EQUITY

Earnings per share

Basic earnings per share is determined by dividing net income attributable to Kellogg Company by the weighted average number of common shares outstanding during the period. Diluted earnings per share is similarly determined, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. Dilutive potential common shares consist principally of employee stock options issued by the Company, and to a lesser extent, certain contingently issuable performance shares. Basic earnings per share is reconciled to diluted earnings per share in the following table:



(millions, except per share data)	Net income attributable to Kellogg Company		Average shares outstanding	Earnings per share
2016
Basic	$	694	350	$	1.98
Dilutive potential common shares			4	(0.02		)
Diluted	$	694	354	$	1.96
2015
Basic	$	614	354	$	1.74
Dilutive potential common shares			2	(0.02		)
Diluted	$	614	356	$	1.72
2014
Basic	$	632	358	$	1.76
Dilutive potential common shares			2	(0.01		)
Diluted	$	632	360	$	1.75

The total number of anti-dilutive potential common shares excluded from the reconciliation for each period was (shares in millions): 2016-2.8; 2015-2.7; 2014-5.0.

Stock transactions

The Company issues shares to employees and directors under various equity-based compensation and stock purchase programs, as further discussed in Note 9. The number of shares issued during the periods presented was (shares in millions): 2016–7; 2015–5; 2014–4. The Company issued shares totaling less than one million in each of the years presented under Kellogg Direct^™, a direct stock purchase and dividend reinvestment plan for U.S. shareholders.

In February 2014, the Company’s board of directors approved a share repurchase program authorizing the repurchase of up to $1.5 billion of our common stock through December 2015. In December 2015, the board of directors approved a new authorization to repurchase of up to $1.5 billion of our common stock beginning in 2016 through December 2017.

During 2016, the Company repurchased 6 million shares of common stock for a total of $426 million . During 2015, the Company repurchased 11 million shares of common stock for a total of $731 million . During 2014, the Company repurchased 11 million shares of common stock at a total cost of $690 million.

Comprehensive income

Comprehensive income includes net income and all other changes in equity during a period except those resulting from investments by or distributions to shareholders. Other comprehensive income for all years presented consists of foreign currency translation adjustments, fair value adjustments associated with cash flow hedges and adjustments for net experience losses and prior service cost related to employee benefit plans. During the year ended January 2, 2016, the Company amended a U.S. postretirement health plan as well as a U.S. pension plan. As a result of the U.S. postretirement health plan amendment, a prior service credit was recognized in other comprehensive income with an offsetting reduction in the accumulated postretirement benefit obligation. The U.S. pension plan amendment increased the Company's pension benefit obligation with an offsetting increase in prior service costs in other comprehensive income. See Note 10 and Note 11 for further details.



	2016									2015									2014
	Pre-tax			Tax (expense)			After-tax			Pre-tax			Tax (expense)			After-tax			Pre-tax			Tax (expense)			After-tax
	amount			benefit			amount			amount			benefit			amount			amount			benefit			amount
Net income							$	695								$	614								$	633
Other comprehensive income:
Foreign currency translation adjustments	$	(230	)	$	(24	)	(254		)	$	(170	)	$	(26	)	$	(196	)	$	(231	)	(32		)	(263		)
Cash flow hedges:
Unrealized gain (loss) on cash flow hedges	(55		)	22			(33		)	8			(3		)	5			(35		)	18			(17		)
Reclassification to net income	11			(6		)	5			(23		)	3			(20		)	(10		)	2			(8		)
Postretirement and postemployment benefits:
Amounts arising during the period:
Net experience gain (loss)	—			—			—			—			—			—			(8		)	3			(5		)
Prior service credit (cost)	21			(7		)	14			63			(24		)	39			10			(3		)	7
Reclassification to net income:
Net experience loss	3			(1		)	2			3			(1		)	2			3			(1		)	2
Prior service cost	5			(1		)	4			9			(3		)	6			10			(3		)	7
Venezuela deconsolidation loss	63			—			63			—			—			—			—			—			—
Other comprehensive income (loss)	$	(182	)	$	(17	)	$	(199	)	$	(110	)	$	(54	)	$	(164	)	$	(261	)	$	(16	)	$	(277	)
Comprehensive income							$	496								$	450								$	356
Net income (loss) attributable to noncontrolling interests							1									—									1
Other comprehensive income (loss) attributable to noncontrolling interests							—									(1		)							—
Comprehensive income attributable to Kellogg Company							$	495								$	451								$	355

Reclassifications out of Accumulated Other Comprehensive Income (AOCI) for the year ended December 31, 2016 and January 2, 2016, consisted of the following:



Details about AOCI Components	Amount reclassified from AOCI									Line item impacted within Income Statement
(millions)	2016			2015			2014
Gains and losses on cash flow hedges:
Foreign currency exchange contracts	$	(14	)	$	(40	)	$	(5	)	COGS
Foreign currency exchange contracts	(1		)	2			(3		)	SGA
Interest rate contracts	13			3			(9		)	Interest expense
Commodity contracts	13			12			7			COGS
	$	11		$	(23	)	$	(10	)	Total before tax
	(6		)	3			2			Tax (expense) benefit
	$	5		$	(20	)	$	(8	)	Net of tax
Amortization of postretirement and postemployment benefits:
Net experience loss	$	3		$	3		$	3		(a)
Prior service cost	5			9			10			(a)
	$	8		$	12		$	13		Total before tax
	(2		)	(4		)	(4		)	Tax (expense) benefit
	$	6		$	8		$	9		Net of tax

Venezuela deconsolidation loss	$	63		$	—		$	—		Other (income) expense
Total reclassifications	$	74		$	(12	)	$	1		Net of tax

(a) See Note 10 and Note 11 for further details.

Accumulated other comprehensive income (loss) as of December 31, 2016 and January 2, 2016 consisted of the following:



(millions)	December 31, 2016			January 2, 2016
Foreign currency translation adjustments	$	(1,505	)	$	(1,314	)
Cash flow hedges — unrealized net gain (loss)	(67		)	(39		)
Postretirement and postemployment benefits:
Net experience loss	(14		)	(16		)
Prior service cost	11			(7		)
Total accumulated other comprehensive income (loss)	$	(1,575	)	$	(1,376	)

Noncontrolling interests

In December 2012, the Company entered into a series of agreements with a third party including a subordinated loan (VIE Loan) of $44 million which was convertible into approximately 85% of the equity of the entity (VIE). Due to this convertible subordinated loan and other agreements, the Company determined that the entity was a variable interest entity, the Company was the primary beneficiary and the Company consolidated the financial statements of the VIE. During 2015, the 2012 Agreements were terminated and the VIE loan, including related accrued interest and other receivables, were settled, resulting in a charge of $19 million which was recorded as Other income (expense) in the year ended January 2, 2016. Upon termination of the 2012 Agreements, the Company was no longer considered the primary beneficiary of the VIE, the VIE was deconsolidated, and the Company derecognized all assets and liabilities of the VIE, including an allocation of a portion of goodwill from the U.S. Snacks operating segment, resulting in a $67 million non-cash gain, which was recorded within SGA expense for the year ended January 2, 2016.