Kellogg Company Reports Earnings Per Share At The High End Of Guidance For 2012 And Reaffirms Guidance For 2013 Growth

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 ended
(Results are unaudited)	December 29, 2012 (a)	December 31, 2011 (b)	December 29, 2012 (a)	December 31, 2011 (b)
Net sales	$3,563	$3,015	$14,197	$13,198
Cost of goods sold	2,387	2,144	8,763	8,046
Selling, general and administrative expense	1,173	1,109	3,872	3,725
Operating profit	3	(238)	1,562	1,427
Interest expense	66	55	261	233
Other income (expense), net	(6)	--	24	(10)
Income before income taxes	(69)	(293)	1,325	1,184
Income taxes	(37)	(98)	363	320
Earnings from joint ventures	--	--	(1)	--
Net income	($32)	($195)	$961	$864
Net loss attributable to noncontrolling interests	--	--	--	(2)
Net income attributable to Kellogg Company	($32)	($195)	$961	$866
Per share amounts:
Basic	($0.09)	($.54)	$2.68	$2.39
Diluted	($0.09)	($.54)	$2.67	$2.38
Dividends per share	$.440	$.430	$1.740	$1.670
Average shares outstanding:
Basic	359	358	358	362
Diluted	359	358	360	364
Actual shares outstanding at year end			361	357
(a) Financial results for the quarter and year-to-date periods ended December 29, 2012 include the impact of adopting new pension and post-retirement benefit plan accounting.
(b) Results for the quarter and year-to-date periods ended December 31, 2011 have been re-cast to include the impact of adopting new pension and post-retirement benefit plan accounting.

Kellogg Company and Subsidiaries
SELECTED OPERATING SEGMENT DATA
(millions)
	Quarter ended		Year-to-date period ended
(Results are unaudited)	December 29, 2012 (a)	December 31, 2011 (b)	December 29, 2012 (a)	December 31, 2011 (b)
Net sales
U.S. Morning Foods & Kashi	$881	$829	$3,707	$3,611
U.S. Snacks	816	702	3,226	2,883
U.S. Specialty	257	219	1,121	1,008
North America Other	360	311	1,485	1,371
Europe	691	494	2,527	2,334
Latin America	285	233	1,121	1,049
Asia Pacific	273	227	1,010	942
Consolidated	$3,563	$3,015	$14,197	$13,198
Operating profit
U.S. Morning Foods & Kashi	$122	$131	$595	$611
U.S. Snacks	116	112	469	437
U.S. Specialty	52	46	241	231
North America Other	58	55	265	250
Europe	51	42	261	302
Latin America	32	24	167	176
Asia Pacific	6	26	85	104
Total Reportable Segments	437	436	2,083	2,111
Corporate	(434)	(674)	(521)	(684)
Consolidated	$3	($238)	$1,562	$1,427
(a) Financial results for the quarter and year-to-date periods ended December 29, 2012 include the impact of adopting new pension and post-retirement benefit plan accounting.
(b) Results for the quarter and year-to-date periods ended December 31, 2011 have been re-cast to include the impact of adopting new pension and post-retirement benefit plan accounting. In addition to the change in accounting, the Company also changed the way pension and post-retirement benefit related costs are allocated to its reportable segments. Previously the Company allocated all components of net pension and post-retirement benefit expense (i.e. service cost, interest cost, expected return on assets, amortization of gains/loss and prior service cost) to the individual reportable segment. The Company has changed its allocation methodology whereby the reportable segments will only be allocated service cost and prior service cost. Interest cost, expected return on assets and the annual mark-to-market adjustment are recorded in Corporate. This change in allocation provides improved transparency into the underlying operating results of the reportable segments. Costs that are more sensitive to changes in actuarial assumptions (including discount rates and expected return on assets) are recorded in Corporate where they are centrally managed.

Kellogg Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(millions)
	Year ended
(unaudited)	December 29, 2012 (a)	December 31, 2011 (b)
Operating activities
Net income	$961	$864
Adjustments to reconcile net income to operating cash flows:
Depreciation and amortization	448	369
Postretirement benefit plan expense	419	684
Deferred income taxes	(159)	(93)
Other	(21)	(115)
Postretirement benefit plan contributions	(51)	(192)
Changes in operating assets and liabilities	161	78
Net cash provided by operating activities	1,758	1,595
Investing activities
Additions to properties	(533)	(594)
Acquisitions, net of cash acquired	(2,668)	--
Other	(44)	7
Net cash used in investing activities	(3,245)	(587)
Financing activities
Net issuances of notes payable	796	189
Issuances of long-term debt	1,727	895
Reductions of long-term debt	(750)	(945)
Net issuances of common stock	229	291
Common stock repurchases	(63)	(798)
Cash dividends	(622)	(604)
Other	--	15
Net cash provided by (used in) financing activities	1,317	(957)
Effect of exchange rate changes on cash and cash equivalents	(9)	(35)
Increase (decrease) in cash and cash equivalents	(179)	16
Cash and cash equivalents at beginning of period	460	444
Cash and cash equivalents at end of period	$281	$460
Supplemental financial data:
Cash Flow (operating cash flow less property additions) (c)	$1,225	$1,001
(a) Financial results for the year-to-date period ended December 29, 2012 include the impact of adopting new pension and and post-retirement benefit plan accounting.
(b) Results for the year-to-date period ended December 31, 2011 have been re-cast to include the impact of adopting new pension and post-retirement benefit plan accounting.
(c) 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)
	December 29, 2012 (a) (unaudited)	December 31, 2011 (b)  *
Current assets
Cash and cash equivalents	$281	$460
Accounts receivable, net	1,454	1,188
Inventories:
Raw materials and supplies	300	247
Finished goods and materials in process	1,065	927
Deferred income taxes	159	149
Other prepaid assets	128	98
Total current assets	3,387	3,069
Property, net of accumulated depreciation of $5,209 and $4,847	3,782	3,281
Goodwill	5,053	3,623
Other intangibles, net of accumulated amortization of $53 and $49	2,359	1,454
Pension	184	150
Other assets	478	366
Total assets	$15,243	$11,943
Current liabilities
Current maturities of long-term debt	$755	$761
Notes payable	1,065	234
Accounts payable	1,402	1,189
Accrued advertising and promotion	517	410
Accrued income taxes	52	66
Accrued salaries and wages	266	242
Other current liabilities	473	411
Total current liabilities	4,530	3,313
Long-term debt	6,082	5,037
Deferred income taxes	536	643
Pension liability	787	560
Nonpension postretirement benefits	414	188
Other liabilities	414	404
Commitments and contingencies
Equity
Common stock, $.25 par value	105	105
Capital in excess of par value	573	522
Retained earnings	5,615	5,305
Treasury stock, at cost	(2,943)	(3,130)
Accumulated other comprehensive income (loss)	(931)	(1,006)
Total Kellogg Company equity	2,419	1,796
Noncontrolling interests	61	2
Total equity	2,480	1,798
Total liabilities and equity	$15,243	$11,943
* Condensed from audited financial statements.
(a) Financial results for the year ended December 29, 2012 include the impact of adopting new pension and post-retirement benefit plan accounting.
(b) Results for the year ended December 31, 2011 have been re-cast to include the impact of adopting new pension and post-retirement benefit plan accounting.

Kellogg Company and Subsidiaries
Reconciliation of Non-GAAP Amounts - Reported Operating Profit Growth to Comparable Internal Operating Profit Growth
	Quarter ended	Year-to-date period ended
	December 29, 2012	December 29, 2012
Reported Operating Profit Growth	101.2%	9.5%
Acquisitions/Dispositions	19.3%	8.6%
Integration costs	-11.4%	-5.4%
Foreign currency	-1.0%	-1.2%
Internal Operating Profit Growth	94.3%	7.5%
Mark-to-market (a)	103.9%	13.2%
Adjusted Operating Profit Growth (b)	-9.6%	-5.7%
Impact of Changes to Pension Accounting (c)	-2.0%	0.2%
Comparable Internal Operating Profit Growth (d)	-7.6%	-5.9%
(a) Actuarial gains/losses are recognized in the year they occur. In 2012, asset returns exceeded expectations but discount rates fell almost 100 basis points resulting in a net loss.
(b) Adjusted Operating Profit Growth is a non-GAAP measure that excludes the impact of pension and post-retirement benefits mark-to-market entries and will act as the 2012 base for future comparisons.
(c) Primarily amortization of actuarial gains and losses not included in reported amounts. This adjustment is necessary to provide visibility into comparable operating profit growth (non-GAAP).
(d) Comparable Internal Operating Profit Growth calculated to correspond to previously provided guidance. This measure eliminates the impact resulting from the adoption of new pension and post-retirement benefits accounting and is a non-GAAP measure.

Kellogg Company and Subsidiaries
Analysis of net sales and operating profit performance
Fourth quarter of 2012 versus 2011
(dollars in millions)	U.S. Morning Foods & Kashi	U.S. Snacks	U.S. Specialty	North America Other	North America	Europe	Latin America	Asia Pacific	Corp- orate	Consoli- dated
2012 net sales	$ 881	$ 816	$ 257	$ 360	$ 2,314	$ 691	$ 285	$ 273	$ --	$ 3,563
2011 net sales	$ 829	$ 702	$ 219	$ 311	$ 2,061	$ 494	$ 233	$ 227	$ --	$ 3,015
% change - 2012 vs. 2011:
Volume (tonnage) (c)					3.4%	-.1%	-.6%	6.4%	--	2.6%
Pricing/mix					2.1%	2.8%	10.0%	-1.8%	--	2.7%
Subtotal - internal business (d)	6.3%	.7%	10.0%	11.2%	5.5%	2.7%	9.4%	4.6%	--	5.3%
Acquisitions (e)	--%	15.5%	7.3%	3.5%	6.6%	37.8%	10.4%	20.2%	--	13.0%
Dispositions (f)	--%	--%	--%	--%	--%	--%	--%	-3.7%	--	-.3%
Integration impact (g)	--%	--%	--%	--%	--%	--%	--%	-.4%	--	--%
Foreign currency impact	--%	--%	--%	1.2%	.2%	-.6%	2.2%	-.2%	--	.2%
Total change	6.3%	16.2%	17.3%	15.9%	12.3%	39.9%	22.0%	20.5%	--	18.2%
(dollars in millions)	U.S. Morning Foods & Kashi	U.S. Snacks	U.S. Specialty	North America Other	North America	Europe	Latin America	Asia Pacific	Corp- orate	Consoli- dated
2012 operating profit (a)	$ 122	$ 116	$ 52	$ 58	$ 348	$ 51	$ 32	$ 6	$ (434)	$ 3
2011 operating profit (b)	$ 131	$ 112	$ 46	$ 55	$ 344	$ 42	$ 24	$ 26	$ (674)	$ (238)
% change - 2012 vs. 2011:
Internal business (d)	-6.9%	-1.7%	9.0%	2.3%	-1.6%	-7.7%	19.7%	-72.3%	36.6%	94.3%
Acquisitions (e)	--%	13.8%	4.5%	3.8%	5.7%	49.0%	15.5%	6.5%	-.4%	18.2%
Dispositions (f)	--%	--%	--%	--%	--%	--%	--%	8.8%	--%	1.1%
Integration impact (g)	--%	-9.2%	--%	--%	-3.0%	-24.4%	-1.2%	-12.6%	-.4%	-11.4%
Foreign currency impact	--%	--%	--%	1.5%	.2%	4.7%	2.2%	-6.7%	-.4%	-1.0%
Total change	-6.9%	2.9%	13.5%	7.6%	1.3%	21.6%	36.2%	-76.3%	35.4%	101.2%
(a) Financial results for the quarter ended December 29, 2012 include the impact of adopting new pension and post-retirement benefit plan accounting.
(b) Financial results for the quarter ended December 31, 2011 have been re-cast to include the impact of adopting new pension and post-retirement benefit plan accounting.
(c) We measure the volume impact (tonnage) on revenues based on the stated weight of our product shipments.
(d) Internal net sales and operating profit growth for 2012, 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.
(e) Impact of results for the quarter ended December 29, 2012 from the acquisition of Pringles.
(f) Impact of results for the quarter ended December 29, 2012 from the divestiture of Navigable Foods.
(g) 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 2012 versus 2011
(dollars in millions)	U.S. Morning Foods & Kashi	U.S. Snacks	U.S. Specialty	North America Other	North America	Europe	Latin America	Asia Pacific	Corp- orate	Consoli- dated
2012 net sales	$ 3,707	$ 3,226	$ 1,121	$ 1,485	$ 9,539	$ 2,527	$ 1,121	$ 1,010	$ --	$ 14,197
2011 net sales	$ 3,611	$ 2,883	$ 1,008	$ 1,371	$ 8,873	$ 2,334	$ 1,049	$ 942	$ --	$ 13,198
% change - 2012 vs. 2011:
Volume (tonnage) (c)					--%	-4.8%	-2.2%	4.5%	--	-.8%
Pricing/mix					3.6%	1.0%	8.9%	-1.8%	--	3.3%
Subtotal - internal business (d)	2.7%	1.9%	7.4%	7.0%	3.6%	-3.8%	6.7%	2.7%	--	2.5%
Acquisitions (e)	--%	10.0%	3.8%	1.8%	4.0%	16.6%	4.2%	10.9%	--	6.7%
Dispositions (f)	--%	--%	--%	--%	--%	--%	--%	-3.4%	--	-.2%
Integration impact (g)	--%	--%	--%	--%	--%	--%	--%	-.1%	--	--%
Foreign currency impact	--%	--%	--%	-.5%	-.1%	-4.5%	-4.1%	-2.8%	--	-1.4%
Total change	2.7%	11.9%	11.2%	8.3%	7.5%	8.3%	6.8%	7.3%	--	7.6%
(dollars in millions)	U.S. Morning Foods & Kashi	U.S. Snacks	U.S. Specialty	North America Other	North America	Europe	Latin America	Asia Pacific	Corp- orate	Consoli- dated
2012 operating profit (a)	$ 595	$ 469	$ 241	$ 265	$ 1,570	$ 261	$ 167	$ 85	$ (521)	$ 1,562
2011 operating profit (b)	$ 611	$ 437	$ 231	$ 250	$ 1,529	$ 302	$ 176	$ 104	$ (684)	$ 1,427
% change - 2012 vs. 2011:
Internal business (d)	-2.7%	-.8%	1.2%	5.2%	-.3%	-15.8%	-3.7%	-28.7%	29.3%	7.5%
Acquisitions (e)	--%	12.4%	3.1%	1.7%	4.3%	12.6%	2.6%	7.6%	-.8%	7.8%
Dispositions (f)	--%	--%	--%	--%	--%	--%	--%	9.7%	--%	.8%
Integration impact (g)	--%	-4.3%	--%	--%	-1.2%	-8.0%	-.4%	-4.5%	-4.1%	-5.4%
Foreign currency impact	.0%	--%	--%	-.7%	-.1%	-2.3%	-3.5%	-2.5%	-.6%	-1.2%
Total change	-2.7%	7.3%	4.3%	6.2%	2.7%	-13.5%	-5.0%	-18.4%	23.8%	9.5%
(a) Financial results for the year ended December 29, 2012 include the impact of adopting new pension and post-retirement benefit plan accounting.
(b) Financial results for the year ended December 31, 2011 have been re-cast to include the impact of adopting new pension and post-retirement benefit plan accounting.
(c) We measure the volume impact (tonnage) on revenues based on the stated weight of our product shipments.
(d) Internal net sales and operating profit growth for 2012, 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.
(e) Impact of results for the year ended December 29, 2012 from the acquisition of Pringles.
(f) Impact of results for the year ended December 29, 2012 from the divestiture of Navigable Foods.
(g) Includes impact of integration costs associated with the Pringles acquisition.

Kellogg Company and Subsidiaries
Up-Front Costs*
$ millions
	Quarter ended December 29, 2012			Year-to-date period ended December 29, 2012
	Cost of goods sold (a)	Selling, general and administrative expense	Total	Cost of goods sold (a)	Selling, general and administrative expense	Total
2012
U.S. Morning Foods & Kashi	$ 4	$ 1	$ 5	$ 11	$ 5	$ 16
U.S. Snacks	2	(2)	--	6	4	10
U.S. Specialty	--	--	--	--	1	1
North America Other	3	--	3	5	1	6
Europe	--	--	--	3	--	3
Latin America	1	1	2	1	1	2
Asia Pacific	17	--	17	17	1	18
Corporate	--	--	--	--	--	--
Total	$ 27	$ --	$ 27	$ 43	$ 13	$ 56
	Quarter ended December 31, 2011			Year-to-date period ended December 31, 2011
	Cost of goods sold (a)	Selling, general and administrative expense	Total	Cost of goods sold (a)	Selling, general and administrative expense	Total
2011
U.S. Morning Foods & Kashi	$ 1	$ 1	$ 2	$ 7	$ 4	$ 11
U.S. Snacks	2	2	4	7	17	24
U.S. Specialty	--	--	--	--	1	1
North America Other	2	1	3	5	1	6
Europe	3	1	4	15	1	16
Latin America	--	--	--	--	1	1
Asia Pacific	--	--	--	2	--	2
Corporate	--	--	--	--	--	--
Total	$ 8	$ 5	$ 13	$ 36	$ 25	$ 61
2012 Variance - better(worse) than 2011
U.S. Morning Foods & Kashi	$ (3)	$ --	$ (3)	$ (4)	$ (1)	$ (5)
U.S. Snacks	--	4	4	1	13	14
U.S. Specialty	--	--	--	--	--	--
North America Other	(1)	1	--	--	--	--
Europe	3	1	4	12	1	13
Latin America	(1)	(1)	(2)	(1)	--	(1)
Asia Pacific	(17)	--	(17)	(15)	(1)	(16)
Corporate	--	--	--	--	--	--
Total	$ (19)	$ 5	$ (14)	$ (7)	$ 12	$ 5
* Up-front costs are charges incurred by the Company which will result in future cash savings and/or reduced depreciation.
(a) Includes expense associated with capital projects across our supply chain network incurred primarily in North America.

Kellogg Company and Subsidiaries
Transaction and Integration Costs*
$ millions
	Quarter ended December 29, 2012					Year-to-date period ended December 29, 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	$ --	$ --	$ 9	$ --	$ 9	$ --	$ --	$ 18	$ --	$ 18
Europe	--	--	10	--	10	--	1	23	--	24
Latin America	--	--	1	--	1	--	--	1	--	1
Asia Pacific	1	1	2	--	4	1	1	3	--	5
Corporate	--	--	3	--	3	--	--	28	5	33
Total	$ 1	$ 1	$ 25	$ --	$ 27	$ 1	$ 2	$ 73	$ 5	$ 81
* 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 ended December 29, 2012.

CONTACT: Analyst Contact: Simon Burton, CFA [phone]
         Media Contact: Kris Charles [phone]

« First ‹ Previous 1 2 3 4 5 6 7