Reportable Segments

9 Months Ended

Oct. 03, 2015

Segment Reporting [Abstract]

Reportable Segments

Reportable segments

Kellogg Company is the world’s leading producer of cereal, second largest producer of cookies and crackers, and a leading producer of savory snacks and frozen foods. Additional product offerings include toaster pastries, cereal bars, fruit-flavored snacks and veggie foods. Kellogg products are manufactured and marketed globally. Principal markets for these products include the United States and United Kingdom.

Beginning in the first quarter of 2015, a new Kashi operating segment was established in order to optimize future growth potential of this business. This operating segment is included in the North America Other reportable segment. Previously, results of Kashi were included within the U.S. Morning Foods, U.S. Snacks, and the U.S. Frozen operating segments. Goodwill was reallocated between operating segments on a relative fair value basis. In conjunction with the reallocation of goodwill, an impairment analysis was performed. No impairment of the operating segments was noted. Reportable segment results of prior periods have been recast to conform to the current presentation. The Company currently has the following reportable segments: U.S. Morning Foods; U.S. Snacks; U.S. Specialty; North America Other; Europe; Latin America; and Asia Pacific.

The Company manages its operations through nine operating segments that are based on product category or geographic location. These operating segments are evaluated for similarity with regards to economic characteristics, products, production processes, types or classes of customers, distribution methods and regulatory environments to determine if they can be aggregated into reportable segments.

The reportable segments are discussed in greater detail below.

U.S. Morning Foods includes cereal, toaster pastries, health and wellness bars, and beverages.

U.S. Snacks includes cookies, crackers, cereal bars, savory snacks and fruit-flavored snacks.

U.S. Specialty primarily represents food away from home channels, including food service, convenience, vending, Girl Scouts and food manufacturing. The food service business is mostly non-commercial, serving institutions such as schools and hospitals. The convenience business includes traditional convenience stores as well as alternate retail outlets.

North America Other includes the U.S. Frozen, Kashi and Canada operating segments. As these operating segments are not considered economically similar enough to aggregate with other operating segments and are immaterial for separate disclosure, they have been grouped together as a single reportable segment.

The three remaining reportable segments are based on geographic location – Europe which consists principally of European countries; Latin America which consists of Central and South America and includes Mexico; and Asia Pacific which consists of Sub-Saharan Africa, Australia and other Asian and Pacific markets.

The measurement of reportable segment results is based on segment operating profit which is generally consistent with the presentation of operating profit in the Consolidated Statement of Income. Intercompany transactions between operating segments were insignificant in all periods presented.

	Quarter ended						Year-to-date period ended
(millions)	October 3, 2015			September 27, 2014			October 3, 2015			September 27, 2014
Net sales
U.S. Morning Foods	$	762		$	782		$	2,280		$	2,340
U.S. Snacks	795			807			2,484			2,522
U.S. Specialty	281			270			912			918
North America Other	426			470			1,298			1,416
Europe	628			720			1,885			2,192
Latin America	202			320			825			918
Asia Pacific	235			270			699			760
Consolidated	$	3,329		$	3,639		$	10,383		$	11,066
Operating profit
U.S. Morning Foods	$	110		$	115		$	368		$	378
U.S. Snacks (a)	62			59			302			269
U.S. Specialty	63			59			200			209
North America Other	44			69			140			226
Europe	73			59			191			174
Latin America (b)	7			50			2			145
Asia Pacific	14			18			36			39
Total Reportable Segments	373			429			1,239			1,440
Corporate (c)	(39		)	(64		)	(109		)	6
Consolidated	$	334		$	365		$	1,130		$	1,446

(a) Includes a non-cash gain of $67 million associated with the deconsolidation of a VIE during the year-to-date period ended October 3, 2015. No related activity in the third quarter of 2015.

(b) Includes non-cash losses totaling $13 million and $115 million, associated with the remeasurement of the financial statements of the Company's Venezuela subsidiary during the quarter and year-to-date periods ended October 3, 2015, respectively.

(c) Includes mark-to-market adjustments for pension plans, commodity and foreign currency contracts totaling $(27) million and ($66) million for the quarters ended October 3, 2015 and September 27, 2014, respectively. Includes mark-to-market adjustments for pension plans, commodity and foreign currency contracts totaling ($59) million and $38 million for the year-to-date periods ended October 3, 2015 and September 27, 2014, respectively.