-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, NS3+nzvJoHIYbndOMBwrOyQoXkpIfFNbwzdNYZj12h8Eccn0EWQZJ+HNBNbdpXpq GaHofiz53Yw+dt2rmzosgw== 0000950124-95-000907.txt : 199507120000950124-95-000907.hdr.sgml : 19950711 ACCESSION NUMBER: 0000950124-95-000907 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950328 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KELLOGG CO CENTRAL INDEX KEY: 0000055067 STANDARD INDUSTRIAL CLASSIFICATION: GRAIN MILL PRODUCTS [2040] IRS NUMBER: 380710690 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04171 FILM NUMBER: 95523810 BUSINESS ADDRESS: STREET 1: ONE KELLOGG SQ STREET 2: P O BOX 3599 CITY: BATTLE CREEK STATE: MI ZIP: 49016 BUSINESS PHONE: 6169612000 MAIL ADDRESS: STREET 1: ONE KELLOGG SQUARE STREET 2: P.O. BOX 3599 CITY: BATTLE CREEK STATE: MI ZIP: 49016 10-K 1 FORM 10K 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------- FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 COMMISSION FILE NUMBER 1-4171 --------------------------- KELLOGG COMPANY (Exact Name of Registrant as Specified in its Charter) DELAWARE 38-0710690 State of Incorporation I.R.S. Employer Identification No.
ONE KELLOGG SQUARE BATTLE CREEK, MICHIGAN 49016-3599 (Address of Principal Executive Offices) REGISTRANT'S TELEPHONE NUMBER: (616) 961-2000 --------------------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class: Name of each exchange on which registered: COMMON STOCK, $0.25 PAR VALUE PER SHARE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: NONE --------------------------- Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / / The aggregate market value of the common stock held by non-affiliates of the registrant (assuming only for purposes of this computation that directors and executive officers may be affiliates) was $12,141,777,485 as determined by the March 1, 1995 closing price of $55.125 for one share of common stock on the New York Stock Exchange. As of March 1, 1995, 221,096,969 shares of the common stock of the registrant were issued and outstanding. Portions of the registrant's Annual Report to Stockholders for the fiscal year ended December 31, 1994, are incorporated by reference into Part II of this Report. Portions of the registrant's definitive Proxy Statement, dated March 13, 1995, for the Annual Meeting of Stockholders to be held April 21, 1995, are incorporated by reference into Part III of this Report. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART I ITEM 1. BUSINESS The Company. Kellogg Company, incorporated in Delaware in 1922, and its subsidiaries are engaged in the manufacture and marketing of ready-to-eat cereal and other convenience food products on a worldwide basis. The address of the principal business office of Kellogg Company is One Kellogg Square, P.O. Box 3599, Battle Creek, Michigan 49016-3599. Unless otherwise indicated by the context, the term "Company" as used in this report means Kellogg Company, its divisions and subsidiaries. Principal Products. The principal products of the Company are ready-to-eat cereals and convenience food products which are manufactured in 19 countries and distributed in nearly 160 countries. Ready-to-eat cereals are marketed under the KELLOGG'S(R) name and are sold principally to the grocery trade through direct sales forces for resale to consumers and through broker and distribution arrangements in less developed market areas. Other Convenience Food Products. In the United States and Canada, in addition to ready-to-eat cereals, the Company produces or processes and distributes toaster pastries and frozen waffles. The Company also markets, in the United States, cereal and granola bars, and markets a variety of other convenience food products in various locations throughout the world. Raw Materials. Agricultural commodities are the principal raw materials used in the Company's products. World supplies and prices of such commodities are constantly monitored, as are government trade policies. The cost of raw materials used may fluctuate widely due to government policy and regulation, weather conditions or other unforeseen circumstances. Continuous efforts are made to maintain and improve the qualities and supplies of raw materials for purposes of the Company's short-term and long-term requirements. The principal ingredients in the products produced by the Company in the United States include corn grits, oats, rice, various fruits, sweeteners, wheat and wheat derivatives. Ingredients are purchased principally from sources in the United States. In producing toaster pastries and frozen waffles, the Company may use dairy products, eggs, fruit and other filling ingredients, flour, shortening and sweeteners, which ingredients are obtained from various sources. Although the Company enters into some long-term contracts, the bulk of such raw materials are purchased on the open market. While the cost of raw materials may increase over time, the Company believes that it will be able to purchase an adequate supply of such raw materials as needed. The Company also uses commodity futures and options to hedge some of its raw materials costs. See Note 11 to the Consolidated Financial Statements contained in the Company's Annual Report for the fiscal year ended December 31, 1994 which Note is incorporated by reference in Item 8 of this Report. Raw materials and packaging needed for internationally based operations are available in adequate supply and are sometimes imported from countries other than those where used in manufacture. Cereal processing ovens at major domestic and international facilities are regularly fueled by natural gas or propane obtained from local utilities or other local suppliers. Short-term standby propane storage exists at several plants for use in the event of interruption in natural gas supplies. Additionally, oil may be used to fuel certain plant operations in the event of natural gas shortages at various plants or when its use presents economic advantages. Trademarks and Technology. Generally, the Company's products are marketed under trademarks owned by the Company. The Company's principal trademarks are its housemark, brand names, slogans and designs related to cereals and convenience food products manufactured and marketed by the Company. These trademarks include Kellogg's(R), for cereals and other products of the Company and the brand names of certain ready-to-eat cereals, including All-Bran(R), Kellogg's(R) Squares(TM), Apple Jacks(R), Apple Raisin Crisp(R), Apple Cinnamon Rice Krispies(TM), Bran Buds(R), Complete(R) Bran Flakes, Cocoa Krispies(R), Common Sense(R), Kellogg's Corn Flakes(R), Cracklin' Oat Bran(R), Kellogg's(R) Cinnamon Mini-Buns, Crispix(R), Double Dip Crunch(R), Froot Loops(R), Kellogg's Frosted Bran(R), Kellogg's Frosted Flakes(R), Frosted Krispies(R), Frosted Mini- Wheats(R), Fruitful Bran(R), Fruity Marshmallow Krispies(R), Just Right(R), Kenmei(R), Kellogg's(R) Low Fat Granola, 2 3 Nut & Honey Crunch(R), Nut & Honey Crunch O's(R), Mueslix(R), Nutri-Grain(R), Pops(R), Product 19(R), Kellogg's(R) Raisin Bran, Rice Krispies(R), Rice Krispies Treats(TM), Smacks(R) and Special K(R). Additional Company trademarks are the names of certain combinations of Kellogg's(R) ready-to-eat cereals, including Handi-Pak(R), Snack-Pak(R), Fun Pak(R), Jumbo(R) and Variety(R). Other Company brand names include Kellogg's(R) Corn Flake Crumbs; Croutettes(R) for herb season stuffing mix; Kellogg's(R) Nutri-Grain(R) for cereal bars; Pop-Tarts(R) for toaster pastries; Eggo(R), Special K(R) and Nutri-Grain(R) for frozen waffles. Company trademarks also include depictions of certain animated characters in conjunction with the Company's products, including Snap!(R) Crackle!(R) Pop!(R) for Kellogg's(R) Frosted Krispies(R), Fruity Marshmallow Krispies(R) and Rice Krispies(R); Tony the Tiger(R) for Kellogg's Frosted Flakes(R); Toucan Sam(R) for Froot Loops(R); Dig 'Em!(R) for Smacks(R); and Coco(TM) for Cocoa Krispies(R). The slogans "The Best To You Each Morning"(R), and "They're GR-R-R-EAT!"(R) used in connection with the Company's ready-to-eat cereals, are also important Company trademarks. The Company's use of the advertising theme "Get A Taste For The Healthy Life"(TM) represents part of its effort to establish throughout the United States and the world the concept of a nutritious breakfast. The Company considers that, taken as a whole, the rights under its various patents, which expire from time to time, are a valuable asset, but the Company does not believe that its businesses are materially dependent upon any single patent or group of related patents. The Company's activities under licenses or other franchises or concessions are not material. Seasonality. Demand for the Company's products is approximately level throughout the year. Working Capital. Although terms vary around the world, in the United States the Company requires payment for goods sold eleven days subsequent to the date of invoice, with a 2% discount allowed for payment within ten days. Receipts from goods sold, supplemented as required by borrowings, provide for the Company's payment of dividends, capital expansion and for other operating expenses and working capital needs. Customers. The Company is not dependent on any single customer or a few customers for a material part of its sales. Products of the Company are sold through its own sales forces and through broker and distributor arrangements and are generally resold to consumers in retail stores, restaurants and other food service establishments. Backlog. For the most part, orders are filled within a few days of their receipt and are subject to cancellation at any time prior to shipment. The backlog of any unfilled orders at any particular time is not material to the Company. Competition. The Company has experienced intense competition for sales of all of its principal products in its major markets, both domestically and internationally. The Company's products compete with advertised and branded products of a similar nature as well as unadvertised and private label products, which are typically distributed at lower prices, and generally with other food products with different characteristics. Principal methods and factors of competition include, among others, new product introductions, product quality, composition and nutritional value, price, advertising and promotion. The Company is the world's largest manufacturer and marketer of ready-to-eat cereals. Research and Development. Research to support and expand the use of the Company's existing products and to develop new food products is carried on at the Company's research laboratories and pilot plant facilities in Battle Creek, Michigan, and at other plant locations around the world. The Company's expenditures for research and development were approximately $71.7 million in 1994, and, on a comparable basis, were $59.2 million in 1993 and $56.7 million in 1992. Environmental Matters. The Company's facilities are subject to various foreign, federal, state and local laws and regulations regarding the discharge of material into the environment and the protection of the environment in other ways. The Company is not a party to any material proceedings arising under these regulations. The Company believes that compliance with existing environmental laws and regulations will not materially affect the financial condition or the competitive position of the Company. In 1995, the Company 3 4 expects to spend approximately $24.0 million for capital expenditures related to environmental controls, approximately $8.0 million of which is expected to be spent on a waste water recycling facility at the Company's plant in Bremen, Germany and $7.3 million of which is expected to be spent on a grain fines collection system at the Company's plant in Memphis, Tennessee. The Company is currently in substantial compliance with all material environmental regulations affecting the Company and its properties. Employees. At December 31, 1994, the Company had approximately 15,657 employees. Segment and Geographic Information. The Company operates in a single industry, which is the manufacture and marketing of convenience food products throughout the world. Net sales and operating profit for the years 1994, 1993, and 1992, and identifiable segment assets and corporate assets, consisting principally of equity investments, cash, and temporary investments, at the related year-ends are presented in Note 13 of the Consolidated Financial Statements captioned "Operating Segments" and incorporated by reference in Item 8 of this Report. ITEM 2. PROPERTIES The Company's corporate headquarters and principal research and development facilities are located in Battle Creek, Michigan. The Company operates manufacturing plants and warehouses totalling more than ten million (10,000,000) square feet of building area in the United States and other countries. The Company's plants have been designed and constructed to meet its specific production requirements, and the Company periodically invests money for capital and technological improvements. At the time of its selection, each location was considered to be favorable, based on the location of markets, sources of raw materials, availability of suitable labor, transportation facilities, location of other Company plants producing similar products and other factors. Manufacturing facilities of the Company in the United States include five cereal plants and warehouses located in Battle Creek, Michigan; Lancaster, Pennsylvania; Memphis, Tennessee; Omaha, Nebraska; and San Leandro, California. Other of the Company's convenience foods are also manufactured in the United States at various plant locations. Outside the United States, the Company has additional manufacturing locations, some with warehousing facilities, in Argentina, Australia, Brazil, Canada, Colombia, Denmark, Germany, Great Britain, Guatemala, India, Italy, Japan, Latvia, Mexico, South Africa, South Korea, Spain and Venezuela. A new cereal plant in China is currently under construction and is expected to commence operation in summer 1995. The principal properties of the Company, including its major office facilities, are held in fee and none is subject to any major encumbrance. Distribution centers and offices of non-plant locations typically are leased. The Company considers its facilities generally suitable, adequate and of sufficient capacity for its current operations. ITEM 3. LEGAL PROCEEDINGS The Company is not a party to any pending legal proceedings which, if decided adversely, would be material to the Company on a consolidated basis, nor are any of the Company's properties or subsidiaries subject to any such proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT Executive Officers of the Registrant -- The names, ages as of March 1, 1995 and positions of the executive officers of the Company are listed below together with their business experience. Executive officers are elected annually by the Board of Directors at the meeting immediately following the Annual Meeting of Stockholders. 4 5 EXECUTIVE OFFICERS Arnold G. Langbo Chairman of the Board, President and Chief Executive Officer..................57 Mr. Langbo has been employed by the Company and certain of its subsidiaries since 1956. He was named Executive Vice President and President, Kellogg International Division, in 1986. He was named President and Chief Operating Officer in December 1990 and became Chairman of the Board and Chief Executive Officer on January 1, 1992. Charles W. Elliott Executive Vice President - Administration, Chief Financial Officer............63 Mr. Elliott joined the Company as Executive Vice President -Administration in February 1987 and was named Chief Financial Officer of the Company in December 1988. William A. Camstra Executive Vice President, President - Kellogg Latin America...................62 Mr. Camstra has been employed by the Company and certain of its subsidiaries since 1956. He was named a Vice President and Director of Latin American Operations in 1983. He was named Executive Vice President of the Company on January 1, 1992 and President, Kellogg Latin America in July 1994. Donald G. Fritz Executive Vice President, President - Kellogg Europe..........................47 Mr. Fritz first joined Kellogg Canada Inc. in 1979. He was named General Manager - Kellogg (Aust.) Pty. Limited in 1984, and Director of Australasia in 1989, and a Vice President of the Company in January 1990. He was named Executive Vice President of the Company on January 1, 1992, and President, Kellogg Europe in July 1994. Carlos M. Gutierrez Executive Vice President, President - Kellogg Asia-Pacific....................41 Mr. Gutierrez joined Kellogg de Mexico in 1975. In January 1989, he was appointed President and Chief Executive Officer of Kellogg Canada Inc. He was promoted to Vice President, Kellogg Company and Executive Vice President - Sales and Marketing, Kellogg USA in July 1990. In 1993, Mr. Gutierrez was promoted to Executive Vice President, Kellogg USA and General Manager, Kellogg USA Cereal Division. In September 1994, Mr. Gutierrez was appointed Executive Vice President of Kellogg Company and President, Kellogg Asia-Pacific. Thomas A. Knowlton Executive Vice President, President - Kellogg North America...................48 Mr. Knowlton joined Kellogg Canada Inc. in 1980 and became its President and Chief Executive Officer and also a Vice President of the Company in 1983. In January 1989, he was named Managing Director, Kellogg Company of Great Britain Limited and continued as a Vice President of the Company. He was named an Executive Vice President of the Company on January 1, 1992 and President, Kellogg North America in July 1994. Donald W. Thomason Executive Vice President - Corporate Services and Technology..................51 Mr. Thomason has been employed by the Company since 1966. He was named a Vice President and Executive Vice President - Operations in the Company's U.S. Food Products Division in January 1989. He was named Executive Vice President - Corporate Services and Technology in 1990. Richard M. Clark Senior Vice President, General Counsel and Secretary..........................57 Mr. Clark joined the Company as Senior Vice President, General Counsel and Secretary in September 1989. 5 6 Robert L. Creviston Senior Vice President - Human Resources.......................................53 Mr. Creviston joined the Company as Vice President - Employee Relations in 1982. He was named Senior Vice President - Human Resources in August 1991. Daryl R. Schaller Senior Vice President - Scientific Affairs....................................51 Dr. Schaller has been employed by the Company since 1972. He was named Senior Vice President - Science and Technology in 1986, Senior Vice President - Research, Quality and Nutrition in January 1990, and Senior Vice President - Scientific Affairs in April 1994. Joseph M. Stewart Senior Vice President - Corporate Affairs.....................................52 Mr. Stewart has been employed by the Company since 1980. He was named Vice President - Public Affairs in 1985 and Senior Vice President - Corporate Affairs in 1988. Michael J. Teale Senior Vice President - Worldwide Operations and Technology...................50 Mr. Teale joined Kellogg Company of Great Britain Limited in 1966. In January 1990, he was named a Vice President-Cereal Manufacturing of the Company's U.S. Food Products Division, and in September 1994, he was named Senior Vice President - Worldwide Operations and Technology. Charles E. French Vice President - Finance and Treasurer........................................50 Mr. French has been employed by the Company and various subsidiaries of the Company since 1966. In 1988, he was named Director - Administration, Kellogg Company of Great Britain Limited. In 1992, he also became Director - Finance of Kellogg Europe, and in September 1993, he was named Vice President - Finance and Treasurer of the Company. Alan Taylor Vice President and Corporate Controller.......................................43 Mr. Taylor has been employed by the Company and certain of its subsidiaries since 1982. He served as Director - Finance of Kellogg (Aust.) Pty. Ltd. from 1988 until 1993. He became Controller of the Company in August 1993, and was named a Vice President in July 1994. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The information called for by this Item is set forth in Note 12 to the Consolidated Financial Statements of the Company which is incorporated by reference into Item 8 of this Report. ITEM 6. SELECTED FINANCIAL DATA The information called for by this Item is incorporated herein by reference from page 15 of the Company's Annual Report to Stockholders for the fiscal year ended December 31, 1994. Such information should be read in conjunction with the Consolidated Financial Statements and Notes thereto of the Company included in Item 8 of this Report, incorporated by reference from the Company's Annual Report to Stockholders. 6 7 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information called for by this Item is incorporated herein by reference from pages 16 through 18 of the Company's Annual Report to Stockholders for the fiscal year ended December 31, 1994. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information called for by this Item is incorporated herein by reference from pages 19 through 28 of the Company's Annual Report to Stockholders for the fiscal year ended December 31, 1994. Supplementary quarterly financial data, which is also incorporated herein by reference, is set forth in Note 12 to the Consolidated Financial Statements on page 27 of the Annual Report to Stockholders. ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Directors -- See the Company's Proxy Statement dated March 13, 1995 for the Annual Meeting of Stockholders to be held on April 21, 1995, under the captions "Nominees for Election to the Board of Directors" and "Continuing Directors of the Company" on pages 5 through 8, which information is incorporated herein by reference. Executive Officers of the Registrant -- See "Executive Officers of the Registrant" under Item 4A at pages 4 through 6 of this Report. Compliance with Section 16(a) of the Securities Exchange Act -- See the Company's Proxy Statement, dated March 13, 1995 for the Annual Meeting of Stockholders to be held on April 21, 1995 at page 22, under the caption "Compliance with Section 16(a) of the Securities Exchange Act of 1934," which information is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION See the Company's Proxy Statement dated March 13, 1995 for the Annual Meeting of Stockholders to be held on April 21, 1995, under the captions "Executive Compensation" and "Selected Benefit Plans and Agreements" at pages 13 through 15 and 20 through 22, which information, except for that portion captioned "Report of the Compensation Committee on Executive Compensation," is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT See the Company's Proxy Statement dated March 13, 1995 for the Annual Meeting of Stockholders to be held on April 21, 1995, under the caption "Voting Securities And Ownership Thereof By Certain Persons" at pages 1 through 4, which information is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS See the Company's Proxy Statement dated March 13, 1995 for the Annual Meeting of Stockholders to be held on April 21, 1995, under the captions "About The Board of Directors" at page 10, "Selected Benefit Plans and Agreements" at pages 21 through 22, and footnote 9 to the Summary Compensation Table at page 14, which information is incorporated herein by reference. 7 8 PART IV ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES, AND REPORTS ON FORM 8-K THE FOLLOWING CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES, TOGETHER WITH THE REPORT THEREON OF PRICE WATERHOUSE LLP DATED FEBRUARY 3, 1995, APPEARING ON PAGES 19 THROUGH 28, INCLUSIVE, OF THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 ARE INCORPORATED HEREIN BY REFERENCE: (A)1. CONSOLIDATED FINANCIAL STATEMENTS Consolidated Earnings and Retained Earnings for 1994, 1993, and 1992. Consolidated Balance Sheet for December 31, 1994 and December 31, 1993. Consolidated Statement of Cash Flows for 1994, 1993, and 1992. Notes to Consolidated Financial Statements. (A)2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULE The Financial Schedule and related Report of Independent Accountants filed as part of this Report are as follows:
PAGE ---- Schedule VIII - Valuation Reserve................................................. 11 Report of Independent Accountants................................................. 12
This Consolidated Financial Statement Schedule should be read in conjunction with the Consolidated Financial Statements included in the Company's Annual Report to Stockholders for the fiscal year ended December 31, 1994. 8 9 All other financial statement schedules are omitted because they are not applicable or the required data is shown in the Company's Consolidated Financial Statements or the Notes thereto. (A)3. EXHIBITS
EXHIBIT NO. DESCRIPTION - ----------- -------------------------------------------------------------------------------- 3.01 Amended and Restated Certificate of Incorporation of Kellogg Company, incorporated by reference to Exhibit 3.01 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission file number 1-4171. 3.02 Bylaws of Kellogg Company, as amended, incorporated by reference to Exhibit 3.02 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission file number 1-4171. 4.01 Indenture dated as of March 1, 1988 between the Company and Bankers Trust Company, incorporated by reference to Exhibit 4(a) to the Company's Registration Statement on Form S-3, Commission file number 33-20731. 4.02 Form of Debt Security, incorporated by reference to Exhibit 4(d) to the Company's Registration Statement on Form S-3, Commission file number 33-20731. 4.03 Supplemental Indenture, dated January 30, 1989, between the Company and Bankers Trust Company, incorporated by reference to Exhibit B to the Company's Current Report on Form 8-K, Commission file number 1-4171, dated January 31, 1989. 4.04 Instrument of Resignation, Acceptance and Appointment, dated as of January 31, 1989, between the Company, Bankers Trust Company and NBD Bank, N.A. (formerly known as National Bank of Detroit), incorporated by reference to Exhibit A to the Company's Current Report on Form 8-K, Commission file number 1-4171, dated January 31, 1989. 4.05 Agency Agreement, dated as of January 31, 1989, between NBD Bank, N.A. (formerly known as National Bank of Detroit) and Bankers Trust Company, incorporated by reference to Exhibit C to the Company's Current Report on Form 8-K, Commission file number 1-4171, dated January 31, 1989. 10.01 Employment Agreements between the Company and C. W. Elliott, made and entered into as of January 30, 1987, incorporated by reference to Exhibit 10.02 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987, Commission file number 1-4171.* 10.02 Kellogg Company Excess Benefit Retirement Plan, incorporated by reference to Exhibit 10.01 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1983, Commission file number 1-4171.* 10.03 Kellogg Company Supplemental Retirement Plan, incorporated by reference to Exhibit 10.05 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission file number 1-4171.* 10.04 Kellogg Company Supplemental Savings and Investment Plan.* 10.05 Kellogg Company 1982 Stock Option Plan, as amended on December 7, 1990, incorporated by reference to Exhibit 10.07 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission file number 1-4171.* 10.06 Kellogg Company International Retirement Plan, incorporated by reference to Exhibit 10.05 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1984, Commission file number 1-4171.* 10.07 Kellogg Company Executive Survivor Income Plan, incorporated by reference to Exhibit 10.06 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1985, Commission file number 1-4171.*
9 10
EXHIBIT NO. DESCRIPTION - ----------- -------------------------------------------------------------------------------- 10.08 Kellogg Company Key Executive Benefits Plan, incorporated by reference to Exhibit 10.09 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission file number 1-4171.* 10.09 Kellogg Company Key Employee Long Term Incentive Plan, incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission file number 1-4171.* 10.10 Deferred Compensation Plan for Non-Employee Directors, incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission file number 1-4171.* 10.11 Agreement between the Company and G. E. Costley, made and entered into as of July 7, 1994.* 13.01 Pages 15 through 28 of the Company's Annual Report to Stockholders for the fiscal year ended December 31, 1994. 21.01 Domestic and Foreign Subsidiaries of the Company. 23.01 Consent of Price Waterhouse LLP. 23.02 Consent of Price Waterhouse LLP. 24.01 Powers of Attorney authorizing Richard M. Clark to execute the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 on behalf of the Board of Directors, and each of them. 27.01 Financial Data Schedule. 99.01 Kellogg Company American Federation of Grain Millers Savings and Investment Plan Annual Report on Form 11-K for the fiscal year ended October 31, 1994. 99.02 Kellogg Company Salaried Savings and Investment Plan Annual Report on Form 11-K for the fiscal year ended October 31, 1994.
- ------------------------- * A management contract or compensatory plan required to be filed with this Report. THE COMPANY AGREES TO FURNISH TO THE SECURITIES AND EXCHANGE COMMISSION, UPON ITS REQUEST, A COPY OF ANY INSTRUMENT DEFINING THE RIGHTS OF HOLDERS OF LONG-TERM DEBT OF THE COMPANY AND ITS SUBSIDIARIES AND ANY OF ITS UNCONSOLIDATED SUBSIDIARIES FOR WHICH FINANCIAL STATEMENTS ARE REQUIRED TO BE FILED. THE COMPANY WILL FURNISH ANY OF ITS STOCKHOLDERS A COPY OF ANY OF THE ABOVE EXHIBITS NOT INCLUDED HEREIN UPON THE WRITTEN REQUEST OF SUCH STOCKHOLDER AND THE PAYMENT TO THE COMPANY OF THE REASONABLE EXPENSES INCURRED BY THE COMPANY IN FURNISHING SUCH COPY OR COPIES. (B) REPORT ON FORM 8-K No report on Form 8-K was filed during the Company's fourth quarter for the fiscal year ended December 31, 1994. 10 11 SCHEDULE VIII -- VALUATION RESERVE (in millions)
1994 1993 1992 ----- ----- ----- Balance at January 1................................................... $ 6.0 $ 6.2 $ 5.8 Addition charged to costs and expenses................................. 1.8 0.9 2.4 Doubtful accounts charged to reserves.................................. (0.9) (0.7) (1.0) Currency translation adjustments....................................... (0.7) (0.4) (1.0) ----- ----- ----- Balance at December 31................................................. $ 6.2 $ 6.0 $ 6.2 ===== ===== =====
11 12 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors of Kellogg Company Our audits of the consolidated financial statements referred to in our report dated February 3, 1995 appearing in the 1994 Annual Report to Stockholders of Kellogg Company (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. PRICE WATERHOUSE LLP Battle Creek, Michigan February 3, 1995 12 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, this 27th day of March 1995. KELLOGG COMPANY By: /s/ ARNOLD G. LANGBO -------------------------------------- Arnold G. Langbo Chairman of the Board Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
NAME CAPACITY DATE - ---------------------------------------- ----------------------------------- --------------- /s/ ARNOLD G. LANGBO Chairman of the Board, Chief March 27, 1995 - ---------------------------------------- Executive Officer; Director Arnold G. Langbo (Principal Executive Officer) /s/ CHARLES W. ELLIOTT Executive Vice President, Chief March 27, 1995 - ---------------------------------------- Financial Officer; Director Charles W. Elliott (Principal Financial Officer) /s/ ALAN TAYLOR Vice President and Corporate March 27, 1995 - ---------------------------------------- Controller (Principal Accounting Alan Taylor Officer) Claudio X. Gonzalez Director Gordon Gund Director William E. LaMothe Director Russell G. Mawby Director Ann McLaughlin Director J. Richard Munro Director Harold A. Poling Director Donald Rumsfeld Director Timothy P. Smucker Director Dolores D. Wharton Director John L. Zabriskie Director By: /s/ RICHARD M. CLARK March 27, 1995 - ---------------------------------------- Richard M. Clark As Attorney-in-Fact
13 14 EXHIBIT INDEX
ELECTRONIC(E) PAPER(P) INCORP. BY EXHIBIT NO. DESCRIPTION REF.(IBRF) - ----------- --------------------------------------------------------------------- ------------- 3.01 Amended and Restated Certificate of Incorporation of Kellogg Company, incorporated by reference to Exhibit 3.01 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission file number 1-4171. IBRF 3.02 Bylaws of Kellogg Company, as amended, incorporated by reference to Exhibit 3.02 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission file number 1-4171. IBRF 4.01 Indenture dated as of March 1, 1988 between the Company and Bankers Trust Company, incorporated by reference to Exhibit 4(a) to the Company's Registration Statement on Form S-3, Commission file number 33-20731. IBRF 4.02 Form of Debt Security, incorporated by reference to Exhibit 4(d) to the Company's Registration Statement on Form S-3, Commission file number 33-20731. IBRF 4.03 Supplemental Indenture, dated January 30, 1989, between the Company and Bankers Trust Company, incorporated by reference to Exhibit B to the Company's Current Report on Form 8-K, Commission file number 1-4171, dated January 31, 1989. IBRF 4.04 Instrument of Resignation, Acceptance and Appointment, dated as of January 31, 1989, between the Company, Bankers Trust Company and NBD Bank, N.A. (formerly known as National Bank of Detroit), incorporated by reference to Exhibit A to the Company's Current Report on Form 8-K, Commission file number 1-4171, dated January 31, 1989. IBRF 4.05 Agency Agreement, dated as of January 31, 1989, between NBD Bank, N.A. (formerly known as National Bank of Detroit) and Bankers Trust Company, incorporated by reference to Exhibit C to the Company's Current Report on Form 8-K, Commission file number 1-4171, dated January 31, 1989. IBRF 10.01 Employment Agreements between the Company and C. W. Elliott, made and entered into as of January 30, 1987, incorporated by reference to Exhibit 10.02 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987, Commission file number 1-4171.* IBRF 10.02 Kellogg Company Excess Benefit Retirement Plan, incorporated by reference to Exhibit 10.01 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1983, Commission file number 1-4171.* IBRF 10.03 Kellogg Company Supplemental Retirement Plan, incorporated by reference to Exhibit 10.05 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission file number 1-4171.* IBRF 10.04 Kellogg Company Supplemental Savings and Investment Plan.* E 10.05 Kellogg Company 1982 Stock Option Plan, as amended on December 7, 1990, incorporated by reference to Exhibit 10.07 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission file number 1-4171.* IBRF 10.06 Kellogg Company International Retirement Plan, incorporated by reference to Exhibit 10.05 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1984, Commission file number 1-4171.* IBRF
14 15
ELECTRONIC(E) PAPER(P) INCORP. BY EXHIBIT NO. DESCRIPTION REF.(IBRF) - ----------- --------------------------------------------------------------------- ------------- 10.07 Kellogg Company Executive Survivor Income Plan, incorporated by reference to Exhibit 10.06 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1985, Commission file number 1-4171.* IBRF 10.08 Kellogg Company Key Executive Benefits Plan, incorporated by reference to Exhibit 10.09 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission file number 1-4171.* IBRF 10.09 Kellogg Company Key Employee Long Term Incentive Plan, incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission file number 1-4171.* IBRF 10.10 Deferred Compensation Plan for Non-Employee Directors, incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission file number 1-4171.* IBRF 10.11 Agreement between the Company and G. E. Costley, made and entered into as of July 7, 1994.* E 13.01 Pages 15 through 28 of the Company's Annual Report to Stockholders for the fiscal year ended December 31, 1994. E 21.01 Domestic and Foreign Subsidiaries of the Company. E 23.01 Consent of Price Waterhouse LLP. E 23.02 Consent of Price Waterhouse LLP. E 24.01 Powers of Attorney authorizing Richard M. Clark to execute the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 on behalf of the Board of Directors, and each of them. E 27.01 Financial Data Schedule. E 99.01 Kellogg Company American Federation of Grain Millers Savings and Investment Plan Annual Report on Form 11-K for the fiscal year ended October 31, 1994. E 99.02 Kellogg Company Salaried Savings and Investment Plan Annual Report on Form 11-K for the fiscal year ended October 31, 1994. E
- ------------------------- * A management contract or compensatory plan required to be filed with this Report. THE COMPANY WILL FURNISH ANY OF ITS STOCKHOLDERS A COPY OF ANY OF THE ABOVE EXHIBITS NOT INCLUDED HEREIN UPON THE WRITTEN REQUEST OF SUCH STOCKHOLDER AND THE PAYMENT TO THE COMPANY OF THE REASONABLE EXPENSES INCURRED BY THE COMPANY IN FURNISHING SUCH COPY OR COPIES. 15 EX-10.04 2 EXHIBIT 10.04 1 EXHIBIT 10.04 KELLOGG COMPANY SUPPLEMENTAL SAVINGS AND INVESTMENT PLAN 2 KELLOGG COMPANY Supplemental Savings and Investment Plan October 17, 1994 3 KELLOGG COMPANY SUPPLEMENTAL SAVINGS AND INVESTMENT PLAN Article I INTRODUCTION 1.1 THE PLAN AND ITS EFFECTIVE DATE. The Kellogg Company Supplemental Savings and Investment Plan (the "Plan") is hereby established by the Kellogg Company (the "Company") and certain commonly controlled entities effective, November 1, 1994. 1.2 PURPOSE. The Company maintains the Kellogg Company Salaried Savings and Investment Plan (the "Savings and Investment Plan"), which is intended to meet the requirements of a "qualified plan" under the Code. Section 401(a)(17) of the Code places limitations on the amount of annual compensation of each employee which may be taken into account under a qualified plan. For plan years beginning in the 1993 calendar year, the aforesaid limitation on compensation was $235,840, and was scheduled to be indexed annually (the "old compensation limit"). However, the Omnibus Budget Reconciliation Act of 1993 reduced the aforesaid compensation limit to $150,000 for plan years beginning in the 1994 calendar year, and also modified the procedure for indexing the new $150,000 limit (the "new compensation limit"). The purpose of the Plan is to allow employees to make contributions (and receive matching contributions from the Company or another Employer hereunder) which could have been made and accumulated under the Savings and Investment Plan based on the "old compensation limit", but which now cannot be so made and accumulated because of the "new compensation limit". Kellogg Company Supplemental Savings and Investment Plan - 1 - 4 Article II PARTICIPATION AND BENEFITS 2.1 ELIGIBILITY TO PARTICIPATE. Subject to the conditions and limitations of the Plan, if an employee of an Employer (as defined in Section 3.7) participates in the Savings and Investment Plan, and such employee has, for any Plan Year beginning on or after November 1, 1994, compensation which exceeds the limitations under Section 401(a)(17) of the Code, then such employee shall be a participant hereunder. 2.2 COMPENSATION. For purposes of this Plan, the term Compensation shall have the same meaning as given to this term in the Savings and Investment Plan, without regard to the dollar limits contained in Section 401(a)(17) of the Code. 2.3 OLD COMPENSATION LIMIT. For any Plan Year, the Old Compensation Limit shall be equal to $235,840 multiplied by the ratio of Consumer Price Index for wage earners (CPI-W) for December of the calendar year which immediately precedes the start of the applicable Plan Year over the value of the CPI-W for December of 1992 (such latter value being 139.8). The value determined by the foregoing procedure shall be rounded up to the next higher multiple of $1,000. For the initial Plan Year of this Plan, beginning November 1, 1994, the Old Compensation Limit shall be equal to $241,744, which is rounded up to $242,000. 2.4 EXCESS COMPENSATION. A participant's Excess Compensation for any Plan Year shall be equal to the lesser of his Compensation for such year or the Old Compensation Limit for such year, reduced by the compensation limitation in effect for such Plan Year under Section 401(a)(17) of the Code. For the initial Plan Year of this Plan, beginning November 1, 1994, the Excess Compensation for any participant shall be no greater than $92,000 (the difference between $242,000 and $150,000). Kellogg Company Supplemental Savings and Investment Plan - 2 - 5 2.5 CONTRIBUTIONS. Contributions to this Plan shall include both Before-Tax Contributions and Employer Matching Contributions as defined below: (a) A participant's Before-Tax Contribution for any Plan Year shall be equal to the product of his Excess Compensation for such year, multiplied by the percentage of compensation he has elected to contribute to the Savings and Investment Plan as of the payroll period starting on (or immediately before) the first day in which he earns one dollar of Excess Compensation for such Plan Year. (b) A participant's Employer Matching Contribution for any Plan Year shall be equal to 80% of the product of his Excess Compensation for such Plan Year, multiplied by the lesser of 5% or the percentage of contributions elected for the payroll period starting on (or immediately before) the first day in which he earns one dollar of Excess Compensation for such Plan Year. Notwithstanding anything in the Plan to the contrary, for any Plan Year, the total Annual Additions to a participant's accounts in the Savings and Investment Plan and the Plan shall not exceed $30,000. If necessary, a participant's Before-Tax Contribution hereunder, which is in excess of 5% of Excess Compensation, shall be limited in accordance with the procedures adopted by the ERISA Administration Committee in order to ensure compliance with the aforementioned $30,000 annual limitation. If reducing a participant's Before-Tax Contribution hereunder to 5% of Excess Compensation is not sufficient to achieve such compliance, the participant's Before-Tax Contributions hereunder shall be limited to less than 5% of Excess Compensation and the related 80% Employer Matching Contributions (on the amount of Before-Tax contributions which are foregone) shall not be made hereunder. The $30,000 annual limitation referenced in this Section 2.5 shall be increased to reflect increases in the cost- Kellogg Company Supplemental Savings and Investment Plan - 3 - 6 of-living in the same manner as the $30,000 annual limitation set forth in Section 415(c)(1)(A) of the Code. In the event that the foregoing $30,000 limit is exceeded in any Plan Year, for any reason, the Administrative Committee shall direct that the portion of the excess attributable to Before-Tax Contributions hereunder be refunded to the affected Employee, and that the portion of the excess attributable to Employer Matching Contributions hereunder be forfeited from the Employee's accounts. Any earnings credited on such excess Contributions shall be refunded or forfeited in the same manner as the related Contributions. 2.6 ACCOUNTS AND CREDITING OF EARNINGS. Two accounts shall be maintained for each participant in this Plan; one to record accumulated Before-Tax Contributions (and earnings thereon) and one to record accumulated Employer Matching Contributions (and earnings thereon). Earnings on both accounts shall be credited at the same time and in the same amount and manner as credited to Savings and Investment Plan accounts which are invested in the fixed income fund provided thereunder for investment of a participant's accounts. 2.7 VESTING OF AMOUNTS. All accounts maintained hereunder shall be 100% vested at all times and, except as provided in Section 3.3 or 3.4, shall not be forfeitable for any reason. 2.8 PAYMENT OF BENEFITS. Payment of Plan benefits shall be accomplished by means of payments directly from the Employer. Subject to the last paragraph of this Section, distribution of any such benefits shall be made in the same manner and form and subject to the same conditions, as the distributions available under the Savings and Investment Plan, so long as an election is made prior to the earliest date on which a distribution may be made; except that the participant may elect, with the ERISA Administration Committee's approval, to receive the distribution of his accounts in a form other than as provided by the Savings and Investment Plan. Kellogg Company Supplemental Savings and Investment Plan - 4 - 7 Notwithstanding the foregoing, for any Employee who is a "covered employee" within the meaning of Section 162(m) of the Code, distribution of such Employee's participant accounts shall not commence before the earliest date such distribution would be deductible, for income tax purposes, by the Employer. No in-service withdrawals or loans shall be available from the Plan. No distributions may be made from the Plan until at least 30 days after the earliest to occur of the Employee's retirement, death, disability (as defined in the Savings and Investment Plan) or termination of employment with all Employers hereunder. 2.9 FUNDING. Benefits payable under the Plan to any participant (or beneficiary thereof) shall be paid directly by the Company. Neither the Company nor any other Employer shall be required to fund, or otherwise segregate assets, to be used for payment of benefits under the Plan. 2.10 PLAN YEAR. Each twelve-month period beginning on November 1 and ending on October 31 of the succeeding calendar year shall be considered a Plan Year. 2.11 BENEFICIARY DESIGNATION. A participant may designate a beneficiary or beneficiaries to receive benefits payable hereunder in the event of a participant's death prior to distribution of the full value of his accounts hereunder. Such designation shall be in writing, on a form acceptable to the ERISA Administration Committee, and need not be the same designation made under the Savings and Investment Plan. In the event no beneficiary is named hereunder, the beneficiary designation under the Savings and Investment Plan shall be applicable hereunder. 2.12 Annual Additions. For purposes of this Plan, a participant's Annual Additions shall include his Before-Tax Contributions and Employer Matching Contributions hereunder, Kellogg Company Supplemental Savings and Investment Plan - 5 - 8 plus any amounts credited to the participant's accounts under the Savings and Investment Plan that would constitute annual additions within the meaning of Section 415(c)(2) of the Code. Kellogg Company Supplemental Savings and Investment Plan - 6 - 9 Article III GENERAL PROVISIONS 3.1 PLAN ADMINISTRATION. The Plan shall be administered by the ERISA Administration Committee responsible for administration of the Savings and Investment Plan. The Administration Committee shall have, to the extent appropriate, the same powers, rights, duties and obligations with respect to the Plan as it has with respect to the Savings and Investment Plan. 3.2 EMPLOYMENT RIGHTS. The establishment of the Plan shall not be construed to give any Employee the right to be retained in an Employer's service or to any benefits not specifically provided by the Plan, nor shall the establishment of the Plan in any manner modify the Employers' rights to modify, amend or terminate the Savings and Investment Plan. 3.3 INTERESTS NOT TRANSFERRABLE. Except as to withholding of any tax under the laws of the United States or any State or locality, no benefit payable at any time under the Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge, attachment, or other legal process, or encumbrance of any kind. Any attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any such benefits, whether currently or thereafter payable, shall be void. No benefit shall, in any manner, be liable for or subject to the debts or liabilities of any person entitled to such benefits. If any participant or beneficiary thereof shall attempt to, or shall alienate, sell, transfer, assign, pledge or otherwise encumber his benefits under the Plan, or if by any reason of his bankruptcy or other event happening at any time, such benefits would devolve upon any other person or would not be enjoyed by the person entitled thereto under the Plan, then the Employer of such participant, in its discretion, may terminate the interest in any such benefits of the participant or beneficiary entitled thereto under the Plan and hold or apply them Kellogg Company Supplemental Savings and Investment Plan - 7 - 10 to or for the benefit of any such person or his spouse, children or other dependents, or any of them, in such manner as the Employer may deem proper. 3.4 UNCLAIMED AMOUNT. Unclaimed amounts shall consist of the Plan accounts of a participant which cannot be distributed because of the ERISA Administration Committee's inability, after a reasonable search, to locate the participant or his beneficiary, as applicable, within a period of two (2) years after the payment of benefits becomes due. Unclaimed amounts shall be forfeited at the end of such two-year period. After an unclaimed amount has been forfeited, the participant or beneficiary, as applicable, shall have no further right to his Plan benefit. 3.5 CONTROLLING LAW. The law of Michigan, without regard to its law with respect to choice of law, shall be controlling in all matters relating to the Plan to the extent not pre-empted by the Employee Retirement Income Security Act of 1974, as it may be amended from time-to-time. 3.6 GENDER AND NUMBER. Words in the masculine gender shall include the feminine, and the plural shall include the singular and the singular shall include the plural. 3.7 EMPLOYER. The term "Employer" shall be used throughout this Plan to designate the respective Employer entities unless the context demands otherwise and each entity covering its Employees hereunder shall be deemed to be such only as to those participants who are on its payroll and, in each case only to the extent of the Compensation which it pays to these participants. 3.8 CODE. As used in this Plan, "Code" means the Internal Revenue Code of 1986, as it may be amended from time-to-time. Reference to any section or subsection of the Code includes reference to any succeeding provisions of any legislation that amends, supplements or replaces such section or subsection. Kellogg Company Supplemental Savings and Investment Plan - 8 - 11 3.9 ACTION BY AN EMPLOYER. Subject to Article VI, any action required of, or permitted by, an Employer under the Plan shall be by resolution of the Board of Directors of such Employer, or if so authorized by resolution of the Board of Directors of the Employer, by any member of the ERISA Administration Committee or such other person(s) which the aforesaid Board of Directors shall designate. 3.10 DEDUCTION OF TAXES FROM AMOUNTS PAYABLE. An Employer may deduct from the amount to be distributed under the Plan such amount as the Employer, in its sole discretion, deems proper for the payment of income, employment, death, succession, inheritance or other taxes with respect to benefits under the Plan. Kellogg Company Supplemental Savings and Investment Plan - 9 - 12 Article IV CLAIMS PROCEDURE 4.1 INITIAL CLAIM FOR BENEFITS. Each participant or beneficiary (a "Claimant") may submit his claim for benefits to the Administrative Committee (or to such other person or persons as may be designated by the Administrative Committee) in writing in such form as is provided or approved by the Administrative Committee, which claim shall designate the date upon which the Claimant desires his benefits to commence. A claimant shall have no right to seek review of a denial of benefits, or to bring any action in any court to enforce a claim for benefits prior to his filing a claim for benefits and exhausting his rights to review under Sections 4.1 and 4.2. When a claim for benefits has been filed properly, such claim for benefits shall be evaluated and the Claimant shall be notified of the approval or the denial within ninety (90) days after the receipt of such claim unless special circumstances require an extension of time for processing the claim. If such an extension of time for processing is required, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial ninety (90) day period which shall specify the special circumstances requiring an extension and the date by which a final decision will be reached (which date shall not be later than one hundred and eighty (180) days after the date on which the claim was filed). A Claimant shall be given a written notice in which the Claimant shall be advised as to whether the claim is granted or denied, in whole or in part. If a claim is denied, in whole or in part, the Claimant shall be given written notice which shall contain (1) the specific reasons for the denial, (2) references to pertinent plan provisions upon which the denial is based, (3) a description of any additional Kellogg Company Supplemental Savings and Investment Plan - 10 - 13 material or information necessary to perfect the claim and an explanation of why such material or information is necessary, and (4) the Claimant's rights to seek review of the denial. 4.2 REVIEW OF CLAIM DENIAL. If a claim is denied, in whole or in part (or if within the time periods presented in Section 4.1 the Claimant has not received an approval or a denial and the claim is, therefore, deemed denied), the Claimant shall have the right to request that the Administrative Committee review the denial, provided that the Claimant files a written request for review with the Administrative Committee within sixty (60) days after the date on which the Claimant received written notification of the denial. A Claimant (or his duly authorized representative) may review pertinent documents and submit issues and comments in writing to the Administrative Committee. Within sixty (60) days after a request for review is received, the review shall be made and the Claimant shall be advised in writing of the decision on review, unless special circumstances require an extension of time for processing the review, in which case the Claimant shall be given a written notification within such initial sixty (60) day period specifying the reasons for the extension and when such review shall be completed (provided that such review shall be completed within one hundred and twenty (120) days after the date on which the request for review was filed). The decision on review shall be forwarded to the Claimant in writing and shall include specific reasons for the decision and references to plan provisions upon which the decision is based. A decision on review shall be final and binding on all persons for all purposes. If a Claimant shall fail to file a request for review in accordance with the procedures described in Sections 4.1 and 4.2, such Claimant shall have no right to review and shall have no right to bring action in any court and the denial of the claim shall become final and binding on all persons for all purposes. Kellogg Company Supplemental Savings and Investment Plan - 11 - 14 Article V SUBSIDIARY PARTICIPATION 5.1 ADOPTION OF PLAN. Any commonly controlled entity with respect to the Company which has adopted the Savings and Investment Plan may, with the approval of the ERISA Administration Committee and under such terms and conditions as the ERISA Administration Committee may prescribe, adopt the Plan by resolution of its Board of Directors and thereby become an Employer hereunder. 5.2 WITHDRAWAL FROM THE PLAN BY EMPLOYER. Any Employer other than the Company shall have the right, at any time, upon the approval of and under such conditions as may be prescribed by the ERISA Administration Committee, to withdraw from the Plan by delivering to the ERISA Administration Committee written notice of its election so to withdraw, provided however, that if a participant in the Plan who is an employee of the withdrawing Employer, or a beneficiary thereof, becomes entitled to a benefit under the Plan, such Plan benefits shall constitute an irrevocable obligation of the withdrawing Employer. Kellogg Company Supplemental Savings and Investment Plan - 12 - 15 Article VI AMENDMENT AND TERMINATION The Company by action of the Chairman of the Board, or resolution of the Board of Directors, reserves the right at any time to modify, amend or terminate the Plan, provided however, that no termination, amendment or modification of or to the Plan may, without written approval of a participant, reduce the total benefit payable under this Plan to an amount that is less than the amount that would have been payable to the participant under the Plan, assuming the participant retired, died or otherwise terminated employment as of the date of such termination, amendment or modification. Such amount shall constitute an irrevocable obligation of the Company or other applicable Employer. Executed this day of , 1994. -------- ---------------- KELLOGG COMPANY By: ---------------------------- ATTEST: - ----------------------- Kellogg Company Supplemental Savings and Investment Plan - 13 - EX-10.11 3 EXHIBIT 10.11 1 EXHIBIT 10.11 AGREEMENT BETWEEN THE COMPANY AND G. E. COSTLEY, MADE AND ENTERED INTO AS OF JULY 7, 1994 2 Leave Of Absence Agreement This Agreement (the "Agreement") made and entered into this 1st day of July, 1994, by and between Kellogg Company, a Delaware corporation, and Gary E. Costley, an individual ("Costley"). Kellogg Company, and its subsidiaries, divisions and affiliates are collectively referred to herein as the "Company." The purpose of this Agreement is to set forth the arrangements with respect to Costley's resignation as an officer of Kellogg Company, effective July 1, 1994, and related matters. As of that date, Costley is relieved of all of his titles, duties, responsibilities and authority as an officer and otherwise with respect to the Company. Except as otherwise provided in this Agreement, for the period beginning July 1, 1994, and continuing through October 31, 1998, Costley will be an employee on a paid leave-of-absence. During Costley's paid leave-of-absence, Costley will receive the salary continuation payments as described herein, but Costley shall not hold any title or position with the Company, and Costley shall have no titles, duties, responsibilities or authority with respect to the Company, its business and/or operations. As more fully provided hereinbelow, the salary continuation and supplemental pension payments described herein are in consideration of Costley's release of any and all cause or causes of action he has, has had or may have against the Company and also in consideration of Costley's agreement not to compete. Commencing July 1, 1994 and ending December 31, 1994, Costley will receive salary continuation payments equal to $39,583.33 per month. Commencing January 1, 1995 and ending October 31, 1998, Costley shall receive salary continuation payments equal to $18,478.26 per month. The amounts payable to Costley under this Agreement are in lieu of any amounts which may be payable to Costley for termination pay. Prior to July 31, 1994, Kellogg Company will pay to Costley that sum which is equivalent to all unused, earned and accrued vacation of Costley as of July 1, 1994. Costley shall not be entitled to any future vacation pay accruals from and after the date of this Agreement. Usual and customary withholding for tax purposes will be withheld from all monthly salary continuation payments through October 31, 1998, and from any other payments made to Costley, to the extent required by law. All tax liability, with respect to any and all payments or services received by Costley under this Agreement (other than employer withholding and employer payroll taxes), will be Costley's responsibility. Costley will be eligible to participate in the Second Restated Kellogg Company Salaried Savings and Investment Plan, subject to the terms and provisions thereof, including any amendment or alteration thereof after the date of this Agreement, throughout Costley's paid leave-of-absence. Usual and customary withholding for personal designated deductions, including participation in such Savings Plan, will be withheld throughout Costley's paid leave-of-absence. Costley's right to exercise nonqualified stock options that Costley received pursuant to the Kellogg Company 1982 Stock Option Plan and the 1991 Key Employee Long-Term Incentive Plan will be administered in accordance with and be subject to the respective provisions of those Plans, and shall continue so long as Costley is employed by Kellogg Company and for such period of time as provided by such Plans upon Costley's retirement. Costley shall repay to Kellogg Company all sums due under the terms of his existing loans related to stock options, the /1 3 exercise thereof and taxes related thereto, in accordance with his existing loans agreements with Kellogg Company. Kellogg Company will continue Costley's coverage under the existing Kellogg Company Executive Survivor Income Plan, based upon Costley's most recent compensation rate of $725,000. Costley will be eligible, at Kellogg Company's expense, for outplacement assistance by an outplacement agency mutually agreeable to Costley and Kellogg Company. Arrangements for these services will be coordinated by R. L. Creviston of Kellogg Company. Except as otherwise provided herein, benefits for Costley and his eligible dependents, as outlined in "A Guide To Your Health Care and Pension Benefits" effective April 1, 1990, and under the Executive Income Survivor Plan, subject to the respective terms and provisions thereof, including any amendment or alteration thereof after the date of this Agreement, will be continued for Costley as an employee, and, to the extent provided in such plans, upon Costley's retirement. However, at such time as Costley is eligible for coverage by the health plan of another employer, such health insurance shall be deemed the primary health insurance coverage for Costley and his eligible dependents. Price Waterhouse will provide to Costley, at Kellogg Company's expense, for the tax year 1994 only, not to exceed $10,000 in fees and costs of Price Waterhouse, tax preparation and tax counseling services. Costley shall and does hereby irrevocably elect to retire upon reaching age 55 and then be eligible for pension benefits through the Kellogg Company Salaried Pension Plan, the Kellogg Company Excess Benefit or Supplemental Retirement Plan (collectively the "Pension Plans"). Pension benefits for which Costley will be eligible will be based upon Costley's highest consecutive three-year earnings during his last ten years of employment with Kellogg Company. Kellogg Company agrees to supplement such pension benefit so as to provide Costley with an annual pension of $250,000 based upon a single-life annuity payout election; provided, however, that no such payments, including such payments as may have accrued under the Pension Plans, shall qualify for lump sum payments to Costley. Years of service for this program will include the period while Costley is on leave-of-absence. At the time Costley elects to begin receiving such benefits, he should contact the Employee Benefits Department of Kellogg Company. In further consideration of the foregoing, Costley agrees that, for the respective Restricted Periods (as hereinafter defined), Costley shall not (i) directly or indirectly, accept any employment, consult for or with, or otherwise provide or perform any services of any nature to, for or on behalf of any person, firm, partnership, corporation or other business or entity that manufactures, produces, distributes, sells or markets any of the Products (as hereinbelow defined) in the Geographic Area (as hereinafter defined), or (ii) directly or indirectly, permit any business firm which Costley, individually or jointly with others, may own, manage, operate or control, to engage in the manufacture, production, distribution, sale or marketing of any of the Products in the Geographic Area. For purposes of this paragraph, the term "Products" shall mean ready-to-eat cereal products, toaster pastries, cereal bars, granola bars, and frozen waffles, and the term "Geographic Area" shall mean any country in the world where Kellogg Company (including any subsidiary, division or affiliate thereof) manufactures, produces, distributes, sells or markets any of the Products at any time during the applicable Restricted Period (as defined below). For purposes of this paragraph, the Restricted Period with respect to ready-to-eat cereal products, /2 4 toaster pastries and cereal bars shall be five (5) years from the date of this Agreement. For purposes of this paragraph, the Restricted Period with respect to granola bars and frozen waffles shall be two (2) years from the date of this Agreement, provided, however, said Restricted Period shall not apply in the case of granola bars and frozen waffles with respect to a partnership, corporation or other business or entity which is engaged in the granola bar or frozen waffle business if, and only if, total sales throughout the Restricted Period of such products by such partnership, corporation or other business or entity constitute three percent (3%) percent or less of the total sales (unit and dollar volume) of such products in the United States as measured by I.R.I. InfoScan, and provided, further, that Costley is not involved in, does not devote any time to, and does not otherwise consult with or provide any information to any person with respect to any such product or products for the period ending two (2) years from the date of this Agreement. As a result of this extension of salary and benefits eligibility, Kellogg Company, its subsidiaries, divisions and affiliates (including the directors, officers and employees of any of them) shall have no further obligations of any kind or nature to Costley, including, without limitation, obligations for any termination, severance or vacation pay, except as specifically provided herein and except as may be provided under Kellogg Company benefit plans in accordance with their terms. Costley agrees not to divulge any confidential or proprietary information regarding the Company as provided in Costley's Confidentiality Agreement with Kellogg Company dated January 16, 1970, and Costley further agrees to and shall immediately return to Kellogg Company all files, documents, correspondence, memoranda, customer and client lists, prospect lists, subscription lists, contracts, pricing policies, operational methods, marketing plans or strategies, product development techniques or plans, business acquisition plans, employee records, technical processes, designs and design projects, inventions, research projects presentations, proposals, quotations, data, notes, records, photographic slides, chromes, photographs, posters, manuals, brochures, internal publications, books, films, drawings, videos, sketches, plans, outlines, computer disks, computer files, work plans, specifications, credit cards, keys (including elevator, pass, building and door keys), identification cards, equipment, supplies and any other documents, writings and materials that Costley came to possess or otherwise acquire as a result of and/or in connection with Costley's employment with Kellogg Company or any of its subsidiaries, divisions and affiliates. Costley may keep the computer, third-party computer software, and facsimile machine in his possession which were previously provided to him by Kellogg Company. Costley agrees to conduct himself in a manner that reflects positively on the Company. Similarly, the Company agrees to conduct itself in a manner that reflects positively on Costley. Nothing contained in this Agreement, nor any actions taken by Kellogg Company, its subsidiaries, divisions and/or affiliates (including the directors, officers and employees of any of them) constitute any admission of fault, liability or wrongdoing of any kind, and Kellogg Company, its subsidiaries, divisions and affiliates (including the directors, officers and employees of any of them) each specifically denies any liability to Costley on any theory. It is understood that the monthly salary continuation payments as provided in this Agreement shall continue to be made to Costley through October 31, 1998, whether or not Costley secures new employment. For purposes of this Agreement, Costley will be deemed to have secured new employment upon being employed by another company and becoming eligible for coverage under the health plan of that company, whereupon such company's health coverage shall be and be deemed to be the primary health coverage for Costley and his eligible dependents. Costley will not be deemed to have secured new employment as a result of business activities or services rendered by Costley to others on a part-time basis or otherwise as an independent contractor; provided, however, that nothing herein shall release Costley of Costley's obligation hereunder not to render such activities or services in connection with the manufacture, production, distribution, sale or marketing the Products in the Geographical Area, as above provided. /3 5 Costley hereby acknowledges and agrees that these arrangements set forth the sole and entire obligations of Kellogg Company, its subsidiaries, divisions and affiliates (including the directors, officers and employees of any of them) to Costley. Costley's signature in the space below shall conclusively evidence his acceptance of the terms set forth herein. Costley hereby resigns all of his titles, offices and positions with Kellogg Company and its subsidiaries, divisions and affiliates, effective July 1, 1994. Costley's signature also releases, remises and discharges Kellogg Company, its subsidiaries, divisions and affiliates (including the directors, officers and employees of any of them), fully, absolutely and unconditionally, of and from any and all claims, demands, actions, cause or causes of action, known or unknown, which Costley has, has had or may have against any of them, including, but not limited to, the Age Discrimination in Employment Act, from the beginning of time to the day and date of these presents, except for matters arising under or contemplated by this Agreement. Execution on behalf of Kellogg Company releases, remises and discharges Costley fully, absolutely and unconditionally, of and from any and all claims, demands, actions, cause or causes of action, known or unknown, which Kellogg Company, its subsidiaries, divisions and affiliates has, has had or may have against him, from the beginning of time to the day and date of these presents, except for matters arising under or contemplated by this Agreement. This Agreement shall be construed and interpreted under the laws of the State of Michigan, including conflict of laws. It is agreed that any controversy, claim or dispute between the parties, directly or indirectly, concerning this Agreement or the breach thereof shall only be resolved in the Circuit Court of Calhoun County, or the United States District Court for the Western District of Michigan, whichever court has jurisdiction over the subject matter thereof, and the parties hereby submit to the jurisdiction of said courts. Costley acknowledges that he has reviewed this Agreement with his own independent counsel of his choosing and has been advised by such counsel with respect thereto. For purposes of any construction or interpretation of this Agreement, all terms and provisions thereof shall be deemed to have been mutually drafted by both of the parties. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and date first above written in Battle Creek, Michigan. Kellogg Company By: s/Richard M. Clark s/ Gary E. Costley --------------------------- ---------------------- Richard M. Clark Gary E. Costley, Senior Vice President, an individual 7/7/94 General Counsel and Secretary Approved as to form: Approved as to form: s/ Frederick P. Furth s/Daniel R. Shulman - ------------------------------- --------------------------- Frederick P. Furth, Daniel R. Shulman, Counsel to Counsel to Kellogg Company Gary E. Costley /4 EX-13.01 4 EXHIBIT 13.01 1 EXHIBIT 13.01 PAGES 15 THROUGH 28 OF THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 2 SELECTED FINANCIAL DATA (dollar amounts in millions, except per share data) SUMMARY OF OPERATIONS
EARNINGS BEFORE (A) NET % OPERATING % ACCOUNTING % NET % SALES GROWTH PROFIT GROWTH CHANGE GROWTH EARNINGS GROWTH ----- ------ -------- ------ --------- ------ -------- ------ 10-year Compound Growth Rate 10% 10% 11% 11% - ----------- 1994 $6,562.0 4 $1,162.6 9 $705.4 4 $705.4 4 1993 6,295.4 2 1,068.9 1 680.7 - 680.7 58 1992 6,190.6 7 1,062.8 3 682.8 13 431.2 (29) 1991 5,786.6 12 1,027.9 16 606.0 21 606.0 21 1990 5,181.4 11 886.0 21 502.8 19 502.8 7 1989 4,651.7 7 732.5 (8) 422.1 (12) 470.2 (2) 1988 4,348.8 15 794.1 15 480.4 21 480.4 21 1987 3,793.0 14 691.2 7 395.9 24 395.9 24 1986 3,340.7 14 647.4 16 318.9 13 318.9 13 1985 2,930.1 13 558.4 21 281.1 12 281.1 12 1984 2,602.4 9 463.2 12 250.5 3 250.5 3
PER COMMON SHARE DATA (B) EARNINGS AVERAGE BEFORE (A) SHARES ACCOUNTING NET CASH BOOK OUTSTANDING SHAREHOLDERS' CHANGE EARNINGS DIVIDENDS VALUE (MILLIONS) EQUITY ----------- -------- --------- ----- ----------- --------- 14% 14% 13% 1994 $3.15 $3.15 $1.40 $8.15 224.2 $1,807.5 1993 2.94 2.94 1.32 7.52 231.5 1,713.4 1992 2.86 1.81 1.20 8.20 238.9 1,945.2 1991 2.51 2.51 1.075 8.98 241.2 2,159.8 1990 2.08 2.08 .96 7.88 241.6 1,901.8 1989 1.73 1.93 .86 6.70 244.2 1,634.4 1988 1.95 1.95 .76 6.03 246.4 1,483.2 1987 1.60 1.60 .64 4.91 247.4 1,211.4 1986 1.29 1.29 .51 3.63 247.0 898.4 1985 1.14 1.14 .45 2.77 246.6 683.0 1984 .84 .84 .42 1.98 298.8 487.2
OTHER INFORMATION AND FINANCIAL RATIOS
FINANCIAL RATIOS ------------------------------------- PRETAX INTEREST RETURN ON DEBT TO CASH LONG- PROPERTY, CAPITAL TOTAL NUMBER OF CURRENT COVERAGE AVERAGE TOTAL PROVIDED TERM NET EXPENDITURES DEPRECIATION ASSETS EMPLOYEES RATIO (TIMES) EQUITY CAPITAL BY OPERATIONS DEBT --------- ------------ ------------ ------ --------- ------- -------- ------- ------- ------------- ----- 1994 $2,892.8 $354.3 $256.1 $4,467.3 15,657 1.2 23 40% 36% $966.8 $719.2 1993 2,768.4 449.7 265.2 4,237.1 16,151 1.0 27 37% 35% 800.2 521.6 1992 2,662.7 473.6 231.5 4,015.0 16,551 1.2 33 21% 21% 741.9 314.9 1991 2,646.5 333.5 222.8 3,925.8 17,017 .9 17 30% 18% 934.4 15.2 1990 2,595.4 320.5 200.2 3,749.4 17,239 .9 10 28% 26% 819.2 295.6 1989 2,406.3 508.7 167.6 3,390.4 17,268 .9 10 30% 34% 533.5 371.4 1988 2,131.9 538.1 139.7 3,297.9 17,461 .9 14 36% 32% 492.3 272.1 1987 1,738.8 478.4 113.1 2,680.9 17,762 .9 14 38% 27% 523.5 290.4 1986 1,281.1 329.2 92.7 2,084.2 17,383 1.1 13 40% 31% 542.7 264.1 1985 1,035.9 245.6 75.4 1,726.1 17,082 1.4 11 48% 38% 449.7 392.6 1984 856.0 228.9 63.9 1,667.1 17,239 1.1 26 27% 59% 331.5 364.1
(a) Net earnings for 1992 include a $251.6 million charge ($1.05 per share) resulting from the adoption of Statement of Financial Accounting Standards 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," as of January 1, 1992. Net earnings for 1989 include a $48.1 million gain ($.20 per share) resulting from the adoption of Statement of Financial Accounting Standards 96, "Accounting for Income Taxes," as of January 1, 1989. (b) All per share data retroactively restated to reflect 2 for 1 stock splits in 1991 and 1986. 15 3 [GRAPH] 1994 Global Market Share (volume) - The 1994 Global Market Share (volume) graph shows in pie chart form, the Company's market share at 42% with all other competition (collectively) at 58%. [GRAPH] Consolidated Net Sales - The Consolidated Net Sales graph shows in bar chart form, total net sales for the Company as follows: 1984 $2.6 billion, 1989 $4.7 billion, 1994 $6.6 billion. [GRAPH] 1994 Geographic Net Sales - The 1994 Geographic Net Sales graph shows in pie chart form, the relative proportion of the Company's 1994 net sales attributable to major geographic segments as follows: United States 59%, Europe 25%, Other 16%. MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS 1994 COMPARED TO 1993 Kellogg revenues are generated from the sale of ready-to-eat cereals and other grain-based convenience foods in nearly 160 countries. The ready-to-eat cereal category continued to exhibit volume growth around the world in 1994, with Kellogg continuing to demonstrate strong global leadership in market share. The Company's 1994 annual market volume share was 42% globally, 36% in North America, 49% in Europe, 47% in Asia-Pacific, and 73% in Latin America. Consolidated net sales increased 4% over 1993, principally from higher selling prices and, to a lesser extent, product mix improvements and lower trade spending. Excluding the results of the Mrs. Smith's Frozen Foods pie business, divested during the first quarter of 1994, and the Argentine snack business, divested during the fourth quarter of 1993, consolidated net sales increased 7%. On a geographic basis, excluding the results of divested businesses, sales increased 5% in the U.S., 9% in Europe, and 10% in all other areas. The Company's reported total volume was down 2% versus the prior year. However, excluding results of divested businesses, total volume increased 2% over the previous year, buoyed by strong growth in the U.S. convenience foods market. Recognizing the importance of this business, a new U.S. convenience foods division was created in late 1993. Despite intense competitive pressure in all developed markets, Kellogg's global cereal volume grew 1% during 1994, with a volume decline in the U.S. cereal market more than offset by volume growth in non-U.S. markets. The volume decline in the U.S. cereal market reflected this competitive pressure and the Company's introduction of a new strategy on pricing and market spending, focusing on the reduction of inefficient price promotion on established brands. The gross profit margin strengthened to 55%, up 2 percentage points over 1993. This increase in gross margin was the result of favorable pricing, combined with cost containment programs and productivity improvements which held cost of goods sold essentially flat on a per-kilo basis. Intense global competition requires heavy investment in value-added marketing and new-product research and development. As a result, selling and administrative expense for 1994 was up 9% over 1993, and represented 37% of net sales, up one percentage point from the prior year. Beginning in the second quarter of 1994, a shift in the marketing investment mix occurred toward advertising from promotion. This trend continued throughout the remainder of 1994. Management believes that the strategy of investment in brand-building advertising and reduction in price promotion spending on established brands, coupled with a strong new-product program, will assist in delivering long-term growth. Operating profit increased 9% to $1.16 billion, reflecting strong margins and efficient marketing investment. Excluding the results of divested businesses, operating profit was up 11% in total, 10% in the U.S., 14% in Europe, and 13% in all other areas. Foreign currency movements contributed favorably by 3% in Europe and less than 1% in other non-U.S. areas. Other income for 1994 includes a gain of $21.1 million ($13.3 million after tax or $.06 per share) from the sale of the Mrs. Smith's Frozen Foods pie business. Other expense includes a charge of $20.5 million ($13.1 million after tax or $.06 per share), primarily from the initial funding of the Kellogg's Corporate Citizenship Fund, a private trust established for charitable donations. Gross interest expense, prior to amounts capitalized, increased to $52.3 million for 1994 compared to $40.4 million for 1993, due to higher debt levels, incurred primarily to fund common stock repurchases, and increased interest rates on short-term borrowings. The Company expects a further increase in interest expense during 1995, primarily due to anticipated continuing increases in U.S. interest rates. The Company's effective income tax rate for the year was 37.6%, 3.4 percentage points higher than the comparable rate for 1993. A primary factor contributing to this variance is the one-time favorable impact of statutory rate reductions in several foreign jurisdictions during 1993. The Company expects its effective income tax rate for 1995 to be between 37% and 38%. 16 4 [GRAPH] Gross Margin - The Gross Margin graph shows in bar chart form, the Company's gross margin percentage for the following years: 1992 52%, 1993 53%, 1994 55%. [GRAPH] 1994 Geographic Operating Profit - The 1994 Geographic Operating Profit graph shows in pie chart form, the Company's relative proportion of 1994 operating profit attributable to major geographic segments as follows: United States 61%, Europe 24%, Other 15%. [GRAPH] Net Earnings (millions before accounting change) - The Net Earnings graph shows in continuous bar chart form, the Company's net earnings for the period 1984-1994. Net Earnings are presented in millions before accounting change as follows: 1984 $251, 1989 $422, 1994 $705. Earnings per share for 1994 were $3.15, up 7%. Net earnings were $705.4 million, an increase of 4%. Excluding all one-time events and the results of divested businesses, earnings per share for 1994 were $3.16, up 10% over 1993, and net earnings were $708.8 million, up 7%. 1993 COMPARED TO 1992 Consolidated net sales increased by 2% for 1993. This increase was achieved through higher selling prices and a 2% increase in cereal volume, partially offset by unfavorable foreign currency movements. Excluding the unfavorable impact of currency movements, 1993 sales would have increased 6%. During 1993, sales within the United States rose by 6% from increased selling prices and volume for both cereal and convenience foods. European sales, which were significantly impacted by unfavorable foreign currency movements, were down 8%, and sales in other areas increased by 2%. If the effects of foreign currency are excluded, European sales would have risen 4% and other area sales would have increased 6%. The Company's gross margin improved to 53% from 52% in 1992, due to higher selling prices, increased volume, cost containment, and productivity improvements. Cost of sales per kilo declined over 1% versus the prior year. As a percentage of net sales, selling and administrative expense was up one percentage point to 36%, reflecting the Company's commitment to building strong, long-term brand franchises through effective marketing and research and development expenditures. Total operating profit increased 1% in 1993 to $1.07 billion, primarily due to the improvement in gross margin. Geographically, U.S. operating profit increased 9% over 1992, with European and other areas operating profit declining 13% and 7%, respectively. Unfavorable currency movements significantly impacted non-U.S. operating profit results. Excluding the currency impact, operating profit would have been essentially flat in Europe and down 3% in other areas. Other income for 1993 includes a pre-tax gain of $32.2 million ($24.1 million after tax or $.10 per share) from the sale of Cereal Packaging Ltd., a wholly owned subsidiary of Kellogg Company of Great Britain Ltd., and a pre-tax gain of $33.7 million ($22.2 million after tax or $.10 per share) from the sale of the Company's Argentine snack food business. Other expense for 1993 includes a pre-tax charge of $64.3 million ($41.1 million after tax or $.18 per share) from the write-down of certain assets in Europe and North America. Other income for 1992 includes a pre-tax gain of $58.5 million ($39.2 million after tax or $.16 per share) from the sale of Fearn International Inc., a foodservice subsidiary. Other expense includes a pre-tax charge of $22.4 million ($13.5 million after tax or $.05 per share) from the disposition of convenience foods operations in Canada and other North American assets. Gross interest expense, prior to amounts capitalized, increased to $40.4 million for 1993 compared to $33.6 million for 1992, due to higher debt levels incurred primarily to fund common stock repurchases. The Company's effective tax rate was 34.2% for the year compared to 36.2% for 1992. The decrease in tax rate was partially as a result of statutory rate decreases in various foreign jurisdictions which more than offset the 1% increase in the U.S. statutory rate during 1993. For 1993, earnings per share were $2.94, versus 1992 earnings per share of $1.81. Net earnings were $680.7 million, compared to 1992 earnings of $431.2 million. The 1992 results include the effect of adopting FAS 106. Excluding all one-time events and the effect of FAS 106, earnings per share were $2.92, up 6% over $2.75 in 1992; and net earnings were $675.5 million, up 3% over 1992 earnings of $657.1 million. Without the negative impact of foreign currency fluctuations, earnings per share would have been up 10% and net earnings up 6%. LIQUIDITY AND CAPITAL RESOURCES The financial condition of the Company remained strong during 1994. Consistent with historical results, operations provided a strong, positive cash flow during 1994 which resulted in a net increase in cash of $168.2 million during the year. The strong cash flow, combined with a program of issuing commercial paper and maintaining worldwide credit facilities, provides adequate liquidity to meet the Company's operational needs. The Company maintains credit facilities with banking institutions in the United States and other countries where it conducts business. At year-end, the Company had $594.3 million of short-term lines of credit, of which $554.2 million were available. 17 5 [GRAPH] Cash Flow From Operations (millions) - The Cash Flow From Operations graph shows in bar chart form, the Company's cash flow in millions for the following years: 1992 $742, 1993 $800, 1994 $967. [GRAPH] Capital Expenditures (millions) - The Capital Expenditures graph shows in bar chart form, the Company's capital spending in millions for the following years: 1992 $474, 1993 $450, 1994 $354. [GRAPH] Stock Repurchased Since 1984 (based on shares outstanding at 12/31/83) - The Stock Repurchased Since 1984 graph shows in pie chart form the relative proportion of the Company's Common Stock repurchased versus outstanding as a percentage of shares outstanding at 12/31/83. Common Stock repurchased and outstanding were 29% and 71% respectively. The ratio of current assets to current liabilities was 1.2:1.0 as of December 31, 1994, and 1.0:1.0 at December 31, 1993. Capital spending for 1994 was $354.3 million compared with $449.7 million during 1993. Capital expenditures have decreased, reflecting the Company's application of value-based management principles and the ongoing strategy of improving return on invested capital. Over the past several years, investment has been focused on gaining entrance to relatively untapped markets, which are expected to provide significant long- term growth potential in ready-to-eat cereal consumption. As a result, the Company opened new plants in Latvia in 1993 and India in 1994, and expects to be manufacturing at new plants in China and Argentina by mid-1995. Management anticipates that 1995 capital expenditures will be approximately $350 million. In recent years the Company has divested units that do not fit with its long-term strategic plan. As discussed above, the results of operations for 1994, 1993, and 1992 reflect divestitures of non-core businesses. As a result of an aggressive common stock repurchase program, combined with these strategic divestitures and other operational factors, return on average equity (before cumulative effect of accounting change) increased from 33% in 1992 to 37% in 1993 and to 40% in 1994. During 1994 the Company spent $327.3 million to purchase 6,194,500 shares of its common stock. Stock repurchases are made under plans authorized by the Company's Board of Directors. The total authorized purchase amount for 1995 is $325.4 million. Market conditions permitting, management intends to fully utilize this authorization by the end of 1995. Long-term debt outstanding at year-end 1994 consisted principally of $200 million of three-year notes issued in 1994, $200 million of five-year notes issued in 1993, and $300 million of five-year notes issued in 1992. Short-term debt outstanding at year-end 1994 and 1993 consisted principally of commercial paper. The Company continues to enjoy the highest available debt ratings on both its long-term debt and commercial paper. The Company's net debt position (long-term debt plus notes payable less cash) at December 31, 1994, was $728.6 million, down $83.1 million from December 31, 1993, as the increase in cash during the year more than offset the net increase in total debt. The ratio of debt to total capitalization was 36% compared to 35% at December 31, 1993. At December 31, 1994, the Company had available an unused "shelf registration" of $200 million with the Securities and Exchange Commission to provide for the issuance of debt in the United States. Such an offering would be added to the Company's working capital and be available for general corporate purposes. Dividends paid per share of common stock increased 6% to $1.40 in 1994, marking the 38th consecutive year of increase. Management believes the trend of increased dividends will continue in 1995. LOOKING FORWARD Management is not aware of any adverse trends that would materially affect the Company's strong financial position. Should suitable investment opportunities or working capital needs arise that would require additional financing, management believes that the Company's triple A credit rating, strong balance sheet, and its solid earnings history provides a base for obtaining additional financial resources at competitive rates and terms. Management's objective of maximizing shareholder value includes a constant reassessment of its business strategies. The commitment to position the Company for continued success will include in 1995 the implementation of a program to improve productivity and streamline its cereal production operations. On February 6, 1995, the Company announced plans to change its manufacturing staffing patterns and reduce approximately 300-350 employee positions through a voluntary program of incentives for early retirement and severance. Approximately one-third of the reduction will be salaried positions in the Company's U.S. cereal operations, with the remainder coming from outside the United States. When fully implemented, management expects this program to result in annual cost savings of $12-$15 million. Subject to the timing of employee acceptance of these incentives, management expects to report a non-recurring pre-tax charge to earnings of approximately $30-$40 million during the second or third quarter of 1995, primarily comprised of expenses for acceleration of pension and health care benefits and cash outlays for employee separation payments. 18 6 Kellogg Company and Subsidiaries CONSOLIDATED EARNINGS AND RETAINED EARNINGS Year ended December 31,
(in millions, except per share amounts) 1994 1993 1992 NET SALES $6,562.0 $6,295.4 $6,190.6 -------- -------- -------- Cost of goods sold 2,950.7 2,989.0 2,987.7 Selling and administrative expense 2,448.7 2,237.5 2,140.1 -------- -------- -------- OPERATING PROFIT 1,162.6 1,068.9 1,062.8 -------- -------- -------- Interest expense 45.4 33.3 29.2 Other income (expense), net 12.8 (1.5) 36.8 -------- -------- -------- EARNINGS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE 1,130.0 1,034.1 1,070.4 Income taxes 424.6 353.4 387.6 -------- -------- -------- EARNINGS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 705.4 680.7 682.8 Cumulative effect of change in method of accounting for postretirement benefits other than pensions - $1.05 per share (net of income tax benefit of $144.6) (251.6) -------- -------- -------- NET EARNINGS - $3.15, $2.94, $1.81 per share 705.4 680.7 431.2 Retained earnings, beginning of year 3,409.4 3,033.9 2,889.1 Dividends paid - $1.40, $1.32, $1.20 per share (313.6) (305.2) (286.4) -------- -------- -------- RETAINED EARNINGS, END OF YEAR $3,801.2 $3,409.4 $3,033.9 ======== ======== ========
See notes to consolidated financial statements. 19 7 Kellogg Company and Subsidiaries CONSOLIDATED BALANCE SHEET At December 31,
(millions) 1994 1993 ---- ---- CURRENT ASSETS Cash and temporary investments $ 266.3 $ 98.1 Accounts receivable, less allowances of $6.2 & $6.0 564.5 536.8 Inventories: Raw materials and supplies 141.7 148.5 Finished goods and materials in process 254.6 254.6 Deferred income taxes 79.4 85.5 Other current assets 127.0 121.6 --------- -------- TOTAL CURRENT ASSETS 1,433.5 1,245.1 --------- -------- PROPERTY Land 47.3 40.6 Buildings 1,122.6 1,065.7 Machinery and equipment 3,141.0 2,857.6 Construction in progress 289.6 308.6 Accumulated depreciation (1,707.7) (1,504.1) --------- -------- PROPERTY, NET 2,892.8 2,768.4 --------- -------- INTANGIBLE ASSETS 4.1 59.1 OTHER ASSETS 136.9 164.5 --------- -------- TOTAL ASSETS $ 4,467.3 $4,237.1 ========= ========
20 8 Kellogg Company and Subsidiaries CONSOLIDATED BALANCE SHEET continued
At December 31, (millions, except share data) 1994 1993 CURRENT LIABILITIES Current maturities of long-term debt $ .9 $ 1.5 Notes payable 274.8 386.7 Accounts payable 334.5 308.8 Accrued liabilities: Income taxes 72.0 65.9 Salaries and wages 80.5 76.5 Advertising and promotion 257.5 233.8 Other 165.0 141.4 --------- --------- TOTAL CURRENT LIABILITIES 1,185.2 1,214.6 --------- --------- LONG-TERM DEBT 719.2 521.6 NONPENSION POSTRETIREMENT BENEFITS 486.8 450.9 DEFERRED INCOME TAXES 198.1 188.9 OTHER LIABILITIES 70.5 147.7 SHAREHOLDERS' EQUITY Common stock, $.25 par value Authorized: 330,000,000 shares Issued: 310,356,488 shares in 1994 and 310,292,753 in 1993 77.6 77.6 Capital in excess of par value 68.6 72.0 Retained earnings 3,801.2 3,409.4 Treasury stock, at cost: 88,655,238 shares in 1994 and 82,372,409 in 1993 (1,980.6) (1,653.1) Minimum pension liability adjustment (25.3) Currency translation adjustment (159.3) (167.2) --------- --------- TOTAL SHAREHOLDERS' EQUITY 1,807.5 1,713.4 --------- --------- TOTAL LIABILITIES AND SHAREHOLERS' EQUITY $ 4,467.3 $ 4,237.1 ========= =========
See notes to consolidated financial statements. 21 9 Kellogg Company and Subsidiaries CONSOLIDATED STATEMENT OF CASH FLOWS Year ended December 31,
(millions) 1994 1993 1992 OPERATING ACTIVITIES Net earnings $ 705.4 $ 680.7 $ 431.2 Items in net earnings not requiring (providing) cash: Cumulative effect of accounting change 251.6 Depreciation 256.1 265.2 231.5 Pre-tax gain on sale of subsidiaries (26.7) (65.9) (58.5) Deferred income taxes 24.5 (22.3) .1 Other (49.3) 11.9 34.7 Change in operating assets and liabilities: Accounts receivable (27.7) (17.7) (99.1) Inventories 6.8 13.3 (15.3) Other current assets (5.4) (32.3) (.9) Accounts payable 25.7 (5.0) 24.0 Accrued liabilities 57.4 (27.7) (57.4) ------- ------- ------- NET CASH PROVIDED FROM OPERATING ACTIVITIES 966.8 800.2 741.9 ------- ------- ------- INVESTING ACTIVITIES Additions to properties (354.3) (449.7) (473.6) Proceeds from sale of subsidiaries 95.5 95.6 115.0 Property disposals 15.6 19.0 18.8 Other 7.8 (25.1) (10.6) ------- ------- ------- NET CASH USED IN INVESTING ACTIVITIES (235.4) (360.2) (350.4) ------- ------- ------- FINANCING ACTIVITIES Net borrowings of notes payable (111.9) 176.7 21.6 Issuance of long-term debt 200.0 208.3 311.7 Reduction in long-term debt (2.9) (1.7) (270.2) Issuance of common stock 2.3 2.9 13.4 Common stock repurchases (327.3) (548.1) (224.1) Cash dividends (313.6) (305.2) (286.4) Other (6.1) 2.9 11.4 ------- ------- ------- NET CASH USED IN FINANCING ACTIVITIES (559.5) (464.2) (422.6) ------- ------- ------- Effect of exchange rate changes on cash (3.7) (4.0) (20.6) ------- ------- ------- Increase (decrease) in cash and temporary investments 168.2 (28.2) (51.7) Cash and temporary investments at beginning of year 98.1 126.3 178.0 ------- ------- ------- CASH AND TEMPORARY INVESTMENTS AT END OF YEAR $ 266.3 $ 98.1 $ 126.3 ======= ======= =======
See notes to consolidated financial statements. 22 10 Kellogg Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 ACCOUNTING POLICIES Consolidation - The consolidated financial statements include the accounts of Kellogg Company and its wholly owned subsidiaries. Intercompany balances and transactions are eliminated. Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. Cash and temporary investments - Highly liquid temporary investments with original maturities of less than three months are considered to be cash equivalents. The carrying amount approximates fair value. Inventories - Inventories are valued at the lower of cost (principally average) or market. Property - Fixed assets are recorded at cost and depreciated over estimated useful lives using straight-line methods for financial reporting and accelerated methods for tax reporting. Cost includes an amount of capitalized interest associated with significant capital additions. Net earnings per share - Net earnings per share is determined by dividing net earnings by the weighted average number of common shares outstanding during the year. NOTE 2 LEASES Operating leases generally are for equipment and warehouse space. Rent expense on all operating leases, which generally are renewable at the Company's option, was $37.5 million in 1994, $43.7 million in 1993, and $42.4 million in 1992. There are no significant future minimum rental commitments under non-cancelable leases. NOTE 3 RESEARCH AND DEVELOPMENT Expenditures for research and development are expensed as incurred, and generally include costs related to product and process advancements. Research and development costs charged to earnings during 1994 were $71.7 million. Comparable amounts for 1993 and 1992 were $59.2 million and $56.7 million, respectively. NOTE 4 DIVESTITURES AND OTHER NONRECURRING ITEMS All gains from divestitures and nonrecurring charges are recorded in other income (expense). None of the divestitures during the past three years were significant to the Company's consolidated revenues and earnings. During 1994, the Company recognized a pre-tax gain of $21.1 million ($13.3 million after-tax or $.06 per share) from the sale of the Mrs. Smith's Frozen Foods pie business to The J. M. Smucker Co. The Company also recognized a pre-tax charge of $20.5 million ($13.1 million after tax or $.06 per share) primarily from the initial funding of the Kellogg's Corporate Citizenship Fund, a private trust established for charitable donations. During 1993, the Company recognized a pre-tax gain of $32.2 million ($24.1 million after tax or $.10 per share) from the sale of Cereal Packaging, Ltd., a wholly owned subsidiary of Kellogg Company of Great Britain, Ltd., and a pre-tax gain of $33.7 million ($22.2 million after tax or $.10 per share) from the sale of the Argentine snack food business. The Company also recognized a pre-tax charge of $64.3 million ($41.1 million after tax or $.18 per share) from the write-down of certain assets in Europe and North America. During 1992, the Company sold Fearn International Inc., a foodservice subsidiary, resulting in a pre-tax gain of $58.5 million ($39.2 million after tax or $.16 per share). The Company also recognized a pre-tax charge of $22.4 million ($13.5 million after tax or $.05 per share) from the disposition of convenience foods operations in Canada and other North American assets. NOTE 5 SHAREHOLDERS' EQUITY Under plans authorized by the Board of Directors, the Company purchased 6,194,500 shares of its common stock in 1994, 9,487,508 shares in 1993, and 3,497,000 shares in 1992. All purchases are included in treasury stock. Net exchange gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries, except those in highly inflationary economies, are accumulated in the currency translation component of shareholders' equity. Components of shareholders' equity were:
(a) Minimum Capital in pension Currency Common excess of Retained Treasury liability translation (millions) stock par value earnings stock adjustment adjustment - ---------------------------------------------------------------------------------------------------- Balance, January 1, 1992 $77.4 $60.2 $2,889.1 ($ 880.9) $ 14.0 Stock options exercised .1 9.0 Net earnings 431.2 Dividends (286.4) Exchange adjustments (144.4) Common stock repurchases (224.1) - ---------------------------------------------------------------------------------------------------- Balance, December 31, 1992 77.5 69.2 3,033.9 (1,105.0) (130.4) Stock options exercised .1 2.8 Net earnings 680.7 Dividends (305.2) Exchange adjustments (36.8) Minimum pension liability adjustment ($25.3) Common stock repurchases (548.1) - ---------------------------------------------------------------------------------------------------- Balance, December 31, 1993 77.6 72.0 3,409.4 (1,653.1) (25.3) (167.2) Stock options exercised 2.3 Net earnings 705.4 Dividends (313.6) Exchange adjustments 7.9 Minimum pension liability adjustment 25.3 Common stock repurchases (327.3) Other (5.7) (.2) - ---------------------------------------------------------------------------------------------------- Balance, December 31, 1994 $77.6 $68.6 $3,801.2 $(1,980.6) $0.0 ($159.3) ====================================================================================================
(a) Refer to Note 8 for explanation of the minimum pension liability adjustments. 23 11 NOTE 6 DEBT Notes payable consist principally of commercial paper borrowings in the United States at the highest credit rating available, and to a lesser extent, bank loans of foreign subsidiaries at competitive market rates. U.S. borrowings at December 31, 1994, were $243.3 million with an effective interest rate of 5.9% and at December 31, 1993, were $352.9 million with an effective interest rate of 3.2%. At December 31, 1994, the Company had $594.3 million of short-term lines of credit, of which $554.2 million were unused and available for borrowing on an unsecured basis. Long-term debt at year-end consisted of:
(millions) 1994 1993 - ----------------------------------------------------- (a) Three-Year Notes due 1997 $200.0 (b) Five-Year Notes due 1998 200.0 $200.0 (c) Five-Year Notes due 1997 299.4 299.2 Other 20.7 23.9 - ----------------------------------------------------- 720.1 523.1 Less current maturities (.9) (1.5) - ----------------------------------------------------- Balance, December 31, $719.2 $521.6 =====================================================
(a) In September 1994, the Company issued $200 million of three-year long-term debt consisting of both 8.125% Euro Canadian Dollar Secured Notes and 5.25% Swiss Franc Secured Notes. These Notes were swapped into U.S. dollar obligations, with a variable rate indexed to the Federal Reserve AA composite rate on 30-day commercial paper, for the duration of the three-year term. (b) In October 1993, the Company issued $200 million of five-year 6.25% Euro Canadian Dollar Notes which were swapped into 4.629% fixed rate U.S. dollar obligations for the duration of the five-year term. In December 1993, the Notes were swapped into variable rate debt for a two-year period, indexed to the London Interbank Offered Rate. (c) In July 1992, the Company issued $300 million of five-year 5.9% U.S. dollar obligations. The Notes were swapped into variable rate debt for a two-year period expiring July 1994, indexed to the London Interbank Offered Rate. In August 1993, the Company filed a $200 million "shelf registration" with the Securities and Exchange Commission which remains unused at December 31, 1994. Scheduled principal repayments on long-term debt are (in millions): 1996-$2, 1997-$502, 1998-$207, 1999-$1. Interest paid, net of amounts capitalized, approximated interest expense in each of the three years ended December 31, 1994. Interest expense capitalized as part of the construction cost of fixed assets was (in millions): 1994-$6.9; 1993-$7.1: 1992-$4.4. NOTE 7 STOCK OPTIONS The Key Employee Long-Term Incentive Plan provides for benefits to be awarded to executive level employees in the form of stock options, performance shares, performance units, incentive stock options, restricted stock awards, and other stock-based awards. Under this plan, options have been granted with exercise prices equal to the fair market value of the Company's common stock at the time of grant, exercisable for a ten-year period following the date of grant. The plan also contains a reload option feature. When Company stock is surrendered to pay the exercise price of a stock option, the holder of the option is granted a new option for the number of shares surrendered. For all options reloaded, the expiration date is not changed, but the option price becomes the fair market value of the Company's stock on the date the new reload option is granted. Under this plan, options for 10,620,578 and 9,949,433 shares were available for grant at January 1, 1994, and December 31, 1994, respectively. In addition, during 1994 shareholders approved the adoption of the Kellogg Employee Stock Ownership Plan. This plan is designed to offer stock and other incentive awards based on Company performance to employees who are not eligible to participate in the Key Employee Long-Term Incentive Plan. Under this plan, during 1994, options for 778,480 shares were granted with exercise prices equal to fair market value, exercisable for a ten-year period following the date of grant, subject to vesting rules. These rules provide for 50% of the options to vest after three years and the remaining 50% to vest after five years, from grant date. Under this plan, options for 5,228,710 shares remain available for grant at December 31, 1994. Transactions under these plans were:
Shares Average price ------ ------------- Under option, January 1, 1993 1,909,382 $52.92 Granted 848,885 62.40 Less exercised (293,494) 45.46 Less cancelled (30,186) 59.10 --------- ------ Under option, December 31, 1993 2,434,587 $56.95 Granted 1,607,984 53.46 Less exercised (85,647) 38.20 Less cancelled (151,589) 54.85 --------- ------ Under option, December 31, 1994 3,805,335 $56.03 ========== ====== Exercisable, December 31, 1994 3,034,195 $57.54 ========= ======
NOTE 8 PENSION BENEFITS The Company has a number of U.S. and worldwide pension plans to provide retirement benefits for its employees. Benefits for salaried employees are generally based on salary and years of service, while union employee benefits are generally a negotiated amount for each year of service. Plan funding strategies are influenced by tax regulations. Plan assets consist primarily of equity securities with smaller holdings of bonds, real estate, and other investments. 24 12 The components of pension expense were:
(millions) 1994 1993 1992 Service cost $29.0 $24.9 $23.7 Interest cost 60.3 57.8 57.2 Actual (return) loss on plan assets (3.5) (76.3) (22.8) Net amortization and deferral (51.0) 26.7 (27.3) ----- ----- ----- Pension expense - Company plans 34.8 33.1 30.8 Pension expense - multiemployer plans 2.0 3.1 1.5 ----- ----- ----- Total pension expense $36.8 $36.2 $32.3 ===== ===== =====
Reconciliation of funded status of the plans at year-end was:
Underfunded Overfunded (millions) 1994 1993 1994 1993 Accumulated benefit obligation: Nonvested $ 5.6 $ 35.3 $ 51.7 $ 26.9 Vested 35.0 288.8 592.4 322.3 ----- ------ ------ ------ Total 40.6 324.1 644.1 349.2 Projected salary increases 14.6 13.8 89.7 86.3 ----- ------ ------ ------ Projected benefit obligation 55.2 337.9 733.8 435.5 Plan assets at fair value 9.5 279.5 711.9 404.4 ----- ------ ------ ------ Assets (less) greater than projected benefit obligation (45.7) (58.4) (21.9) (31.1) Unrecognized net (gain) loss 7.7 41.3 83.3 25.7 Unrecognized transition amount (2.5) 19.3 .4 (14.6) Unrecognized prior service cost 4.9 46.3 56.3 21.3 Minimum liability adjustment (1.9) (96.0) ----- ------ ------ ------ Prepaid (accrued) pension ($37.5) ($47.5) $118.1 $ 1.3 ===== ====== ====== ======
The underfunded liability in excess of the unamortized prior service cost and the net transition obligation was recorded as a reduction in shareholders' equity of $25.3 million, net of tax, as of December 31, 1993. The shift from underfunded to overfunded plan status at year-end 1994 versus year-end 1993, was primarily due to plan funding and an increase in the assumed discount rate, reducing the accumulated benefit obligation. The amount of intangible assets related to underfunded pension plans was correspondingly reduced from $56.9 million at year-end 1993 to $1.9 million at year-end 1994. The 1993 projected benefit obligation was impacted by plan improvements that covered most U.S. employees. All gains and losses are recognized over the average remaining service period of active employees. The worldwide weighted averages for actuarially assumed discount rate, long-term rate of compensation increase, and long-term rate of return on plan assets were 8.3, 5.3, and 9.5 percent in 1994; 7.9, 5.4, and 9.5 percent in 1993; and 9.2, 6.7, and 9.6 percent in 1992. The Company and certain subsidiaries sponsor 401K or similar savings plans for active employees. Expense related to these plans was (in millions): 1994-$16; 1993-$16; 1992-$17. NOTE 9 NONPENSION POSTRETIREMENT BENEFITS Effective January 1, 1992, the Company adopted FAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions". This standard requires that the estimated cost of postretirement benefits, principally health care, be accrued over the period earned rather than expensed as incurred. The transition effect of adopting FAS 106 on the immediate recognition basis, as of January 1, 1992, resulted in a charge of $251.6 million ($1.05 per share) to 1992 earnings, net of approximately $144.6 million of income tax benefit. The Company adopted FAS 106 on a worldwide basis; however, costs associated with subsidiaries outside North America are insignificant. The Company and its North American subsidiaries provide health care and certain other benefits to substantially all retired employees, their covered dependents, and beneficiaries. Generally, employees are eligible for these benefits when one of the following service/age requirements are met: 30 years and any age; 20 years and age 55; 5 years and age 62. Components of postretirement benefit expense were:
(millions) 1994 1993 1992 ---- ---- ---- Service cost $13.3 $12.1 $10.9 Interest cost 39.2 38.6 34.9 Net amortization and deferral 3.1 1.0 ----- ----- ----- Postretirement benefit expense $55.6 $51.7 $45.8 ===== ===== =====
Actuarial assumptions used to determine the accumulated postretirement benefit obligation include a discount rate of 8.5% for 1994, 7.75% for 1993, and 9% for 1992. The assumed health care cost trend was 8.5% for 1994, decreasing gradually to 6% by the year 2000 and remaining at that level thereafter. These trend rates reflect the Company's prior experience and management's expectation that future rates will decline. Increasing the assumed health care cost trend rates by 1 percentage point in each year would increase the accumulated postretirement benefit obligation as of December 31, 1994, by $67.8 million and postretirement benefit expense for 1994 by $8.4 million. All gains and losses are recognized over the average remaining service period of active plan participants. The Company's postretirement health care plans currently are not funded. 25 13 The accrued postretirement benefit cost included in the balance sheet at year-end was:
(millions) 1994 1993 ---- ---- Accumulated benefit obigation: Retirees $250.7 $251.7 Active plan participants 254.5 265.0 ------ ------ 505.2 516.7 Unrecognized experience loss 1.0 (47.2) Unrecognized prior service cost (.5) (.5) ------ ------ Accrued postretirement benefit cost $505.7 $469.0 ====== ======
NOTE 10 INCOME TAXES Effective January 1, 1992, the Company adopted FAS 109, "Accounting for Income Taxes." This standard requires the use of the asset and liability approach for financial reporting of income taxes. The Company previously accounted for income taxes in conformity with FAS 96. The effect of the accounting change was not material except for allowing recognition of the tax benefit associated with the cumulative effect of adopting FAS 106 (refer to Note 9). Earnings before income taxes and the provision for U.S. federal, state, and foreign taxes on these earnings were:
(millions) 1994 1993 1992 ---- ---- ---- Earnings before income taxes and cumulative effect of accounting change: United States $ 741.1 $ 703.3 $ 727.3 Foreign 388.9 330.8 343.1 -------- -------- -------- $1,130.0 $1,034.1 $1,070.4 Income taxes: ======== ======== ======== Currently payable: Federal $ 207.4 $ 233.0 $ 226.8 State 42.4 38.0 27.8 Foreign 150.3 104.7 132.9 -------- -------- -------- 400.1 375.7 387.5 Deferred: Federal 18.1 (19.4) (4.2) State .2 (2.2) (1.0) Foreign 6.2 (.7) 5.3 -------- -------- -------- 24.5 (22.3) .1 -------- -------- -------- Total income taxes $ 424.6 $ 353.4 $ 387.6 ======== ======== ========
The difference between the U.S. federal statutory tax rate and the Company's effective rate was:
1994 1993 1992 ---- ---- ---- U.S. statutory rate 35.0% 35.0% 34.0% Foreign rates varying from 35% 0.2 (1.5) 1.2 State income taxes, net of federal benefit 2.5 2.2 1.7 Other (.1) (1.5) (.7) ---- ---- ---- Effective income tax rate 37.6% 34.2% 36.2% ==== ==== ====
The deferred tax assets and liabilities included in the balance sheet at year-end were:
Deferred tax assets Deferred tax liabilities (millions) 1994 1993 1994 1993 Current: Promotion and advertising $ 46.0 $ 54.4 $ 5.8 $ 7.5 Wages and payroll taxes 13.9 12.8 Pension 1.5 9.5 10.6 Health and postretirement benefits 15.3 13.1 State taxes 8.4 9.6 Other 22.7 27.9 13.0 11.4 ------- ------- ------- ------- 106.3 119.3 28.3 29.5 ------- ------- ------- ------- Less valuation allowance (4.0) (5.9) ------- ------- ------- ------- 102.3 113.4 28.3 29.5 ------- ------- ------- ------- Noncurrent: Depreciation and asset disposals 7.0 4.9 313.8 301.2 Postretirement benefits 177.7 162.3 28.0 15.4 Capitalized interest 3.5 3.7 32.7 32.6 State taxes 1.7 .7 Other 13.4 16.6 7.9 3.2 ------- ------- ------- ------- 203.3 188.2 382.4 352.4 ------- ------- ------- ------- Less valuation allowance (13.9) (10.6) ------- ------- ------- ------- 189.4 177.6 382.4 352.4 ------- ------- ------- ------- Total deferred taxes $ 291.7 $ 291.0 $ 410.7 $ 381.9 ======= ======= ======= =======
At December 31, 1994, foreign subsidiary earnings of $1.27 billion were considered permanently invested in those businesses. Accordingly, U.S. income taxes have not been provided on these earnings. Foreign withholding taxes of approximately $57 million would be payable upon remittance of these earnings. Subject to certain limitations, the withholding taxes would then be available for use as tax credits against the U.S. tax liability. Cash paid for income taxes was (in millions): 1994-$396; 1993-$425; 1992-$361. 26 14 NOTE 11 FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATION The fair values of the Company's financial instruments are based on carrying value in the case of short-term items, quoted market prices for derivatives and investments, and, in the case of long-term debt, incremental borrowing rates currently available on loans with similar terms and maturities. The carrying amounts of the Company's cash, temporary investments, receivables, notes payable, and long-term debt approximate fair value. The Company uses derivative financial instruments only for the purpose of hedging currency, price, and interest rate exposures which exist as a part of its ongoing business operations. The Company does not engage in speculative transactions. The Company enters into forward contracts and options to hedge against the adverse impact of fluctuations in foreign currency-denominated receivables, payables, intercompany loans, and other commitments. Gains and losses on forward contracts and options are not significant and are recognized in the earnings statement in the same period as the hedged transaction. Gains and losses related to currency hedges of net investments in foreign subsidiaries are recorded in the cumulative translation adjustment component of shareholders' equity. Forward contracts and options generally have maturities of six months or less and are entered into with major international financial institutions. The notional amounts of open forward contracts and options were $91.2 million and $77.5 million, at December 31, 1994 and 1993, respectively. The Company enters into currency and interest rate swaps in connection with certain debt issues (refer to Note 6 for a description of outstanding swaps). Currency swaps are used to convert foreign currency-denominated debt to U.S. dollars; thereby, minimizing the risk of currency fluctuations in these debt issues. The Company enters into interest rate swaps to reduce borrowing costs and to achieve a desired proportion of variable versus fixed rate debt, based on current and projected market conditions. Gains and losses from currency and interest rate swaps are not significant and are recognized over the life of the debt issue as a component of interest expense. The notional amounts of currency and interest rate swaps were $600 million and $723.9 million at December 31, 1994 and 1993, respectively. The Company also uses commodity futures and options to hedge raw material costs. Gains and losses realized upon sale or exchange of these contracts are not significant and are recognized in cost of goods sold. The notional amounts of commodity futures and options outstanding at December 31, 1994 and 1993, as well as related deferred gains or losses, were insignificant. The Company is exposed to credit loss in the event of nonperformance by counterparties on foreign exchange contracts, currency and interest rate swaps, and commodity hedges. This credit loss is limited to the cost of replacing these contracts at current market rates. Management believes that the risk of such loss is remote. Financial instruments which potentially subject the Company to concentrations of credit risk are primarily cash, temporary investments, and accounts receivable. The Company places its investments in highly rated financial institutions and investment grade short-term debt instruments, and limits the amount of credit exposure to any one entity. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers, generally short payment terms, and their dispersion across geographic areas. NOTE 12 QUARTERLY FINANCIAL DATA (unaudited)
(millions, except per share data) Net sales Gross profit 1994 1993 1994 1993 ---- ---- ---- ---- First $1,611.2 $1,518.4 $ 879.2 $ 793.4 Second 1,616.9 1,541.6 888.2 785.7 Third 1,741.9 1,669.2 985.7 897.3 Fourth 1,592.0 1,566.2 858.2 830.0 -------- -------- -------- -------- $6,562.0 $6,295.4 $3,611.3 $3,306.4 ======== ======== ======== ======== Net earnings Earnings per share 1994 1993 1994 1993 ---- ---- ---- --- First $183.9 $179.2 $ .81 $ .76 Second 151.5 142.7 .68 .62 Third 216.7 209.3 .96 .90 Fourth 153.3 149.5 .70 .66 -------- -------- ------- -------- $ 705.4 $ 680.7 $ 3.15 $ 2.94 ======== ======== ======= ========
The principal market for trading Kellogg shares is the New York Stock Exchange. The shares are also traded on the Boston, Cincinnati, Midwest, Pacific, and Philadelphia Stock Exchanges. On December 31, 1994, the closing price (on the NYSE) was $58.125 and there were approximately 29,721 shareholders of record. Dividends paid per share of common stock increased 6% to $1.40 in 1994, marking the 38th consecutive year of increase. Management believes the trend of increased dividends will continue in 1995. Dividends paid and the quarterly price ranges on the New York Stock Exchange during the last two years were:
1994 - Quarter Dividend High Low - -------------- -------- ---- --- Fourth $ .36 $60.50 $56.38 Third .36 57.38 51.25 Second .34 56.38 47.75 First .34 58.00 48.25 ----- ------ ------ $1.40 ===== ====== ====== 1993 Fourth $ .34 $61.88 $48.75 Third .34 54.88 47.25 Second .32 61.00 51.00 First .32 67.88 59.38 ----- ------ ------ $1.32 ===== ====== ======
27 15 NOTE 13 OPERATING SEGMENTS The Company operates in a single industry - manufacturing and marketing convenience food products throughout the world. The following table describes operations by geographic area. Geographic operating profit includes allocated corporate overhead expenses. Corporate assets are comprised principally of equity investments, cash, and temporary investments held for general corporate purposes.
Net sales (a) (millions) 1994 % change 1993 % change 1992 % change - ---------- ---- -------- ---- -------- ---- -------- United States $3,840.8 2 $3,783.9 6 $3,564.9 5 % of total 59% 60% 58% Europe 1,637.3 9 1,505.9 -8 1,643.6 14 % of total 25% 24% 27% Other areas 1,083.9 8 1,005.6 2 982.1 6 % of total 16% 16% 15% -------- -- -------- -- -------- -- Consolidated $6,562.0 4 $6,295.4 2 $6,190.6 7 ======== == ======== == ======== == Operating profit(a) (millions) 1994 % change 1993 % change 1992 % change ---- -------- ---- -------- ---- -------- United States $ 708.5 8 $ 658.0 9 $ 602.8 1 % of total 61% 62% 57% Europe 279.3 14 245.1 -13 281.2 8 % of total 24% 23% 26% Other areas 174.8 5 165.8 -7 178.8 3 % of total 15% 15% 17% -------- -- -------- -- -------- -- Consolidated $1,162.6 9 $1,068.9 1 $1,062.8 3 ======== == ======== == ======== == Identifiable assets(a) (millions) 1994 % change 1993 % change 1992 % change ---- -------- ---- -------- ---- -------- United States $2,242.0 -4 $2,344.8 14 $2,065.1 11 % of total 50% 55% 51% Europe 1,252.6 21 1,036.2 -6 1,106.7 -5 % of total 28% 24% 28% Other areas 953.7 14 833.2 4 797.9 -9 % of total 21% 20% 20% Corporate assets 19.0 -17 22.9 -49 45.3 74 % of total 1% 1% 1% -------- -- -------- -- -------- -- Consolidated $4,467.3 5 $4,237.1 6 $4,015.0 2 ======== == ======== == ======== ==
(a) Includes the results and assets of divested businesses through the date of divestment. (Refer to Note 4.) REPORT OF INDEPENDENT ACCOUNTANTS PRICE WATERHOUSE LLP To the Shareholders and Board of Directors of Kellogg Company In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of earnings and retained earnings and of cash flows present fairly, in all material respects, the financial position of Kellogg Company and its subsidiaries at December 31, 1994 and 1993, and the results of their operations and cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Notes 9 and 10 to the financial statements, during 1992 the Company changed its methods of accounting for post-retirement benefits other than pensions and for income taxes. Price Waterhouse LLP Battle Creek, Michigan February 3, 1995 EX-21.01 5 EXHIBIT 21.01 1 EXHIBIT 21.01 DOMESTIC AND FOREIGN SUBSIDIARIES OF THE COMPANY 2 EXHIBIT 21.01 DOMESTIC AND FOREIGN SUBSIDIARIES OF THE COMPANY Kellogg (Australia) Pty. Ltd. Kellogg Canada, Inc. Kellogg Company of Great Britain, Ltd. Kellogg de Mexico, S.A. de C.V. Kellogg (Deutschland) GmbH Kellogg USA Inc. EX-23.01 6 EXHIBIT 23.01 1 EXHIBIT 23.01 CONSENT OF PRICE WATERHOUSE LLP 2 EXHIBIT 23.01 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 (Nos. 33-20731,33-38846 and 33-49875) and the Registration Statements on Form S-8 (Nos. 2-77316, 33-27293, 33-27294, 33-40651 and 33-53403) of Kellogg Company of our report dated February 3, 1995 appearing on page 28 of the Annual Report to Shareholders which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedule, which appears on page 12 of this form 10-K. PRICE WATERHOUSE LLP Battle Creek, Michigan March 22, 1995 EX-23.02 7 EXHIBIT 23.02 1 EXHIBIT 23.02 CONSENT OF PRICE WATERHOUSE LLP 2 EXHIBIT 23.02 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-27294) of Kellogg Company of our report dated March 3, 1995 which appears on page 1 of Exhibit 99.01 of this Form 10-K and to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-27293) of Kellogg Company of our report dated March 3, 1995 which appears on page 1 of Exhibit 99.02 of this Form 10-K. PRICE WATERHOUSE LLP Battle Creek, Michigan March 22, 1995 EX-24.01 8 EXHIBIT 24.01 1 EXHIBIT 24.01 POWERS OF ATTORNEY AUTHORIZING RICHARD M. CLARK TO EXECUTE THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 ON BEHALF OF THE BOARD OF DIRECTORS, AND EACH OF THEM 2 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice President, General Counsel and Secretary of Kellogg Company, as my lawful attorney-in-fact and agent, to act on my behalf, with full power of substitution, in preparing, executing and filing the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1994, and any exhibits, amendments and other documents related thereto, with the Securities and Exchange Commission. Said filing shall be for the purpose of fulfilling applicable legal requirements. Whereupon, I grant unto said Richard M. Clark full power and authority to perform all necessary and appropriate acts in connection therewith, and hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute, may lawfully do, or cause to be done, by virtue hereof. s/ Charles W. Elliott -------------------------------- Director Dated: January 30, 1995 3 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice President, General Counsel and Secretary of Kellogg Company, as my lawful attorney-in-fact and agent, to act on my behalf, with full power of substitution, in preparing, executing and filing the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1994, and any exhibits, amendments and other documents related thereto, with the Securities and Exchange Commission. Said filing shall be for the purpose of fulfilling applicable legal requirements. Whereupon, I grant unto said Richard M. Clark full power and authority to perform all necessary and appropriate acts in connection therewith, and hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute, may lawfully do, or cause to be done, by virtue hereof. s/ Claudio X. Gonzalez -------------------------------- Director Dated: January 21, 1995 4 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice President, General Counsel and Secretary of Kellogg Company, as my lawful attorney-in-fact and agent, to act on my behalf, with full power of substitution, in preparing, executing and filing the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1994, and any exhibits, amendments and other documents related thereto, with the Securities and Exchange Commission. Said filing shall be for the purpose of fulfilling applicable legal requirements. Whereupon, I grant unto said Richard M. Clark full power and authority to perform all necessary and appropriate acts in connection therewith, and hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute, may lawfully do, or cause to be done, by virtue hereof. s/ Gordon Gund -------------------------------- Director Dated: February 1, 1995 5 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice President, General Counsel and Secretary of Kellogg Company, as my lawful attorney-in-fact and agent, to act on my behalf, with full power of substitution, in preparing, executing and filing the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1994, and any exhibits, amendments and other documents related thereto, with the Securities and Exchange Commission. Said filing shall be for the purpose of fulfilling applicable legal requirements. Whereupon, I grant unto said Richard M. Clark full power and authority to perform all necessary and appropriate acts in connection therewith, and hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute, may lawfully do, or cause to be done, by virtue hereof. s/ W. E. LaMothe -------------------------------- Director Dated: January 31, 1995 6 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice President, General Counsel and Secretary of Kellogg Company, as my lawful attorney-in-fact and agent, to act on my behalf, with full power of substitution, in preparing, executing and filing the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1994, and any exhibits, amendments and other documents related thereto, with the Securities and Exchange Commission. Said filing shall be for the purpose of fulfilling applicable legal requirements. Whereupon, I grant unto said Richard M. Clark full power and authority to perform all necessary and appropriate acts in connection therewith, and hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute, may lawfully do, or cause to be done, by virtue hereof. s/ A. G. Langbo -------------------------------- Director Dated: January 18, 1995 7 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice President, General Counsel and Secretary of Kellogg Company, as my lawful attorney-in-fact and agent, to act on my behalf, with full power of substitution, in preparing, executing and filing the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1994, and any exhibits, amendments and other documents related thereto, with the Securities and Exchange Commission. Said filing shall be for the purpose of fulfilling applicable legal requirements. Whereupon, I grant unto said Richard M. Clark full power and authority to perform all necessary and appropriate acts in connection therewith, and hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute, may lawfully do, or cause to be done, by virtue hereof. s/ Russell G. Mawby -------------------------------- Director Dated: January 19, 1995 8 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice President, General Counsel and Secretary of Kellogg Company, as my lawful attorney-in-fact and agent, to act on my behalf, with full power of substitution, in preparing, executing and filing the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1994, and any exhibits, amendments and other documents related thereto, with the Securities and Exchange Commission. Said filing shall be for the purpose of fulfilling applicable legal requirements. Whereupon, I grant unto said Richard M. Clark full power and authority to perform all necessary and appropriate acts in connection therewith, and hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute, may lawfully do, or cause to be done, by virtue hereof. s/ Ann McLaughlin -------------------------------- Director Dated: January 23, 1995 9 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice President, General Counsel and Secretary of Kellogg Company, as my lawful attorney-in-fact and agent, to act on my behalf, with full power of substitution, in preparing, executing and filing the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1994, and any exhibits, amendments and other documents related thereto, with the Securities and Exchange Commission. Said filing shall be for the purpose of fulfilling applicable legal requirements. Whereupon, I grant unto said Richard M. Clark full power and authority to perform all necessary and appropriate acts in connection therewith, and hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute, may lawfully do, or cause to be done, by virtue hereof. s/ J. R. Munro -------------------------------- Director Dated: January 20, 1995 10 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice President, General Counsel and Secretary of Kellogg Company, as my lawful attorney-in-fact and agent, to act on my behalf, with full power of substitution, in preparing, executing and filing the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1994, and any exhibits, amendments and other documents related thereto, with the Securities and Exchange Commission. Said filing shall be for the purpose of fulfilling applicable legal requirements. Whereupon, I grant unto said Richard M. Clark full power and authority to perform all necessary and appropriate acts in connection therewith, and hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute, may lawfully do, or cause to be done, by virtue hereof. s/ Harold A. Poling -------------------------------- Director Dated: January 20, 1995 11 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice President, General Counsel and Secretary of Kellogg Company, as my lawful attorney-in-fact and agent, to act on my behalf, with full power of substitution, in preparing, executing and filing the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1994, and any exhibits, amendments and other documents related thereto, with the Securities and Exchange Commission. Said filing shall be for the purpose of fulfilling applicable legal requirements. Whereupon, I grant unto said Richard M. Clark full power and authority to perform all necessary and appropriate acts in connection therewith, and hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute, may lawfully do, or cause to be done, by virtue hereof. s/ Donald Rumsfeld -------------------------------- Director Dated: January 30, 1995 12 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice President, General Counsel and Secretary of Kellogg Company, as my lawful attorney-in-fact and agent, to act on my behalf, with full power of substitution, in preparing, executing and filing the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1994, and any exhibits, amendments and other documents related thereto, with the Securities and Exchange Commission. Said filing shall be for the purpose of fulfilling applicable legal requirements. Whereupon, I grant unto said Richard M. Clark full power and authority to perform all necessary and appropriate acts in connection therewith, and hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute, may lawfully do, or cause to be done, by virtue hereof. s/ T. P. Smucker -------------------------------- Director Dated: January 24, 1995 13 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice President, General Counsel and Secretary of Kellogg Company, as my lawful attorney-in-fact and agent, to act on my behalf, with full power of substitution, in preparing, executing and filing the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1994, and any exhibits, amendments and other documents related thereto, with the Securities and Exchange Commission. Said filing shall be for the purpose of fulfilling applicable legal requirements. Whereupon, I grant unto said Richard M. Clark full power and authority to perform all necessary and appropriate acts in connection therewith, and hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute, may lawfully do, or cause to be done, by virtue hereof. s/ Dolores D. Wharton -------------------------------- Director Dated: January 25, 1995 14 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice President, General Counsel and Secretary of Kellogg Company, as my lawful attorney-in-fact and agent, to act on my behalf, with full power of substitution, in preparing, executing and filing the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1994, and any exhibits, amendments and other documents related thereto, with the Securities and Exchange Commission. Said filing shall be for the purpose of fulfilling applicable legal requirements. Whereupon, I grant unto said Richard M. Clark full power and authority to perform all necessary and appropriate acts in connection therewith, and hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute, may lawfully do, or cause to be done, by virtue hereof. s/ John L. Zabriskie -------------------------------- Director Dated: January 20, 1995 EX-27.01 9 EXHIBIT 27.01
5 This schedule contains summary financial information extracted from Kellogg Company and subsidiaries consolidated financial statements for the twelve months ended December 31, 1994 and is qualified in its entirety by reference to such financial statements. 1,000,000 U.S. DOLLARS YEAR DEC-31-1994 JAN-01-1994 DEC-31-1994 1 266 0 565 (6) 396 1,434 4,601 (1,708) 4,467 1,185 719 78 0 0 69 4,467 6,562 6,562 2,951 2,951 2,436 0 45 1,130 425 705 0 0 0 705 3.15 0.0
EX-99.01 10 EXHIBIT 99.01 1 EXHIBIT 99.01 KELLOGG COMPANY AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN ANNUAL REPORT ON FORM 11-K FOR THE FISCAL YEAR ENDED OCTOBER 31, 1994 2 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) /X/ Annual report pursuant to Section 15(d) of the Securities and Exchange Act of 1934 (Fee required) For the fiscal year ended OCTOBER 31, 1994 O R / / Transition report pursuant to Section 15(d) of the Securities and Exchange Act of 1934 (No fee required) For the transition period from _______________ to _______________ Commission file number 1-4171 A. Full title of the plan and the address of the Plan, if different from that of the issuer named below: KELLOGG COMPANY AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: KELLOGG COMPANY ONE KELLOGG SQUARE BATTLE CREEK, MICHIGAN 49016-3599 3 KELLOGG COMPANY AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS AND SCHEDULES OCTOBER 31, 1994 4 KELLOGG COMPANY AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN INDEX TO OCTOBER 31, 1994 FINANCIAL STATEMENTS
Page Report of independent accountants 1 Financial statements as of October 31, 1994 and 1993 and for the year ended October 31, 1994: Statement of assets available for benefits 2-3 Statement of changes in assets available for benefits 4 Notes to financial statements 5-10 Schedules as of and for the year ended October 31, 1994: Schedule of assets held outside the master trust 11 Schedule of reportable transactions 12
5 REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees and Participants of the Kellogg Company American Federation of Grain Millers Savings and Investment Plan In our opinion, the accompanying statements of assets available for benefits and the related statement of changes in assets available for benefits present fairly, in all material respects, the assets available for benefits of the Kellogg Company American Federation of Grain Millers Savings and Investment Plan at October 31, 1994 and 1993, and the changes in assets available for benefits for the year ended October 31, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information included on pages 11 and 12 is presented for purposes of additional analysis and is not a required part of the basic financial statements but is additional information required by ERISA. The fund information in the statements of assets available for benefits and the statement of changes in assets available for benefits is presented for purposes of additional analysis rather than to present the assets available for plan benefits and changes in assets available for benefits of each fund. The additional information and the fund information have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. PRICE WATERHOUSE LLP Battle Creek, Michigan March 3, 1995 6 KELLOGG COMPANY 2 AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN STATEMENT OF ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION OCTOBER 31, 1994
FIXED COMPANY LOAN BOND INCOME EQUITY STOCK TOTAL FUND FUND FUND FUND FUND ASSETS: Receivables: Employer contributions $ 516,046 $ -- $ 6,500 $ 298,366 $ 28,161 $ 183,019 Employee contributions (96) (96) Interest 133,139 133,139 ------------ ----------- ---------- ------------ ----------- ------------ Total receivables 649,089 6,500 431,409 28,161 183,019 ------------ ----------- ---------- ------------ ----------- ------------ Investments (Note 1): Plan's interest in Master Trust 134,687,224 4,124,385 3,207,217 21,108,072 106,247,550 Guaranteed investment contracts 478,739,579 478,739,579 TBC Pooled Funds Daily Liquidity 1,199 1,199 Loans to participants 10,562,350 10,562,350 ------------ ----------- ---------- ------------ ----------- ------------ Total investments 623,990,352 10,562,350 4,124,385 481,947,995 21,108,072 106,247,550 ------------ ----------- ---------- ------------ ----------- ------------ Assets available for benefits $624,639,441 $10,562,350 $4,130,885 $482,379,404 $21,136,233 $106,430,569 ============ =========== ========== ============ =========== ============
See accompanying notes to financial statements 7 KELLOGG COMPANY 3 AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN STATEMENT OF ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION OCTOBER 31, 1993
FIXED COMPANY BOND INCOME EQUITY STOCK TOTAL FUND FUND FUND FUND Receivables: Employer contributions $ 490,749 $ 7,700 $ 265,522 $ 25,000 $ 192,527 Employee contributions 178 178 Interest 58,894 58,894 ------------ ----------- ------------ ----------- ------------ Total receivables 549,821 7,700 324,416 25,000 192,705 ------------ ----------- ------------ ----------- ------------ Investments: Plan's interest in Master Trust 176,897,387 6,266,224 39,394,703 20,604,198 110,632,262 Guaranteed investment contracts 412,108,992 412,108,992 TBC Pooled Funds Daily Liquidity 502,504 3 502,473 11 17 ------------ ----------- ------------ ----------- ------------ Total investments 589,508,883 6,266,227 452,006,168 20,604,209 110,632,279 ------------ ----------- ------------ ----------- ------------ Assets available for benefits $590,058,704 $6,273,927 $452,330,584 $20,629,209 $110,824,984 ============ ========== ============ =========== ============
See accompanying notes to financial statements 8 KELLOGG COMPANY 4 AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION OCTOBER 31, 1994
FIXED COMPANY LOAN BOND INCOME EQUITY STOCK TOTAL FUND FUND FUND FUND FUND ASSETS: Additions to net assets attributable to: Employer $ 6,731,830 $ -- $ 96,306 $ 3,712,620 $ 370,939 $ 2,551,965 Employee 16,561,106 264,670 10,129,889 1,051,033 5,115,514 Rollover from other qualified plans 487 49 49 49 340 ------------ ----------- ----------- ------------ ----------- ------------ Total contributions 23,293,423 361,025 13,842,558 1,422,021 7,667,819 ------------ ----------- ----------- ------------ ----------- ------------ Earnings on Investments: Plan's interest in income of Master Trust 7,593,582 (252,991) 581,728 1,090,261 6,174,584 Interest income 34,020,024 33,991,060 28,964 Investment services fees (28,208) (28,208) Trustee fees (93,270) (946) (73,187) (3,687) (15,450) ------------ ----------- ----------- ------------ ----------- ------------ Total earnings on investments, net 41,492,128 (253,937) 34,471,393 1,115,538 6,159,134 ------------ ----------- ----------- ------------ ----------- ------------ Net transfers between funds 10,562,350 10,562,350 (1,646,292) 14,440,226 (246,165) (12,547,769) Participant withdrawals (30,079,264) (413,978) (26,547,262) (997,838) (2,120,186) New loan distributions (10,562,350) (189,860) (6,144,136) (786,532) (3,441,822) Net transfers between Plans (125,550) (13,959) (111,591) ------------ ----------- ----------- ------------ ----------- ------------ Net increase (decrease) 34,580,737 10,562,350 (2,143,042) 30,048,820 507,024 (4,394,415) ------------ ----------- ----------- ------------ ----------- ------------ Assets available for benefits at beginning of year 590,058,704 6,273,927 452,330,584 20,629,209 110,824,984 ------------ ----------- ----------- ------------ ----------- ------------ Assets available for benefits at end of year $624,639,441 $10,562,350 $ 4,130,885 $482,379,404 $21,136,233 $106,430,569 ============ =========== ========== ============ =========== ============
See accompanying notes to financial statements 9 KELLOGG COMPANY 5 AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The accounts of the Kellogg Company American Federation of Grain Millers Savings and Investment Plan ("the Plan") are maintained on the accrual basis. Expenses of administration are paid by Kellogg Company. INVESTMENTS All investments are reported at current quoted market values except for guaranteed insurance contracts, which are reported at contract value and represent contributions made plus interest at the contract rate. The following investments exceeded five percent of the assets available for benefits at October 31, 1994 and 1993:
INTEREST OCTOBER 31, DESCRIPTION RATE 1994 1993 Prudential Ins. Co. GAC #5669222 9.00% $ -- $ 35,522,412 Brundage, Story & Rose Managed Synthetic GIC Fund Variable 34,537,855 Hartford Life Ins. GIC 9.53% 34,344,219 Morgan Bank GIC #41 9.37% 108,353,894 99,070,947 John Hancock GAC #5916-10000 8.30% 59,553,995 83,280,728 John Hancock GAC #5916-10001 8.82% 91,720,860 83,966,063 Putnam Horizon Managed Synthetic GIC Fund Variable 34,472,455 Plan's Interest in Master Trust Variable 134,687,224 176,897,387
ALLOCATION OF NET INVESTMENT INCOME TO PARTICIPANTS Net investment income related to the respective investment options described in Note 2 is allocated monthly to participant accounts in proportion to their respective ownership at the beginning of the month. 2. PROVISIONS OF THE PLAN PLAN ADMINISTRATION The Plan is administered by trustees appointed by Kellogg and the American Federation of Grain Millers. PLAN PARTICIPATION Generally, all Kellogg Company hourly employees belonging to American Federation of Grain Millers Union Local Nos. 3, 50, 211, 252, 374 and 401 are eligible to participate in the Plan. 10 KELLOGG COMPANY 6 AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS 2. PROVISIONS OF THE PLAN (CONTINUED) Subject to limitations prescribed by the Internal Revenue Service, participants may elect to contribute from 1 percent to 15 percent of their annual wages. Employee contributions not exceeding 5 percent of wages are matched by Kellogg Company at an 80 percent rate, with 12.5 percent of the Company match restricted for investment in the Kellogg Company stock fund. Employees may contribute to the Plan from their date of hire; however, the monthly contributions are not matched by the Company until the participant has completed one year of service. Participants of the Plan may elect to invest the contributions to their accounts as well as their account balances in an equity, bond, fixed income or Kellogg Company stock fund or a combination thereof in multiples of one percent. VESTING Participant account balances are fully vested. PARTICIPANT LOANS Effective September 1, 1994, participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their account balance. Loan transactions are treated as transfers between the Loan fund and the other funds. Loan terms range from 12 to 60 months. Interest is paid at a rate equal to one percent over the prime rate. Principal and interest are paid ratably through monthly payroll deductions. PARTICIPANT DISTRIBUTIONS Participants may elect to withdraw all or a portion of their contributions made after October 31, 1978, plus related net investment income. The withdrawal of any participant contributions which were not previously subject to income tax under a Plan option effective January 1, 1983, is restricted by Internal Revenue Service regulations. Under certain circumstances and subject to approval by the Trustees, participants may request withdrawal of a portion of Company contributions and their own contributions made prior to November 1, 1978, including net investment income thereon. Participants who terminate employment before retirement, by reasons other than death or disability, may remain in the Plan or receive payment of their account balances in a lump sum. If the account balance is less than $3,500 the terminated participant will receive the account balance in a lump sum. Participants are eligible to retire from the Company at age 62, upon reaching 55 with 20 years of service, or after 30 years of service. Upon retirement, disability, or death, a participant's account may be received in a lump sum or installment payments. 11 KELLOGG COMPANY 7 AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS 3. INCOME TAX STATUS The Plan administrator has received a favorable letter from the Internal Revenue Service regarding the Plan's qualification under applicable income tax regulations as an entity exempt from federal income taxes. 4. MASTER TRUST Assets of the Plan have been combined for investment purposes with assets of the Kellogg Company Salaried Savings and Investment Plan and Kellogg Company sponsored pension plans in a Master Trust. The Plan has an undivided interest in the assets held in the Master Trust in which interests are determined on the basis of cumulative funds specifically contributed on behalf of the Plan adjusted for an allocation of income. Such income allocation is based on the Plan's funds available for investment during the year. Master Trust assets held by the Plan and the Kellogg Company Salaried Savings and Investment Plan at October 31, 1994 and November 1, 1993 and the changes in assets for the period ended October 31, 1994 are as follows: 12 KELLOGG COMPANY AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENT - -------------------------------------------------------------------------------- 4. MASTER TRUST (CONTINUED) KELLOGG COMPANY SAVINGS AND INVESTMENT PLANS: FOR THE PLAN YEAR ENDED OCTOBER 31, 1994 SCHEDULE OF ASSETS AND LIABILITIES FOR MASTER TRUST INVESTMENT ACCOUNTS
SHORT TERM BOND FUND FIXED INCOME FUND INVESTMENT ACCOUNT INVESTMENT ACCOUNT INVESTMENT ACCOUNT 11/1/93 10/31/94 11/1/93 10/31/94 11/1/93 10/31/94 ------------------------ ----------------------- ---------------------- CASH/EQUIVALENTS: Non-Interest Bearing $0 $2,615 $1,241,113 $0 $0 $0 Interest Bearing Cash $0 $0 $0 $149,329 $0 $0 Certificates of Deposit $0 $0 $0 $0 $0 $0 ------- ---------- ---------- ---------- ----------- ---------- TOTAL CASH/EQUIVALENTS $0 $2,615 $1,241,113 $149,329 $0 $0 ------- ---------- ---------- ---------- ----------- ---------- RECEIVABLES $2,800 $6,610 $169,592 $355,046 $810,567 $9 ------- ---------- ---------- ---------- ----------- ---------- GENERAL INVESTMENTS: Long Term U.S. Gov't Securities $0 $0 $8,073,595 $6,909,396 $22,419,505 $0 Short Term U.S. Gov't Securities $0 $0 $0 $0 $7,067,866 $0 Long Term U.S. Municipal Securities $0 $0 $0 $0 $15,675,216 $0 Corporate Debt - Long Term $0 $0 $2,632,477 $1,816,556 $0 $0 Corporate Debt - Short Term $0 $0 $636,413 $90,822 $0 $0 Corporate Stocks - Preferred $0 $0 $0 $0 $0 $0 Corporate Stocks - Common $0 $0 $0 $0 $0 $0 Shares of Registered Investment Co. $0 $0 $0 $0 $0 $0 Value of Interest in Pooled Funds $36,821 $1,343,305 $119,119 $279,481 $8,601,784 $2,014 Guaranteed Investment Contracts $0 $0 $0 $0 $6,606,406 $7,200,983 ------- ---------- ---------- ---------- ----------- ---------- TOTAL INVESTMENTS $36,821 $1,343,305 $11,461,604 $9,096,255 $60,370,777 $7,202,997 ------- ---------- ---------- ---------- ----------- ---------- TOTAL ASSETS $39,621 $1,352,530 $12,872,309 $9,600,630 $61,181,344 $7,203,006 ------- ---------- ---------- ---------- ----------- ---------- PAYABLES $0 $0 $0 ($105,531) $0 $0 ------- ---------- ---------- ---------- ----------- ---------- TOTAL LIABILITIES $0 $0 $0 ($105,531) $0 $0 ------- ---------- ---------- ---------- ----------- ---------- NET ASSETS $39,621 $1,352,530 $12,872,309 $9,495,099 $61,181,344 $7,203,006 ======= ========== =========== ========== =========== ========== During the plan year: Total costs of acquisitions of common stock $0 $0 $0 Total proceeds from dispositions of common stock $0 $0 $0
13 KELLOGG COMPANY AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 4. MASTER TRUST (CONTINUED) KELLOGG COMPANY SAVINGS AND INVESTMENT PLANS: FOR THE PLAN YEAR ENDED OCTOBER 31, 1994 SCHEDULE OF ASSETS AND LIABILITIES FOR MASTER TRUST INVESTMENT ACCOUNTS
EQUITY FUND COMPANY STOCK FUND INVESTMENT ACCOUNT INVESTMENT ACCOUNT 11/1/93 10/31/94 11/1/93 10/31/94 ----------------------------- --------------------------- CASH/EQUIVALENTS: Non-Interest Bearing $0 $0 $0 $0 Interest Bearing Cash $0 $0 $0 $0 Certificates of Deposit $0 $0 $0 $0 ----------- ----------- ------------ ------------ TOTAL CASH/EQUIVALENTS $0 $0 $0 $0 ----------- ----------- ------------ ------------ RECEIVABLES $49 $221 $1,274 $4,188 ----------- ----------- ------------ ------------ GENERAL INVESTMENTS: Long Term U.S. Gov't Securities $0 $0 $0 $0 Short Term U.S. Gov't Securities $0 $0 $0 $0 Long Term U.S. Municipal Securities $0 $0 $0 $0 Corporate Debt - Long Term $0 $0 $0 $0 Corporate Debt - Short Term $0 $0 $0 $0 Corporate Stocks - Preferred $0 $0 $0 $0 Corporate Stocks - Common $47,748,019 $52,686,114 $164,142,461 $155,887,191 Shares of Registered Investment Co. $0 $0 $0 $0 Value of Interest in Pooled Funds $17,861 $49,776 $1,461 $1,059,640 Guaranteed Investment Contracts $0 $0 $0 $0 ----------- ----------- ------------ ------------ TOTAL INVESTMENTS $47,765,880 $52,735,890 $164,143,922 $156,946,831 ----------- ----------- ------------ ------------ TOTAL ASSETS $47,765,929 $52,736,111 $164,145,196 $156,951,019 ----------- ----------- ------------ ------------ PAYABLES $0 $0 $0 $0 ----------- ----------- ------------ ------------ TOTAL LIABILITIES $0 $0 $0 $0 ----------- ----------- ------------ ------------ NET ASSETS $47,765,929 $52,736,111 $164,145,196 $156,951,019 =========== =========== ============ ============ During the plan year: Total costs of acquisitions of common stock $24,238,000 $15,551,457 Total proceeds from dispositions of common stock $21,756,000 $29,132,650
14 KELLOGG COMPANY AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------ 4. MASTER TRUST (CONTINUED) KELLOGG COMPANY MASTER TRUST FOR THE PLAN YEAR ENDED OCTOBER 31, 1994 SCHEDULE OF INCOME AND EXPENSES, CHANGES IN NET ASSETS AND NET INCREASE (DECREASE) IN NET ASSETS OF MASTER TRUST INVESTMENT ACCOUNTS
SHORT TERM BOND FUND FIXED INCOME FUND EQUITY FUND COMPANY STOCK INVESTMENT ACCOUNT ADVISORY ACCOUNT ADVISORY ACCOUNT ADVISORY ACCOUNT ADVISORY ACCOUNT ------------------ ---------------- ----------------- ---------------- ---------------- Transfer of Assets Into Investment Account $177,677,120 $1,223,000 $13,738 $26,355,073 $11,523,034 Earnings on Investments Interest $83,247 $802,017 $1,265,377 $1,743 $24,856 Dividends $0 $0 $0 $0 $3,929,011 Corporate Actions $0 $0 $0 $0 $0 Pooled Fund Distributions $0 $0 $0 $0 $0 Miscellaneous $0 $0 $0 $0 $0 Net Realized Gain/(Loss) $0 ($272,505) $2,155,134 $3,198,564 ($288,125) ------------- ----------- ------------ ------------ ------------ TOTAL ADDITIONS $177,760,367 $1,752,512 $3,434,249 $29,555,380 $15,188,776 ------------- ----------- ------------ ------------ ------------ Transfer of Assets Out of Investment Account ($176,447,458) ($4,073,400) ($54,983,152) ($23,820,000) ($28,074,662) Fees and Commissions $0 ($12,223) ($67,168) ($24,489) $0 ------------- ----------- ------------ ------------ ------------ TOTAL DISTRIBUTIONS ($176,447,458) ($4,085,623) ($55,050,320) ($23,844,489) ($28,074,662) ------------- ----------- ------------ ------------ ------------ Change in Unrealized Appreciation $0 ($1,044,028) ($2,362,267) ($740,709) $5,691,709 ------------- ----------- ------------ ------------ ------------ NET CHANGE IN ASSETS $1,312,909 ($3,377,139) ($53,978,338) $4,970,182 ($7,194,177) ------------- ----------- ------------ ------------ ------------ NET ASSETS AT 10/31/93 $39,621 $12,872,238 $61,181,344 $47,765,929 $164,145,196 ------------- ----------- ------------ ------------ ------------ NET ASSETS AT 10/31/94 $1,352,530 $9,495,099 $7,203,006 $52,736,111 $156,951,019 ============= =========== ============ ============ ============
15 KELLOGG COMPANY 11 AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN SCHEDULE OF ASSETS HELD OUTSIDE THE MASTER TRUST AT OCTOBER 31, 1994 FORM 5500 - ITEM 27A
MARKET UNREALIZED SECURITY DESCRIPTION COST PRICE VALUE GAIN/LOSS TBC, Inc. Pooled Employee Funds Daily Liquidity Fund $ 1,199 1.000 $ 1,199 $ -- Loans to participants 10,562,350 1.000 10,562,350 Brundage Story & Rose Managed Synthetic GIC Fund Variable Rate 34,537,855 1.000 34,537,855 Morgan Bank GIC #41 9.37% 6/1/96 108,353,894 1.000 108,353,894 John Hancock GAC #5916-10000 8.30% 6/1/95 59,553,995 1.000 59,553,995 John Hancock GAC #5916-10001 8.82% 6/1/97 91,720,860 1.000 91,720,860 Protective Life Ins. GIC #807-B 6.08% 1/31/97 27,342,907 1.000 27,342,907 Provident Life GIC #627-05439-01A 6.24% 6/30/97 15,719,424 1.000 15,719,424 Protective Life Ins. GIC #893-B 4.68% 6/1/96 13,993,822 1.000 13,993,822 Provident Life GIC #627-05439-02A 4.60% 6/3/96 13,849,126 1.000 13,849,126 Putnam Horizon Managed Synthetic GIC Variable Rate 6/1/99 34,472,455 1.000 34,472,455 Principal Mutual GAC #4-12130-01 5.30% 12/1/98 17,918,080 1.000 17,918,080 Peoples Security Ins #BDA00378FR 5.15% 12/1/97 17,548,893 1.000 17,548,893 Allstate Life Ins. GAC #5686A 8.13% 12/1/98 9,013,575 1.000 9,013,575 Commonwealth Life #ADA00687FR 7.54% 6/1/98 25,701,477 1.000 25,701,477 John Hancock GAC #7605 7.87% 12/1/98 9,013,216 1.000 9,013,216 $ 489,303,128 $ 489,303,128 $ --
16 KELLOGG COMPANY 12 AMERICAN FEDERATION OF GRAIN MILLERS SAVINGS AND INVESTMENT PLAN SCHEDULE OF REPORTABLE TRANSACTIONS FORM 5500 ITEM 27D (1)
CURRENT VALUE AT TRANSACTION DATE COST OF NET NET NET SECURITIES REALIZED IDENTITY OF ISSUE PURCHASE PRICE SALES PRICE SOLD GAIN Putnam Horizon Managed Synthetic GIC Variable Rate 6/1/99 $ 34,472,455 $ -- $ -- $ -- Protective Life Ins. GIC #893-B 4.68% 6/1/96 21,083,883 24,818,327 24,818,327 Provident Life GIC #3902A 4.60% 6/3/96 21,050,653 24,875,995 24,875,995 Brundage Story & Rose Managed Synthetic GIC Variable Rate 34,537,855 Prudential Assets GAC #5669222 9.00% 6/1/94 915,955 31,770,155 31,770,155 Hartford Life Ins GIC 9.53% 6/1/94 939,621 30,756,317 30,756,317 John Hancock GAC #5916-1000 8.30% 6/1/97 6,741,405 30,468,138 30,468,138
(1) Represents Plan's interest in a transaction (or a series of transactions of the same issue) in excess of five percent of the Plan's assets available at November 1, 1993. EX-99.02 11 EXHIBIT 99.02 1 EXHIBIT 99.02 KELLOGG COMPANY SALARIED SAVINGS AND INVESTMENT PLAN ANNUAL REPORT ON FORM 11-K FOR THE FISCAL YEAR ENDED OCTOBER 31, 1994 2 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) /X/ Annual report pursuant to Section 15(d) of the Securities and Exchange Act of 1934 (Fee required) For the fiscal year ended OCTOBER 31, 1994 OR / / Transition report pursuant to Section 15(d) of the Securities and Exchange Act of 1934 (No fee required) For the transition period from _______________ to _______________ Commission file number 1-4171 A. Full title of the plan and the address of the Plan, if different from that of the issuer named below: KELLOGG COMPANY SALARIED SAVINGS AND INVESTMENT PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: KELLOGG COMPANY ONE KELLOGG SQUARE BATTLE CREEK, MICHIGAN 49016-3599 3 KELLOGG COMPANY SALARIED SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS AND SCHEDULES OCTOBER 31, 1994 4 KELLOGG COMPANY SALARIED SAVINGS AND INVESTMENT PLAN INDEX TO OCTOBER 31, 1994 FINANCIAL STATEMENTS
PAGE Report of independent accountants 1 Financial statements as of October 31, 1994 and 1993 and for the year ended October 31, 1994: Statement of assets available for benefits 2-3 Statement of changes in assets available for benefits 4 Notes to financial statements 5-10 Schedules as of and for the year ended October 31, 1994: Schedule of assets held outside the master trust 11 Schedule of reportable transactions 12
5 REPORT OF INDEPENDENT ACCOUNTANTS To the ERISA Finance Committee and Participants of the Kellogg Company Salaried Savings and Investment Plan In our opinion, the accompanying statements of assets available for benefits and the related statement of changes in assets available for benefits present fairly, in all material respects, the assets available for benefits of the Kellogg Company Salaried Savings and Investment Plan at October 31, 1994 and 1993, and the changes in assets available for benefits for the year ended October 31, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information included on pages 11 and 12 is presented for purposes of additional analysis and is not a required part of the basic financial statements but is additional information required by ERISA. The fund information in the statements of assets available for benefits and the statement of changes in assets available for benefits is presented for purposes of additional analysis rather than to present the assets available for plan benefits and changes in assets available for benefits of each fund. The additional information and the fund information have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. PRICE WATERHOUSE LLP Battle Creek, Michigan March 3, 1995 6 KELLOGG COMPANY SALARIED 2 SAVINGS AND INVESTMENT PLAN STATEMENT OF ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION OCTOBER 31, 1994
FIXED COMPANY LOAN BOND INCOME EQUITY STOCK TOTAL FUND FUND FUND FUND FUND ASSETS: Receivables: Employer contributions $ 391,817 $ - $ 14,237 $ 162,273 $ 68,377 $ 146,930 Employee contributions 96 96 Interest 76,387 4 76,383 --------- --------- --------- ---------- --------- ---------- Total receivables 468,300 14,241 238,752 68,377 146,930 --------- --------- --------- ---------- --------- ---------- Investments: Plan's interest in Master Trust 93,050,541 5,359,818 3,778,593 33,849,932 50,062,198 Guaranteed investment contracts 255,403,672 255,403,672 Loans to participants 3,465,644 3,465,644 TBC Pooled Funds Daily Liquidity 14,702 14,702 ----------- --------- --------- ----------- ---------- ---------- Total investments 351,934,559 3,465,644 5,359,818 259,196,967 33,849,932 50,062,198 ----------- --------- --------- ----------- ---------- ---------- Assets available for benefits $352,402,859 $3,465,644 $5,374,059 $259,435,719 $33,918,309 $50,209,128 ============ ========== ========== ============ =========== ===========
See accompanying notes to financial statements 7 KELLOGG COMPANY SALARIED 3 SAVINGS AND INVESTMENT PLAN STATEMENT OF ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION OCTOBER 31, 1993
FIXED COMPANY BOND INCOME EQUITY STOCK TOTAL FUND FUND FUND FUND Receivables: Employer contributions $ 374,141 $ 16,411 $ 134,963 $ 62,702 $ 160,065 Interest 557 557 ------------ ---------- ------------ ----------- ----------- Total receivables 374,698 16,411 135,520 62,702 160,065 ------------ ---------- ------------ ----------- ----------- Investments: Plan's interest in Master Trust 109,106,939 6,631,239 18,378,075 29,881,522 54,216,103 Guaranteed investment contracts 218,679,509 218,679,509 TBC Pooled Funds Daily Liquidity 206,573 4 206,530 25 14 ------------ ---------- ------------ ----------- ----------- Total investments 327,993,021 6,631,243 237,264,114 29,881,547 54,216,117 ------------ ---------- ------------ ----------- ----------- Assets available for benefits $328,367,719 $6,647,654 $237,399,634 $29,944,249 $54,376,182 ============ ========== ============ =========== ===========
See accompanying notes to financial statements 8 KELLOGG COMPANY SALARIED 4 SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION OCTOBER 31, 1994
FIXED COMPANY LOAN BOND INCOME EQUITY STOCK TOTAL FUND FUND FUND FUND FUND Contributions: Employer $ 5,615,849 $ - $ 208,302 $ 2,505,813 $ 912,145 $ 1,989,589 Employee 12,104,928 592,617 5,436,276 2,529,983 3,546,052 Loans repaid 986 986 Rollover from other qualified plans 379,552 65,264 189,435 82,842 42,011 ---------- ----------- ------- ---------- --------- --------- Total contributions 18,101,315 866,183 8,132,510 3,524,970 5,577,652 ---------- ----------- ------- ---------- --------- --------- Earnings on Investments: Plan's interest in income of Master Trust 4,760,300 (273,951) 426,741 1,406,088 3,201,422 Interest income 18,068,101 4 18,043,986 24,109 2 Trustee fees (55,034) (1,053) (40,750) (5,158) (8,073) Administrative fees (152,262) (2,092) (107,170) (26,613) (16,387) ---------- ----------- ------- ---------- --------- --------- Total earnings on investments, net 22,621,105 (277,092) 18,322,807 1,398,426 3,176,964 ---------- ----------- ------- ---------- --------- ---------- Net transfers between funds 3,465,644 3,465,644 (1,600,206) 11,380,957 491,555 (10,272,306) Participant withdrawals (16,811,843) (166,378) (14,092,518) (999,053) (1,553,894) Loans to participants (3,466,631) (96,102) (1,721,630) (441,838) (1,207,061) Net transfers between Plans 125,550 13,959 111,591 ---------- ----------- ------- ---------- --------- ----------- Net increase (decrease) 24,035,140 3,465,644 (1,273,595) 22,036,085 3,974,060 (4,167,054) Assets available for benefits at beginning of year 328,367,719 6,647,654 237,399,634 29,944,249 54,376,182 ----------- ---------- --------- ----------- ---------- ---------- Assets available for benefits at end of year $352,402,859 $3,465,644 $5,374,059 $259,435,719 $33,918,309 $50,209,128 ============ ========== ========== ============ =========== ===========
See accompanying notes to financial statements 9 KELLOGG COMPANY SALARIED 5 SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The accounts of the Kellogg Company Salaried Savings and Investment Plan ("the Plan") are maintained on the accrual basis. Expenses of administration are paid by the Plan. INVESTMENTS All investments are reported at current quoted market values except for guaranteed insurance contracts, which are reported at contract value and represent contributions made plus interest at the contract rate. The following investments exceeded five percent of the assets available for benefits at October 31, 1994 and 1993:
INTEREST OCTOBER 31, DESCRIPTION RATE 1994 1993 Morgan Bank GIC #40 9.37% $ 47,895,595 $ 43,792,261 John Hancock GAC #5917-10000 8.30% 33,910,889 47,398,082 John Hancock GAC #5917-10001 8.82% 52,274,469 47,831,482 Protective Life Ins. GIC #807-A 6.08% 17,769,730 16,786,338 Plan's interest in Master Trust Variable 93,050,541 109,106,939
ALLOCATION OF NET INVESTMENT INCOME TO PARTICIPANTS Net investment income related to the respective investment options described in Note 2 is allocated monthly to participant accounts in proportion to their respective ownership at the beginning of the month. 2. PROVISIONS OF THE PLAN PLAN ADMINISTRATION The Plan is administered by the ERISA Administrative Committee appointed by Kellogg Company. PLAN PARTICIPATION Generally, all salaried employees of Kellogg Company and its U.S. subsidiaries are eligible to participate in the Plan. 10 KELLOGG COMPANY SALARIED 6 SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS 2. PROVISIONS OF THE PLAN (CONTINUED) Subject to limitations prescribed by the Internal Revenue Service, participants may elect to contribute from 1 percent to 15 percent of their annual wages. Employee contributions not exceeding 5 percent of wages are matched by Kellogg Company at an 80 percent rate, with 12.5 percent of the Company match restricted for investment in the Kellogg Company stock fund. Employees may contribute to the Plan from their date of hire; however, the monthly contributions are not matched by the Company until the participant has completed one year of service. Participants of the Plan may elect to invest the contributions as well as their account balances in an equity, bond, fixed income or Kellogg Company stock fund or a combination thereof in multiples of one percent. VESTING Participant account balances are fully vested. PARTICIPANT LOANS Effective September 1, 1994, participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their account balance. Loan transactions are treated as transfers between the Loan fund and the other funds. Loan terms range from 12 to 60 months. Interest is paid at a rate equal to one percent over the prime rate. Principal and interest are paid ratably through monthly payroll deductions. PARTICIPANT DISTRIBUTIONS Participants may elect to withdraw all or a portion of their contributions made after October 31, 1978, plus related net investment income. The withdrawal of any participant contributions which were not previously subject to income tax under a Plan option effective January 1, 1983, is restricted by Internal Revenue Service regulations. Under certain circumstances and subject to approval by the Trustees, participants may request withdrawal of a portion of Company contributions and their own contributions made prior to November 1, 1978, including net investment income thereon. Participants who terminate employment before retirement, by reasons other than death or disability, may remain in the Plan or receive payment of their account balances in a lump sum. If the account balance is less than $3,500 the terminated participant will receive the account balance in a lump sum. Participants are eligible to retire from the Company at age 62, upon reaching 55 with 20 years of service, or after 30 years of service. Upon retirement, disability, or death, a participant's account may be received in a lump sum or installment payments. 11 KELLOGG COMPANY SALARIED 7 SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS 3. INCOME TAX STATUS The Plan administrator has received a favorable letter from the Internal Revenue Service regarding the Plan's qualification under applicable income tax regulations as an entity exempt from federal income taxes. 4. MASTER TRUST Assets of the Plan have been combined for investment purposes with assets of the Kellogg Company American Federation of Grain Millers Savings and Investment Plan and Kellogg Company sponsored pension plans in a Master Trust. The Plan has an undivided interest in the assets held in the Master Trust in which interests are determined on the basis of cumulative funds specifically contributed on behalf of the Plan adjusted for an allocation of income. Such income allocation is based on the Plan's funds available for investment during the year. Master Trust assets held by the Plan and the Kellogg Company American Federation of Grain Millers Savings and Investment Plan at October 31, 1994 and November 1, 1993 and the changes in assets for the period ended October 31, 1994 are as follows: 12 KELLOGG COMPANY SALARIED SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 4. MASTER TRUST (CONTINUED) KELLOGG COMPANY SAVINGS AND INVESTMENT PLANS: FOR THE PLAN YEAR ENDED OCTOBER 31, 1994 SCHEDULE OF ASSETS AND LIABILITIES FOR MASTER TRUST INVESTMENT ACCOUNTS
SHORT TERM BOND FUND FIXED INCOME FUND INVESTMENT ACCOUNT INVESTMENT ACCOUNT INVESTMENT ACCOUNT 11/1/93 10/31/94 11/1/93 10/31/94 11/1/93 10/31/94 ------------------------ ----------------------- ---------------------- CASH/EQUIVALENTS: Non-Interest Bearing $0 $2,615 $1,241,113 $0 $0 $0 Interest Bearing Cash $0 $0 $0 $149,329 $0 $0 Certificates of Deposit $0 $0 $0 $0 $0 $0 ------------------------ ------------------------ ---------------------- TOTAL CASH/EQUIVALENTS $0 $2,615 $1,241,113 $149,329 $0 $0 ------------------------ ------------------------ ---------------------- RECEIVABLES $2,800 $6,610 $169,592 $355,046 $810,567 $9 ------------------------ ------------------------ ---------------------- GENERAL INVESTMENTS: Long Term U.S. Gov't Securities $0 $0 $8,073,595 $6,909,396 $22,419,505 $0 Short Term U.S. Gov't Securities $0 $0 $0 $0 $7,067,866 $0 Long Term U.S. Municipal Securities $0 $0 $0 $0 $15,675,216 $0 Corporate Debt - Long Term $0 $0 $2,632,477 $1,816,556 $0 $0 Corporate Debt - Short Term $0 $0 $636,413 $90,822 $0 $0 Corporate Stocks - Preferred $0 $0 $0 $0 $0 $0 Corporate Stocks - Common $0 $0 $0 $0 $0 $0 Shares of Registered Investment Co. $0 $0 $0 $0 $0 $0 Value of Interest in Pooled Funds $36,821 $1,343,305 $119,119 $279,481 $8,601,784 $2,014 Guaranteed Investment Contracts $0 $0 $0 $0 $6,606,406 $7,200,983 ------------------------ ------------------------- ------------------------ TOTAL INVESTMENTS $36,821 $1,343,305 $11,461,604 $9,096,255 $60,370,777 $7,202,997 ------------------------ ------------------------- ------------------------- TOTAL ASSETS $39,621 $1,352,530 $12,872,309 $9,600,630 $61,181,344 $7,203,006 ------------------------ -------------------------- ------------------------- PAYABLES $0 $0 $0 ($105,531) $0 $0 ------------------------ -------------------------- -------------------------- TOTAL LIABILITIES $0 $0 $0 ($105,531) $0 $0 ------------------------ -------------------------- -------------------------- NET ASSETS $39,621 $1,352,530 $12,872,309 $9,495,099 $61,181,344 $7,203,006 ======================== ========================== ========================== During the plan year: Total costs of acquisitions of common stock $0 $0 $0 Total proceeds from dispositions of common stock $0 $0 $0
13 KELLOGG COMPANY 11 SALARIED SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 4. MASTER TRUST (CONTINUED) KELLOGG COMPANY SAVINGS AND INVESTMENT PLANS: FOR THE PLAN YEAR ENDED OCTOBER 31, 1994 SCHEDULE OF ASSETS AND LIABILITIES FOR MASTER TRUST INVESTMENT ACCOUNTS
EQUITY FUND COMPANY STOCK FUND INVESTMENT ACCOUNT INVESTMENT ACCOUNT ------------------------ ----------------------- 11/1/93 10/31/94 11/1/93 10/31/94 ------- -------- ------- -------- CASH/EQUIVALENTS: Non-Interest Bearing $0 $0 $0 $0 Interest Bearing Cash $0 $0 $0 $0 Certificates of Deposit $0 $0 $0 $0 ----------- ----------- ------------ ------------ TOTAL CASH/EQUIVALENTS $0 $0 $0 $0 ----------- ----------- ------------ ------------ RECEIVABLES $49 $221 $1,274 $4,188 ----------- ----------- ------------ ------------ GENERAL INVESTMENTS: Long Term U.S. Gov't Securities $0 $0 $0 $0 Short Term U.S. Gov't Securities $0 $0 $0 $0 Long Term U.S. Municipal Securities $0 $0 $0 $0 Corporate Debt - Long Term $0 $0 $0 $0 Corporate Debt - Short Term $0 $0 $0 $0 Corporate Stocks - Preferred $0 $0 $0 $0 ----------- ----------- ------------ ------------ Corporate Stocks - Common $47,748,019 $52,686,114 $164,142,461 $155,887,191 ----------- ----------- ------------ ------------ Shares of Registered Investment Co. $0 $0 $0 $0 ----------- ----------- ------------ ------------ Value of Interest in Pooled Funds $17,861 $49,776 $1,461 $1,059,640 ----------- ----------- ------------ ------------ Guaranteed Investment Contracts $0 $0 $0 $0 ----------- ----------- ------------ ------------ TOTAL INVESTMENTS $47,765,880 $52,735,890 $164,143,922 $156,946,831 ----------- ----------- ------------ ------------ TOTAL ASSETS $47,765,929 $52,736,111 $164,145,196 $156,951,019 ----------- ----------- ------------ ------------ PAYABLES $0 $0 $0 $0 ----------- ----------- ------------ ------------ TOTAL LIABILITIES $0 $0 $0 $0 ----------- ----------- ------------ ------------ NET ASSETS $47,765,929 $52,736,111 $164,145,196 $156,951,019 =========== =========== ============ ============ During the plan year: Total costs of acquisitions of common stock $24,238,000 $15,551,457 Total proceeds from dispositions of common stock $21,756,000 $29,132,650
14 KELLOGG COMPANY 12 SALARIED SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS 4. MASTER TRUST (CONTINUED) KELLOGG COMPANY MASTER TRUST FOR THE PLAN YEAR ENDED OCTOBER 31, 1994 SCHEDULE OF INCOME AND EXPENSES, CHANGES IN NET ASSETS AND NET INCREASE (DECREASE) IN NET ASSETS OF MASTER TRUST INVESTMENT ACCOUNTS
SHORT TERM BOND FUND FIXED INCOME FUND EQUITY FUND COMPANY STOCK INVESTMENT ACCOUNT ADVISORY ACCOUNT ADVISORY ACCOUNT ADVISORY ACCOUNT ADVISORY ACCOUNT ------------------ ---------------- ----------------- ---------------- ---------------- Transfer of Assets Into Investment Account $177,677,120 $1,223,000 $13,738 $26,355,073 $11,523,034 Earnings on Investments Interest $83,247 $802,017 $1,265,377 $1,743 $24,856 Dividends $0 $0 $0 $0 $3,929,011 Corporate Actions $0 $0 $0 $0 $0 Pooled Fund Distributions $0 $0 $0 $0 $0 Miscellaneous $0 $0 $0 $0 $0 Net Realized Gain/(Loss) $0 ($272,505) $2,155,134 $3,198,564 ($288,125) ------------ ---------- ---------- ----------- ------------ TOTAL ADDITIONS $177,760,367 $1,752,512 $3,434,249 $29,555,380 $15,188,776 ------------ ---------- ---------- ----------- ------------ Transfer of Assets Out of Investment Account ($176,447,458) ($4,073,400) ($54,983,152) ($23,820,000) ($28,074,662) Fees and Commissions $0 ($12,223) ($67,168) ($24,489) $0 ------------ ---------- ---------- ----------- ------------ TOTAL DISTRIBUTIONS ($176,447,458) ($4,085,623) ($55,050,320) ($23,844,489) ($28,074,662) ------------ ---------- ---------- ----------- ------------ Change in Unrealized Appreciation $0 ($1,044,028) ($2,362,267) ($740,709) $5,691,709 ------------ ---------- ---------- ----------- ------------ NET CHANGE IN ASSETS $1,312,909 ($3,377,139) ($53,978,338) $4,970,182 ($7,194,177) ------------ ---------- ---------- ----------- ------------ NET ASSETS AT 10/31/93 $39,621 $12,872,238 $61,181,344 $47,765,929 $164,145,196 ------------ ---------- ---------- ----------- ------------ NET ASSETS AT 10/31/94 $1,352,530 $9,495,099 $7,203,006 $52,736,111 $156,951,019 ============ ========== ========== =========== ============
15 13 KELLOGG COMPANY SALARIED SAVINGS AND INVESTMENT PLAN SCHEDULE OF ASSETS HELD OUTSIDE THE MASTER TRUST AT OCTOBER 31, 1994 FORM 5500 - ITEM 27A
MARKET UNREALIZED SECURITY DESCRIPTION COST PRICE VALUE GAIN/LOSS TBC, Inc. Pooled Employee Funds Daily Liquidity Fund $ 14,702 1.000 $ 14,702 $ - Loans to participants 3,465,644 1.000 3,465,644 Brundage Story & Rose Managed Synthetic GIC Fund Variable Rate 17,555,441 1.000 17,555,441 Morgan Bank GIC #40 9.37% 6/1/96 47,895,595 1.000 47,895,595 John Hancock GAC #5917-10000 8.30% 6/1/95 33,910,889 1.000 33,910,889 John Hancock GAC #5917-10001 8.82% 6/1/97 52,274,469 1.000 52,274,469 Protective Life Ins. GIC #807-A 6.08% 1/31/97 17,769,730 1.000 17,769,730 Provident Life GAC #627-05437-01A 6.24% 6/30/97 13,244,699 1.000 13,244,699 Protective Life Ins. GIC #893-A 4.86% 6/1/96 7,436,677 1.000 7,436,677 Provident Life GAC #627-05437-02A 4.60% 6/3/96 7,451,503 1.000 7,451,503 Principal Mutual GAC #4-11730-01 5.30% 12/1/98 7,848,968 1.000 7,848,968 Putnam Horizon Managed Synthetic GIC Variable Rate 6/1/99 17,514,354 1.000 17,514,354 Peoples Security Ins Co #BDA00379FR 5.15% 12/1/97 8,194,170 1.000 8,194,170 Allstate Life Insurance GAC #5686 8.13% 12/1/98 5,004,426 1.000 5,004,426 Commonwealth Life #ADA00668FR 7.54% 6/1/98 14,298,523 1.000 14,298,523 John Hancock GAC #7606 7.87% 12/1/98 5,004,228 1.000 5,004,228 --------------- --------------- ----- $ 258,884,018 $ 258,884,018 $ - =============== =============== =====
16 KELLOGG COMPANY SALARIED 14 SAVINGS AND INVESTMENT PLAN SCHEDULE OF REPORTABLE TRANSACTIONS FORM 5500 ITEM 27D(1)
CURRENT VALUE AT TRANSACTION DATE COST OF NET NET NET SECURITIES REALIZED IDENTITY OF ISSUE PURCHASE PRICE SALES PRICE SOLD GAIN Protective Life Ins. GIC #893-A 4.86% 6/1/96 $ 11,580,632 $ 13,007,164 $ 13,007,164 $ - Provident Life GAC #3702A 4.60% 6/3/96 11,504,600 12,949,494 12,949,494 John Hancock GAC 5917-10000 8.30% 6/1/95 3,861,796 17,348,990 17,348,990 Putnam Horizon Managed Synthetic GIC Variable Rate 6/1/99 17,514,354 Brundage Story & Rose Managed Synthetic Fund Variable Rate 17,555,441
(1) Represents Plan's interest in a transaction (or a series of transactions of the same issue) in excess of five percent of the Plan's assets available at November 1, 1993. -----END PRIVACY-ENHANCED MESSAGE-----