LAMB WESTON HOLDINGS, INC. (Exact name of registrant as specified in - PDF document

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 27, 2016 OR ☐ ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 F or the transition period from to Commission File Number: 1-37830 LAMB WESTON HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware 61-1797411 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 599 S. Rivershore Lane Eagle, Idaho 83616 (Address of principal executive offices) (Zip Code) (208) 938-1047 (Registrant’s telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) I ndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒ * * The registrant became subject to such requirements on October 12, 2016. Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☐  Accelerated filer ☐ Non-accelerated filer ☒ (Do not check if a smaller reporting company) Smaller reporting company  ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of December 30, 2016, the Registrant had 146,058,934 shares of common stock, par value $1.00 per share, outstanding.

Table of Contents Table of Contents Part I. FINANCIAL INFORMATION Item 1 Financial Statements 3 Unaudited Condensed Combined and Consolidated Statements of Earnings for the Thirteen and Twenty-Six Weeks ended November 27, 2016 and November 29, 2015 3 Unaudited Condensed Combined and Consolidated Statements of Comprehensive Income (Loss) for the Thirteen and Twenty-Six Weeks ended November 27, 2016 and November 29, 2015 4 Unaudited Condensed Combined and Consolidated Balance Sheets a s of November 27, 2016 and May 29, 2016 5 Unaudited Condensed Combined and Consolidated Statements of Cash Flows for the Twenty-Six Weeks ended November 27, 2016 and November 29, 2015 6 Notes to Condensed Combined and Consolidated Financial Statements 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 27 Item 3 Quantitative and Qualitative Disclosures About Market Risk 38 Item 4 Controls and Procedures 38 Part II. OTHER INFORMATION 38 Item 1 Legal Proceedings 38 Item 1A Risk Factors 38 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 39 Item 3 Defaults Upon Senior Securities 39 Item 4 Mine Safety Disclosures 39 Item 5 Other Information 39 Item 6 Exhibits 40 All reports we file with the Securities and Exchange Commission (SEC) are available free of charge via the Electronic Data Gathering Analysis and Retrieval (EDGAR) System on the SEC’s website at www.sec.gov. We also provide copies of our SEC filings at no charge upon request and make electronic copies of our reports available through our website at www.lambweston.com as soon as reasonably practicable after filing such material with the SEC. 2

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

Table of Contents Lamb Weston Holdings, Inc. Condensed Combined and Consolidated Statements of Comprehensive Income (Loss) (unaudited, dollars in millions) Thirteen Weeks Ended Thirteen Weeks Ended November 27, 2016 November 29, 2015 Tax Tax Pre-Tax (Expense) After-Tax Pre-Tax (Expense) After-Tax Amount Benefit Amount Amount Benefit Amount Net income $ 124.9 $ (33.9) $ 91.0 $ 115.7 $ (38.7) $ 77.0 Other comprehensive income (loss): Unrealized currency translation gains (losses) (11.9) — (11.9) (8.6) — (8.6) Comprehensive income (loss) 113.0 (33.9) 79.1 107.1 (38.7) 68.4 Less: Comprehensive income attributable to noncontrolling interests 3.8 — 3.8 3.7 — 3.7 Comprehensive income (loss) attributable to $ 109.2 $ (33.9) $ 75.3 $ 103.4 $ (38.7) $ 64.7 Lamb Weston Twenty-Six Weeks Ended Twenty-Six Weeks Ended November 27, 2016 November 29, 2015 Tax Tax Pre-Tax (Expense) After-Tax Pre-Tax (Expense) After-Tax Amount Benefit Amount Amount Benefit Amount Net income $ 259.0 $ (84.9) $ 174.1 $ 211.5 $ (71.0) $ 140.5 Other comprehensive income (loss): Unrealized pension and post-employment benefit obligations — — — 6.7 (1.7) 5.0 Unrealized currency translation gains (losses) (13.0) — (13.0) (10.4) — (10.4) Comprehensive income (loss) 246.0 (84.9) 161.1 207.8 (72.7) 135.1 Less: Comprehensive income attributable to noncontrolling interests 7.3 — 7.3 5.2 — 5.2 Comprehensive income (loss) attributable to Lamb Weston $ 238.7 $ (84.9) $ 153.8 $ 202.6 $ (72.7) $ 129.9 See Notes to Condensed Combined and Consolidated Financial Statements. 4

Table of Contents Lamb Weston Holdings, Inc. Condensed Combined and Consolidated Balance Sheets (unaudited, dollars in millions except share data) November 27, May 29, 2016 2016 ASSETS Current assets: Cash and cash equivalents $ 69.4 $ 36.4 Receivables, less allowance for doubtful accounts of $0.6 and $0.5 232.2 186.5 Inventories 615.9 498.9 Prepaid expenses and other current assets 18.5 58.2 Total current assets 936.0 780.0 Property, plant and equipment, net 1,134.3 1,043.1 Goodwill 131.7 133.9 Intangible assets, net 38.3 39.6 Equity method investments 150.8 155.2 Other assets 9.1 6.5 Total assets $ 2,400.2 $ 2,158.3 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Revolving credit facility $ 80.0 $ — Notes payable 25.2 24.9 Current portion of long-term debt 39.0 13.5 Accounts payable 314.3 238.0 Accrued liabilities 146.6 133.2 Total current liabilities 605.1 409.6 Long-term liabilities: Long-term debt, excluding current portion 2,382.0 104.6 Deferred income taxes 56.9 144.0 Other noncurrent liabilities 64.8 52.1 Total long-term liabilities 2,503.7 300.7 Commitment and contingencies Redeemable noncontrolling interest 50.0 47.4 Stockholders' equity: Common stock of $1.00 par value, 600,000,000 shares authorized; 146,046,395 shares issued 146.0 — Parent companies' invested equity — 1,409.8 Additional distributed capital (897.7) — Retained earnings 15.3 — Accumulated other comprehensive loss (22.2) (9.2) Total stockholders' equity (deficit) (758.6) 1,400.6 Total liabilities and stockholders’ equity (deficit) $ 2,400.2 $ 2,158.3 See Notes to Condensed Combined and Consolidated Financial Statements. 5