INCOME TAXES (Tables)

12 Months Ended

May 29, 2022


	For the Fiscal Years Ended May
(in millions)	2022		2021		2020
United States	$	287.9	$	352.0	$	462.0
Foreign		(15.2)		56.3		16.2
Total pre-tax income	$	272.7	$	408.3	$	478.2

Schedule of analysis of the components of the consolidated income tax provision


	For the Fiscal Years Ended May
(in millions)	2022		2021		2020
Current
U.S. federal	$	45.4	$	66.2	$	75.7
State and local		9.5		15.0		13.2
Foreign		3.4		5.5		3.4
Total current provision for taxes		58.3		86.7		92.3

Deferred
U.S. federal		10.0		(0.4)		18.6
State and local		(1.9)		1.2		4.4
Foreign		5.4		3.0		(3.0)
Total deferred provision for taxes	$	13.5	$	3.8	$	20.0
Total provision for taxes	$	71.8	$	90.5	$	112.3

Schedule of reconciliation of income tax expense using the statutory U.S. income tax rate compared with the actual income tax provision


	For the Fiscal Years Ended May
(in millions)	2022		2021		2020
Provision computed at U.S. statutory rate	$	57.3	$	85.7	$	100.4
Increase (reduction) in rate resulting from:
State and local taxes, net of federal benefit		6.4		13.7		15.3
Effect of taxes on foreign operations		(0.7)		(4.7)		(4.4)
Write-off of net investment in Russia (a)		13.2		—		—
Other		(4.4)		(4.2)		1.0
Total income tax expense	$	71.8	$	90.5	$	112.3
Effective income tax rate (b)		26.3%		22.2%		23.5%

(a)	In connection with Lamb-Weston/Meijer v.o.f.’s (“LWM”) intent to withdraw from Russia, we reflected a $13.2 million tax detriment as any loss realized upon the sale of shares is a non-deductible permanent difference.

(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. Excluding the write-off of our portion of LWM’s net investment in Russia, our effective tax rate was 21.4% in fiscal 2022.

Schedule of deferred income tax assets and liabilities


	May 29, 2022				May 30, 2021
(in millions)	Assets		Liabilities		Assets		Liabilities
Property, plant and equipment	$	—	$	189.4	$	—	$	187.1
Goodwill and other intangible assets		37.6		—		46.3		—
Compensation and benefit related liabilities		21.0		—		32.2		—
Net operating loss and credit carryforwards (a)		4.5		—		3.6		—
Accrued expenses and other liabilities		14.1		—		13.9		—
Inventory and inventory reserves		8.6		—		5.5		—
Lease obligations		26.9		—		32.0		—
Lease assets		—		25.1		—		30.3
Debt issuance costs		—		0.1		—		2.9
Equity method investments		—		3.4		—		4.7
Other		3.3		17.7		3.5		16.4
		116.0		235.7		137.0		241.4
Less: Valuation allowance (b)		(50.1)		—		(53.1)		—
Net deferred taxes (c)	$	65.9	$	235.7	$	83.9	$	241.4

(a)

At May 29, 2022, Lamb Weston had approximately $7.6 million of gross ($1.6 million after-tax) foreign net operating loss carryforwards, which will not expire. Lamb Weston also had a foreign tax credit carryforward of $1.2 million, which will expire by fiscal 2032, and a state business credit carryforward of $1.7 million, which will expire by fiscal 2036.

(b)	The valuation allowance is predominantly related to non-amortizable intangible assets. The net impact on income tax expense related to changes in the valuation allowance, including net operating loss carryforwards, was zero in fiscal 2022, 2021, and 2020.

(c)

Deferred tax assets of $2.7 million and $2.2 million as of May 29, 2022 and May 30, 2021, respectively, were presented in “Other assets.” Deferred tax liabilities of $172.5 million and $159.7 million as of May 29, 2022 and May 30, 2021, 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.

Schedule of change in the unrecognized tax benefits


	For the Fiscal Years Ended May
(in millions)	2022			2021	2020
Beginning balance	$	37.1	$	31.3	$	21.7
Decreases from positions established during prior fiscal years		—		—		—
Increases from positions established during current and prior fiscal years		9.5		8.7		10.3
Decreases relating to settlements with taxing authorities		(1.0)		(0.8)		—
Expiration of statute of limitations		(5.2)		(2.1)		(0.7)
Ending balance (a)	$	40.4	$	37.1	$	31.3

(a)

If we were to prevail on the unrecognized tax benefits recorded as of May 29, 2022 and May 30, 2021, it would result in a tax benefit of $34.3 million and $31.6 million, respectively, and a reduction in the effective tax rate. The ending balances exclude $7.3 million and $7.2 million of gross interest and penalties in fiscal 2022 and 2021, respectively. We accrue interest and penalties associated with uncertain tax positions as part of income tax expense.