16. SEGMENTS

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				Thirty-Nine Weeks Ended
	February 26,		February 28,		February 26,		February 28,
(in millions)	2017		2016		2017		2016
Net sales:
Global	$	391.6	$	381.4	$	1,203.4	$	1,152.5
Foodservice		242.2		219.9		753.0		691.4
Retail		99.7		98.5		285.8		278.0
Other		35.0		28.9		93.3		94.9
Total net sales		768.5		728.7		2,335.5		2,216.8
Product contribution margin (a):
Global		93.2		85.6		259.1		219.9
Foodservice		84.1		64.8		243.8		182.7
Retail		23.1		23.2		63.6		51.8
Other		2.2		4.0		5.0		12.9
Total product contribution margin		202.6		177.6		571.5		467.3
Equity method investment earnings (b)		12.7		36.1		29.5		56.3
Total product contribution margin plus equity method investment earnings		215.3		213.7		601.0		523.6
Other selling, general and administrative expenses (a) (c)		57.4		50.3		175.8		145.9
Interest expense, net		26.3		1.5		34.5		4.3
Income tax expense		44.0		53.2		129.0		124.2
Net income		87.6		108.7		261.7		249.2
Less: Income attributable to noncontrolling interests		3.4		1.3		10.7		6.5
Net income attributable to Lamb Weston Holdings, Inc.	$	84.2	$	107.4	$	251.0	$	242.7

(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 thirty-nine weeks ended February 28, 2016, both include a $17.7 million non-cash gain related to the settlement of a pension plan of our Lamb-Weston/Meijer joint venture.

(c)

The thirteen and thirty-nine weeks ended February 26, 2017 include $5.1 million and $23.8 million, respectively, of pre-tax expenses related to the Separation. The thirteen and thirty-nine weeks ended February 28, 2016, both include $0.7 million of pre-tax Separation-related expenses. In all periods, 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 11% of consolidated “Net sales” in all periods presented in our Condensed Combined and Consolidated Statements of Earnings.