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January 22, 2013 Kellogg Company Fourth Quarter And Full-Year 2012 Results Conference Call / Webcast
BATTLE CREEK, MICH. – Kellogg Company (NYSE: K) plans to issue its fourth quarter and full-year 2012 earnings results in a press release at approximately 8:00 am ET on Tuesday, February 5, 2013. The company will also host a public conference call / webcast during which Kellogg executive management will review and discuss these results. Speaking on behalf of Kellogg Company will be John Bryant, Kellogg Company president and CEO; Ron Dissinger, Kellogg Company Chief Financial Officer; and Michael Allen, President, U.S. Frozen Foods. A question and answer session with analysts and investors will follow. Live Conference Date: Tuesday, February 5, 2013 Time: 9:30 am – 10:30 am ET Teleconference Number: (877) 270-2148 in the U.S. (412) 902-6510 outside the U.S. Dial-in available beginning at 9:15 am ET, no access code needed. Presentation Slides: Printable slides available at approximately 8:00 am ET on Tuesday, February 5, at http://investor.kelloggs.com . Webcast: Live audio webcast with...
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October 10, 2012 Kellogg Company Third Quarter 2012 Results Conference Call / Webcast
BATTLE CREEK, Mich. Oct. 10, 2012 (GLOBE NEWSWIRE) - (NYSE:K) - Kellogg Company (NYSE:K) plans to issue its 2012 third quarter earnings results in a press release at approximately 8:00 am ET on Thursday, November 1, 2012 . The company will also host a public conference call / webcast during which Kellogg executive management will review and discuss these results. Speaking on behalf of Kellogg Company will be John Bryant , Kellogg Company president and CEO; and Ron Dissinger , Kellogg Company Chief Financial Officer. A question and answer session with analysts and investors will follow. Live Conference Date: Thursday, November 1, 2012     Time: 9:30 am – 10:30 am ET     Teleconference Number: (888) 338-8373 in the U.S.    (973) 872-3000 outside the U.S.    Dial-in available beginning at 9:15 am ET, no access code needed.     Presentation Slides: Printable slides available at approximately 8:00 am ET on Thursday,   November 1, at...
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  • Kellogg Company Third Quarter Results Conference Call / Webcast

    Kellogg Company (NYSE: K) plans to issue its 2014 third quarter earnings results in a press release at approximately 8:00 am ET on Thursday, October 30, 2014.

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  • The 2013 Annual Report is now available.

Investor Relations

Kellogg Company Reports Second-Quarter Results and Reaffirms Full-Year Earnings Guidance on a Currency-Neutral Basis

August 01,2013

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BATTLE CREEK, Mich., Aug. 1, 2013 (GLOBE NEWSWIRE) -- Kellogg Company (NYSE:K) today announced second quarter 2013 reported net sales of $3.7 billion, an increase of 6.9 percent from the second quarter of 2012. Internal net sales*, which exclude the effects of foreign currency translation, acquisitions, dispositions, and integration costs, decreased by 0.5 percent over the same period. Quarterly operating profit was $570 million, a reported increase of 9.6 percent; underlying internal operating profit* increased by 3.4 percent. The growth in operating profit was achieved despite the continued effect of higher net inflation. Underlying internal results exclude the effects of foreign currency translation, acquisitions, dispositions, mark-to-market accounting, and integration costs.

Reported second quarter 2013 earnings were $352 million, or $0.96 per diluted share, an increase of seven percent from the earnings of $0.90 per diluted share reported in the second quarter of 2012. Comparable earnings*, which exclude the impact of mark-to-market accounting and the integration costs associated with the acquisition of Pringles, were $1.00 per share; this result represents 5.3 percent growth from comparable earnings of $0.95 last year. This quarter's reported earnings included $0.03 per share of integration costs associated with last year's acquisition and $0.01 per share of commodity-related mark-to-market impact.

* Internal sales growth, underlying internal operating profit growth, comparable earnings, internal operating profit growth and cash flow are all non-GAAP financial measures. See the tables herein for important information regarding these measures and a full reconciliation to the most comparable GAAP measure.

"We are reaffirming our full-year earnings guidance on a currency-neutral basis," said John Bryant , Kellogg Company's president and chief executive officer. "While sales growth has been slower than we anticipated in developed markets, particularly the U.S., the work we have been doing on our cost base has enabled us to offset the impact. In addition, we have now owned Pringles for more than a year. The integration has gone very well, and we remain excited regarding the opportunities we see for future growth."

North America

Kellogg North America's reported net sales increased by 3.3 percent to $2.4 billion in the second quarter; internal net sales decreased by 1.6 percent. The U.S. Morning Foods segment posted a decline in reported and internal net sales of 3.3 percent. Reported net sales increased by eight percent in the U.S. Snacks business; internal net sales declined by 3.2 percent. The U.S. Specialty segment posted reported net sales growth of 8.1 percent and internal net sales growth of 1.9 percent. The North America Other segment reported net sales growth of five percent and internal net sales growth of 3.9 percent as the result of strong growth in the Frozen Food business. Second quarter North American reported operating profit increased by six percent; internal operating profit* increased by 3.2 percent. 

International

The Latin American business posted reported net sales growth of 11.3 percent and internal net sales growth of five percent in the quarter. European reported net sales increased by 17.9 percent; internal net sales decreased by 0.3 percent due to the difficult operating environment in the region. Reported net sales increased by 10 percent in the Asia Pacific segment; internal net sales increased by 4.1 percent, as the result of growth in Australia and strong double-digit growth in both South East Asia and India.

Interest and Tax

Interest expense was $61 million in the second quarter. The effective tax rate was 29.8 percent. 

Cash flow

Cash flow*, defined as cash from operating activities less capital expenditure, was $467 million for the first half of 2013, a decrease of $58 million compared to results from the first half of 2012; the year-over-year decline was the result of increased capital expenditure and last year's one-time benefit to working capital from the acquisition of Pringles.

Kellogg Reaffirms 2013 Earnings Per Share Guidance On a Currency-Neutral Basis

The company reaffirmed its guidance for full-year earnings per share of $3.84 to $3.93 per share on a currency-neutral basis, excluding integration costs and the impact of mark-to-market accounting. Previous guidance of $3.82 to $3.91 included $0.02 of negative impact from currency translation.   Reported earnings per share are now expected to include a negative impact from currency translation of $0.09 per share, a $0.07 increase from previous guidance. Reported sales growth is now expected to be approximately five percent; this change is due to the slower-than-expected growth in developed markets, particularly the U.S., and the negative impact of currency translation.  The company continues to expect that full-year cash flow will be between $1.1 and 1.2 billion

Conference Call / Webcast

Kellogg will host a conference call to discuss these results on August 1, 2013 at 9:30 a.m. Eastern Time. The conference call and accompanying presentation slides will be broadcast live over the Internet at http://investor.kelloggs.com. Analysts and institutional investors may participate in the Q&A session by dialing (877) 270-2148 in the U.S., and (412) 902-6510 outside of the U.S. Members of the media and the public are invited to attend in a listen-only mode. Rebroadcast information is available at http://investor.kelloggs.com.

About Kellogg Company

At Kellogg Company (NYSE:K), we are driven to enrich and delight the world through foods and brands that matter. With 2012 sales of $14.2 billion, Kellogg is the world's leading cereal company; second largest producer of cookies and crackers; a leading producer of savory snacks; and a leading North American frozen foods company. Every day, our well-loved brands nourish families so they can flourish and thrive. These brands include Kellogg's®, Keebler®, Special K®, Pringles®, Frosted Flakes®, Pop-Tarts®, Corn Flakes®, Rice Krispies®, Kashi®, Cheez-It®, Eggo®, Coco Pops®, Mini-Wheats®, and many more. To learn more about our responsible business leadership, foods that delight and how we strive to make a difference in our communities around the world, visit www.kelloggcompany.com.

Use of Non-GAAP Financial Measures

Certain financial measures have been provided on a non-GAAP (Generally Accepted Accounting Principles) basis. Management believes the use of such non-GAAP measures provides increased transparency and assists investors in understanding the underlying operating performance of the company and its segments and in the analysis of ongoing operating trends. All non-GAAP financial measures have been reconciled with the most directly comparable GAAP financial measures in the attachments provided with the release.

Forward-Looking Statements Disclosure

This news release contains, or incorporates by reference, "forward-looking statements" with projections concerning, among other things, the integration of the Pringles® business, the Company's strategy, and the Company's sales, earnings, margin, operating profit, costs and expenditures, interest expense, tax rate, capital expenditure, dividends, cash flow, debt reduction, share repurchases, costs, brand building, ROIC, working capital, growth, new products, innovation, cost reduction projects, and competitive pressures. Forward-looking statements include predictions of future results or activities and may contain the words "expects," "believes," "should," "will," "anticipates," "projects," "estimates," "implies," "can," or words or phrases of similar meaning.

The Company's actual results or activities may differ materially from these predictions. The Company's future results could also be affected by a variety of factors, including the ability to realize the anticipated benefits and synergies from the Pringles acquisition in the amounts and at the times expected, the impact of competitive conditions; the effectiveness of pricing, advertising, and promotional programs; the success of innovation, renovation and new product introductions; the recoverability of the carrying value of goodwill and other intangibles; the success of productivity improvements and business transitions; commodity and energy prices; labor costs; disruptions or inefficiencies in supply chain; the availability of and interest rates on short-term and long-term financing; actual market performance of benefit plan trust investments; the levels of spending on systems initiatives, properties, business opportunities, integration of acquired businesses, and other general and administrative costs; changes in consumer behavior and preferences; the effect of U.S. and foreign economic conditions on items such as interest rates, statutory tax rates, currency conversion and availability; legal and regulatory factors including changes in food safety, advertising and labeling laws and regulations; the ultimate impact of product recalls; business disruption or other losses from war, terrorist acts or political unrest; and other items. 

Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to update them publicly.

         
Kellogg Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(millions, except per share data)
 
  Quarter ended Year-to-date period ended
  June 29, June 30, June 29, June 30,
(Results are unaudited) 2013 2012 2013 2012
         
Net sales $3,714 $3,474 $7,575 $6,914
         
Cost of goods sold 2,237 2,035 4,705 4,122
Selling, general and administrative expense 907 920 1,797 1,746
         
Operating profit 570 519 1,073 1,046
         
Interest expense 61 89 121 122
Other income (expense), net (5) 7 (12) 20
         
Income before income taxes  504 437 940 944
Income taxes 150 113 274 269
Earnings (loss) from joint ventures (2)  -- (3)  --
Net income $352 $324 $663 $675
Net income (loss) attributable to noncontrolling interests   --  --  --  --
Net income attributable to Kellogg Company  $352 $324 $663 $675
         
Per share amounts:        
Basic $.96 $.91 $1.82 $1.89
Diluted $.96 $.90 $1.81 $1.88
         
Dividends per share $.4400 $.4300 $.8800 $.8600
         
Average shares outstanding:        
Basic 364 357 364 357
Diluted  367  359 366 359
         
Actual shares outstanding at period end     362 358
         
Kellogg Company and Subsidiaries
SELECTED OPERATING SEGMENT DATA
         
(millions)
  Quarter ended Year-to-date period ended
  June 29, June 30, June 29, June 30,
(Results are unaudited) 2013 2012 2013 2012
         
Net sales        
U.S. Morning Foods $863 $892 $1,774 $1,789
U.S. Snacks 917 850 1,818 1,636
U.S. Specialty 272 252 651 600
North America Other 388 369 791 737
Europe  723 613 1,415 1,151
Latin America  304 274 612 544
Asia Pacific 247 224 514 457
Consolidated $3,714 $3,474 $7,575 $6,914
         
         
Operating profit         
U.S. Morning Foods $180 $178 $343 $331
U.S. Snacks 130 121 236 244
U.S. Specialty 62 56 140 127
North America Other 78 70 153 140
Europe  75 64 146 134
Latin America  42 48 90 99
Asia Pacific 17 17 38 50
Total Reportable Segments 584 554 1,146 1,125
Corporate (14) (35) (73) (79)
Consolidated $570 $519 $1,073 $1,046
 
     
Kellogg Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(millions)
 
   Year-to-date period ended
   June 29,  June 30,
(unaudited)  2013  2012
     
Operating activities    
Net income $663 $675
Adjustments to reconcile net income to     
operating cash flows:    
 Depreciation and amortization 226 194
 Postretirement benefit plan expense (benefit) (8) (10)
 Deferred income taxes 9 (32)
 Other  60  (20)
Postretirement benefit plan contributions (36) (32)
Changes in operating assets and liabilities, net of acquisitions (209) (95)
     
Net cash provided by (used in) operating activities 705 680
     
Investing activities    
Additions to properties (238) (155)
Acquisitions, net of cash acquired  -- (2,674)
Other  (1) 6
     
Net cash provided by (used in) investing activities (239) (2,823)
     
Financing activities    
Net issuances of notes payable 71 500
Issuances of long-term debt 645  1,727
Reductions of long-term debt (760)  --
Net issuances of common stock 408 65
Common stock repurchases   (544) (63)
Cash dividends (320) (306)
Other  20 (3)
     
Net cash provided by (used in) financing activities (480) 1,920
     
Effect of exchange rate changes on cash and cash equivalents  (5) (7)
     
Decrease in cash and cash equivalents (19) (230)
Cash and cash equivalents at beginning of period 281 460
     
Cash and cash equivalents at end of period $262 $230
 
Supplemental financial data:    
     
Net cash provided by (used in) operating activities $705 $680
Additions to properties (238) (155)
Cash Flow (operating cash flow less property additions) (a) $467 $525
     
(a) We use this non-GAAP measure of cash flow to focus management and investors on the amount of cash available for debt reduction, dividend distributions, acquisition opportunities, and share repurchase.
     
Kellogg Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(millions, except per share data)
 
   June 29,  December 29,
   2013  2012
   (unaudited)  *
     
Current assets    
Cash and cash equivalents $262 $281
Accounts receivable, net  1,512  1,454
Inventories:    
 Raw materials and supplies  305  300
 Finished goods and materials in process  969  1,065
Deferred income taxes  161  152
Other prepaid assets  198  128
     
Total current assets 3,407 3,380
     
Property, net of accumulated depreciation of $5,246 and $5,209 3,719 3,782
Goodwill 5,019 5,038
Other intangibles, net of accumulated amortization of $56 and $53 2,347 2,359
Pension 171 145
Other assets 413 465
     
Total assets $15,076 $15,169
     
Current liabilities    
Current maturities of long-term debt $293 $755
Notes payable 1,136 1,065
Accounts payable 1,364 1,402
Accrued advertising and promotion 482 517
Accrued income taxes  31  46
Accrued salaries and wages 219 266
Other current liabilities 444 472
     
Total current liabilities 3,969 4,523
     
Long-term debt 6,337 6,082
Deferred income taxes  569 523
Pension liability 869 886
Nonpension postretirement benefits 273 281
Other liabilities 440 409
     
Commitments and contingencies    
     
Equity    
Common stock, $.25 par value 105 105
Capital in excess of par value 568 573
Retained earnings 5,939 5,615
Treasury stock, at cost (3,031) (2,943)
Accumulated other comprehensive income (loss)  (1,023) (946)
     
Total Kellogg Company equity 2,558 2,404
     
Noncontrolling interests  61 61
     
Total equity 2,619 2,465
     
Total liabilities and equity $15,076 $15,169
* Condensed from audited financial statements.
     
Kellogg Company and Subsidiaries
Reconciliation of Non-GAAP Amounts - Reported Operating  
Profit Growth to Underlying Internal Operating Profit Growth
     
  Quarter ended Year-to-date period ended
  June 29, 2013 June 29, 2013
     
Reported Operating Profit Growth(d) 9.6% 2.5%
Acquisitions/Dispositions 5.7% 6.6%
Integration costs 3.3% -0.4%
Foreign currency -1.5% -1.4%
Internal Operating Profit Growth(a) 2.1% -2.3%
Mark-to-market(b), (d) -1.3% -1.0%
Underlying Internal Operating Profit Growth(c) 3.4% -1.3%
     
(a) Internal operating profit growth excludes the impact of foreign currency, and, if applicable, acquisitions, dispositions, and transaction and integration costs associated with the acquisition of Pringles. The Company believes the use of this non-GAAP measure provides increased transparency and assists in understanding underlying operating performance. This non-GAAP measure is reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.
     
(b) Includes mark-to-market adjustments for pension plans and commodity contracts as reflected in cost of goods sold. Actuarial gains/losses for pension plans are recognized in the year they occur. In 2012, asset returns exceeded expectations by $211 million but discount rates fell almost 100 basis points for pension plans resulting in an unfavorable mark-to-market adjustment recorded in earnings in the fourth quarter of 2012. A portion of the 2012 pension mark-to-market adjustment was capitalized as an inventoriable cost at the end of 2012. This amount has been recorded in earnings in the first quarter of 2013. During the second quarter of 2013 there were no pension mark-to-market adjustments recorded to earnings. Mark-to-market adjustments for commodities reflect the changes in the fair value of contracts for the difference between contract and market prices for the underlying commodities. The resulting gains/losses are recognized in the quarter they occur.
     
(c) Underlying internal operating profit growth excludes the impact of foreign currency translation, pension and commodity mark-to-market adjustments, and, if applicable, acquisitions, dispositions, and transaction and integration costs associated with the acquisition of Pringles. The Company believes the use of this non-GAAP measure provides increased transparency and assists in understanding underlying operating performance. This non-GAAP measure is reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.
(d) Underlying reported operating profit growth is reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.
     
     
  Quarter ended Year-to-date period ended
  June 29, 2013 June 29, 2013
     
Reported Operating Profit Growth 9.6% 2.5%
Mark-to-market -1.3% -1.0%
Underlying Reported Operating Profit Growth 10.9% 3.5%
                     
Kellogg Company and Subsidiaries
                     
Analysis of net sales and operating profit performance
                     
Second quarter of 2013 versus 2012
                     
  U.S. U.S. U.S. North Amer. North   Latin Asia Corp- Consoli-
(dollars in millions) Morning Foods Snacks Specialty Other America Europe America Pacific orate dated
2013 net sales  $ 863  $ 917  $ 272  $ 388  $ 2,440  $ 723  $ 304  $ 247  $ --   $ 3,714
2012 net sales  $ 892  $ 850  $ 252  $ 369  $ 2,363  $ 613  $ 274  $ 224  $ --   $ 3,474
% change - 2013 vs. 2012:                    
Volume (tonnage) (a)         -1.9% -2.8% -2.8% 8.6%  --  -1.6%
Pricing/mix         .3% 2.5% 7.8% -4.5%  --  1.1%
Subtotal - internal business (b) -3.3% -3.2% 1.9% 3.9% -1.6% -.3% 5.0% 4.1%  --  -.5%
Acquisitions (c) --% 11.2% 6.2% 2.2% 5.0% 18.4% 6.5% 13.8%  --  8.0%
Dispositions (d) --% --% --% --% --% --% --% -1.2%  --  --%
Integration impact (e) --% --% --% --% --% --% --% -.6%  --  -.1%
Foreign currency impact --% --% --% -1.1% -.1% -.2% -.2% -6.1%  --  -.5%
Total change -3.3% 8.0% 8.1% 5.0% 3.3% 17.9% 11.3% 10.0%  --  6.9%
                     
 
 
  U.S. U.S. U.S. North Amer. North   Latin Asia Corp- Consoli-
(dollars in millions) Morning Foods Snacks Specialty Other America Europe America Pacific orate dated
2013 operating profit   $ 180  $ 130  $ 62  $ 78  $ 450  $ 75  $ 42  $ 17  $ (14)  $ 570
2012 operating profit  $ 178  $ 121  $ 56  $ 70  $ 425  $ 64  $ 48  $ 17  $ (35)  $ 519
% change - 2013 vs. 2012:                    
Internal business (b) 1.9% --% 2.3% 12.5% 3.2% 1.8% -8.3% 11.3% -10.1% 2.1%
Acquisitions (c) --% 11.9% 8.0% .2% 4.5% 11.2% 7.6% 6.3% -11.5% 5.6%
Dispositions (d) --% --% --% --% --% --% --% 3.4% --% .1%
Integration impact (e) --% -5.0% --% -.1% -1.5% 6.9% -.2% -10.3% 77.4% 3.3%
Foreign currency impact --% --% --% -1.2% -.2% -1.4% -9.1% -9.0% -2.6% -1.5%
Total change 1.9% 6.9% 10.3% 11.4% 6.0% 18.5% -10.0% 1.7% 53.2% 9.6%
                     
(a) The Company measures the volume impact (tonnage) on revenues based on the stated weight of our product shipments.
(b) Internal net sales and operating profit growth for 2013 exclude the impact of acquisitions, divestitures, integration costs and impact of currency. Internal net sales and operating profit growth are non-GAAP financial measures which are reconciled to the directly comparable measures in accordance with U.S. GAAP within these tables.
(c) Impact of results for the quarters ended June 29, 2013 and June 30, 2012 from the acquisition of Pringles.
(d) Impact of results for the quarter ended June 29, 2013 from the divestiture of the China cereal business.
(e) Includes impact of integration costs associated with the Pringles acquisition.
                     
Kellogg Company and Subsidiaries
                     
Analysis of net sales and operating profit performance
                     
Year-to-date 2013 versus 2012
                     
  U.S. U.S. U.S. North Amer. North   Latin Asia Corp- Consoli-
(dollars in millions) Morning Foods Snacks Specialty Other America Europe America Pacific orate dated
2013 net sales  $ 1,774  $ 1,818  $ 651  $ 791  $ 5,034  $ 1,415  $ 612  $ 514  $ --   $ 7,575
2012 net sales  $ 1,789  $ 1,636  $ 600  $ 737  $ 4,762  $ 1,151  $ 544  $ 457  $ --   $ 6,914
% change - 2013 vs. 2012:                    
Volume (tonnage) (a)         -.3% -.7% -1.3% 6.8%  --  -.1%
Pricing/mix         .4% 1.8% 7.5% -4.6%  --  .9%
Subtotal - internal business (b) -.8% -2.5% 2.8% 5.7% .1% 1.1% 6.2% 2.2%  --  .8%
Acquisitions (c) --% 13.6% 5.7% 2.7% 5.8% 22.6% 7.6% 17.4%  --  9.5%
Dispositions (d) --% --% --% --% --% --% --% -1.4%  --  -.1%
Integration impact (e) --% --% --% -.1% --% --% --% -.5%  --  --%
Foreign currency impact --% --% --% -.9% -.2% -.8% -1.3% -5.3%  --  -.6%
Total change -.8% 11.1% 8.5% 7.4% 5.7% 22.9% 12.5% 12.4%  --  9.6%
 
                     
  U.S. U.S. U.S. North Amer. North   Latin Asia Corp- Consoli-
(dollars in millions) Morning Foods Snacks Specialty Other America Europe America Pacific orate dated
2013 operating profit   $ 343  $ 236  $ 140  $ 153  $ 872  $ 146  $ 90  $ 38  $ (73)  $ 1,073
2012 operating profit  $ 331  $ 244  $ 127  $ 140  $ 842  $ 134  $ 99  $ 50  $ (79)  $ 1,046
% change - 2013 vs. 2012:                    
Internal business (b) 3.8% -12.8% 4.6% 8.5% -.1% .9% -6.9% -15.5% -17.9% -2.3%
Acquisitions (c) --% 13.6% 6.1% 2.1% 5.2% 12.7% 6.9% 12.2% -4.7% 6.7%
Dispositions (d) --% --% --% --% --% --% --% -1.4% --% -.1%
Integration impact (e) --% -4.0% --% -.7% -1.3% -2.6% -.3% -13.3% 28.6% -.4%
Foreign currency impact -.1% --% --% -1.0% -.2% -1.6% -8.3% -5.5% -1.2% -1.4%
Total change 3.7% -3.2% 10.7% 8.9% 3.6% 9.4% -8.6% -23.5% 4.8% 2.5%
                     
(a) The Company measures the volume impact (tonnage) on revenues based on the stated weight of our product shipments.
(b) Internal net sales and operating profit growth for 2013 exclude the impact of acquisitions, divestitures, integration costs and impact of currency. Internal net sales and operating profit growth are non-GAAP financial measures which are reconciled to the directly comparable measures in accordance with U.S. GAAP within these tables.
(c) Impact of results for the year-to-date periods ended June 29, 2013 and June 30, 2012 from the acquisition of Pringles.
(d) Impact of results for the year-to-date period ended June 29, 2013 from the divestiture of the China cereal and snacks businesses.
(e) Includes impact of integration costs associated with the Pringles acquisition.
             
Kellogg Company and Subsidiaries
Up-Front Costs*
$ millions
             
  Quarter ended June 29, 2013 Year-to-date period ended June 29, 2013
  Cost of
goods sold
Selling, general and
administrative expense
Total Cost of
goods sold
Selling, general and
administrative expense
Total
2013            
U.S. Morning Foods  $ 1  $ 1  $ 2  $ 2  $ 3  $ 5
U.S. Snacks  1  2  3  2  4  6
U.S. Specialty  1  --  1  1  1  2
North America Other  --  1  1  --  1  1
Europe  --  --  --  --  --  --
Latin America  --  --  --  --  --  --
Asia Pacific  --  --  --  6  --  6
Corporate  --  --  --  --  --  --
Total  $ 3  $ 4  $ 7  $ 11  $ 9  $ 20
             
  Quarter ended June 30, 2012 Year-to-date period ended June 30, 2012
  Cost of
goods sold
Selling, general and
administrative expense
Total Cost of
goods sold
Selling, general and
administrative expense
Total
2012            
U.S. Morning Foods  $ 2  $ 1  $ 3  $ 4  $ 3  $ 7
U.S. Snacks  --  3  3  2  4  6
U.S. Specialty  --  1  1  --  1  1
North America Other  --  --  --  --  1  1
Europe  2  --  2  3  --  3
Latin America  --  --  --  --  --  --
Asia Pacific  --  --  --  --  --  --
Corporate  --  --  --  --  --  --
Total  $ 4  $ 5  $ 9  $ 9  $ 9  $ 18
 
2013 Variance - better(worse) than 2012            
U.S. Morning Foods  $ 1  $ --  $ 1  $ 2  $ --  $ 2
U.S. Snacks  (1)  1  --  --  --  --
U.S. Specialty  (1)  1  --  (1)  --  (1)
North America Other  --  (1)  (1)  --  --  --
Europe  2  --  2  3  --  3
Latin America  --  --  --  --  --  --
Asia Pacific  --  --  --  (6)  --  (6)
Corporate  --  --  --  --  --  --
Total  $ 1  $ 1  $ 2  $ (2)  $ --  $ (2)
             
* Up-front costs are charges incurred by the Company which will result in future cash savings and/or reduced depreciation. 
                     
Kellogg Company and Subsidiaries
Transaction and Integration Costs*
$ millions
                     
  Quarter ended June 29, 2013 Year-to-date period ended June 29, 2013
  Net Sales Cost of goods sold Selling, general and administrative expense Other Income/Expense Total Net Sales Cost of goods sold Selling, general and administrative expense Other Income/Expense Total
2013                    
U.S. Snacks  $ --  $ 1  $ 7  $ --  $ 8  $ --  $ 1  $ 10  $ --  $ 11
North America Other  --  --  --  --  --  1  --  --  --  1
Europe  --  1  2  --  3  --  4  7  --  11
Asia Pacific  1  --  2  --  3  2  1  5  --  8
Corporate  --  --  2  --  2  --  --  5  --  5
Total  $ 1  $ 2  $ 13  $ --  $ 16  $ 3  $ 6  $ 27  $ --  $ 36
                     
  Quarter ended June 30, 2012 Year-to-date period ended June 30, 2012
  Net Sales Cost of goods sold Selling, general and administrative expense Other Income/Expense Total Net Sales Cost of goods sold Selling, general and administrative expense Other Income/Expense Total
2012                    
U.S. Snacks  $ --  $ --  $ 1  $ --  $ 1  $ --  $ --  $ 1  $ --  $ 1
North America Other  --  --  --  --  --  --  --  --  --  --
Europe  --  --  7  --  7  --  --  7  --  7
Latin America  --  --  --  --  --  --  --  --  --  --
Asia Pacific  --  --  1  --  1  --  --  1  --  1
Corporate  --  --  22  5  27  --  --  22  5  27
Total  $ --  $ --  $ 31  $ 5  $ 36  $ --  $ --  $ 31  $ 5  $ 36
 
2013 Variance - better(worse) than 2012                    
U.S. Snacks  $ --  $ (1)  $ (6)  $ --  $ (7)  $ --  $ (1)  $ (9)  $ --  $ (10)
North America Other  --  --  --  --  --  (1)  --  --  --  (1)
Europe  --  (1)  5  --  4  --  (4)  --  --  (4)
Asia Pacific  (1)  --  (1)  --  (2)  (2)  (1)  (4)  --  (7)
Corporate  --  --  20  5  25  --  --  17  5  22
Total  $ (1)  $ (2)  $ 18  $ 5  $ 20  $ (3)  $ (6)  $ 4  $ 5  $ --
                     
* Transaction and integration costs are charges incurred by the Company as a direct result of the work performed for the acquisition of the Pringles business.
 No transaction costs were incurred during the quarter and year-to-date periods ended June 29, 2013. 
               
Kellogg Company and Subsidiaries
RECAST SEGMENT DATA AS SHOWN ON Q1 2013 PRESS RELEASE
 
2012 (millions) Quarter ended Year-to-date period ended
  March 31, 2012 June 30, 2012 September 29, 2012 December 29, 2012 June 30, 2012 September 29, 2012 December 29, 2012
               
Net Sales (Recast*)              
U.S. Morning Foods  $ 897  $ 892  $ 903  $ 841  $ 1,789  $ 2,692  $ 3,533
U.S. Snacks  786  850  908  856  1,636  2,544  3,400
U.S. Specialty  348  252  264  257  600  864  1,121
North America Other  368  369  388  360  737  1,125  1,485
 North America Total  2,399  2,363  2,463  2,314  4,762  7,225  9,539
Europe  538  613  685  691  1,151  1,836  2,527
Latin America  270  274  292  285  544  836  1,121
Asia Pacific  233  224  280  273  457  737  1,010
Consolidated  $ 3,440  $ 3,474  $ 3,720  $ 3,563  $ 6,914  $ 10,634  $ 14,197
               
               
Operating Profit (Recast*)              
U.S. Morning Foods  $ 153  $ 178  $ 134  $ 123  $ 331  $ 465  $ 588
U.S. Snacks  123  121  117  115  244  361  476
U.S. Specialty  71  56  62  52  127  189  241
North America Other  70  70  67  58  140  207  265
 North America Total  417  425  380  348  842  1,222  1,570
Europe  70  64  76  51  134  210  261
Latin America  51  48  36  32  99  135  167
Asia Pacific  33  17  29  6  50  79  85
 Total Reportable Segments  571  554  521  437  1,125  1,646  2,083
Corporate  (44)  (35)  (8)  (434)  (79)  (87)  (521)
Consolidated  $ 527  $ 519  $ 513  $ 3  $ 1,046  $ 1,559  $ 1,562
* During the first quarter of 2013, the Kashi operating segment was eliminated. The Kashi financial results have been recast between U.S. Morning Foods and U.S. Snacks.
               
 
2012 (millions) Quarter ended Year-to-date period ended
  March 31, 2012 June 30, 2012 September 29, 2012 December 29, 2012 June 30, 2012 September 29, 2012 December 29, 2012
               
Net Sales (As originally reported)              
U.S. Morning Foods & Kashi  $ 941  $ 939  $ 946  $ 881  $ 1,880  $ 2,826  $ 3,707
U.S. Snacks  742  803  865  816  1,545  2,410  3,226
U.S. Specialty  348  252  264  257  600  864  1,121
North America Other  368  369  388  360  737  1,125  1,485
 North America Total  2,399  2,363  2,463  2,314  4,762  7,225  9,539
Europe  538  613  685  691  1,151  1,836  2,527
Latin America  270  274  292  285  544  836  1,121
Asia Pacific  233  224  280  273  457  737  1,010
Consolidated  $ 3,440  $ 3,474  $ 3,720  $ 3,563  $ 6,914  $ 10,634  $ 14,197
               
               
Operating Profit (As originally reported)              
U.S. Morning Foods & Kashi  $ 157  $ 181  $ 135  $ 122  $ 338  $ 473  $ 595
U.S. Snacks  119  118  116  116  237  353  469
U.S. Specialty  71  56  62  52  127  189  241
North America Other  70  70  67  58  140  207  265
 North America Total  417  425  380  348  842  1,222  1,570
Europe  70  64  76  51  134  210  261
Latin America  51  48  36  32  99  135  167
Asia Pacific  33  17  29  6  50  79  85
 Total Reportable Segments  571  554  521  437  1,125  1,646  2,083
Corporate  (44)  (35)  (8)  (434)  (79)  (87)  (521)
Consolidated  $ 527  $ 519  $ 513  $ 3  $ 1,046  $ 1,559  $ 1,562
         
Kellogg Company and Subsidiaries
Reconciliation of Non-GAAP Amounts - Reported Operating Profit
to Comparable Operating Profit
         
  Quarter ended Year-to-date period ended
  June 29, 2013 June 30, 2012 June 29, 2013 June 30, 2012
         
Reported Operating Profit  $ 570  $ 519  $ 1,073  $ 1,046
Mark-to-market(a)  (7)  --  (61)  (50)
Underlying Operating Profit(b)  $ 577  $ 519  $ 1,134  $ 1,096
Pringles integration costs  (16)  (31)  (36)  (31)
Comparable Operating Profit(c)  $ 593  $ 550  $ 1,170  $ 1,127
         
(a) Includes mark-to-market adjustments for pension plans and commodity contracts as reflected in cost of goods sold. Actuarial gains/losses for pension plans are recognized in the year they occur. In 2012, asset returns exceeded expectations by $211 million but discount rates fell almost 100 basis points for pension plans resulting in an unfavorable mark-to-market adjustment recorded in earnings in the fourth quarter of 2012. A portion of the 2012 pension mark-to-market adjustment was capitalized as an inventoriable cost at the end of 2012. This amount has been recorded in earnings in the first quarter of 2013. During the second quarter of 2013 there were no pension mark-to-market adjustments recorded to earnings. In 2011, asset returns were lower than expected by $471 million and discount rates declined resulting in an unfavorable mark-to-market adjustment recorded in earnings in the fourth quarter of 2011. A portion of the 2011 pension mark-to-market adjustment was capitalized as an inventoriable cost at the end of 2011. This amount was recorded in earnings in the first quarter of 2012. During the second quarter of 2012, there were no pension mark-to-market adjustments recorded in earnings. Mark-to-market adjustments for commodities reflect the changes in the fair value of contracts for the difference between contract and market prices for the underlying commodities. The resulting gains/losses are recognized in the quarter they occur.
         
(b) Underlying Operating Profit excludes the impact of mark-to-market adjustments on pension plans and commodity contracts. The Company believes the use of this non-GAAP measure provides increased transparency and assists in understanding underlying operating performance. This non-GAAP measure is reconciled to the directly comparable measure in accordance with U.S. GAAP within this table. Underlying operating profit for the quarters ended June 29, 2013 and June 30, 2012 includes postretirement benefit plan expense (income) of ($4) million and ($5) million, respectively. Underlying operating profit for the year-to-date periods ended June 29, 2013 and June 30, 2012 includes postretirement benefit plan expense (income) of ($8) million and ($10) million, respectively. 
         
(c) Comparable Operating Profit is a non-GAAP measure that excludes the impact of mark-to-market adjustments on pension plans and commodity contracts, and the impact of integration costs related to the acquisition of the Pringles business. 
             
Kellogg Company and Subsidiaries
Reconciliation of Non-GAAP Amounts - Reported EPS to Comparable EPS
             
  Quarter ended   Year-to-date period ended  
  June 29, 2013 June 30, 2012 Change vs. prior year June 29, 2013 June 30, 2012 Change vs. prior year
             
Reported EPS  $ 0.96  $ 0.90 6.7%  $ 1.81  $ 1.88 -3.7%
Mark-to-market(a)  (0.01)  --  -1.1%  (0.11)  (0.10) -0.7%
Underlying EPS(b)  $ 0.97  $ 0.90 7.8%  $ 1.92  $ 1.98 -3.0%
Pringles Integration costs (net of one-time benefits)  (0.03)  (0.05) 2.5%  (0.07)  --  -3.5%
Comparable EPS(c)  $ 1.00  $ 0.95 5.3%  $ 1.99  $ 1.98 0.5%
             
(a) Includes mark-to-market adjustments for pension plans and commodity contracts as reflected in cost of goods sold. Actuarial gains/losses for pension plans are recognized in the year they occur. In 2012, asset returns exceeded expectations by $211 million but discount rates fell almost 100 basis points for pension plans resulting in an unfavorable mark-to-market adjustment recorded in earnings in the fourth quarter of 2012. A portion of the 2012 pension mark-to-market adjustment was capitalized as an inventoriable cost at the end of 2012. This amount has been recorded in earnings in the first quarter of 2013. During the second quarter of 2013 there were no pension mark-to-market adjustments recorded to earnings. In 2011, asset returns were lower than expected by $471 million and discount rates declined resulting in an unfavorable mark-to-market adjustment recorded in earnings in the fourth quarter of 2011. A portion of the 2011 pension mark-to-market adjustment was capitalized as an inventoriable cost at the end of 2011. This amount was recorded in earnings in the first quarter of 2012. During the second quarter of 2012, there were no pension mark-to-market adjustments recorded in earnings. Mark-to-market adjustments for commodities reflect the changes in the fair value of contracts for the difference between contract and market prices for the underlying commodities. The resulting gains/losses are recognized in the quarter they occur.
             
(b) Underlying EPS is a non-GAAP measure that excludes the impact of pension and commodity mark-to-market adjustments.
             
(c) Comparable EPS is a non-GAAP measure that excludes the impact of mark-to-market adjustments on pension plans and commodity contracts, and the impact of integration costs net of one-time benefits related to the acquisition of the Pringles business. One-time benefits in the first quarter of 2012 consisted of a gain on transaction-related hedging. Second quarter 2012 net one-time benefits included foreign exchange and tax rate benefits which were partially offset by a loss on transaction-related hedging. 
CONTACT: Analyst Contact:
         Simon Burton, CFA (269) 961-6636
         Media Contact:
         Kris Charles (269) 961-3799

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