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Section 1: 8-K (8-K)

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): August 1, 2019

Kellogg Company
(Exact name of registrant as specified in its charter)
 
Delaware
 
1-4171
 
38-0710690
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
One Kellogg Square
Battle Creek, Michigan 49016-3599
(Address of principal executive offices, including zip code)
(269) 961-2000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $.25 par value per share
K
New York Stock Exchange
1.750% Senior Notes due 2021
K 21
New York Stock Exchange
0.800% Senior Notes due 2022
K 22A
New York Stock Exchange
1.000% Senior Notes due 2024
K 24
New York Stock Exchange
1.250% Senior Notes due 2025
K 25
New York Stock Exchange
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 of this chapter).
 
 
 
 
Emerging growth company
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act.
 
 





Item 2.02. Results of Operations and Financial Condition.
The information in this Current Report, including the attached Exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
On August 1, 2019 Kellogg Company issued a press release announcing financial results for the period ended June 29, 2019, a copy of which is attached as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.
Description
Press Release dated August 1, 2019.
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document







SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
KELLOGG COMPANY
 
 
Date: August 1, 2019
 
/s/ Amit Banati
 
 
Name: Amit Banati
 
 
Title:   Senior Vice President and Chief Financial Officer



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

Exhibit 99.1
399007253_kellogglogo2015a04.jpg    
 
Kellogg Company
 
Financial News Release
 
 
 
Analyst Contact:
 
John Renwick, CFA (269) 961-9050
 
 
 
Media Contact:
 
Kris Bahner (269) 961-3799
 
 


Kellogg Company Reports Second Quarter 2019 Results, Reaffirms Earnings Outlook
BATTLE CREEK, Mich. - August 1, 2019 - Kellogg Company (NYSE: K) today announced second-quarter 2019 results and reaffirmed its full-year earnings guidance.
Highlights:
Net sales growth led by accelerated, broad-based organic growth.

Completed previously announced divestiture and launched business realignment initiatives. Proceeds of approximately $1.3 billion will be utilized to reduce debt.

As expected, higher input costs and effective tax rate contributed to lower earnings.

Continued progress on strategic priorities, including a second wave of improved innovation, a pack-harmonization in U.S. cereal, momentum in key snacks brands, and further expansion in emerging markets.

Reaffirmed earnings guidance for the full-year 2019 based on improved visibility around the recently closed divestiture and related transition. Updated cash flow guidance to reflect divestiture.

"This was another quarter in which we progressed solidly against our strategy and our 2019 plan, providing further, tangible evidence that Deploy for Growth is working,” said Steve Cahillane, Kellogg Company’s Chairman and Chief Executive Officer. “We delivered another quarter of net sales growth, featuring more and better innovation, momentum on revitalized snacks brands, better price realization, and continued expansion in emerging markets. We closed on a divestiture that improves our portfolio's focus, growth profile, and profit margins. We took further steps to realign our business and restructure our organization for greater agility and cost efficiency. And we enter the second half with increased confidence that we will finish the year on our guidance."
    
* All guidance and goals expressed in this press release are on a currency-neutral basis, and adjusted to exclude restructuring charges, mark-to-market adjustments of pensions (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded) and various financial instruments , and other costs impacting comparability. Expected net sales, margins, operating profit, and earnings per share are provided on this non-GAAP, currency-neutral basis only because certain information necessary to calculate such measures on a GAAP basis is unavailable, dependent on future events outside of our control and cannot be predicted without unreasonable efforts by the Company. Please refer to the "Non-GAAP Financial Measures" section included later in this press release for a further discussion of our use of non-GAAP measures, including quantification of known expected adjustment items.



Financial Summary:
 
Quarter ended
 
Year-to-date period ended
(millions, except per share data)
 
June 29, 2019
 
June 30, 2018
 
%
Change
 
June 29, 2019
 
June 30, 2018
 
%
Change
Reported Net Sales
 
$
3,461

 
$
3,360

 
3.0
 %
 
$
6,983

 
$
6,761

 
3.3
 %
Currency-Neutral Net Sales *
 
$
3,524

 
$
3,360

 
4.9
 %
 
$
7,169

 
$
6,761

 
6.0
 %
Organic Net Sales *
 
$
3,437

 
$
3,360

 
2.3
 %
 
$
6,848

 
$
6,761

 
1.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported Operating Profit
 
$
397

 
$
474

 
(16.2
)%
 
$
778

 
$
984

 
(20.9
)%
Adjusted Operating Profit *
 
$
452

 
$
476

 
(5.1
)%
 
$
917

 
$
976

 
(6.0
)%
Currency-Neutral Adjusted Operating Profit *
 
$
458

 
$
476

 
(3.8
)%
 
$
935

 
$
976

 
(4.2
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported Diluted Earnings Per Share
 
$
0.84

 
$
1.71

 
(50.9
)%
 
$
1.66

 
$
2.99

 
(44.5
)%
Adjusted Diluted Earnings Per Share *
 
$
0.99

 
$
1.14

 
(13.2
)%
 
$
2.00

 
$
2.37

 
(15.6
)%
Currency-Neutral Adjusted Diluted Earnings Per Share *
 
$
1.00

 
$
1.14

 
(12.3
)%
 
$
2.05

 
$
2.37

 
(13.5
)%
* Non-GAAP financial measure. See "Non-GAAP Financial Measures" section and "Reconciliation of Non-GAAP Amounts" tables within this release for important information regarding these measures.
Second Quarter Consolidated Results
Kellogg’s second quarter 2019 GAAP (or "reported") net sales increased by 3% year on year. The consolidation of Nigerian distributor Multipro (May 2018) more than offset negative currency translation. On an organic basis, net sales increased by more than 2%.
For the first six months, reported net sales increased by more than 3%, driven by the Multipro consolidation, which more than offset negative currency translation. On an organic basis, net sales increased by over 1%, largely due to positive price realization.
Reported operating profit in the second quarter decreased by about 16% versus the year-ago quarter, largely due to restructuring as well as business and portfolio realignment charges mainly related to the recently completed divestiture. On an adjusted basis, operating profit decreased by 5%, owing primarily to higher input costs, as well as adverse currency translation. Excluding currency translation, adjusted operating profit declined by less than 4%.
For the first six months, reported operating profit decreased by 21%, mainly reflecting the business and portfolio realignment charges. On an adjusted basis, operating profit decreased by 6%, principally due to to higher input costs, investments in capabilities, and adverse currency translation. Excluding currency translation, adjusted operating profit declined by approximately 4%.
Reported earnings per share decreased by about 51% from the prior-year quarter, owing to business and portfolio realignment charges, mainly related to the recently completed divestiture as well as higher input costs and lapping year-ago tax benefits. On an adjusted basis, earnings per share declined by about 13%, negatively impacted by the higher input costs and effective tax rate, lower expected returns on pension assets, and higher interest expense related to debt from acquiring additional stakes in our Nigerian investments in May of 2018. On a currency-neutral basis, adjusted earnings per share declined slightly over 12% in the second quarter.
For the first six months, earnings per share decreased approximately 45% on a reported basis, mainly reflecting the business and portfolio realignment charges, and adverse currency translation. Earnings per share were down 16% on an adjusted basis, and down less than 14% on a currency-neutral adjusted basis, owing to the higher input costs and effective tax rate , lower expected returns on pension assets, and higher interest expense related to debt from acquiring additional stakes in our Nigerian investments in May of 2018.

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Second Quarter Business Performance
Please refer to the segment tables in the back of this document.
Kellogg Company sustained its improved net sales performance, with a final quarter of acquisition benefit from the May 2018 consolidation of Multipro, and broad-based organic growth. Accelerated organic growth was led by good momentum in several revitalized snacks brands, continued growth in emerging markets, and improved price realization. The Company views this return to organic net sales growth as the most tangible sign that its Deploy For Growth strategy is gaining traction. As expected, profitability in the quarter remained pressured by charges taken to restructure European operations, and to realign the North America business around the recent divestiture of cookies, fruit snacks, pie crusts, and ice cream cones, as well as by rising input costs and the year-on-year impact of mix and costs related to new pack formats. As planned, the Company's operating profit decline moderated in the quarter. The Company's second quarter performance, along with the recent completion of the divestiture, offers improved visibility and confidence in the rest of the year.
Kellogg North America’s net sales in the second quarter increased by 1%, after a slightly negative currency translation impact. Net sales growth in snacks was driven by continued momentum in key brands such as Pringles, Cheez-It, Rice Krispies Treats, Pop-Tarts, and RXBAR. Frozen foods net sales increased, led by innovation and effective commercial programs for MorningStar Farms veggie foods as well as Eggo waffles and french toast. Cereal net sales declined on reduced promotional activity amidst the second and final wave of pack-size harmonization. Kellogg North America's operating profit decreased by 17% on a reported basis, on business realignment charges, higher input costs and lower cereal sales volume. On a currency-neutral adjusted basis, operating profit declined by 6%.
Kellogg Europe recorded a 3% decrease in reported net sales because of substantially adverse currency translation, while net sales grew approximately 2% on a currency-neutral basis. Growth continues to be led by Pringles, and by Russia, more then offsetting modest declines in certain developed markets' cereal and wholesome snacks. Operating profit for the Region was down 58%, due to business realignment charges. On a currency-neutral adjusted basis, operating profit increased by about 2% on higher net sales.
Kellogg Latin America posted a slight increase in reported net sales, as sharply negative currency translation offset underlying growth, with currency-neutral net sales increasing by over 2% year on year. Cereal net sales growth was led by continued consumption growth in Mexico, while snacks growth was driven by biscuits in Brazil and by Pringles in most markets. Reported operating profit declined by 13%, reflecting charges for business and portfolio realignment, as well adverse currency translation. On a currency-neutral adjusted basis, operating profit declined by slightly less than 5%, reflecting higher input costs and investments in capabilities.
Kellogg Asia, Middle East and Africa ("AMEA") reported net sales growth of 23%, partially due to the consolidation of results of Multipro, for which the beginning of May marked the one year anniversary. On an organic basis, net sales growth was approximately 9% year on year, on improved price realization, continued expansion by Multipro, and growth momentum for Pringles across the Region, particularly in emerging markets. Kellogg AMEA recorded a 16% increase in reported operating profit, partially due to the consolidation of Multipro. On a currency-neutral adjusted basis, its operating profit grew 27%.
Kellogg Reaffirms Full-Year Earnings Guidance
Kellogg Company reaffirmed full-year earnings guidance, expressing increased confidence based on its first-half results and enhanced visibility now that it has completed its divestiture of selected cookies, fruit snacks, pie crusts, and ice-cream cones businesses. Specifically:
Net sales growth is still expected to be +1-2% year on year on both a currency-neutral and organic basis.

Currency-neutral adjusted operating profit expectations continue to be for a decline in the range of (4)% to (5)%.

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Currency-neutral adjusted EPS decline is still expected to be (10)% to (11)% year on year.

With the closing of its recent divestiture, the Company provided an update on Cash Flow guidance. Cash flow is now expected to be approximately $0.5 billion for the year. This update from previous, pre-divestiture guidance of $0.9-1.0 billion, reflects estimated cash tax on proceeds from the sale, the absence of the divested businesses cash flow, working capital impacts of assets and liabilities not sold with the businesses, and transaction-related costs. The outlook range for cash flow in the underlying business has not changed.
Conference Call / Webcast
Kellogg will host a conference call to discuss results and outlook on Thursday, August 1, 2019 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 (855) 209-8258 in the U.S., and (412) 542-4104 outside of the U.S. Members of the media and the public are invited to attend in a listen-only mode. Information regarding the rebroadcast is available at http://investor.kelloggs.com.

About Kellogg Company
At Kellogg Company (NYSE: K), we strive to enrich and delight the world through foods and brands that matter. Our beloved brands include Pringles®, Cheez-It®, Special K®, Kellogg's Frosted Flakes®, Pop-Tarts®, Kellogg's Corn Flakes®, Rice Krispies®, Eggo®, Mini-Wheats®, Kashi®, RXBAR® and more. Net sales in 2018 were approximately $13.5 billion, comprised principally of snacks and convenience foods like cereal and frozen foods. Kellogg brands are beloved in markets around the world. We are also a company with Heart & Soul, committed to creating Better Days for 3 billion people by the end of 2030 through our Kellogg’s® Better Days global purpose platform. Visit www.KelloggCompany.com or www.OpenforBreakfast.com.


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Non-GAAP Financial Measures
This filing includes non-GAAP financial measures that we provide to management and investors that exclude certain items that we do not consider part of on-going operations. Items excluded from our non-GAAP financial measures are discussed in the "Significant items impacting comparability" section of this filing. Our management team consistently utilizes a combination of GAAP and non-GAAP financial measures to evaluate business results, to make decisions regarding the future direction of our business, and for resource allocation decisions, including incentive compensation. As a result, we believe the presentation of both GAAP and non-GAAP financial measures provides investors with increased transparency into financial measures used by our management team and improves investors’ understanding of our underlying operating performance and in their analysis of ongoing operating trends. All historic non-GAAP financial measures have been reconciled with the most directly comparable GAAP financial measures.
    
Non-GAAP financial measures used include currency-neutral and organic net sales, adjusted and currency-neutral adjusted operating profit, adjusted and currency-neutral adjusted diluted EPS, currency-neutral adjusted gross profit, currency-neutral adjusted gross margin, and cash flow. We determine currency-neutral results by dividing or multiplying, as appropriate, the current-period local currency operating results by the currency exchange rates used to translate our financial statements in the comparable prior-year period to determine what the current period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period. These non-GAAP financial measures may not be comparable to similar measures used by other companies.

Currency-neutral net sales and organic net sales: We adjust the GAAP financial measure to exclude the impact of foreign currency, resulting in currency-neutral net sales. In addition, we exclude the impact of acquisitions, dispositions, and foreign currency, resulting in organic net sales. We excluded the items which we believe may obscure trends in our underlying net sales performance. By providing these non-GAAP net sales measures, management intends to provide investors with a meaningful, consistent comparison of net sales performance for the Company and each of our reportable segments for the periods presented. Management uses these non-GAAP measures to evaluate the effectiveness of initiatives behind net sales growth, pricing realization, and the impact of mix on our business results. These non-GAAP measures are also used to make decisions regarding the future direction of our business, and for resource allocation decisions.
Adjusted operating profit and diluted EPS: We adjust the GAAP financial measures to exclude the effect of restructuring programs, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodities and certain foreign currency contracts, and other costs impacting comparability. We excluded the items which we believe may obscure trends in our underlying profitability. By providing these non-GAAP profitability measures, management intends to provide investors with a meaningful, consistent comparison of the Company's profitability measures for the periods presented. Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability, as well as to evaluate the impacts of inflationary pressures and decisions to invest in new initiatives within each of our segments.
Currency-neutral adjusted gross profit, gross margin, operating profit, and diluted EPS: We adjust the GAAP financial measures to exclude the effect of restructuring programs, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodities and certain foreign currency contracts, other costs impacting comparability, and foreign currency, resulting in currency-neutral adjusted. We excluded the items which we believe may obscure trends in our underlying profitability. By providing these non-GAAP profitability measures, management intends to provide investors with a meaningful, consistent comparison of the Company's profitability measures for the periods presented. Management uses these non-GAAP financial

5



measures to evaluate the effectiveness of initiatives intended to improve profitability, as well as to evaluate the impacts of inflationary pressures and decisions to invest in new initiatives within each of our segments.
Adjusted effective income tax rate: We adjust the GAAP financial measures to exclude the effect of restructuring programs, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodities and certain foreign currency contracts, and other costs impacting comparability. We excluded the items which we believe may obscure trends in our pre-tax income and the related tax effect of those items on our adjusted effective income tax rate. By providing this non-GAAP measure, management intends to provide investors with a meaningful, consistent comparison of the Company's effective tax rate, excluding the pre-tax income and tax effect of the items noted above, for the periods presented. Management uses this non-GAAP measure to monitor the effectiveness of initiatives in place to optimize our global tax rate.
Cash flow: Defined as net cash provided by operating activities reduced by expenditures for property additions. Cash flow does not represent the residual cash flow available for discretionary expenditures. We use this non-GAAP financial measure of cash flow to focus management and investors on the amount of cash available for debt repayment, dividend distributions, acquisition opportunities, and share repurchases once all of the Company’s business needs and obligations are met. Additionally, certain performance-based compensation includes a component of this non-GAAP measure.
These measures have not been calculated in accordance with GAAP and should not be viewed as a substitute for GAAP reporting measures.
    
Forward-looking guidance for currency-neutral net sales, currency-neutral adjusted operating profit, currency-neutral diluted EPS, and cash flow is included in this press release. Guidance for net sales excludes the impact of foreign currency translation. Guidance for operating profit excludes the impact of costs related to restructuring programs, mark-to-market adjustments (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), other items that could affect comparability, and foreign currency translation. Guidance for earnings per share excludes the impact of costs related to restructuring programs, mark-to-market adjustments (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), other items that could affect comparability, and foreign currency translation. We have provided these non-GAAP measures for future guidance for the same reasons that were outlined above for historical non-GAAP measures.
We are unable to reasonably estimate the potential full-year financial impact of mark-to-market adjustments because these impacts are dependent on future changes in market conditions (interest rates, return on assets, and commodity prices) or future decisions to be made by our management team and Board of Directors. Additionally, we are unable to reasonably estimate the potential full-year financial impacts of Brexit because of uncertainties in outcomes. Similarly, because of volatility in foreign exchange rates and shifts in country mix of our international earnings, we are unable to reasonably estimate the potential full-year financial impact of foreign currency translation. 
 
As a result, these impacts are not included in the guidance provided. Therefore, we are unable to provide a full reconciliation of these non-GAAP measures used in our guidance without unreasonable effort as certain information necessary to calculate such measure on a GAAP basis is unavailable, dependent on future events outside of our control and cannot be predicted without unreasonable efforts by the Company.

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    See the table below that outlines the projected impact of certain other items that are excluded from non-GAAP guidance for 2019:
Impact of certain items excluded from Non-GAAP guidance:
Net Sales
Operating Profit
Earnings Per Share
Project K (pre-tax)
 
$45-55M
$0.13-0.16
Business and portfolio realignment (pre-tax)
 
$170-190M
$0.50-0.56
Income tax impact applicable to adjustments, net**
 
 
$0.14-0.16
Currency-neutral adjusted guidance*
1-2%
(4)-(5)%
(10)-(11)%
Subtract: Acquisitions
2%
 
 
Add Back: Divestiture
~(2)-(3)%
 
 
Organic guidance
1-2%
 
 
* 2019 full year guidance for net sales, operating profit, and earnings per share are provided on a non-GAAP basis only because certain information necessary to calculate such measures on a GAAP basis is unavailable, dependent on future events outside of our control and cannot be predicted without unreasonable efforts by the Company. These items for 2019 include impacts of Brexit, and mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), and commodities and certain foreign currency contracts. The Company is providing quantification of known adjustment items where available.

** Represents the estimated income tax effect on the reconciling items, using weighted-average statutory tax rates, depending upon the applicable jurisdiction.


Reconciliation of Non-GAAP amounts - Cash Flow Guidance
 
(billions)
 
 
Full Year 2019
Net cash provided by (used in) operating activities
~$1.0
Additions to properties
~(0.5)
Cash Flow
~$0.5

Forward-Looking Statements Disclosure
This news release contains, or incorporates by reference, “forward-looking statements” with projections concerning, among other things, the Company’s efficiency-and-effectiveness program (Project K), the integration of acquired businesses, 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, charges, rates of return, brand building, ROIC, working capital, growth, new products, innovation, cost reduction projects, workforce reductions, savings, 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 expected benefits and costs of the divestiture of selected cookies, fruit and fruit flavored-snacks, pie crusts, and ice-cream cones businesses of the Company, the risk that disruptions from the divestiture will divert management's focus or harm the Company’s business, risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects, risks associated with the Company’s provision of transition services to the divested businesses post-closing, the ability to implement restructurings as planned, whether the expected amount of costs associated with restructurings will differ from forecasts, whether the Company will be able to realize the anticipated benefits from restructurings in the amounts and times expected, the ability to realize the anticipated benefits and synergies from business acquisitions 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; transportation costs; labor costs; disruptions or

7



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.

Additional information concerning these and other factors can be found in our filings with the Securities
and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10- Q, and Current Reports on Form 8-K.

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

[Kellogg Company Financial News]

Kellogg Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(millions, except per share data)
 
 
 
Quarter ended
 
Year-to-date period ended
(Results are unaudited)
 
June 29,
2019
 
June 30,
2018
 
June 29,
2019
 
June 30,
2018
Net sales
 
$
3,461

 
$
3,360

 
$
6,983

 
$
6,761

Cost of goods sold
 
2,275

 
2,151

 
4,690

 
4,300

Selling, general and administrative expense
 
789

 
735

 
1,515

 
1,477

Operating profit
 
397

 
474

 
778

 
984

Interest expense
 
75

 
72

 
149

 
141

Other income (expense), net
 
45

 
69

 
97

 
139

Income before income taxes
 
367

 
471

 
726

 
982

Income taxes
 
74

 
70

 
146

 
137

Earnings (loss) from unconsolidated entities
 
(1
)
 
198

 
(3
)
 
198

Net income
 
292

 
599

 
577

 
1,043

Net income attributable to noncontrolling interests
 
6

 
3

 
9

 
3

Net income attributable to Kellogg Company
 
$
286

 
$
596

 
$
568

 
$
1,040

Per share amounts:
 
 
 
 
 
 
 
 
Basic earnings
 
$
0.84

 
$
1.72

 
$
1.66

 
$
3.00

Diluted earnings
 
$
0.84

 
$
1.71

 
$
1.66

 
$
2.99

Average shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
340

 
347

 
341

 
346

Diluted
 
341

 
348

 
342

 
348

Actual shares outstanding at period end
 
 
 
 
 
341

 
346



8



Kellogg Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(millions)
 
 
 
Year-to-date period ended
(unaudited)
 
June 29,
2019
 
June 30,
2018
Operating activities
 
 
 
 
Net income
 
$
577

 
$
1,043

Adjustments to reconcile net income to operating cash flows:
 
 
 
 
Depreciation and amortization
 
243

 
234

Postretirement benefit plan expense (benefit)
 
(65
)
 
(86
)
Deferred income taxes
 
23

 
69

Stock compensation
 
29

 
30

Gain from unconsolidated entities, net
 

 
(200
)
Other
 
1

 
(67
)
Postretirement benefit plan contributions
 
(12
)
 
(274
)
Changes in operating assets and liabilities, net of acquisitions:
 
 
 
 
      Trade receivables
 
(239
)
 
(83
)
      Inventories
 
(6
)
 
(38
)
      Accounts payable
 
29

 
64

      All other current assets and liabilities
 
(60
)
 
(245
)
Net cash provided by (used in) operating activities
 
520

 
447

Investing activities
 
 
 
 
Additions to properties
 
(294
)
 
(270
)
Acquisitions, net of cash acquired
 
(8
)
 
(28
)
Investments in unconsolidated entities, net proceeds
 

 
(388
)
Acquisition of cost method investments
 

 
(4
)
Purchases of available for sale securities
 
(16
)
 

Sales of available for sale securities
 
16

 

Other
 
(25
)
 
29

Net cash provided by (used in) investing activities
 
(327
)
 
(661
)
Financing activities
 
 
 
 
Net issuances (reductions) of notes payable
 
391

 
(76
)
Issuances of long-term debt
 
28

 
993

Reductions of long-term debt
 

 
(401
)
Net issuances of common stock
 
12

 
70

Common stock repurchases
 
(220
)
 
(50
)
Cash dividends
 
(380
)
 
(374
)
Other
 
(8
)
 

Net cash provided by (used in) financing activities
 
(177
)
 
162

Effect of exchange rate changes on cash and cash equivalents
 
3

 
28

Increase (decrease) in cash and cash equivalents
 
19

 
(24
)
Cash and cash equivalents at beginning of period
 
321

 
281

Cash and cash equivalents at end of period
 
$
340

 
$
257


 

9



Kellogg Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(millions, except per share data)
 
 
 
June 29,
2019
 
December 29,
2018
 
 
(unaudited)
 
*
Current assets
 
 
 
 
Cash and cash equivalents
 
$
340

 
$
321

Accounts receivable, net
 
1,643

 
1,375

Inventories
 
1,234

 
1,330

Other current assets
 
175

 
131

Current assets held for sale
 
112

 

Total current assets
 
3,504

 
3,157

Property, net
 
3,526

 
3,731

Operating lease right-of-use assets
 
415

 

Goodwill
 
5,871

 
6,050

Other intangibles, net
 
2,587

 
3,361

Investments in unconsolidated entities
 
407

 
413

Other assets
 
1,171

 
1,068

Noncurrent assets held for sale
 
1,188

 

Total assets
 
$
18,669

 
$
17,780

Current liabilities
 
 
 
 
Current maturities of long-term debt
 
$
508

 
$
510

Notes payable
 
568

 
176

Accounts payable
 
2,401

 
2,427

Current operating lease liabilities
 
103

 

Other current liabilities
 
1,409

 
1,416

Total current liabilities
 
4,989

 
4,529

Long-term debt
 
8,262

 
8,207

Operating lease liabilities
 
321

 

Deferred income taxes
 
778

 
730

Pension liability
 
619

 
651

Other liabilities
 
488

 
504

Commitments and contingencies
 
 
 
 
Equity
 
 
 
 
Common stock, $.25 par value
 
105

 
105

Capital in excess of par value
 
895

 
895

Retained earnings
 
7,858

 
7,652

Treasury stock, at cost
 
(4,739
)
 
(4,551
)
Accumulated other comprehensive income (loss)
 
(1,469
)
 
(1,500
)
Total Kellogg Company equity
 
2,650

 
2,601

Noncontrolling interests
 
562

 
558

Total equity
 
3,212

 
3,159

Total liabilities and equity
 
$
18,669

 
$
17,780

 * Condensed from audited financial statements.
 

10



Kellogg Company and Subsidiaries
Adjustments to Reconcile Reported Results to Currency-Neutral Adjusted Results
(millions, except per share data)

 
Quarter ended June 29, 2019
(Results are unaudited)
Cost of goods sold
Selling, general and administrative expense
Operating profit
Other income (expense)
Income taxes
Earnings (loss) from unconsolidated entities
Net income (loss) attributable to Kellogg
Per share amount: Diluted
Mark-to-market (pre-tax)
$
(47
)
$
1

$
46

$
(11
)
$

$

$
35

$
0.10

Project K (pre-tax)
11

4

(15
)



(15
)
(0.05
)
Brexit impacts (pre-tax)
3


(3
)



(3
)
(0.01
)
Business and portfolio realignment (pre-tax)
4

79

(83
)



(83
)
(0.24
)
Income tax impact applicable to adjustments, net*




(15
)

15

0.05

Foreign currency impact
(44
)
(13
)
(6
)
(1
)
(1
)
(1
)
(6
)
(0.01
)
Adjustments to adjusted basis
$
(73
)
$
71

$
(61
)
$
(12
)
$
(16
)
$
(1
)
$
(57
)
$
(0.16
)
 
 
 
 
 
 
 
 
 
 
Quarter ended June 30, 2018
(Results are unaudited)
Cost of goods sold
Selling, general and administrative expense
Operating profit
Other income (expense)
Income taxes
Earnings (loss) from unconsolidated entities
Net income (loss) attributable to Kellogg
Per share amount: Diluted
Mark-to-market (pre-tax)
$
(2
)
$
(1
)
$
3

$
2

$

$

$
5

$
0.01

Project K (pre-tax)
(4
)
9

(5
)



(5
)
(0.01
)
Income tax impact applicable to adjustments, net*








Gain from unconsolidated entities, net





200

200

0.57

Adjustments to adjusted basis
$
(6
)
$
8

$
(2
)
$
2

$

$
200

$
200

$
0.57


 
Year-to-date period ended June 29, 2019
(Results are unaudited)
Cost of goods sold
Selling, general and administrative expense
Operating profit
Other income (expense)
Income taxes
Earnings (loss) from unconsolidated entities
Net income (loss) attributable to Kellogg
Per share amount: Diluted
Mark-to-market (pre-tax)
$
(5
)
$
1

$
4

$
(10
)
$

$

$
(6
)
$
(0.02
)
Project K (pre-tax)
17

6

(23
)



(23
)
(0.07
)
Brexit impacts (pre-tax)
6


(6
)



(6
)
(0.02
)
Business and portfolio realignment (pre-tax)
8

106

(114
)



(114
)
(0.33
)
Income tax impact applicable to adjustments, net*




(34
)

34

0.10

Foreign currency impact
(131
)
(37
)
(18
)
(2
)
(1
)

(17
)
(0.05
)
Adjustments to adjusted basis
$
(105
)
$
76

$
(157
)
$
(12
)
$
(35
)
$

$
(132
)
$
(0.39
)
 
 
 
 
 
 
 
 
 
 
Year-to-date period ended June 30, 2018
(Results are unaudited)
Cost of goods sold
Selling, general and administrative expense
Operating profit
Other income (expense)
Income taxes
Earnings (loss) from unconsolidated entities
Net income (loss) attributable to Kellogg
Per share amount: Diluted
Mark-to-market (pre-tax)
$
(32
)
$
(1
)
$
33

$
11

$

$

$
44

$
0.13

Project K (pre-tax)
9

16

(25
)



(25
)
(0.07
)
Income tax impact applicable to adjustments, net*




3


(3
)
(0.01
)
Gain from unconsolidated entities, net





200

200

0.57

Adjustments to adjusted basis
$
(23
)
$
15

$
8

$
11

$
3

$
200

$
216

$
0.62

* Represents the estimated income tax effect on the reconciling items, using weighted-average statutory tax rates, depending upon the applicable jurisdiction.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.



11



Kellogg Company and Subsidiaries
Reconciliation of Non-GAAP Amounts - Reported Net Sales to Organic Net Sales
 
Quarter ended June 29, 2019
 
 
 
 
 
 
 
 
 
 
 
 
(millions)
 
North America
 
Europe
 
Latin
America
 
AMEA
 
Corporate
 
Kellogg
Consolidated
Reported net sales
 
$
2,148

 
$
541

 
$
239

 
$
533

 
$

 
$
3,461

Foreign currency impact on total business (inc)/dec
 
(4
)
 
(28
)
 
(5
)
 
(25
)
 

 
(62
)
Currency-neutral net sales
 
$
2,151

 
$
569

 
$
245

 
$
558

 
$

 
$
3,524

Acquisitions
 

 

 

 
73

 

 
73

Foreign currency impact on acquisitions (inc)/dec
 

 

 

 
13

 

 
13

Organic net sales
 
$
2,151

 
$
569

 
$
245

 
$
471

 
$

 
$
3,437

 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
(millions)
 
North America
 
Europe
 
Latin
America
 
AMEA
 
Corporate
 
Kellogg
Consolidated
Reported net sales
 
$
2,127

 
$
559

 
$
239

 
$
435

 
$

 
$
3,360

 
 
 
 
 
 
 
 
 
 
 
 
 
% change - 2019 vs. 2018:
 
 
 
 
 
 
 
 
 
 
 
 
Reported growth
 
1.0
 %
 
(3.2
)%
 
0.2
 %
 
22.6
 %
 
%
 
3.0
 %
Foreign currency impact on total business (inc)/dec
 
(0.1
)%
 
(5.0
)%
 
(2.1
)%
 
(5.8
)%
 
%
 
(1.9
)%
Currency-neutral growth
 
1.1
 %
 
1.8
 %
 
2.3
 %
 
28.4
 %
 
%
 
4.9
 %
Acquisitions
 
 %
 
 %
 
 %
 
16.9
 %
 
%
 
2.2
 %
Foreign currency impact on acquisitions (inc)/dec
 
 %
 
 %
 
 %
 
3.0
 %
 
%
 
0.4
 %
Organic growth
 
1.1
 %
 
1.8
 %
 
2.3
 %
 
8.5
 %
 
%
 
2.3
 %
Volume (tonnage)
 
(1.8
)%
 
1.3
 %
 
(2.1
)%
 
 %
 
%
 
(1.0
)%
Pricing/mix
 
2.9
 %
 
0.5
 %
 
4.4
 %
 
8.5
 %
 
%
 
3.3
 %
Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.




















12



Kellogg Company and Subsidiaries
Reconciliation of Non-GAAP Amounts - Reported Net Sales to Organic Net Sales

Year-to-date period ended June 29, 2019
 
 
 
 
 
 
 
 
 
 
 
 
(millions)
 
North America
 
Europe
 
Latin
America
 
AMEA
 
Corporate
 
Kellogg
Consolidated
Reported net sales
 
$
4,437

 
$
1,038

 
$
464

 
$
1,044

 
$

 
$
6,983

Foreign currency impact on total business (inc)/dec
 
(10
)
 
(74
)
 
(22
)
 
(80
)
 

 
(185
)
Currency-neutral net sales
 
$
4,446

 
$
1,112

 
$
487

 
$
1,124

 
$

 
$
7,169

Acquisitions
 

 

 

 
271

 

 
271

Foreign currency impact on acquisitions (inc)/dec
 

 

 

 
49

 

 
49

Organic net sales
 
$
4,446

 
$
1,112

 
$
487

 
$
803

 
$

 
$
6,848

 
 
 
 
 
 
 
 
 
 
 
 
 
Year-to-date period ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
(millions)
 
North America
 
Europe
 
Latin
America
 
AMEA
 
Corporate
 
Kellogg
Consolidated
Reported net sales
 
$
4,457

 
$
1,079

 
$
471

 
$
754

 
$

 
$
6,761

 
 
 
 
 
 
 
 
 
 
 
 
 
% change - 2019 vs. 2018:
 
 
 
 
 
 
 
 
 
 
 
 
Reported growth
 
(0.5
)%
 
(3.8
)%
 
(1.4
)%
 
38.6
 %
 
%
 
3.3
 %
Foreign currency impact on total business (inc)/dec
 
(0.2
)%
 
(6.8
)%
 
(4.7
)%
 
(10.6
)%
 
%
 
(2.7
)%
Currency-neutral growth
 
(0.3
)%
 
3.0
 %
 
3.3
 %
 
49.2
 %
 
%
 
6.0
 %
Acquisitions
 
 %
 
 %
 
 %
 
36.0
 %
 
%
 
4.0
 %
Foreign currency impact on acquisitions (inc)/dec
 
 %
 
 %
 
 %
 
6.6
 %
 
%
 
0.7
 %
Organic growth
 
(0.3
)%
 
3.0
 %
 
3.3
 %
 
6.6
 %
 
%
 
1.3
 %
Volume (tonnage)
 
(1.7
)%
 
2.0
 %
 
(0.8
)%
 
0.2
 %
 
%
 
(0.7
)%
Pricing/mix
 
1.4
 %
 
1.0
 %
 
4.1
 %
 
6.4
 %
 
%
 
2.0
 %
Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.





















13



Kellogg Company and Subsidiaries
Reconciliation of Non-GAAP Amounts - Reported Gross Profit to Currency-Neutral Adjusted Gross Profit

 
 
Quarter ended
 
Year-to-date period ended
 
 
June 29,
2019
 
June 30,
2018
 
June 29,
2019
 
June 30,
2018
Reported gross profit
 
$
1,186

 
$
1,209

 
$
2,293

 
$
2,461

Mark-to-market (COGS)
 
47

 
2

 
5

 
32

Project K (COGS)
 
(11
)
 
4

 
(17
)
 
(9
)
Brexit impacts (COGS)
 
(3
)
 

 
(6
)
 

Business and portfolio realignment (COGS)
 
(4
)
 

 
(8
)
 

Foreign currency impact
 
(19
)
 

 
(55
)
 

Currency-neutral adjusted gross profit
 
$
1,176

 
$
1,203

 
$
2,374

 
$
2,438

Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.









Kellogg Company and Subsidiaries
Reconciliation of Non-GAAP Amounts - Reported Gross Margin to Currency-Neutral Adjusted Gross Margin


 
 
Quarter ended
 
Year-to-date period ended
 
 
June 29,
2019
 
June 30,
2018
 
June 29,
2019
 
June 30,
2018
Reported gross margin
 
34.3
 %
 
36.0
%
 
32.8
 %
 
36.4
 %
Mark-to-market (COGS)
 
1.4
 %
 
%
 
 %
 
0.5
 %
Project K (COGS)
 
(0.3
)%
 
0.2
%
 
(0.2
)%
 
(0.2
)%
Brexit impacts (COGS)
 
(0.1
)%
 
%
 
(0.1
)%
 
 %
Business and portfolio realignment (COGS)
 
(0.1
)%
 
%
 
(0.1
)%
 
 %
Foreign currency impact
 
 %
 
%
 
0.1
 %
 
 %
Currency-neutral adjusted gross margin
 
33.4
 %
 
35.8
%
 
33.1
 %
 
36.1
 %
Note: Tables may not foot due to rounding.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.






14



Kellogg Company and Subsidiaries
Reconciliation of Non-GAAP Amounts - Reported Operating Profit to Currency-Neutral Adjusted Operating Profit

Quarter ended June 29, 2019
 
 
 
 
 
 
 
 
 
 
 
 
(millions)
 
North America*
 
Europe
 
Latin
America
 
AMEA
 
Corporate*
 
Kellogg
Consolidated
Reported operating profit
 
$
322

 
$
36

 
$
17

 
$
45

 
$
(23
)
 
$
397

Mark-to-market
 

 

 

 

 
46

 
46

Project K
 
(10
)
 

 
(2
)
 
(3
)
 

 
(15
)
Brexit impacts
 

 
(3
)
 

 

 

 
(3
)
Business and portfolio realignment
 
(42
)
 
(32
)
 
(2
)
 
(2
)
 
(5
)
 
(83
)
Adjusted operating profit
 
$
374

 
$
72

 
$
22

 
$
49

 
$
(64
)
 
$
452

Foreign currency impact
 

 
(3
)
 

 
(2
)
 

 
(6
)
Currency-neutral adjusted operating profit
 
$
373

 
$
75

 
$
22

 
$
51

 
$
(64
)
 
$
458

 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
(millions)
 
North America*
 
Europe
 
Latin
America
 
AMEA
 
Corporate*
 
Kellogg
Consolidated
Reported operating profit
 
$
385

 
$
87

 
$
20

 
$
38

 
$
(56
)
 
$
474

Mark-to-market
 

 

 

 

 
3

 
3

Project K
 
(12
)
 
13

 
(2
)
 
(3
)
 
(1
)
 
(5
)
Adjusted operating profit
 
$
397

 
$
74

 
$
22

 
$
41

 
$
(58
)
 
$
476

 
 
 
 
 
 
 
 
 
 
 
 
 
% change - 2019 vs. 2018:
 
 
 
 
 
 
 
 
 
 
 
 
Reported growth
 
(16.6
)%
 
(58.4
)%
 
(12.8
)%
 
16.3
 %
 
60.8
 %
 
(16.2
)%
Mark-to-market
 
 %
 
 %
 
 %
 
 %
 
77.2
 %
 
9.4
 %
Project K
 
(0.2
)%
 
(7.7
)%
 
(0.6
)%
 
(0.2
)%
 
2.2
 %
 
(2.7
)%
Brexit impacts
 
 %
 
(3.6
)%
 
 %
 
 %
 
 %
 
(0.5
)%
Business and portfolio realignment
 
(10.5
)%
 
(43.8
)%
 
(8.4
)%
 
(5.0
)%
 
(8.0
)%
 
(17.3
)%
Adjusted growth
 
(5.9
)%
 
(3.3
)%
 
(3.8
)%
 
21.5
 %
 
(10.6
)%
 
(5.1
)%
Foreign currency impact
 
 %
 
(5.0
)%
 
0.7
 %
 
(5.6
)%
 
0.2
 %
 
(1.3
)%
Currency-neutral adjusted growth
 
(5.9
)%
 
1.7
 %
 
(4.5
)%
 
27.1
 %
 
(10.8
)%
 
(3.8
)%
Note: Tables may not foot due to rounding.
* Corporate in 2019 includes the cost of certain global research and development activities that were previously included in the North America reportable segment in 2018 that totaled approximately $12 million.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.




















15



Kellogg Company and Subsidiaries
Reconciliation of Non-GAAP Amounts - Reported Operating Profit to Currency-Neutral Adjusted Operating Profit

Year-to-date period ended June 29, 2019
 
 
 
 
 
 
 
 
 
 
 
 
(millions)
 
North America*
 
Europe
 
Latin
America
 
AMEA
 
Corporate*
 
Kellogg
Consolidated
Reported operating profit
 
$
702

 
$
96

 
$
38

 
$
92

 
$
(150
)
 
$
778

Mark-to-market
 

 

 

 

 
4

 
4

Project K
 
(14
)
 
(1
)
 
(4
)
 
(4
)
 

 
(23
)
Brexit impacts
 

 
(6
)
 

 

 

 
(6
)
Business and portfolio realignment
 
(53
)
 
(36
)
 
(2
)
 
(2
)
 
(21
)
 
(114
)
Adjusted operating profit
 
$
769

 
$
139

 
$
44

 
$
97

 
$
(132
)
 
$
917

Foreign currency impact
 
(1
)
 
(10
)
 
(1
)
 
(6
)
 

 
(18
)
Currency-neutral adjusted operating profit
 
$
769

 
$
149

 
$
45

 
$
103

 
$
(132
)
 
$
935

 
 
 
 
 
 
 
 
 
 
 
 
 
Year-to-date period ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
(millions)
 
North America*
 
Europe
 
Latin
America
 
AMEA
 
Corporate*
 
Kellogg
Consolidated
Reported operating profit
 
$
784

 
$
147

 
$
42

 
$
79

 
$
(68
)
 
$
984

Mark-to-market
 

 

 

 

 
33

 
33

Project K
 
(22
)
 
6

 
(4
)
 
(3
)
 
(2
)
 
(25
)
Adjusted operating profit
 
$
806

 
$
141

 
$
46

 
$
82

 
$
(99
)
 
$
976

 
 
 
 
 
 
 
 
 
 
 
 
 
% change - 2019 vs. 2018:
 
 
 
 
 
 
 
 
 
 
 
Reported growth
 
(10.5
)%
 
(34.9
)%
 
(10.3
)%
 
16.0
 %
 
(117.8
)%
 
(20.9
)%
Mark-to-market
 
 %
 
 %
 
 %
 
 %
 
(67.9
)%
 
(2.3
)%
Project K
 
0.8
 %
 
(3.8
)%
 
(0.8
)%
 
(0.8
)%
 
2.9
 %
 
(0.3
)%
Brexit impacts
 
 %
 
(4.0
)%
 
 %
 
 %
 
 %
 
(0.6
)%
Business and portfolio realignment
 
(6.6
)%
 
(25.7
)%
 
(4.1
)%
 
(2.6
)%
 
(20.8
)%
 
(11.7
)%
Adjusted growth
 
(4.7
)%
 
(1.4
)%
 
(5.4
)%
 
19.4
 %
 
(32.0
)%
 
(6.0
)%
Foreign currency impact
 
(0.1
)%
 
(7.0
)%
 
(1.9
)%
 
(7.5
)%
 
0.1
 %
 
(1.8
)%
Currency-neutral adjusted growth
 
(4.6
)%
 
5.6
 %
 
(3.5
)%
 
26.9
 %
 
(32.1
)%
 
(4.2
)%
Note: Tables may not foot due to rounding.
* Corporate in 2019 includes the cost of certain global research and development activities that were previously included in the North America reportable segment in 2018 that totaled approximately $24 million.
For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.





16



Kellogg Company and Subsidiaries
Reconciliation of Non-GAAP Amounts - Reported Income Taxes to Adjusted Income Taxes and Reported Effective Tax Rate to Adjusted Effective Tax Rate
 
 
 
Quarter ended
 
Year-to-date period ended
 
 
June 29,
2019
 
June 30,
2018
 
June 29,
2019
 
June 30,
2018
Reported incomes taxes
 
$
74

 
$
70

 
$
146

 
$
137

Mark-to-market
 
10

 
1

 
(2
)
 
8

Project K
 
(4
)
 
(1
)
 
(4
)
 
(5
)
Brexit impacts
 
(1
)
 

 
(1
)
 

Business and portfolio realignment
 
(20
)
 

 
(27
)
 

Adjusted income taxes
 
$
89

 
$
70

 
$
180

 
$
134

Reported effective tax rate