BUSINESS SEGMENTS AND RELATED INFORMATION

6 Months Ended

Nov. 27, 2016

BUSINESS SEGMENTS AND RELATED INFORMATION

BUSINESS SEGMENTS AND RELATED INFORMATION

16.    BUSINESS SEGMENTS AND RELATED INFORMATION

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

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

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

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

Assets by Segment

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

Other Information

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