLIGATIONS
The components of our debt, including financing obligations, were as follows:
Amount Interest Rate Amount Interest Rate
Short-term borrowings:
Other credit facilities (a) 33.7 (a) 37.6 (a)
Long-term debt:
Financing obligations:
Lease financing obligations due on various dates through 2040 (d) 4.0 5.2
Total debt and financing obligations 3,928.7 4,148.2
Debt issuance costs (e) (13.5) (16.8)
Current portion of long-term debt and financing obligations (70.6) (77.8)
_____________________________________________________
(a)Other credit facilities consist of short-term facilities at our subsidiaries used for working capital purposes. Borrowings under these facilities bear interest at various rates.
(b)The interest rates applicable to the Term A-3, A-4, and A-5 loans do not include anticipated patronage dividends. We have received and expect to continue receiving patronage dividends under these term loan facilities.
(c)In May 2026, our subsidiary entered into a new RMB loan facility, due May 2031. The existing RMB loan facility, due February 2027 was repaid in full and terminated in connection with our subsidiary’s borrowing under the new RMB loan facility. See “RMB Loan Facilities” below for further information.
(d)The interest rates on our lease financing obligations ranged from 2.49% to 6.19% at May 31, 2026 and May 25, 2025. For more information on our lease financing obligations, see Note 9, Leases.
(e)Excludes debt issuance costs of $2.9 millionand $3.9 million as of May 31, 2026 and May 25, 2025, respectively, related to our Revolving Credit Facility, which are recorded in “Other assets” on our Consolidated Balance Sheets. In fiscal 2026, 2025, and 2024, we recorded $5.1 million, $4.8 million, and $4.5 million, respectively, of amortization expense in “Interest expense” in our Consolidated Statements of Earnings.
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Revolving Credit Facility
On May 3, 2024, we entered into an amended and restated credit agreement (the “Revolving Credit Agreement”), which replaced our then-existing credit agreement, dated as of November 9, 2016. The Revolving Credit Agreement modified the former revolving credit agreement for the purpose of, among other things, (i) increasing the commitments under the Revolving Credit Facility to $1.5 billion, (ii) extending the maturity date of the Revolving Credit Facility from August 2026 to May 2029, and (iii) establishing a new €200.0 million term loan facility maturing May 2029 (the “Euro Term Loan Facility”).
Borrowings under the Revolving Credit Facility bear interest at a per annum rate equal to (i) an applicable rate described in the table below plus (ii)(a) for U.S. dollar denominated loans, Term SOFR, Adjusted Daily Simple SOFR or the Base Rate (each as defined in the Revolving Credit Agreement), and (b) for Alternative Currency denominated loans, the Alternative Currency Term Rate or the Alternative Currency Daily Rate (each as defined in the Revolving Credit Agreement). Borrowings under the Euro Term Loan Facility bear interest at a per annum rate equal to (i) an applicable rate described in the table below plus (ii) the Alternative Currency Term Rate applicable to Euro denominated loans. The Revolving Credit Agreement contains certain covenant restrictions, a consolidated net leverage ratio and an interest coverage ratio and customary events of default.
At May 31, 2026, we had approximately $1.3 billion of availability under the Revolving Credit Facility.
Term Loan Facilities
On May 3, 2024, we entered into an amended and restated credit agreement (the “Term Loan Credit Agreement”), which replaced our then-existing credit agreement, dated as of June 28, 2019. The former term loan credit agreement provided for, among other things, (i) a $300.0 million term loan facility due June 2026 (the “Term A-1 Loan Facility”), (ii) a $325.0 million term loan facility due April 2025 (the “Term A-2 Loan Facility”) and (iii) a $450.0 million term loan facility due January 2030 (the “Term A-3 Loan Facility”). The Term Loan Credit Agreement modified the former term loan agreement for the purpose of, among other things, establishing an additional $325.0 million term loan facility due May 2029 (the “Term A-4 Loan Facility”). Borrowings under the Term A-4 Loan Facility were used in part to repay the Term A-2 Loan Facility in full.
On September 27, 2024, we amended the Term Loan Credit Agreement (the “Term Loan Amendment”) to, among other things, establish a new $500 million term loan facility with a maturity date of September 2031 (“Term A-5 Loan Facility”). Borrowings under the Term A-5 Loan Facility were used in part to repay the Term A-1 Loan Facility in full. Borrowings under the Term Loan Credit Agreement bear interest, before anticipated patronage dividends, at a per annum rate equal to (i) an applicable rate described in the table below plus (ii) the Adjusted Term SOFR Rate, the Base Rate or, in the case of Term A-4 and Term A-5 Loan Facilities, the Fixed Rate (each as defined in the Term Loan Credit Agreement). The Term Loan Credit Agreement contains certain covenant restrictions, a consolidated net leverage ratio and an interest coverage ratio and customary events of default.
On January 30, 2026, we further amended the Term Loan Credit Agreement to remove adjustments to the Secured Overnight Financing Rate (“SOFR”).
RMB Loan Facilities
On February 18, 2022, our wholly owned subsidiary, Ulanqab Lamb Weston Food Co., Ltd. (“Ulanqab”), entered into a facility agreement providing for a RMB ¥1,079.0 million (approximately $159 million based on prevailing exchange rates on May 31, 2026) term loan facility (the “RMB 2022 Loan Facility”), maturing on February 25, 2027. The RMB 2022 Loan Facility contained covenants that are standard for credit facilities originated in the People’s Republic of China. Payment obligations under the RMB 2022 Loan Facility were unconditionally guaranteed by Lamb Weston. As described below, the RMB 2022 Loan Facility was repaid in full and terminated in May 2026.
On August 22, 2024, Ulanqab entered into a facility agreement providing for a RMB ¥200 million (approximately $30 million based on prevailing exchange rates on May 31, 2026) term loan facility (the “RMB 2024 Loan Facility”). The RMB 2024 Loan Facility matures on August 28, 2029. The RMB 2024 Loan Facility contains covenants that are standard for credit facilities originated in the People’s Republic of China. Payment obligations under the RMB 2024 Loan Facility are unconditionally guaranteed by Lamb Weston.
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