10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                     

Commission file number 1-4171

KELLOGG COMPANY

State of Incorporation—Delaware IRS Employer Identification No.38-0710690

One Kellogg Square, P.O. Box 3599, Battle Creek, MI 49016-3599

Registrant’s telephone number: 269-961-2000

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or shorter period that the registrant was required to submit and post such files).

Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x Accelerated filer  ¨ Non-accelerated filer  ¨ Smaller reporting  company  ¨ Emerging growth company  o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ¨    No  x

Common Stock outstanding as of July 28, 2018 — 346,672,653 shares

KELLOGG COMPANY

INDEX

	Page
PART I — Financial Information
Item 1:
Financial Statements
Consolidated Balance Sheet — June 30, 2018 and December 30, 2017	3
Consolidated Statement of Income — quarter and year-to-date periods ended June 30, 2018 and July 1, 2017	4
Consolidated Statement of Comprehensive Income – quarter and year-to-date periods ended June 30, 2018 and July 1, 2017	5
Consolidated Statement of Equity — year ended December 30, 2017 and year-to-date period ended June 30, 2018	6
Consolidated Statement of Cash Flows — year-to-date periods ended June 30, 2018 and July 1, 2017	7
Notes to Consolidated Financial Statements	8
Item 2:
Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3:
Quantitative and Qualitative Disclosures about Market Risk	57
Item 4:
Controls and Procedures	57
PART II — Other Information
Item 1:
Legal Proceedings	58
Item 1A:
Risk Factors	58
Item 2:
Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 6:
Exhibits	58
Signatures	59
Exhibit Index	60

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Kellogg Company and Subsidiaries

CONSOLIDATED BALANCE SHEET

(millions, except per share data)

	June 30, 2018 (unaudited)			December 30, 2017
Current assets
Cash and cash equivalents	$	257		$	281
Accounts receivable, net	1,530			1,389
Inventories	1,291			1,217
Other current assets	189			149
Total current assets	3,267			3,036
Property, net	3,638			3,716
Goodwill	6,072			5,504
Other intangibles, net	3,391			2,639
Investments in unconsolidated entities	421			429
Other assets	1,112			1,027
Total assets	$	17,901		$	16,351
Current liabilities
Current maturities of long-term debt	$	7		$	409
Notes payable	324			370
Accounts payable	2,306			2,269
Other current liabilities	1,329			1,474
Total current liabilities	3,966			4,522
Long-term debt	8,737			7,836
Deferred income taxes	714			355
Pension liability	532			839
Other liabilities	548			605
Commitments and contingencies
Equity
Common stock, $.25 par value	105			105
Capital in excess of par value	866			878
Retained earnings	7,743			7,069
Treasury stock, at cost	(4,375		)	(4,417		)
Accumulated other comprehensive income (loss)	(1,501		)	(1,457		)
Total Kellogg Company equity	2,838			2,178
Noncontrolling interests	566			16
Total equity	3,404			2,194
Total liabilities and equity	$	17,901		$	16,351

See accompanying Notes to Consolidated Financial Statements.

3

Kellogg Company and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME

(millions, except per share data)

	Quarter ended				Year-to-date period ended
(Results are unaudited)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Net sales	$	3,360	$	3,175	$	6,761	$	6,423
Cost of goods sold	2,151		1,950		4,300		4,038
Selling, general and administrative expense	735		840		1,477		1,720
Operating profit	474		385		984		665
Interest expense	72		63		141		124
Other income (expense), net	69		63		139		151
Income before income taxes	471		385		982		692
Income taxes	70		102		137		145
Earnings (loss) from unconsolidated entities	198		—		198		2
Net income	599		283		1,043		549
Net income (loss) attributable to noncontrolling interests	3		—		3		—
Net income attributable to Kellogg Company	$	596	$	283	$	1,040	$	549
Per share amounts:
Basic earnings	$	1.72	$	0.81	$	3.00	$	1.57
Diluted earnings	$	1.71	$	0.80	$	2.99	$	1.56
Dividends	$	0.54	$	0.52	$	1.08	$	1.04
Average shares outstanding:
Basic	347		349		346		350
Diluted	348		352		348		353
Actual shares outstanding at period end					346		346

See accompanying Notes to Consolidated Financial Statements.

4

Kellogg Company and Subsidiaries

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(millions)

	Quarter ended June 30, 2018									Year-to-date period ended June 30, 2018
(Results are unaudited)	Pre-tax amount			Tax (expense) benefit			After-tax amount			Pre-tax amount			Tax (expense) benefit			After-tax amount
Net income							$	599								$	1,043
Other comprehensive income (loss):
Foreign currency translation adjustments	$	(54	)	$	(46	)	(100		)	$	(24	)	$	(27	)	(51		)
Cash flow hedges:
Unrealized gain (loss) on cash flow hedges	3			(1		)	2			3			(1		)	2
Reclassification to net income	2			(1		)	1			4			(1		)	3
Postretirement and postemployment benefits:
Reclassification to net income:
Net experience loss	(1		)	—			(1		)	(2		)	—			(2		)
Other comprehensive income (loss)	$	(50	)	$	(48	)	$	(98	)	$	(19	)	$	(29	)	$	(48	)
Comprehensive income							$	501								$	995
Net Income (loss) attributable to noncontrolling interests							3									3
Other comprehensive income (loss) attributable to noncontrolling interests							(4		)							(4		)
Comprehensive income attributable to Kellogg Company							$	502								$	996
	Quarter ended July 1, 2017									Year-to-date period ended July 1, 2017
(Results are unaudited)	Pre-tax amount			Tax (expense) benefit			After-tax amount			Pre-tax amount			Tax (expense) benefit			After-tax amount
Net income							$	283								$	549
Other comprehensive income (loss):
Foreign currency translation adjustments	$	(66	)	$	57		(9		)	$	10		$	66		76
Cash flow hedges:
Reclassification to net income	2			—			2			4			(1		)	3
Postretirement and postemployment benefits:
Reclassification to net income:
Net experience loss	—			—			—			1			—			1
Other comprehensive income (loss)	$	(64	)	$	57		$	(7	)	$	15		$	65		$	80
Comprehensive income							$	276								$	629

See accompanying Notes to Consolidated Financial Statements.

5

Kellogg Company and Subsidiaries

CONSOLIDATED STATEMENT OF EQUITY

(millions)

	Common stock			Capital in excess of par value			Retained earnings			Treasury stock					Accumulated other comprehensive income (loss)			Total Kellogg Company equity			Non-controlling interests			Total equity
(unaudited)	shares	amount								shares		amount
Balance, December 31, 2016	420	$	105	$	806		$	6,552		69		$	(3,997	)	$	(1,575	)	$	1,891		$	16		$	1,907
Common stock repurchases										7		(516		)				(516		)				(516		)
Net income							1,254											1,254			—			1,254
Dividends							(736		)									(736		)				(736		)
Other comprehensive income															118			118			—			118
Stock compensation				66														66						66
Stock options exercised and other	1			6			(1		)	(1	)	96						101						101
Balance, December 30, 2017	421	$	105	$	878		$	7,069		75		$	(4,417	)	$	(1,457	)	$	2,178		$	16		$	2,194
Common stock repurchases										1		(50		)				(50		)				(50		)
Net income							1,040											1,040			3			1,043
Acquisition of noncontrolling interest, net																		—			552			552
Dividends							(374		)									(374		)	(1		)	(375		)
Other comprehensive income															(44		)	(44		)	(4		)	(48		)
Stock compensation				30														30						30
Stock options exercised and other				(42		)	8			(2	)	92						58						58
Balance, June 30, 2018	421	$	105	$	866		$	7,743		74		$	(4,375	)	$	(1,501	)	$	2,838		$	566		$	3,404

See accompanying Notes to Consolidated Financial Statements.

6

Kellogg Company and Subsidiaries

CONSOLIDATED STATEMENT OF CASH FLOWS

(millions)

	Year-to-date period ended
(unaudited)	June 30, 2018			July 1, 2017
Operating activities
Net income	$	1,043		$	549
Adjustments to reconcile net income to operating cash flows:
Depreciation and amortization	234			240
Postretirement benefit plan expense (benefit)	(86		)	(96		)
Deferred income taxes	69			(66		)
Stock compensation	30			36
Gain on unconsolidated entities, net	(200		)	—
Other	(67		)	36
Postretirement benefit plan contributions	(274		)	(28		)
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables	(83		)	(716		)
Inventories	(38		)	63
Accounts payable	64			70
All other current assets and liabilities	(245		)	4
Net cash provided by (used in) operating activities	447			92
Investing activities
Additions to properties	(270		)	(268		)
Collections of deferred purchase price on securitized trade receivables	—			568
Acquisitions, net of cash acquired	(28		)	4
Investments in unconsolidated entities	(388		)	—
Acquisition of cost method investments	(4		)	—
Other	29			(4		)
Net cash provided by (used in) investing activities	(661		)	300
Financing activities
Net issuances (reductions) of notes payable	(76		)	287
Issuances of long-term debt	993			655
Reductions of long-term debt	(401		)	(626		)
Net issuances of common stock	70			65
Common stock repurchases	(50		)	(390		)
Cash dividends	(374		)	(363		)
Net cash provided by (used in) financing activities	162			(372		)
Effect of exchange rate changes on cash and cash equivalents	28			34
Increase (decrease) in cash and cash equivalents	(24		)	54
Cash and cash equivalents at beginning of period	281			280
Cash and cash equivalents at end of period	$	257		$	334
Supplemental cash flow disclosures
Interest paid	$	151		$	138
Income taxes paid	$	76		$	205
Supplemental cash flow disclosures of non-cash investing activities:
Beneficial interests obtained in exchange for securitized trade receivables	$	—		$	566
Additions to properties included in accounts payable	$	77		$	82

See accompanying Notes to Consolidated Financial Statements.

7

Notes to Consolidated Financial Statements

for the quarter ended June 30, 2018 (unaudited)

Note 1 Accounting policies

Basis of presentation

The unaudited interim financial information of Kellogg Company (the Company) included in this report reflects all adjustments, all of which are of a normal and recurring nature, that management believes are necessary for a fair statement of the results of operations, comprehensive income, financial position, equity and cash flows for the periods presented. This interim information should be read in conjunction with the financial statements and accompanying footnotes within the Company’s 2017 Annual Report on Form 10-K.

The condensed balance sheet information at December 30, 2017 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. The results of operations for the quarterly period ended June 30, 2018 are not necessarily indicative of the results to be expected for other interim periods or the full year.

Accounts payable

The Company has agreements with certain third parties to provide accounts payable tracking systems which facilitates participating suppliers’ ability to monitor and, if elected, sell payment obligations from the Company to designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to sell one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s goal in entering into these agreements is to capture overall supplier savings, in the form of payment terms or vendor funding, created by facilitating suppliers’ ability to sell payment obligations, while providing them with greater working capital flexibility. We have no economic interest in the sale of these suppliers’ receivables and no direct financial relationship with the financial institutions concerning these services. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to sell amounts under these arrangements. However, the Company’s right to offset balances due from suppliers against payment obligations is restricted by this agreement for those payment obligations that have been sold by suppliers. As of June 30, 2018, $834 million of the Company’s outstanding payment obligations had been placed in the accounts payable tracking system, and participating suppliers had sold $572 million of those payment obligations to participating financial institutions. As of December 30, 2017, $850 million of the Company’s outstanding payment obligations had been placed in the accounts payable tracking system, and participating suppliers had sold $674 million of those payment obligations to participating financial institutions.

Revenue

The Company recognizes revenue from the sale of food products which are sold to retailers through direct sales forces, broker and distributor arrangements. The Company also recognizes revenue from the license of our trademarks granted to third parties who uses these trademarks on their merchandise. Revenue from these licenses are not material to the Company. Revenue, which includes shipping and handling charges billed to the customer, is reported net of applicable discounts, returns, allowances, and various government withholding taxes.

Contract balances where revenue is recognized in the current period that is not a result of current period performance is not material to the Company. The Company also does not incur costs to obtain or fulfill contracts.

Performance obligations

The Company recognizes revenue when (or as) performance obligations are satisfied by transferring control of the goods to customers. Control is transferred upon delivery of the goods to the customer. At the time of delivery, the customer is invoiced with payment terms which are commensurate with the customer’s credit profile. Shipping and/or handling costs that occur before the customer obtains control of the goods are deemed to be fulfillment activities and are accounted for as fulfillment costs.

The Company assesses the goods and services promised in its customers’ purchase orders and identifies a performance obligation for each promise to transfer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, the Company considers all the goods or services promised, whether explicitly stated or implied based on customary business practices. For a purchase order that has more

8

than one performance obligation, the Company allocates the total consideration to each distinct performance obligation on a relative standalone selling price basis.

Significant Judgments

The Company offers various forms of trade promotions and the methodologies for determining these provisions are dependent on local customer pricing and promotional practices, which range from contractually fixed percentage price reductions to provisions based on actual occurrence or performance. Where applicable, future provisions are estimated based on a combination of historical patterns and future expectations regarding specific in-market product performance.

Our promotional activities are conducted either through the retail trade or directly with consumers and include activities such as in-store displays and events, feature price discounts, consumer coupons, contests and loyalty programs. The costs of these activities are generally recognized at the time the related revenue is recorded, which normally precedes the actual cash expenditure. The recognition of these costs therefore requires management judgment regarding the volume of promotional offers that will be redeemed by either the retail trade or consumer. These estimates are made using various techniques including historical data on performance of similar promotional programs. Differences between estimated expense and actual redemptions are normally insignificant and recognized as a change in management estimate in a subsequent period.

Practical expedients

The Company elected the following practical expedients in accordance with ASU 2014-09:

• Significant financing component - The Company elected not to adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between the transfer of a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

• Shipping and handling costs - The Company elected to account for shipping and handling activities that occur before the customer has obtained control of a good as fulfillment activities (i.e., an expense) rather than as a promised service.

• Measurement of transaction price - The Company has elected to exclude from the measurement of transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer for sales taxes.

New accounting standards

Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. In August 2017, the FASB issued an ASU intended to simplify hedge accounting by better aligning an entity’s financial reporting for hedging relationships with its risk management activities. The ASU also simplifies the application of the hedge accounting guidance. The new guidance is effective on January 1, 2019, with early adoption permitted. For cash flow hedges existing at the adoption date, the standard requires adoption on a modified retrospective basis with a cumulative-effect adjustment to the Consolidated Balance Sheet as of the beginning of the year of adoption. The amendments to presentation guidance and disclosure requirements are required to be adopted prospectively. The Company adopted the ASU in the first quarter of 2018. The impact of adoption was immaterial to the financial statements.

Improving the Presentation of net Periodic Pension Cost and net Periodic Postretirement Benefit Cost. In March 2017, the FASB issued an ASU to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The ASU requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The amendments in this ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The Company adopted the ASU in the first quarter of 2018.

9

Simplifying the test for goodwill impairment. In January 2017, the FASB issued an ASU to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. The ASU is effective for an entity's annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The amendments in this ASU should be applied on a prospective basis. The Company adopted the ASU in the first quarter of 2018 with no impact.

Statement of Cash Flows. In August 2016, the FASB issued an ASU to provide cash flow statement classification guidance for certain cash receipts and payments including (a) debt prepayment or extinguishment costs; (b) contingent consideration payments made after a business combination; (c) insurance settlement proceeds; (d) distributions from equity method investees; (e) beneficial interests in securitization transactions and (f) application of the predominance principle for cash receipts and payments with aspects of more than one class of cash flows.  The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period, in which case adjustments should be reflected as of the beginning of the fiscal year that includes the interim period.   The amendments in this ASU should be applied retrospectively.  The Company adopted the new ASU in the first quarter of 2018.

Recognition and measurement of financial assets and liabilities. In January 2016, the FASB issued an ASU which requires equity investments that are not accounted for under the equity method of accounting to be measured at fair value with changes recognized in net income and which updates certain presentation and disclosure requirements. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption can be elected for all financial statements of fiscal years and interim periods that have not yet been issued or that have not yet been made available for issuance. Entities should apply the update by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company adopted the updated standard in the first quarter of 2018. The impact of adoption was immaterial to the financial statements.

Revenue from contracts with customers. In May 2014, the FASB issued an ASU, as amended, which provides guidance for accounting for revenue from contracts with customers. The core principle of this ASU is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. To achieve that core principle, an entity would be required to apply the following five steps: 1) identify the contract(s) with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations in the contract and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company adopted the updated standard in the first quarter of 2018 using the full retrospective method and restated previously reported amounts. In connection with the adoption, the Company made reclassification of certain customer allowances. The adoption effects relate to the timing of recognition and classification of certain promotional allowances. The updated revenue standard also required additional disaggregated revenue disclosures. Refer to Impacts to Previously Reported Results below for the impact of adoption of the standard on our consolidated financial statements.

Impacts to Previously Reported Results

Adoption of the standards related to revenue recognition, pension and cash flow impacted our previously reported results as follows:

	As of December 30, 2017
Consolidated Balance Sheet	Previously Reported		Revenue Recognition ASU			Restated
Other assets	$	1,026	$	1		$	1,027
Other current liabilities	$	1,431	$	43		$	1,474
Deferred income taxes	$	363	$	(8	)	$	355
Retained earnings	$	7,103	$	(34	)	$	7,069

10

	Quarter ended July 1, 2017
Consolidated Statement of Income	Previously Reported			Revenue Recognition ASU			Pension ASU		Restated
Net sales	$	3,187		$	(12	)	$	—	$	3,175
Cost of goods sold	$	1,922		$	(17	)	$	45	$	1,950
Selling, general and administrative expense	$	812		$	4		$	24	$	840
Other income (expense), net	$	(6	)	$	—		$	69	$	63
Income taxes	$	102		$	—		$	—	$	102
Net income	$	282		$	1		$	—	$	283
Per share amounts:
Basic earnings	$	0.81		$	—		$	—	$	0.81
Diluted earnings	$	0.80		$	—		$	—	$	0.80

	Year-to-date period ended July 1, 2017
Consolidated Statement of Income	Previously Reported			Revenue Recognition ASU			Pension ASU		Restated
Net sales	$	6,441		$	(18	)	$	—	$	6,423
Cost of goods sold	$	3,972		$	(33	)	$	99	$	4,038
Selling, general and administrative expense	$	1,656		$	9		$	55	$	1,720
Other income (expense), net	$	(3	)	$	—		$	154	$	151
Income taxes	$	144		$	1		$	—	$	145
Net income	$	544		$	5		$	—	$	549
Per share amounts:
Basic earnings	$	1.56		$	0.01		$	—	$	1.57
Diluted earnings	$	1.54		$	0.02		$	—	$	1.56

	Year-to-date period ended July 1, 2017
Consolidated Statement of Cash Flows	Previously Reported			Revenue Recognition ASU			Cash Flow ASU			Restated
Net income	$	544		$	5		$	—		$	549
Deferred income taxes	$	(67	)	$	1		$	—		$	(66	)
Other	$	30		$	—		$	6		$	36
Trade receivables	$	(148	)	$	—		$	(568	)	$	(716	)
All other current assets and liabilities, net	$	10		$	(6	)	$	—		$	4
Net cash provided by (used in) operating activities	$	654		$	—		$	(562	)	$	92
Collections of deferred purchase price on securitized trade receivables	$	—		$	—		$	568		$	568
Investment in unconsolidated entities, net proceeds	$	6		$	—		$	(6	)	$	—
Net cash provided by (used in) investing activities	$	(262	)	$	—		$	562		$	300

11

Accounting standards to be adopted in future periods

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. In February 2018, the FASB issued an ASU permitting a company to reclassify the disproportionate income tax effects of the Tax Cuts and Jobs Act of 2017 on items within accumulated other comprehensive income (AOCI). The reclassification is optional. Regardless of whether or not a company opts to make the reclassification, the new guidance requires all companies to include certain disclosures in their financial statements. The guidance is effective for all fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing when to adopt the ASU and the impact of adoption.

Leases. In February 2016, the FASB issued an ASU which will require the recognition of lease assets and lease liabilities by lessees for all leases with terms greater than 12 months. The distinction between finance leases and operating leases will remain, with similar classification criteriaas current GAAP to distinguish between capital and operating leases. The principal difference from current guidance is that the lease assets and lease liabilities arising from operating leases will be recognized on the Consolidated Balance Sheet. Lessor accounting remains substantially similar to current GAAP. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company will adopt the ASU in the first quarter of 2019, and is currently evaluating the impact that implementing this ASU will have on its financial statements.

Note 2 Sale of accounts receivable

During 2016, The Company initiated a program in which a customer could extend their payment terms in exchange for the elimination of early payment discounts (Extended Terms Program).

The Company has two Receivable Sales Agreements (Monetization Programs) and previously had a separate U.S. accounts receivable securitization program (Securitization Program), both described below, which are intended to directly offset the impact the Extended Terms Program would have on the days-sales-outstanding (DSO) metric that is critical to the effective management of the Company's accounts receivable balance and overall working capital. The Company terminated the Securitization Program at the end of 2017 and entered into the second monetization program during the quarter ended March 31, 2018. The impact on working capital of the Extended Terms Program is effectively offset by the Monetization and Securitization Programs.

The Company has no retained interest in the receivables sold, however the Company does have collection and administrative responsibilities for the sold receivables. The Company has not recorded any servicing assets or liabilities as of June 30, 2018 and December 30, 2017 for these agreements as the fair value of these servicing arrangements as well as the fees earned were not material to the financial statements.

Monetization Programs

The Company has two Monetization Programs, for a discrete group of customers, to sell, on a revolving basis, certain trade accounts receivable invoices to third party financial institutions. Transfers under this agreement are accounted for as sales of receivables resulting in the receivables being de-recognized from the Consolidated Balance Sheet. The Monetization Programs provide for the continuing sale of certain receivables on a revolving basis until terminated by either party; however the maximum receivables that may be sold at any time is $1,033 million (increased from $988 million as of March 31, 2018, reflecting the execution of an amendment to the second monetization program on June 26, 2018).  Accounts receivable sold of $936 million and $601 million remained outstanding under these arrangements as of June 30, 2018 and December 30, 2017, respectively. The proceeds from these sales of receivables are included in cash from operating activities in the Consolidated Statement of Cash Flows. The recorded net loss on sale of receivables was $6 million and $12 million for the quarter and year-to-date periods ended June 30, 2018, respectively and was $3 million and $5 million for the quarter and year-to-date periods ended July 1, 2017, respectively. The recorded loss is included in Other income and expense.

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Securitization Program

Between July 2016 and December 2017, the Company had a Securitization Program with a third party financial institution. Under the program, the Company received cash consideration of up to $600 million and a deferred purchase price asset for the remainder of the purchase price. Transfers under the Securitization Program were accounted for as sales of receivables resulting in the receivables being de-recognized from the Consolidated Balance Sheet. This Securitization Program utilized Kellogg Funding Company (Kellogg Funding), a wholly-owned subsidiary of the Company. Kellogg Funding's sole business consisted of the purchase of receivables, from its parent or other subsidiary and subsequent transfer of such receivables and related assets to financial institutions. Although Kellogg Funding is included in the Company's consolidated financial statements, it is a separate legal entity with separate creditors who will be entitled, upon its liquidation, to be satisfied out of Kellogg Funding assets prior to any assets or value in Kellogg Funding becoming available to the Company or its subsidiaries. The assets of Kellogg Funding are not available to pay creditors of the Company or its subsidiaries. The Securitization Program was structured to expire in July 2018, but was terminated at the end of 2017. In March 2018 the Company substantially replaced the securitization program with the second monetization program. Kellogg Funding had no creditors and held no assets at June 30, 2018.

As of December 30, 2017, approximately $433 million of accounts receivable sold to Kellogg Funding under the Securitization Program remained outstanding, for which the Company received net cash proceeds of approximately $412 million and a deferred purchase price asset of approximately $21 million. The portion of the purchase price for the receivables which is not paid in cash by the financial institutions is a deferred purchase price asset, which is paid to Kellogg Funding as payments on the receivables are collected from customers. The deferred purchase price asset represents a beneficial interest in the transferred financial assets and is recognized at fair value as part of the sale transaction. The deferred purchase price asset is included in Other current assets on the Consolidated Balance Sheet. Upon final settlement of the program in March 2018, the outstanding deferred purchase price asset of $21 million was exchanged for previously sold trade accounts receivable.

The recorded net loss on sale of receivables for the year-to-date period ended July 1, 2017 is included in Other income and expense and is not material.

Other programs

Additionally, from time to time certain of the Company's foreign subsidiaries will transfer, without recourse, accounts receivable balances of certain customers to financial institutions. These transactions are accounted for as sales of the receivables resulting in the receivables being de-recognized from the Consolidated Balance Sheet. Accounts receivable sold of $26 million and $86 million remained outstanding under these programs as of June 30, 2018 and December 30, 2017, respectively. The proceeds from these sales of receivables are included in cash from operating activities in the Consolidated Statement of Cash Flows. The recorded net loss on the sale of these receivables is included in Other income and expense and is not material.

Note 3 Acquisitions, West Africa investments, goodwill and other intangible assets

Multipro acquisition

On May 2, 2018, the Company (i) acquired an incremental 1% ownership interest in Multipro, a leading distributor of a variety of food products in Nigeria and Ghana, and (ii) exercised its call option (Purchase Option) to acquire a 50% interest in Tolaram Africa Foods, PTE LTD (TAF), a holding company with a 49% equity interest in an affiliated food manufacturer, resulting in the Company having a 24.5% interest in the affiliated food manufacturer. The aggregate cash consideration paid was approximately $419 million and was funded through cash on hand and short-term borrowings, which was refinanced with long-term borrowings in May 2018. As part of the consideration for the acquisition, an escrow established in connection with the original Multipro investment in 2015, which represented a significant portion of the amount paid for the Company’s initial investment, was released by the Company. The amount paid to exercise the Purchase Option is subject to certain working capital and net debt adjustments based on the actual working capital and net debt existing on the exercise date compared to targeted amounts.

As a result of the Company’s incremental ownership interest in Multipro and concurrent changes to the shareholders' agreement, the Company now has a 51% controlling interest in and began consolidating Multipro. Accordingly, the acquisition was accounted for as a business combination and the assets and liabilities of Multipro were included in the June 30, 2018 Consolidated Balance Sheet and the results of its operations have been included in the Consolidated Statement of Income subsequent to the acquisition date. The aggregate of the

13

consideration paid and the fair value of previously held equity interest totaled $626 million, or $617 million net of cash acquired. The Multipro investment was previously accounted for under the equity method of accounting and the Company recorded our share of equity income or loss from Multipro within Earnings (loss) from unconsolidated entities. In connection with the business combination, the Company recognized a one-time, non-cash gain on the disposition of our previously held equity interest in Multipro of $245 million, which is included within Earnings (loss) from unconsolidated entities.  

The assets and liabilities are included in the Consolidated Balance Sheet as of June 30, 2018 within the Asia-Pacific reporting segment. The acquired assets and assumed liabilities include the following:

(millions)	May 2, 2018
Current assets	$	118
Property	41
Goodwill	616
Intangible assets subject to amortization, primarily customer relationships	425
Intangible assets not subject to amortization, primarily distribution rights	373
Deferred tax liability	(256		)
Other liabilities	(148		)
Noncontrolling interest	(552		)
	$	617

The amounts in the above table represent the preliminary allocation of purchase price and are subject to revision when valuations are finalized for intangible assets, which are expected in 2018. The goodwill from the acquisition is not expected to be deductible for income tax purposes.

Multipro contributed net revenues of $129 million and net earnings of $2 million since the acquisition, including transaction fees and integration costs. The unaudited pro forma historical net sales, as if Multipro had been acquired at the beginning of 2017 are estimated as follows:

	Quarter ended				Year-to-date period ended
(millions)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Net sales	$	3,433	$	3,326	$	7,043	$	6,739

The impact of the business combination as if Multipro had been acquired at the beginning of 2017, on the unaudited pro forma historical net income and net income attributable to Kellogg Company, exclusive of the non-cash $245 million gain on the disposition of the equity interest, was immaterial.

Investment in TAF

The investment in TAF is accounted for under the equity method of accounting with the Company’s share of equity income or loss being recognized within Earnings (loss) from unconsolidated entities. The $458 million aggregate of the consideration paid upon exercise and the historical cost value of the Put Option was compared to the estimated fair value of the Company’s ownership percentage of TAF and the Company recognized a one-time, non-cash loss of $45 million within Earnings (loss) from unconsolidated entities, which represents an other than temporary excess of cost over fair value of the investment. The difference between the carrying amount of TAF and the underlying equity in net assets is primarily attributable to brand and customer list intangible assets, a portion of which is being amortized over future periods, and goodwill.

RXBAR acquisition

In October 2017, the Company completed its acquisition of Chicago Bar Co., LLC, the manufacturer of RXBAR, for $600 million, or $596 million net of cash and cash equivalents. The purchase price was subject to certain working capital adjustments based on the actual working capital on the acquisition date compared to targeted amounts. These adjustments were finalized during the quarter ended March 31, 2018 and resulted in a purchase price reduction of $1 million. The acquisition was accounted for under the purchase price method and was financed with short-term borrowings.

For the year-to-date period ended June 30, 2018, the acquisition added net sales in the Company's North America Other reporting segment totaling $110 million and net earnings totaling $6 million, respectively.

14

The assets and liabilities are included in the Consolidated Balance Sheet as of June 30, 2018 within the North America Other reporting segment. The acquired assets and assumed liabilities include the following:

(millions)	October 27, 2017
Current assets	$	42
Goodwill	373
Intangible assets, primarily indefinite-lived brands	203
Current liabilities	(23		)
	$	595

The amounts in the above table represent the final allocation of purchase price as of June 30, 2018, which resulted in a $2 million increase in amortizable intangible assets with a corresponding reduction of goodwill during the first quarter of 2018.

Goodwill and Intangible Assets

Changes in the carrying amount of goodwill, intangible assets subject to amortization, consisting primarily of customer lists, and indefinite-lived intangible assets, consisting of brands and distribution agreements, are presented in the following tables:

Carrying amount of goodwill

(millions)	U.S. Snacks		U.S. Morning Foods		U.S. Specialty Channels		North America Other			Europe			Latin America			Asia Pacific			Consoli- dated
December 30, 2017	$	3,568	$	131	$	82	$	836		$	414		$	244		$	229		$	5,504
Additions	—		—		—		—			—			—			616			616
Purchase price allocation adjustment	—		—		—		(1		)	—			—			—			(1		)
Purchase price adjustment	—		—		—		(1		)	—			—			—			(1		)
Currency translation adjustment	—		—		—		(2		)	(12		)	(25		)	(7		)	(46		)
June 30, 2018	$	3,568	$	131	$	82	$	832		$	402		$	219		$	838		$	6,072

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Intangible assets subject to amortization

Gross carrying amount
(millions)	U.S. Snacks			U.S. Morning Foods		U.S. Specialty Channels		North America Other			Europe			Latin America			Asia Pacific			Consoli- dated
December 30, 2017	$	42		$	8	$	—	$	22		$	45		$	74		$	10		$	201
Additions	—			—		—		—			—			—			425			425
Purchase price allocation adjustment	—			—		—		2			—			—			—			2
Currency translation adjustment	—			—		—		—			(1		)	(10		)	(3		)	(14		)
June 30, 2018	$	42		$	8	$	—	$	24		$	44		$	64		$	432		$	614
Accumulated Amortization
December 30, 2017	$	22		$	8	$	—	$	5		$	18		$	10		$	4		$	67
Amortization	2			—		—		1			1			2			3			9
Currency translation adjustment	—			—		—		—			—			(1		)	—			(1		)
June 30, 2018	$	24		$	8	$	—	$	6		$	19		$	11		$	7		$	75
Intangible assets subject to amortization, net
December 30, 2017	$	20		$	—	$	—	$	17		$	27		$	64		$	6		$	134
Additions	—			—		—		—			—			—			425			425
Purchase price allocation adjustment	—			—		—		2			—			—			—			2
Amortization	(2		)	—		—		(1		)	(1		)	(2		)	(3		)	(9		)
Currency translation adjustment	—			—		—		—			(1		)	(9		)	(3		)	(13		)
June 30, 2018	$	18		$	—	$	—	$	18		$	25		$	53		$	425		$	539

For intangible assets in the preceding table, amortization was $9 million and $4 million for the year-to-date periods ended June 30, 2018 and July 1, 2017, respectively. The currently estimated aggregate annual amortization expense for full-year 2018 is approximately $23 million.

Intangible assets not subject to amortization

(millions)	U.S. Snacks		U.S. Morning Foods		U.S. Specialty Channels		North America Other		Europe			Latin America			Asia Pacific			Consoli- dated
December 30, 2017	$	1,625	$	—	$	—	$	360	$	434		$	86		$	—		$	2,505
Additions	—		—		—		—		—			—			373			373
Currency translation adjustment	—		—		—		—		(10		)	(13		)	(3		)	(26		)
June 30, 2018	$	1,625	$	—	$	—	$	360	$	424		$	73		$	370		$	2,852

Note 4 Restructuring and cost reduction activities

The Company views its restructuring and cost reduction activities as part of its operating principles to provide greater visibility in achieving its long-term profit growth targets. Initiatives undertaken are currently expected to recover cash implementation costs within a five-year period of completion. Upon completion (or as each major stage is completed in the case of multi-year programs), the project begins to deliver cash savings and/or reduced depreciation.

16

Total Projects

During the quarter ended June 30, 2018, the Company recorded total net charges of $5 million across all restructuring and cost reduction activities. The charges were comprised of $(4) million net gain recorded in cost of goods sold (COGS) and a $9 million expense recorded in selling, general and administrative (SG&A) expense. During the year-to-date period ended June 30, 2018, the Company recorded total charges of $25 million across all restructuring and cost reduction activities. The charges were comprised of $9 million recorded in COGS and $16 million recorded in SG&A expense.

During the quarter ended July 1, 2017, the Company recorded total charges of $96 million across all restructuring and cost reduction activities. The charges were comprised of $24 million recorded in COGS, $75 million recorded in SG&A expense and $(3) million net gain recorded in other (income) expense, net (OIE). During the year-to-date period ended July 1, 2017, the Company recorded total charges of $238 million across all restructuring and cost reduction activities. The charges were comprised of $37 million recorded in COGS, $200 million recorded in SG&A expense and $1 million recorded in OIE.

Project K

Project K is expected to continue generating savings that may be invested in key strategic areas of focus for the business or utilized to achieve our growth initiatives.

Since inception, Project K has reduced the Company’s cost structure, and is expected to provide enduring benefits, including an optimized supply chain infrastructure, an efficient global business services model, a global focus on categories, increased agility from a more efficient organization design, and improved effectiveness in go-to-market models.  These benefits are intended to strengthen existing businesses in core markets, increase growth in developing and emerging markets, and drive an increased level of value-added innovation.

The Company currently anticipates that the program will result in total pre-tax charges, once all phases are approved and implemented, on the lower end of a range of $1.5 to $1.6 billion, with after-tax cash costs, including incremental capital investments, estimated to be approximately $1.1 billion. Based on current estimates and actual charges to date, the Company expects the total project charges will consist of asset-related costs of approximately $500 million which will consist primarily of asset impairments, accelerated depreciation and other exit-related costs; employee-related costs of approximately $500 million which will include severance, pension and other termination benefits; and other costs of approximately $600 million which consists primarily of charges related to the design and implementation of global business capabilities and a more efficient go-to-market model.

The Company currently expects that total pre-tax charges related to Project K will impact reportable segments as follows: U.S. Snacks (approximately 34%), U.S. Morning Foods (approximately 17%), U.S. Specialty Channels (approximately 1%), North America Other (approximately 13%), Europe (approximately 22%), Latin America (approximately 2%), Asia-Pacific (approximately 6%), and Corporate (approximately 5%).

Since the inception of Project K, the Company has recognized charges of $1,402 million that have been attributed to the program. The charges consist of $6 million recorded as a reduction of revenue, $803 million recorded in COGS, $730 million recorded in SG&A, and ($137 million) recorded in OIE.

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The tables below provide the details for charges incurred during the quarters and year-to-date periods ended June 30, 2018 and July 1, 2017 and program costs to date for programs currently active as of June 30, 2018.

	Quarter ended						Year-to-date period ended					Program costs to date
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017		June 30, 2018
Employee related costs	$	1		$	28		$	5		$	135	$	539
Pension curtailment (gain) loss, net	—			(3		)	—			1		(137		)
Asset related costs	(14		)	20			(10		)	30		259
Asset impairment	—			—			—			—		155
Other costs	18			51			30			72		586
Total	$	5		$	96		$	25		$	238	$	1,402
	Quarter ended						Year-to-date period ended					Program costs to date
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017		June 30, 2018
U.S. Snacks	$	3		$	79		9			$	199	$	512
U.S. Morning Foods	10			1			12			2		263
U.S. Specialty Channels	—			1			—			1		21
North America Other	(1		)	2			1			9		141
Europe	(13		)	2			(6		)	8		324
Latin America	2			3			4			4		31
Asia Pacific	3			3			3			4		90
Corporate	1			5			2			11		20
Total	$	5		$	96		$	25		$	238	$	1,402

Employee related costs consist primarily of severance and related benefits. Pension curtailment (gain) loss consists of curtailment gains or losses that resulted from project initiatives. Asset related costs consist primarily of accelerated depreciation. During the quarter ended June 30, 2018, a gain was recognized related to the sale of a manufacturing facility in Europe that was previously impacted as part of Project K. Asset impairments were recorded for fixed assets that were determined to be impaired and were written down to their estimated fair value. Other costs consist of lease termination costs as well as third-party incremental costs related to the development and implementation of global business capabilities and a more efficient go-to-market model.

At June 30, 2018 total project reserves were $76 million, related to severance payments and other costs of which a substantial portion will be paid in 2018 and 2019. The following table provides details for exit cost reserves.

	Employee Related Costs			Pension curtailment (gain) loss, net		Asset Impairment		Asset Related Costs			Other Costs			Total
Liability as of December 31, 2017	$	97		$	—	$	—	$	—		$	63		$	160
2018 restructuring charges	5			—		—		(10		)	30			25
Cash payments	(43		)	—		—		—			(76		)	(119		)
Non-cash charges and other	—			—		—		10			—			10
Liability as of June 30, 2018	$	59		$	—	$	—	$	—		$	17		$	76

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Note 5 Equity

Earnings per share

Basic earnings per share is determined by dividing net income 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, restricted stock units, 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. There were 9 million and 6 million anti-dilutive potential common shares excluded from the reconciliation for the quarter and year-to-date periods ended June 30, 2018, respectively. There were 5 million anti-dilutive potential common shares excluded from the reconciliation for the quarter and year-to-date periods ended July 1, 2017, respectively.

Quarters ended June 30, 2018 and July 1, 2017:

(millions, except per share data)	Net income		Average shares outstanding	Earnings per share
2018
Basic	$	596	347	$	1.72
Dilutive potential common shares			1	(0.01		)
Diluted	$	596	348	$	1.71
2017
Basic	$	283	349	$	0.81
Dilutive potential common shares			3	(0.01		)
Diluted	$	283	352	$	0.80

Year-to-date periods ended June 30, 2018 and July 1, 2017:

(millions, except per share data)	Net income		Average shares outstanding	Earnings per share
2018
Basic	$	1,040	346	$	3.00
Dilutive potential common shares			2	(0.01		)
Diluted	$	1,040	348	$	2.99
2017
Basic	$	549	350	$	1.57
Dilutive potential common shares			3	(0.01		)
Diluted	$	549	353	$	1.56

In December 2017, the board of directors approved a new authorization to repurchase up to $1.5 billion of our common stock beginning in January 2018 through December 2019. As of June 30, 2018, $1.45 billion remains available under the authorization.

During the year-to-date period ended June 30, 2018, the Company repurchased less than 1 million shares of common stock for a total of $50 million. During the year-to-date period ended July 1, 2017, the Company repurchased 6 million shares of common stock for a total of $435 million, of which $390 million was paid and $45 million was payable at July 1, 2017.

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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 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, net of related tax effects.

Reclassifications out of AOCI for the quarter and year-to-date periods ended June 30, 2018 and July 1, 2017, consisted of the following:

(millions)
Details about AOCI components	Amount reclassified from AOCI						Line item impacted within Income Statement
	Quarter ended June 30, 2018			Year-to-date period ended June 30, 2018
(Gains) losses on cash flow hedges:
Foreign currency exchange contracts	$	—		$	—		COGS
Interest rate contracts	2			4			Interest expense
	$	2		$	4		Total before tax
	(1		)	(1		)	Tax expense (benefit)
	$	1		$	3		Net of tax
Amortization of postretirement and postemployment benefits:
Net experience loss	$	(1	)	$	(2	)	OIE
	$	(1	)	$	(2	)	Total before tax
	—			—			Tax expense (benefit)
	$	(1	)	$	(2	)	Net of tax
Total reclassifications	$	—		$	1		Net of tax

20

(millions)
Details about AOCI components	Amount reclassified from AOCI					Line item impacted within Income Statement
	Quarter ended July 1, 2017		Year-to-date period ended July 1, 2017
(Gains) losses on cash flow hedges:
Foreign currency exchange contracts	$	—	$	(1	)	COGS
Foreign currency exchange contracts	—		—			SGA
Interest rate contracts	2		5			Interest expense
Commodity contracts	—		—			COGS
	$	2	$	4		Total before tax
	—		(1		)	Tax expense (benefit)
	$	2	$	3		Net of tax
Amortization of postretirement and postemployment benefits:
Net experience loss	$	—	$	1		See Note 8 for further details
Prior service cost	—		—			See Note 8 for further details
	$	—	$	1		Total before tax
	—		—			Tax expense (benefit)
	$	—	$	1		Net of tax
Total reclassifications	$	2	$	4		Net of tax

Accumulated other comprehensive income (loss), net of tax, as of June 30, 2018 and December 30, 2017 consisted of the following:

(millions)	June 30, 2018			December 30, 2017
Foreign currency translation adjustments	$	(1,473	)	$	(1,426	)
Cash flow hedges — unrealized net gain (loss)	(56		)	(61		)
Postretirement and postemployment benefits:
Net experience loss	32			34
Prior service cost	(4		)	(4		)
Total accumulated other comprehensive income (loss)	$	(1,501	)	$	(1,457	)

Note 6 Debt

The following table presents the components of notes payable at June 30, 2018 and December 30, 2017:

	June 30, 2018				December 30, 2017
(millions)	Principal amount		Effective interest rate		Principal amount		Effective interest rate (a)
U.S. commercial paper	$	197	2.26	%	$	196	1.76	%
Europe commercial paper	—		—	%	96		(0.32	)%
Bank borrowings	127				78
Total	$	324			$	370

(a) Negative effective interest rates on certain borrowings in Europe are the result of efforts by the European Central Bank to stimulate the economy in the eurozone.

In May 2018, the Company issued $600 million of ten-year 4.30% Senior Notes due 2028 and $400 million of three-year 3.25% Senior Notes due 2021, resulting in aggregate net proceeds after debt discount of $994 million. The proceeds from these Notes were used for general corporate purposes, including the repayment of the Company's $400 million, seven-year 3.25% U.S. Dollar Notes due 2018 at maturity, and the repayment of a portion of the Company's commercial paper borrowings used to finance the acquisition of ownership interests in TAF and

21

Multipro. The Notes contain customary covenants that limit the ability of the Company and its restricted subsidiaries (as defined) to incur certain liens or enter into certain sale and lease-back transactions, as well as a change of control provision.

In May 2017, the Company issued €600 million (approximately $685 million USD at July 1, 2017, which reflects the discount and translation adjustments) of five-year 0.80% Euro Notes due 2022, resulting in aggregate net proceeds after debt discount of $656 million. The proceeds from these Notes were used for general corporate purposes, including, together with cash on hand and additional commercial paper borrowings, repayment of the Company's $400 million, five-year 1.75% U.S. Dollar Notes due 2017 at maturity. The Notes contain customary covenants that limit the ability of the Company and its restricted subsidiaries (as defined) to incur certain liens or enter into certain sale and lease-back transactions, as well as a change of control provision. The Notes were designated as a net investment hedge of the Company's investment in its Europe subsidiary when issued.

During the second quarter of 2017, the Company repaid its Cdn.$300 million three year 2.05% Canadian Dollar Notes.

The Company has entered into interest rate swaps with notional amounts totaling $1.5 billion, which effectively converts a portion of the associated U.S. Dollar Notes and Euro Notes from fixed rate to floating rate obligations. These derivative instruments are designated as fair value hedges. The effective interest rates on debt obligations resulting from the Company’s interest rate swaps as of June 30, 2018 were as follows: (a) ten-year 4.15% U.S. Dollar Notes due 2019 – 3.50%; (b) ten-year 4.00% U.S. Dollar Notes due 2020 – 3.39%; (c) ten-year 3.125% U.S. Dollar Notes due 2022 – 3.87%; (d) ten-year 2.75% U.S. Dollar Notes due 2023 – 4.00%; (e) seven-year 2.65% U.S. Dollar Notes due 2023 – 3.42%; (f) eight-year 1.00% Euro Notes due 2024 – 0.72%; (g) ten-year 1.25% Euro Notes due 2025 - 1.30% and (h) ten-year 3.25% U.S. Notes due 2026 – 4.06%.

Note 7 Stock compensation

The Company uses various equity-based compensation programs to provide long-term performance incentives for its global workforce. Currently, these incentives consist principally of stock options, restricted stock units, and to a lesser extent, executive performance shares and restricted stock grants. The Company also sponsors a discounted stock purchase plan in the United States and matching-grant programs in several international locations. Additionally, the Company awards restricted stock to its outside directors. The interim information below should be read in conjunction with the disclosures included within the stock compensation footnote of the Company’s 2017 Annual Report on Form 10-K.

The Company classifies pre-tax stock compensation expense in COGS and SG&A expense principally within its Corporate segment. For the periods presented, compensation expense for all types of equity-based programs and the related income tax benefit recognized was as follows:

	Quarter ended				Year-to-date period ended
(millions)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Pre-tax compensation expense	$	16	$	21	$	33	$	39
Related income tax benefit	$	4	$	8	$	8	$	14

As of June 30, 2018, total stock-based compensation cost related to non-vested awards not yet recognized was $112 million and the weighted-average period over which this amount is expected to be recognized was 2 years.

Stock options

During the year-to-date periods ended June 30, 2018 and July 1, 2017, the Company granted non-qualified stock options to eligible employees as presented in the following activity tables. Terms of these grants and the Company’s methods for determining grant-date fair value of the awards were consistent with that described within the stock compensation footnote in the Company’s 2017 Annual Report on Form 10-K.

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Year-to-date period ended June 30, 2018:

Employee and director stock options	Shares (millions)		Weighted- average exercise price		Weighted- average remaining contractual term (yrs.)	Aggregate intrinsic value (millions)
Outstanding, beginning of period	14		$	64
Granted	3		70
Exercised	(1	)	57
Forfeitures and expirations	(1	)	70
Outstanding, end of period	15		$	65	6.6	$	92
Exercisable, end of period	11		$	63	5.7	$	91

Year-to-date period ended July 1, 2017:

Employee and director stock options	Shares (millions)		Weighted- average exercise price		Weighted- average remaining contractual term (yrs.)	Aggregate intrinsic value (millions)
Outstanding, beginning of period	15		$	62
Granted	2		73
Exercised	(1	)	57
Forfeitures and expirations	—		—
Outstanding, end of period	16		$	64	7.0	$	109
Exercisable, end of period	11		$	60	6.1	$	104

The weighted-average grant date fair value of options granted was $10.00 per share and $10.14 per share for the year-to-date periods ended June 30, 2018 and July 1, 2017, respectively. The fair value was estimated using the following assumptions:

	Weighted- average expected volatility		Weighted- average expected term (years)	Weighted- average risk-free interest rate		Dividend yield
Grants within the year-to-date period ended June 30, 2018:	18	%	6.6	2.82	%	3.00	%
Grants within the year-to-date period ended July 1, 2017:	18	%	6.6	2.26	%	2.80	%

The total intrinsic value of options exercised was $13 million and $17 million for the year-to-date periods ended June 30, 2018 and July 1, 2017, respectively.

Performance shares

In the first quarter of 2018, the Company granted performance shares to a limited number of senior executive-level employees, which entitle these employees to receive a specified number of shares of the Company’s common stock upon vesting. The number of shares earned could range between 0% and 200% of the target amount depending upon performance achieved over the three year vesting period. The performance conditions of the award include adjusted net sales growth and total shareholder return (TSR) of the Company’s common stock relative to a select group of peer companies.

A Monte Carlo valuation model was used to determine the fair value of the awards. The TSR performance metric is a market condition. Therefore, compensation cost of the TSR condition is fixed at the measurement date and is not revised based on actual performance. The TSR metric was valued as a multiplier of possible levels of adjusted net sales growth achievement. Compensation cost related to adjusted net sales growth performance is revised for changes in the expected outcome. The 2018 target grant currently corresponds to approximately 188,000 shares, with a grant-date fair value of $72 per share.

23

Based on the market price of the Company’s common stock at June 30, 2018, the maximum future value that could be awarded to employees on the vesting date for all outstanding performance share awards was as follows:

(millions)	June 30, 2018
2016 Award	$	18
2017 Award	$	16
2018 Award	$	26

The 2015 performance share award, payable in stock, was settled at 75% of target in February 2018 for a total dollar equivalent of $8 million.

Other stock-based awards

During the year-to-date period ended June 30, 2018, the Company granted restricted stock units and a nominal number of restricted stock awards to eligible employees as presented in the following table. Terms of these grants and the Company’s method of determining grant-date fair value were consistent with that described within the stock compensation footnote in the Company’s 2017 Annual Report on Form 10-K.

Year-to-date period ended June 30, 2018:

Employee restricted stock units	Shares (thousands)		Weighted-average grant-date fair value
Non-vested, beginning of year	1,673		$	65
Granted	697		63
Vested	(416	)	59
Forfeited	(151	)	63
Non-vested, end of period	1,803		$	66

Year-to-date period ended July 1, 2017:

Employee restricted stock and restricted stock units	Shares (thousands)		Weighted-average grant-date fair value
Non-vested, beginning of year	1,166		$	63
Granted	654		67
Vested	(35	)	57
Forfeited	(72	)	65
Non-vested, end of period	1,713		$	65

Note 8 Employee benefits

The Company sponsors a number of U.S. and foreign pension plans as well as other nonpension postretirement and postemployment plans to provide various benefits for its employees. These plans are described within the footnotes to the Consolidated Financial Statements included in the Company’s 2017 Annual Report on Form 10-K. Components of Company plan benefit expense for the periods presented are included in the tables below.

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Pension

	Quarter ended						Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Service cost	$	22		$	25		$	44		$	50
Interest cost	41			42			83			83
Expected return on plan assets	(90		)	(90		)	(182		)	(180		)
Amortization of unrecognized prior service cost	2			2			4			4
Recognized net (gain) loss	(2		)	(2		)	(11		)	1
Net periodic benefit cost	(27		)	(23		)	(62		)	(42		)
Curtailment (gain) loss	—			(3		)	—			(2		)
Total pension (income) expense	$	(27	)	$	(26	)	$	(62	)	$	(44	)

Other nonpension postretirement

	Quarter ended						Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Service cost	$	4		$	4		$	9		$	9
Interest cost	9			9			18			18
Expected return on plan assets	(23		)	(25		)	(47		)	(49		)
Amortization of unrecognized prior service (gain)	(2		)	(2		)	(4		)	(4		)
Recognized net (gain) loss	—			—			—			(29		)
Net periodic benefit cost	(12		)	(14		)	(24		)	(55		)
Curtailment loss	—			—			—			3
Total postretirement benefit (income) expense	$	(12	)	$	(14	)	$	(24	)	$	(52	)

Postemployment

	Quarter ended					Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017		June 30, 2018			July 1, 2017
Service cost	$	1		$	2	$	2		$	3
Interest cost	—			1		—			2
Recognized net (gain) loss	(1		)	—		(2		)	1
Total postemployment benefit expense	$	—		$	3	$	—		$	6

During the year-to-date period ended June 30, 2018, the Company recognized a gain of $11 million related to the remeasurement of a U.S. pension plan as current year distributions are expected to exceed service and interest costs resulting in settlement accounting for that particular plan. The amount of the remeasurement gain recognized during the quarter was due primarily to a favorable change in the discount rate relative to prior year end.

During the second quarter of 2017, the Company recognized a curtailment gain of $3 million within a pension plan in conjunction with Project K restructuring activity. The Company remeasured the benefit obligation for the impacted pension plan resulting in a mark-to-market gain of $2 million. The gain was due primarily to plan asset returns in excess of the expected rate of return.

During the first quarter of 2017, the Company recognized curtailment losses of $1 million and $3 million within pension and nonpension postretirement plan, respectively, in conjunction with Project K restructuring activity. In addition, the Company remeasured the benefit obligation for impacted pension and nonpension postretirement plans. The remeasurement resulted in a mark-to-market loss of $3 million on a pension plan due primarily to a lower discount rate and a $29 million gain on a nonpension postretirement plan primarily due to plan asset investment returns slightly mitigated by the impact of a lower discount rate.

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Company contributions to employee benefit plans are summarized as follows:

(millions)	Pension		Nonpension postretirement		Total
Quarter ended:
June 30, 2018	$	251	$	4	$	255
July 1, 2017	$	2	$	2	$	4
Year-to-date period ended:
June 30, 2018	$	266	$	8	$	274
July 1, 2017	$	23	$	5	$	28
Full year:
Fiscal year 2018 (projected)	$	274	$	13	$	287
Fiscal year 2017 (actual)	$	31	$	13	$	44

During the second quarter of 2018, the Company made discretionary contributions to certain U.S. pension plans totaling $250 million. Plan funding strategies may be modified in response to management's evaluation of tax deductibility, market conditions, and competing investment alternatives.

Additionally, during the first quarter of 2017, the Company recognized expense totaling $26 million related to the exit of several multi-employer plans associated with Project K restructuring activity. This amount represents management's best estimate, actual results could differ. The cash obligation is payable over a maximum 20-year period; management has not determined the actual period over which the payments will be made.

Note 9 Income taxes

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (Tax Act). The Tax Act makes broad and complex changes to the U.S. tax code including but not limited to, reducing the corporate tax rate from 35% to 21%, requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that may be electively paid over eight years, and accelerating first year expensing of certain capital expenditures.

The SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which provides guidance on accounting for the Tax Act’s impact. SAB 118 provides a measurement period, which in no case should extend beyond one year from the Tax Act enactment date, during which a company may complete the accounting for the impacts of the Tax Act under ASC Topic 740. Per SAB 118, the Company must reflect the income tax effects of the Tax Act in the reporting period in which the accounting under ASC Topic 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete, the Company can determine a reasonable estimate for those effects and record a provisional estimate in the financial statements in the first reporting period in which a reasonable estimate can be determined. If a Company cannot determine a provisional estimate to be included in the financial statements, the Company should continue to apply ASC 740 based on the provisions of the tax laws that were in effect immediately prior to the Tax Act being enacted. If a Company is unable to provide a reasonable estimate of the impacts of the Tax Act in a reporting period, a provisional amount must be recorded in the first reporting period in which a reasonable estimate can be determined.

The transition tax is on previously untaxed accumulated and current earnings and profits of certain of our foreign subsidiaries. In order to determine the amount of the transition tax, the Company must determine, in addition to other factors, the amount of post-1986 earnings and profits (E&P) of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. E&P is similar to retained earnings of the subsidiary, but requires other adjustments to conform to U.S. tax rules. The Company's estimate was unchanged during the second quarter of 2018. The Company is awaiting further interpretative guidance, continuing to assess available tax methods and elections, and continuing to gather additional information in order to finalize calculations and complete the accounting for the transition tax liability.

In addition to the transition tax, the Tax Act introduced a territorial tax system, which was effective beginning in 2018. The territorial tax system will impact the Company’s overall global capital and legal entity structure, working capital, and repatriation plan on a go-forward basis. In light of the territorial tax system, and other new international provisions within the Tax Act effective beginning in 2018, the Company is currently analyzing its global capital and

26

legal entity structure, working capital requirements, and repatriation plans. Based on the Company's analysis of the territorial tax system and other new international tax provisions as of June 30, 2018, the Company continues to support the assertion to indefinitely reinvest $2.6 billion of accumulated foreign earnings and profits in Europe and other non-U.S. jurisdictions. As a result, as a reasonable provisional estimate, the Company did not record any new deferred tax liabilities associated with the territorial tax system or any changes to the indefinite reinvestment assertion. Further, it is impracticable for the Company to estimate any future tax costs for any unrecognized deferred tax liabilities associated with its indefinite reinvestment assertion as of June 30, 2018, because the actual tax liability, if any, would be dependent on complex analysis and calculations considering various tax laws, exchange rates, circumstances existing when a repatriation, sale, or liquidation occurs, or other factors. If there are any changes to our indefinite reinvestment assertion as a result of finalizing our assessment of the new Tax Act, the Company will adjust its provisional estimates, record, and disclose any tax impacts in the appropriate period, pursuant to SAB 118.

The consolidated effective tax rate for the quarter ended June 30, 2018 was 15% as compared to 26% in the same quarter of the prior year. The effective tax rate for the second quarter benefited from the reduction of the U.S. corporate tax rate as well as a tax benefit of $31 million attributable to discretionary pension contributions made in the second quarter of 2018 totaling $250 million, which are designated as 2017 tax year contributions.

The consolidated effective tax rate for the year-to-date periods ended June 30, 2018 and July 1, 2017 was 14% and 21%, respectively. The effective tax rate for the year-to-date period ended June 30, 2018 benefited from a discretionary pension contribution during the second quarter of 2018, a $44 million discrete tax benefit as a result of the remeasurement of deferred taxes following a legal entity restructuring in the first quarter of 2018, as well as the reduction in the U.S. corporate tax rate effective at the beginning of 2018. These impacts were mitigated somewhat by an increased weighting of taxable income in higher tax rate jurisdictions versus the prior year. The effective tax rate for the year-to-date period ended July 1, 2017 benefited from a deferred tax benefit of $38 million resulting from intercompany transfers of intellectual property.

As of June 30, 2018, the Company classified $8 million of unrecognized tax benefits as a net current liability. Management’s estimate of reasonably possible changes in unrecognized tax benefits during the next twelve months consists of the current liability balance expected to be settled within one year, offset by approximately $6 million of projected additions related primarily to ongoing intercompany transfer pricing activity. Management is currently unaware of any issues under review that could result in significant additional payments, accruals or other material deviation in this estimate.

Following is a reconciliation of the Company’s total gross unrecognized tax benefits for the year-to-date period ended June 30, 2018; $45 million of this total represents the amount that, if recognized, would affect the Company’s effective income tax rate in future periods.

(millions)
December 30, 2017	$	60
Tax positions related to current year:
Additions	3
Reductions	—
Tax positions related to prior years:
Additions	2
Reductions	(6		)
Settlements	(2		)
Lapse in statute of limitations	—
June 30, 2018	$	57

The accrual balance for tax-related interest was approximately $25 million at June 30, 2018.

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Note 10 Derivative instruments and fair value measurements

The Company is exposed to certain market risks such as changes in interest rates, foreign currency exchange rates, and commodity prices, which exist as a part of its ongoing business operations. Management uses derivative and nonderivative financial instruments and commodity instruments, including futures, options, and swaps, where appropriate, to manage these risks. Instruments used as hedges must be effective at reducing the risk associated with the exposure being hedged.

The Company designates derivatives and nonderivative hedging instruments as cash flow hedges, fair value hedges, net investment hedges, and uses other contracts to reduce volatility in interest rates, foreign currency and commodities. As a matter of policy, the Company does not engage in trading or speculative hedging transactions.

Total notional amounts of the Company’s derivative instruments as of June 30, 2018 and December 30, 2017 were as follows:

(millions)	June 30, 2018		December 30, 2017
Foreign currency exchange contracts	$	1,518	$	2,172
Cross-currency contracts	696		—
Interest rate contracts	1,468		2,250
Commodity contracts	348		544
Total	$	4,030	$	4,966

Following is a description of each category in the fair value hierarchy and the financial assets and liabilities of the Company that were included in each category at June 30, 2018 and December 30, 2017, measured on a recurring basis.

Level 1 – Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market. For the Company, level 1 financial assets and liabilities consist primarily of commodity derivative contracts.

Level 2 – Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. For the Company, level 2 financial assets and liabilities consist of interest rate swaps, cross-currency swaps and over-the-counter commodity and currency contracts.

The Company’s calculation of the fair value of interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve. Over-the-counter commodity derivatives are valued using an income approach based on the commodity index prices less the contract rate multiplied by the notional amount. Foreign currency contracts are valued using an income approach based on forward rates less the contract rate multiplied by the notional amount. The Company’s calculation of the fair value of level 2 financial assets and liabilities takes into consideration the risk of nonperformance, including counterparty credit risk.

Level 3 – Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability. The Company did not have any level 3 financial assets or liabilities as of June 30, 2018 or December 30, 2017.

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The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheet on a recurring basis as of June 30, 2018 and December 30, 2017:

Derivatives designated as hedging instruments

	June 30, 2018								December 30, 2017
(millions)	Level 1		Level 2			Total			Level 1		Level 2			Total
Assets:
Cross-currency contracts
Other current assets	$	—	$	27		$	27		$	—	$	—		$	—
Interest rate contracts:
Other assets (a)	—		4			4			—		—			—
Total assets	$	—	$	31		$	31		$	—	$	—		$	—
Liabilities:
Interest rate contracts:
Other liabilities (a)	—		(29		)	(29		)	—		(54		)	(54		)
Total liabilities	$	—	$	(29	)	$	(29	)	$	—	$	(54	)	$	(54	)

(a) The fair value of the related hedged portion of the Company's long-term debt, a level 2 liability, was $1.5 billion and $2.3 billion as of June 30, 2018 and December 30, 2017, respectively.

Derivatives not designated as hedging instruments

	June 30, 2018									December 30, 2017
(millions)	Level 1			Level 2			Total			Level 1			Level 2			Total
Assets:
Foreign currency exchange contracts:
Other current assets	$	—		$	26		$	26		$	—		$	10		$	10
Commodity contracts:
Other current assets	3			—			3			6			—			6
Total assets	$	3		$	26		$	29		$	6		$	10		$	16
Liabilities:
Foreign currency exchange contracts:
Other current liabilities	$	—		$	(14	)	$	(14	)	$	—		$	(14	)	$	(14	)
Commodity contracts:
Other current liabilities	(10		)	—			(10		)	$	(7	)	$	—		$	(7	)
Total liabilities	$	(10	)	$	(14	)	$	(24	)	$	(7	)	$	(14	)	$	(21	)

The Company has designated its outstanding foreign currency denominated long-term debt as a net investment hedge of a portion of the Company’s investment in its subsidiaries’ foreign currency denominated net assets. The carrying value of this debt was approximately $2.7 billion as of June 30, 2018 and December 30, 2017.

29

The following amounts were recorded on the Consolidated Balance Sheet related to cumulative basis adjustments for existing fair value hedges as of June 30, 2018 and December 30, 2017.

(millions)	Line Item in the Consolidated Balance Sheet in which the hedged item is included	Carrying amount of the hedged liabilities				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities (a)
		June 30, 2018		December 30, 2017		June 30, 2018			December 30, 2017
Interest rate contracts	Current maturities of long-term debt	$	—	$	402	$	—		$	2
Interest rate contracts	Long-term debt	$	3,357	$	3,481	$	(45	)	$	(22	)

(a) The current maturities of hedged long-term debt includes $2 million of hedging adjustment on discontinued hedging relationships as of December 30, 2017. The hedged long-term debt includes $(19) million and $32 millionof hedging adjustment on discontinued hedging relationships as of June 30, 2018 and December 30, 2017, respectively.

The Company has elected to not offset the fair values of derivative assets and liabilities executed with the same counterparty that are generally subject to enforceable netting agreements. However, if the Company were to offset and record the asset and liability balances of derivatives on a net basis, the amounts presented in the Consolidated Balance Sheet as of June 30, 2018 and December 30, 2017 would be adjusted as detailed in the following table:

As of June 30, 2018:
				Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet			Financial Instruments			Cash Collateral Received/ Posted		Net Amount
Total asset derivatives	$	60		$	(28	)	$	—	$	32
Total liability derivatives	$	(53	)	$	28		$	25	$	—

As of December 30, 2017:
				Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet			Financial Instruments			Cash Collateral Received/ Posted		Net Amount
Total asset derivatives	$	16		$	(15	)	$	—	$	1
Total liability derivatives	$	(75	)	$	15		$	37	$	(23	)

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The effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the quarters ended June 30, 2018 and July 1, 2017 was as follows:

Derivatives and non-derivatives in net investment hedging relationships

(millions)	Gain (loss) recognized in AOCI					Gain (loss) excluded from assessment of hedge effectiveness				Location of gain (loss) in income of excluded component
	June 30, 2018		July 1, 2017			June 30, 2018		July 1, 2017
Foreign currency denominated long-term debt	$	146	$	(157	)	$	—	$	—
Cross-currency contracts	35		—			$	3	—		Other income (expense), net
Total	$	181	$	(157	)	$	3	$	—

Derivatives not designated as hedging instruments

(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income
		June 30, 2018			July 1, 2017
Foreign currency exchange contracts	COGS	$	4		$	(4	)
Foreign currency exchange contracts	Other income (expense), net	—			(3		)
Foreign currency exchange contracts	SG&A	—			(1		)
Commodity contracts	COGS	(8		)	10
Total		$	(4	)	$	2

The effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the year-to-date periods ended June 30, 2018 and July 1, 2017 was as follows:

Derivatives and non-derivatives in net investment hedging relationships

(millions)	Gain (loss) recognized in AOCI					Gain (loss) excluded from assessment of hedge effectiveness				Location of gain (loss) in income of excluded component
	June 30, 2018		July 1, 2017			June 30, 2018		July 1, 2017
Foreign currency denominated long-term debt	$	73	$	(182	)	$	—	$	—
Cross-currency contracts	27		—			6		—		Other income (expense), net
Total	$	100	$	(182	)	$	6	$	—

Derivatives not designated as hedging instruments

(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income
		June 30, 2018			July 1, 2017
Foreign currency exchange contracts	COGS	$	7		$	(13	)
Foreign currency exchange contracts	Other income (expense), net	(4		)	(8		)
Foreign currency exchange contracts	SGA	1			(1		)
Commodity contracts	COGS	(3		)	(3		)
Commodity contracts	SGA	—			1
Total		$	1		$	(24	)

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The effect of fair value and cash flow hedge accounting on the Consolidated Income Statement for the quarters ended June 30, 2018 and July 1, 2017:

		June 30, 2018			July 1, 2017
(millions)		Interest Expense			Interest Expense
Total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value or cash flow hedges are recorded		$	72		$	63
	Gain (loss) on fair value hedging relationships:
	Interest contracts:
	Hedged items	(7		)	(3		)
	Derivatives designated as hedging instruments	7			8
	Gain (loss) on cash flow hedging relationships:
	Interest contracts:
	Amount of gain (loss) reclassified from AOCI into income	(2		)	(3		)
	Foreign exchange contracts:
	Amount of gain (loss) reclassified from AOCI into income	—			—

The effect of fair value and cash flow hedge accounting on the Consolidated Income Statement for the year-to-date periods ended June 30, 2018 and July 1, 2017:

		June 30, 2018			July 1, 2017
(millions)		Interest Expense			COGS		Interest Expense
Total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value or cash flow hedges are recorded		$	141		$	4,038	$	124
	Gain (loss) on fair value hedging relationships:
	Interest contracts:
	Hedged items	25			—		6
	Derivatives designated as hedging instruments	(21		)	—		4
	Gain (loss) on cash flow hedging relationships:
	Interest contracts:
	Amount of gain (loss) reclassified from AOCI into income	(4		)	—		(5		)
	Foreign exchange contracts:
	Amount of gain (loss) reclassified from AOCI into income	—			1		—

During the next 12 months, the Company expects $7 million of net deferred losses reported in AOCI at June 30, 2018 to be reclassified to income, assuming market rates remain constant through contract maturities.

Certain of the Company’s derivative instruments contain provisions requiring the Company to post collateral on those derivative instruments that are in a liability position if the Company’s credit rating is at or below BB+ (S&P), or Baa1 (Moody’s). The fair value of all derivative instruments with credit-risk-related contingent features in a liability position on June 30, 2018 was $15 million. If the credit-risk-related contingent features were triggered as of June 30, 2018, the Company would be required to post additional collateral of $10 million. In addition, certain derivative instruments contain provisions that would be triggered in the event the Company defaults on its debt agreements. There were no collateral posting as of June 30, 2018 triggered by credit-risk-related contingent features.

32

Financial instruments

The carrying values of the Company’s short-term items, including cash, cash equivalents, accounts receivable, accounts payable, notes payable and current maturities of long-term debt approximate fair value. The fair value of the Company’s long-term debt, which are level 2 liabilities, is calculated based on broker quotes. The fair value and carrying value of the Company's long-term debt was $8.9 billion and $8.7 billion, respectively, as of June 30, 2018.

Counterparty credit risk concentration and collateral requirements

The Company is exposed to credit loss in the event of nonperformance by counterparties on derivative financial and commodity contracts. Management believes a concentration of credit risk with respect to derivative counterparties is limited due to the credit ratings and use of master netting and reciprocal collateralization agreements with the counterparties and the use of exchange-traded commodity contracts.

Master netting agreements apply in situations where the Company executes multiple contracts with the same counterparty. Certain counterparties represent a concentration of credit risk to the Company. If those counterparties fail to perform according to the terms of derivative contracts, this would result in a loss to the Company. As of June 30, 2018, the Company was not in a significant net asset position with any counterparties with which a master netting agreement would apply.

For certain derivative contracts, reciprocal collateralization agreements with counterparties call for the posting of collateral in the form of cash, treasury securities or letters of credit if a fair value loss position to the Company or its counterparties exceeds a certain amount. In addition, the Company is required to maintain cash margin accounts in connection with its open positions for exchange-traded commodity derivative instruments executed with the counterparty that are subject to enforceable netting agreements. As of June 30, 2018, the Company posted $5 million related to reciprocal collateralization agreements. As of June 30, 2018 the Company posted $17 million in margin deposits for exchange-traded commodity derivative instruments, which was reflected as an increase in accounts receivable, net on the Consolidated Balance Sheet.

Management believes concentrations of credit risk with respect to accounts receivable is limited due to the generally high credit quality of the Company’s major customers, as well as the large number and geographic dispersion of smaller customers. However, the Company conducts a disproportionate amount of business with a small number of large multinational grocery retailers, with the five largest accounts encompassing approximately 22% of consolidated trade receivables at June 30, 2018.

Note 11 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, veggie foods and noodles. Kellogg products are manufactured and marketed globally. Principal markets for these products include the United States and United Kingdom.

The Company manages its operations through ten 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.

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

U.S. Morning Foods includes primarily cereal and toaster pastries.

U.S. Specialty Channels 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, Canada, and RXBAR 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.

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The three remaining reportable segments are based on geographic location – Europe which consists principally of European countries, the Middle east and Northern Africa; 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. Certain immaterial reclassifications have been made to the prior year amounts to conform with current year presentation.

	Quarter ended						Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Net sales
U.S. Snacks	$	745		$	815		$	1,507		$	1,610
U.S. Morning Foods	643			664			1,334			1,372
U.S. Specialty Channels	277			275			675			668
North America Other	462			390			941			782
Europe	621			567			1,208			1,080
Latin America	239			232			471			452
Asia Pacific	373			232			625			459
Consolidated	$	3,360		$	3,175		$	6,761		$	6,423
Operating profit
U.S. Snacks	$	111		$	29		$	213		$	(7	)
U.S. Morning Foods	138			170			288			327
U.S. Specialty Channels	60			70			140			166
North America Other	76			59			143			108
Europe	97			77			171			143
Latin America	20			26			42			59
Asia Pacific	28			18			55			40
Total Reportable Segments	530			449			1,052			836
Corporate	(56		)	(64		)	(68		)	(171		)
Consolidated	$	474		$	385		$	984		$	665

Supplemental product information is provided below for net sales to external customers:

	Quarter ended				Year-to-date period ended
(millions)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Snacks	$	1,684	$	1,635	$	3,458	$	3,351
Cereal	1,304		1,305		2,655		2,603
Frozen and other	372		235		648		469
Consolidated	$	3,360	$	3,175	$	6,761	$	6,423

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Note 12 Supplemental Financial Statement Data

Consolidated Balance Sheet
(millions)	June 30, 2018 (unaudited)			December 30, 2017
Trade receivables	$	1,339		$	1,250
Allowance for doubtful accounts	(10		)	(10		)
Refundable income taxes	18			23
Other receivables	183			126
Accounts receivable, net	$	1,530		$	1,389
Raw materials and supplies	$	337		$	333
Finished goods and materials in process	954			884
Inventories	$	1,291		$	1,217
Property	$	9,063		$	9,366
Accumulated depreciation	(5,425		)	(5,650		)
Property, net	$	3,638		$	3,716
Pension	$	290		$	252
Deferred income taxes	242			246
Other	580			529
Other assets	$	1,112		$	1,027
Accrued income taxes	$	32		$	30
Accrued salaries and wages	225			311
Accrued advertising and promotion	570			582
Other	502			551
Other current liabilities	$	1,329		$	1,474
Income taxes payable	$	182		$	192
Nonpension postretirement benefits	39			40
Other	327			373
Other liabilities	$	548		$	605

35

KELLOGG COMPANY

PART I—FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Business overview

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand Kellogg Company, our operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying notes thereto contained in Item 1 of this report.

For more than 100 years, consumers have counted on Kellogg for great-tasting, high-quality and nutritious foods. These foods include snacks, such as cookies, crackers, savory snacks, toaster pastries, cereal bars and bites, fruit-flavored snacks; and convenience foods, such as, ready-to-eat cereals, frozen waffles, veggie foods, and noodles.

Kellogg products are manufactured and marketed globally.

Segments

We manage our operations through ten 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. We report results of operations in the following reportable segments: U.S. Snacks: U.S. Morning Foods; U.S. Specialty Channels; North America Other; Europe; Latin America; and Asia Pacific. The reportable segments are discussed in greater detail in Note 11 within Notes to Consolidated Financial Statements.

Restatement of 2017 financial statements

Financial statements for 2017 were restated to reflect changes in accounting standards that were adopted on a retrospective basis, as well as product transfer between reportable segments.

Non-GAAP financial measures

This filing includes non-GAAP financial measures that we provide to management and investors that exclude certain items that we do not consider part of on-going operations. Items excluded from our non-GAAP financial measures are discussed in the "Significant items impacting comparability" section of this filing. Our management team consistently utilizes a combination of GAAP and non-GAAP financial measures to evaluate business results, to make decisions regarding the future direction of our business, and for resource allocation decisions, including incentive compensation. As a result, we believe the presentation of both GAAP and non-GAAP financial measures provides investors with increased transparency into financial measures used by our management team and improves investors’ understanding of our underlying operating performance and in their analysis of ongoing operating trends. All historic non-GAAP financial measures have been reconciled with the most directly comparable GAAP financial measures.

Non-GAAP financial measures used include currency-neutral and organic net sales, adjusted and currency-neutral adjusted operating profit, adjusted and currency-neutral adjusted diluted EPS, and cash flow. We determine currency-neutral results by dividing or multiplying, as appropriate, the current-period local currency operating results by the currency exchange rates used to translate our financial statements in the comparable prior-year period to determine what the current period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period. These non-GAAP financial measures may not be comparable to similar measures used by other companies.

• Currency-neutral net sales and organic net sales: We adjust the GAAP financial measure to exclude the impact of foreign currency, resulting in currency-neutral sales. In addition, we exclude the impact of acquisitions, dispositions, related integration costs, shipping day differences, and foreign currency, resulting in organic net sales. We excluded the items which we believe may obscure trends in our underlying net sales performance. By providing these non-GAAP net sales measures, management intends to provide investors with a meaningful, consistent comparison of net sales performance for the Company and each of our reportable segments for the periods presented. Management uses these non-GAAP measures to evaluate the effectiveness of initiatives behind net sales growth, pricing realization, and the impact of mix on our business results. These non-GAAP measures are also used to make decisions regarding the future direction of our business, and for resource allocation decisions.

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• Adjusted: operating profit, net income, and diluted EPS: We adjust the GAAP financial measures to exclude the effect of Project K and cost reduction activities, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodities and certain foreign currency contracts, and other costs impacting comparability resulting in adjusted. We excluded the items which we believe may obscure trends in our underlying profitability. By providing these non-GAAP profitability measures, management intends to provide investors with a meaningful, consistent comparison of the Company's profitability measures for the periods presented. Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability, such as Project K, ZBB, and Revenue Growth Management, to assess performance of newly acquired businesses, as well as to evaluate the impacts of inflationary pressures and decisions to invest in new initiatives within each of our segments.

• Currency-neutral adjusted: gross profit, gross margin, SG&A, SG&A%, operating profit, operating profit margin, net income, and diluted EPS: We adjust the GAAP financial measures to exclude the effect of Project K and cost reduction activities, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodities and certain foreign currency contracts, other costs impacting comparability, and foreign currency, resulting in currency-neutral adjusted. We excluded the items which we believe may obscure trends in our underlying profitability. By providing these non-GAAP profitability measures, management intends to provide investors with a meaningful, consistent comparison of the Company's profitability measures for the periods presented. Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability, such as Project K, ZBB, and Revenue Growth Management, to assess performance of newly acquired businesses, as well as to evaluate the impacts of inflationary pressures and decisions to invest in new initiatives within each of our segments.

• Adjusted effective income tax rate: We adjust the GAAP financial measures to exclude the effect of Project K and cost reduction activities, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodities and certain foreign currency contracts. We excluded the items which we believe may obscure trends in our pre-tax income and the related tax effect of those items on our adjusted effective income tax rate. By providing this non-GAAP measure, management intends to provide investors with a meaningful, consistent comparison of the Company's effective tax rate, excluding the pre-tax income and tax effect of the items noted above, for the periods presented. Management uses this non-GAAP measure to monitor the effectiveness of initiatives in place to optimize our global tax rate.

• Cash flow: Defined as net cash provided by operating activities reduced by expenditures for property additions. Cash flow does not represent the residual cash flow available for discretionary expenditures. We use this non-GAAP financial measure of cash flow to focus management and investors on the amount of cash available for debt repayment, dividend distributions, acquisition opportunities, and share repurchases once all of the Company’s business needs and obligations are met. Additionally, certain performance-based compensation includes a component of this non-GAAP measure.

These measures have not been calculated in accordance with GAAP and should not be viewed as a substitute for GAAP reporting measures.

Significant items impacting comparability

Mark-to-market accounting for pension plans, commodities and certain foreign currency contracts

We recognize mark-to-market adjustments for pension plans, commodity contracts, and certain foreign currency contracts as incurred. Actuarial gains/losses for pension plans are recognized in the year they occur. Changes between contract and market prices for commodities contracts and certain foreign currency contracts result in gains/losses that are recognized in the quarter they occur. We recorded a pre-tax mark-to-market benefit of $5 million and $44 million for the quarter and year-to-date periods ended June 30, 2018, respectively. Included within the aforementioned was a pre-tax mark-to-market benefit for pension plans of $2 million and $27 million for the quarter and year-to-date periods ended June 30, 2018, respectively. We also recorded a pre-tax mark-to-market benefit of $6 million and a pre-tax mark-to-market charge of $15 million for the quarter and year-to-date periods ended July 1, 2017, respectively. Included within the aforementioned was a pre-tax mark-to-market benefit for pension plans of $2 million and $3 million for the quarter and year-to-date periods ended July 1, 2017, respectively.

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Project K and cost reduction activities

Project K continued generating savings used to invest in key strategic areas of focus for the business. We recorded pre-tax charges related to this program of $5 million and $25 million for the quarter and year-to-date periods ended June 30, 2018, respectively. We also recorded pre-tax charges related to this program of $95 million and $237 million for the quarter and year-to-date periods ended July 1, 2017, respectively.

See the Restructuring and cost reduction activities section for more information.

Acquisitions

In October of 2017, the Company acquired Chicago Bar Company LLC, manufacturer of RXBAR, a high protein snack bar made of simple ingredients. In our North America Other reportable segment, for the quarter and year-to-date periods ended June 30, 2018, the acquisition added $59 million and $110 million, respectively, in net sales that impacted the comparability of our reported results.

In May of 2018, the Company acquired an incremental 1% ownership interest in Multipro, which along with concurrent changes to the shareholders' agreement, resulted in the Company now having a 51% controlling interest in and began consolidating Multipro, a leading distributor of a variety of food products in Nigeria and Ghana. In our Asia Pacific reportable segment, for the quarter and year-to-date periods ended June 30, 2018, the acquisition added $129 million in net sales that impacted the comparability of our reported results.

Gain on unconsolidated entities, net

In connection with the Multipro business combination, the Company recognized a one-time, non-cash gain on the disposition of our previously held equity interest in Multipro of $245 million. Additionally, the Company exercised its call option to acquire a 50% interest in Tolaram Africa Foods, PTE LTD, a holding company with a 49% equity interest in an affiliated food manufacturer, resulting in the Company have a 24.5% interest in the affiliated food manufacturer. In conjunction with the exercise, the Company recognized a one-time, non-cash loss of $45 million, which represents an other than temporary excess of cost over fair value of the investment. These amounts were recorded within Earnings (loss) from unconsolidated entities.

Foreign currency translation

We evaluate the operating results of our business on a currency-neutral basis. We determine currency-neutral operating results by dividing or multiplying, as appropriate, the current-period local currency operating results by the currency exchange rates used to translate our financial statements in the comparable prior-year period to determine what the current period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period.

Financial results

For the quarter ended June 30, 2018, our reported net sales improved by 5.9% due primarily to the inclusion of RXBAR and Multipro results. These impacts were partially offset by the previously announced list-price adjustments and other impacts in U.S. Snacks related to its transition from DSD as well as unfavorable foreign currency. Currency-neutral net sales increased 6.3% after eliminating the impact of foreign currency. Organic net sales decreased 0.4% from the prior year after also excluding the impact of acquisitions.

Second quarter reported operating profit and operating profit margin increased versus the year-ago quarter, driven by productivity savings and higher net sales, as well as by significantly lower restructuring charges and favorable mark-to-market impacts year-on-year. Currency-neutral adjusted operating profit increased, owing to the higher sales growth and strong productivity savings related to the Project K restructuring program. These savings, driven primarily by last summer's exit and elimination of overhead from its U.S. Snacks segment's Direct Store Delivery system, more than offset a substantial year-on-year increase in advertising and promotion investment, as well as various cost pressures, including a significant rise in freight costs.

Reported diluted EPS of $1.71 for the quarter was up 114% compared to the prior year of $.80 due to a one-time non-cash gain related to our transaction in West Africa, lower restructuring charges, a lower effective tax rate, and favorable mark-to-market adjustments year-on-year. Currency-neutral adjusted diluted EPS of $1.12 increased by 15.5% compared to prior year of $.97, after excluding the impact of mark-to-market and restructuring.

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Reconciliation of certain non-GAAP Financial Measures

	Quarter ended						Year-to-date period ended
Consolidated results (dollars in millions, except per share data)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Reported net income	$	596		$	283		$	1,040		$	549
Mark-to-market (pre-tax)	5			6			44			(15		)
Project K and cost reduction activities (pre-tax)	(5		)	(95		)	(25		)	(237		)
Income tax impact applicable to adjustments, net*	—			31			(3		)	81
Gain from unconsolidated entities, net	200			—			200			—
Adjusted net income	$	396		$	341		$	824		$	720
Foreign currency impact	4						17
Currency-neutral adjusted net income	$	392		$	341		$	807		$	720
Reported diluted EPS	$	1.71		$	0.80		$	2.99		$	1.56
Mark-to-market (pre-tax)	0.01			0.02			0.13			(0.04		)
Project K and cost reduction activities (pre-tax)	(0.01		)	(0.27		)	(0.07		)	(0.67		)
Income tax impact applicable to adjustments, net*	—			0.08			(0.01		)	0.23
Gain from unconsolidated entities, net	0.57			—			0.57			—
Adjusted diluted EPS	$	1.14		$	0.97		$	2.37		$	2.04
Foreign currency impact	0.02						0.05
Currency-neutral adjusted diluted EPS	$	1.12		$	0.97		$	2.32		$	2.04
Currency-neutral adjusted diluted EPS growth	15.5		%				13.7		%

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

For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.

39

Net sales and operating profit

The following tables provide an analysis of net sales and operating profit performance for the second quarter of 2018 versus 2017:

Quarter ended June 30, 2018
(millions)	U.S. Snacks			U.S. Morning Foods			U.S. Specialty Channels			North America Other			Europe			Latin America			Asia Pacific			Corporate			Kellogg Consolidated
Reported net sales	$	745		$	643		$	277		$	462		$	621		$	239		$	373		$	—		$	3,360
Foreign currency impact on total business (inc)/dec	—			—			—			3			20			(13		)	(23		)	—			(13		)
Currency-neutral net sales	$	745		$	643		$	277		$	459		$	601		$	252		$	396		$	—		$	3,373
Acquisitions	—			—			—			59			—			—			129			—			188
Foreign currency impact on acquisitions (inc)/dec	—			—			—			—			—			—			23			—			23
Organic net sales	$	745		$	643		$	277		$	400		$	601		$	252		$	244		$	—		$	3,162
Quarter ended July 1, 2017
(millions)	U.S. Snacks			U.S. Morning Foods			U.S. Specialty Channels			North America Other			Europe			Latin America			Asia Pacific			Corporate			Kellogg Consolidated
Reported net sales	$	815		$	664		$	275		$	390		$	567		$	232		$	232		$	—		$	3,175
% change - 2018 vs. 2017:
Reported growth	(8.6		)%	(3.2		)%	1.1		%	18.4		%	9.5		%	3.5		%	60.8		%	—		%	5.9		%
Foreign currency impact on total business (inc)/dec	—		%	—		%	—		%	0.9		%	3.6		%	(5.7		)%	(10.1		)%	—		%	(0.4		)%
Currency-neutral growth	(8.6		)%	(3.2		)%	1.1		%	17.5		%	5.9		%	9.2		%	70.9		%	—		%	6.3		%
Acquisitions	—		%	—		%	—		%	14.8		%	—		%	—		%	55.9		%	—		%	5.9		%
Foreign currency impact on acquisitions (inc)/dec	—		%	—		%	—		%	—		%	—		%	—		%	10.0		%	—		%	0.8		%
Organic growth	(8.6		)%	(3.2		)%	1.1		%	2.7		%	5.9		%	9.2		%	5.0		%	—		%	(0.4		)%

For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.

40

Quarter ended June 30, 2018
(millions)	U.S. Snacks			U.S. Morning Foods			U.S. Specialty Channels			North America Other			Europe			Latin America			Asia Pacific			Corporate			Kellogg Consolidated
Reported operating profit	$	111		$	138		$	60		$	76		$	97		$	20		$	28		$	(56	)	$	474
Mark-to-market	—			—			—			—			—			—			—			3			3
Project K and cost reduction activities	(3		)	(10		)	—			1			13			(2		)	(3		)	(1		)	(5		)
Adjusted operating profit	$	114		$	148		$	60		$	75		$	84		$	22		$	31		$	(58	)	$	476
Foreign currency impact	—			—			—			1			3			(1		)	(1		)	—			2
Currency-neutral adjusted operating profit	$	114		$	148		$	60		$	74		$	81		$	23		$	32		$	(58	)	$	474
Quarter ended July 1, 2017
(millions)	U.S. Snacks			U.S. Morning Foods			U.S. Specialty Channels			North America Other			Europe			Latin America			Asia Pacific			Corporate			Kellogg Consolidated
Reported operating profit	$	29		$	170		$	70		$	59		$	77		$	26		$	18		$	(64	)	$	385
Mark-to-market	—			—			—			—			—			—			—			5			5
Project K and cost reduction activities	(79		)	(1		)	(1		)	(2		)	(2		)	(3		)	(3		)	(7		)	(98		)
Adjusted operating profit	$	108		$	171		$	71		$	61		$	79		$	29		$	21		$	(62	)	$	478
% change - 2018 vs. 2017:
Reported growth	294.3		%	(18.5		)%	(15.3		)%	28.3		%	25.4		%	(20.4		)%	54.1		%	12.8		%	23.5		%
Mark-to-market	—		%	—		%	—		%	—		%	—		%	—		%	—		%	(2.3		)%	(0.9		)%
Project K and cost reduction activities	287.9		%	(4.9		)%	0.7		%	5.7		%	18.6		%	0.1		%	7.7		%	9.4		%	24.7		%
Adjusted growth	6.4		%	(13.6		)%	(16.0		)%	22.6		%	6.8		%	(20.5		)%	46.4		%	5.7		%	(0.3		)%
Foreign currency impact	—		%	—		%	—		%	0.4		%	3.8		%	(1.1		)%	(6.1		)%	0.3		%	0.4		%
Currency-neutral adjusted growth	6.4		%	(13.6		)%	(16.0		)%	22.2		%	3.0		%	(19.4		)%	52.5		%	5.4		%	(0.7		)%

For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.

U.S. Snacks

This segment consists of crackers, cookies, savory snacks, wholesome snacks and fruit-flavored snacks.

As reported and Currency-neutral net sales were 8.6% lower versus the comparable quarter due primarily to price/mix as a result of the year on year impact of list-price adjustments and rationalization of stock-keeping units related to the DSD exit during the second half of 2017. These impacts were partially offset by improved performance by key brands.

All of our ex-DSD categories experienced year over year gains in velocity during the second quarter, as we now have a stronger set of SKUs on the shelf which are being supported with brand-building.

The Big 3 crackers brands (Cheez-it, Club and Townhouse) collectively grew consumption and share during the second quarter of 2018. Pringles, which was never in DSD, grew both consumption and share during the second quarter lead by our core flavors and immediate-consumption pack-formats.

Wholesome snacks growth was lead by Rice Krispies Treats, which grew consumption and share during the quarter, driven by innovation and advertising.

As reported operating profit increased significantly due to lower Project K restructuring charges and overhead reductions in conjunction with our DSD transition partially offset by a significant increase in brand investment. Currency-neutral adjusted operating profit increased 6.4% after excluding the impact of restructuring charges.

41

U.S. Morning Foods

This segment consists of cereal and toaster pastries. As reported and Currency-neutral net sales declined 3.2% as a result of decreased volume on lower cereal consumption, partially offset by favorable pricing/mix.

During the quarter, our share in the cereal category stabilized, with our Core 6 cereal brands collectively resuming share growth. Special K grew consumption and share during the second quarter as a result of communication around its inner-strength positioning. Raisin Bran grew consumption and share during the quarter, aided by the launch of Raisin Bran Crunch with Bananas, and supported by advertising highlighting Raisin Bran's health attributes. The quarter was negatively impacted by a recall on co-manufactured Honey Smacks.

As reported operating profit decreased 18.5% due to higher restructuring charges, higher commercial investment, and lower net sales. Currency-neutral adjusted operating profit decreased 13.6% after excluding restructuring charges.

U.S. Specialty Channels

This segment is comprised of sales of most of our brands through channels such as foodservice, convenience stores, vending, and others. As reported and Currency-neutral net sales improved 1.1%, primarily the result of higher volume.

The Vending, Girl Scouts, and Convenience channels posted strong growth. Foodservice experienced a modest decline, particularly in K-12 schools and military.

As Reported operating profit decreased 15.3% due to a revised allocation of costs between U.S. operating segments. Currency-neutral adjusted operating profit decreased 16.0% after excluding the impact of restructuring charges.

North America Other

This segment is composed of our U.S. Frozen Foods, Kashi Company, Canada, and RXBAR businesses.

As reported net sales increased 18.4% due to the RXBAR acquisition, higher volume, favorable pricing/mix, and favorable foreign currency. Currency-neutral net sales increased 17.5% after excluding the impact of foreign currency. Organic net sales increased 2.7% from the prior year after also excluding RXBAR results, led by growth momentum in U.S. Frozen Foods.

RXBAR consumption and share grew as we continued to expand distribution of core bars.

U.S. Frozen Foods reported increased net sales on higher volume and favorable price/mix. EggoandMorningstar Farmsboth grew share and consumption during the quarter, benefiting from renovated food and packaging, new innovations, and a focus on core offerings.

In Canada, we posted sales growth during the quarter and we gained share in most of our categories.

As Reported operating profit increased 28.3% due to lower restructuring charges, Project K savings and favorable foreign currency. Currency-neutral adjusted operating profit increased 22.2% after excluding the impact of restructuring charges and foreign currency.

Europe

As Reported net sales increased 9.5% due to favorable foreign currency and higher volume partially offset by unfavorable pricing/mix. Currency-neutral net sales increased 5.9% after excluding the impact of foreign currency.

Growth was led by Pringles, which lapped year-ago promotional disruptions in some markets. Pringlescontinued to grow across the region, well beyond the markets that experienced last year's disruption.

Cereal currency-neutral net sales declined due to softness in Continental Europe, most notably France and Benelux. The U.K. cereal business grew share during the quarter, continuing its improving trend with growth in several brands.

Emerging markets were also a driver of Europe's growth in both cereal and snacks, led by Egypt, Russia, and the Middle East.

42

As reported operating profit increased 25.4%, despite a double-digit increase in brand investment, due primarily to sales growth, lower restructuring charges and favorable foreign currency. Currency-neutral adjusted operating profit increased 3.0% after excluding the impact of restructuring charges and foreign currency.

Latin America

As reported net sales improved 3.5% due to increased volume partially offset by unfavorable pricing/mix and foreign currency. Currency-neutral net sales increased 9.2% after excluding the impact of foreign currency.

Mexico posted its ninth straight quarter of organic net sales growth, growing consumption and share in cereal, while snacks growth was led by Pringles.

Parati continued to grow consumption and share in cookies and crackers in Brazil.

We continued to see good recovery in our Caribbean/Central America business.

As reported operating profit decreased 20.4% due primarily to a substantial increase in advertising and promotion investment as well as costs related to the Brazilian trucking strike. Currency-neutral adjusted operating profit decreased 19.4% after excluding the impact of foreign currency translation and restructuring charges. 

Asia Pacific

As reported net sales improved 61% due to higher volume from the consolidation of Multipro results and favorable price/mix partially offset by unfavorable foreign currency. Currency-neutral net sales increased 71%, after excluding the impact of foreign currency. Organic net sales increased 5.0% after also excluding the impact of Multipro.

Our Pringles business posted strong growth for the quarter in Asia Pacific. We continue to expand product offerings in certain markets while launching new pack-formats in others, extending the brand's distribution reach.

Emerging markets cereal grew during the quarter, with double-digit growth in India.

Australia, our largest market in the region, posted higher net sales for the quarter, driven by consumption growth in cereal.

As reported operating profit increased 54% due to the consolidation of Multipro results, higher organic net sales, and productivity and brand-building efficiencies as a result of Project K and ZBB initiatives. Currency-neutral adjusted operating profit improved 53% after excluding the impact of restructuring and foreign currency.

Corporate

As reported operating profit increased $8 million due primarily to lower restructuring charges. Currency-neutral adjusted operating profit improved $4 million after excluding the impact of mark-to-market, restructuring charges,and foreign currency.

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Year-to-date period ended June 30, 2018
(millions)	U.S. Snacks			U.S. Morning Foods			U.S. Specialty Channels			North America Other			Europe			Latin America			Asia Pacific			Corporate			Kellogg Consolidated
Reported net sales	$	1,507		$	1,334		$	675		$	941		$	1,208		$	471		$	625		$	—		$	6,761
Foreign currency impact on total business (inc)/dec	—			—			—			8			82			(9		)	(12		)	—			69
Currency-neutral net sales	$	1,507		$	1,334		$	675		$	933		$	1,126		$	480		$	637		$	—		$	6,692
Acquisitions	—			—			—			110			—			—			129			—			239
Foreign currency impact on acquisitions (inc)/dec	—			—			—			—			—			—			23			—			23
Organic net sales	$	1,507		$	1,334		$	675		$	823		$	1,126		$	480		$	485		$	—		$	6,430
Year-to-date period ended July 1, 2017
(millions)	U.S. Snacks			U.S. Morning Foods			U.S. Specialty Channels			North America Other			Europe			Latin America			Asia Pacific			Corporate			Kellogg Consolidated
Reported net sales	$	1,610		$	1,372		$	668		$	782		$	1,080		$	452		$	459		$	—		$	6,423
% change - 2018 vs. 2017:
Reported growth	(6.4		)%	(2.8		)%	1.2		%	20.2		%	11.8		%	4.4		%	36.2		%	—		%	5.3		%
Foreign currency impact on total business (inc)/dec	—		%	—		%	—		%	1.0		%	7.6		%	(2.0		)%	(2.7		)%	—		%	1.1		%
Currency-neutral growth	(6.4		)%	(2.8		)%	1.2		%	19.2		%	4.2		%	6.4		%	38.9		%	—		%	4.2		%
Acquisitions	—		%	—		%	—		%	14.0		%	—		%	—		%	28.2		%	—		%	3.7		%
Foreign currency impact on acquisitions (inc)/dec	—		%	—		%	—		%	—		%	—		%	—		%	5.1		%	—		%	0.4		%
Organic growth	(6.4		)%	(2.8		)%	1.2		%	5.2		%	4.2		%	6.4		%	5.6		%	—		%	0.1		%

For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.

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Year-to-date period ended June 30, 2018
(millions)	U.S. Snacks			U.S. Morning Foods			U.S. Specialty Channels			North America Other			Europe			Latin America			Asia Pacific			Corporate			Kellogg Consolidated
Reported operating profit	$	213		$	288		$	140		$	143		$	171		$	42		$	55		$	(68	)	$	984
Mark-to-market	—			—			—			—			—			—			—			33			33
Project K and cost reduction activities	(9		)	(12		)	—			(1		)	6			(4		)	(3		)	(2		)	(25		)
Adjusted operating profit	$	222		$	300		$	140		$	144		$	165		$	46		$	58		$	(99	)	$	976
Foreign currency impact	—			—			—			1			11			—			—			1			13
Currency-neutral adjusted operating profit	$	222		$	300		$	140		$	143		$	154		$	46		$	58		$	(100	)	$	963
Year-to-date period ended July 1, 2017
(millions)	U.S. Snacks			U.S. Morning Foods			U.S. Specialty Channels			North America Other			Europe			Latin America			Asia Pacific			Corporate			Kellogg Consolidated
Reported operating profit	$	(7	)	$	327		$	166		$	108		$	143		$	59		$	40		$	(171	)	$	665
Mark-to-market	—			—			—			—			—			—			—			(42		)	(42		)
Project K and cost reduction activities	(199		)	(2		)	(1		)	(9		)	(8		)	(4		)	(4		)	(9		)	(236		)
Adjusted operating profit	$	192		$	329		$	167		$	117		$	151		$	63		$	44		$	(120	)	$	943
% change - 2018 vs. 2017:
Reported growth	2,883.9		%	(11.9		)%	(15.8		)%	32.1		%	19.1		%	(27.6		)%	38.6		%	60.1		%	48.1		%
Mark-to-market	—		%	—		%	—		%	—		%	—		%	—		%	—		%	38.7		%	13.5		%
Project K and cost reduction activities	2,867.6		%	(3.0		)%	0.3		%	9.6		%	10.0		%	(1.6		)%	5.0		%	4.6		%	31.1		%
Adjusted growth	16.3		%	(8.9		)%	(16.1		)%	22.5		%	9.1		%	(26.0		)%	33.6		%	16.8		%	3.5		%
Foreign currency impact	—		%	—		%	—		%	0.7		%	7.0		%	0.7		%	(0.5		)%	1.2		%	1.4		%
Currency-neutral adjusted growth	16.3		%	(8.9		)%	(16.1		)%	21.8		%	2.1		%	(26.7		)%	34.1		%	15.6		%	2.1		%

For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.

U.S. Snacks

This segment consists of crackers, cookies, savory snacks, wholesome snacks and fruit-flavored snacks.

As reported and Currency-neutral net sales were 6.4% lower versus the comparable year-to-date period due primarily to price/mix as a result of the year on year impact of list-price adjustments and rationalization of stock-keeping units related to the DSD exit during the second half of 2017. These impacts were partially offset by offset by improved performance by key brands.

All of our ex-DSD categories experienced year over year gains in velocity during the first half, as we now have a stronger set of SKUs on the shelf which are being supported with brand-building.

The Big 3 crackers brands (Cheez-it, Club and Townhouse) collectively returned to consumption and share growth during the first half of 2018. Pringles, which was never in DSD, grew both consumption and share during the first half of 2018 as a result of our successful flavor-stacking campaign, involving both media and in-store activation, as well as immediate-consumption pack-formats.

Wholesome snacks growth was lead by Rice Krispies Treats, which grew consumption and share during the first half of 2018, driven by innovation and advertising.

As reported operating profit increased significantly due to lower Project K restructuring charges and overhead reductions in conjunction with our DSD transition partially offset by a significant increase in brand investment. Currency-neutral adjusted operating profit increased 16.3% after excluding the impact of restructuring charges.

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U.S. Morning Foods

This segment consists of cereal and toaster pastries. As reported and Currency-neutral net sales declined 2.8% as a result of decreased volume on lower cereal consumption, partially offset by favorable pricing/mix.

A focus on food news and brand communication in the adult-oriented Health & Wellness segment helped moderate our declines from 2017. Our share in the cereal category stabilized during the second quarter, with our Core 6 cereal brands collectively resuming share growth. Special K grew consumption and share during the first half of the year as a result of communication around its inner-strength positioning. The second quarter was negatively impacted by a recall on co-manufactured Honey Smacks.

As reported operating profit decreased 11.9% due to higher restructuring charges and lower net sales. Currency-neutral adjusted operating profit decreased 8.9% after excluding restructuring charges.

U.S. Specialty Channels

This segment is comprised of sales of most of our brands through channels such as foodservice, convenience stores, vending, and others. As reported and Currency-neutral net sales improved 1.2% as a result of higher volume and improved pricing/mix.

The Vending, Convenience, and Girls Scouts channels posted strong growth. Foodservice posted a modest decline, against a strong first half of 2017.

As Reported operating profit decreased 15.8% due to a revised allocation of costs between U.S. operating segments. Currency-neutral adjusted operating profit decreased 16.1% after excluding the impact of restructuring charges.

North America Other

This segment is composed of our U.S. Frozen Foods, Kashi Company, Canada, and RXBAR businesses.

As reported net sales increased 20.2% due to the RXBAR acquisition, higher volume, favorable pricing/mix, and favorable foreign currency. Currency-neutral net sales increased 19.2% after excluding the impact of foreign currency. Organic net sales increased 5.2% from the prior year after also excluding RXBAR results, led by growth momentum in U.S. Frozen Foods.

RXBAR consumption and share grew as we continued to expand distribution of core bars.

U.S. Frozen Foods reported increased net sales on higher volume and favorable price/mix. EggoandMorningstar Farmsboth grew share and consumption during the first half of the year, benefiting from renovated food and packaging, new innovations, and a focus on core offerings.

In Canada, we posted sales growth during the first half of 2018 on higher volume as we gained share in most of our categories.

As Reported operating profit increased 32.1% due to lower restructuring charges, Project K savings and favorable foreign currency. Currency-neutral adjusted operating profit increased 21.8% after excluding the impact of restructuring charges and foreign currency.

Europe

As Reported net sales increased 11.8% due to favorable foreign currency and higher volume partially offset by unfavorable pricing/mix. Currency-neutral net sales increased 4.2% after excluding the impact of foreign currency.

Growth was led by Pringles, which lapped year-ago promotional disruptions in some markets. Pringlescontinued to grow across the region, well beyond the markets that experienced last year's disruption.

Cereal currency-neutral net sales declined modestly due to softness in Northern Europe, but trends continue to improve. The U.K. cereal business grew consumption and share during the first half, continuing its improving trend with growth in several brands.

Emerging markets were also a driver of Europe's growth in both cereal and snacks, led by Egypt and Russia.

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As reported operating profit increased 19.1% due primarily to sales growth and productivity saving which more than offset a significant increase in Brand Building. The first half also benefited from lower restructuring charges and favorable foreign currency. Currency-neutral adjusted operating profit increased 2.1% after excluding the impact of restructuring charges and foreign currency.

Latin America

As reported net sales improved 4.4% due to increased volume, favorable pricing/mix and favorable foreign currency. Currency-neutral net sales increased 6.4% after excluding the impact of foreign currency.

Mexico posted net sales growth during the year-to-date period, growing consumption and share in cereal, while snacks growth was led by Pringles. Mercosur posted double-digit growth driven by cereal, Pringles, and Parati. Parati continued to grow consumption and share in cookies and crackers in Brazil, and we continue to leverage its presence and expertise in high-frequency stores.

As reported operating profit decreased 27.6%, primarily due to a double-digit increase in Brand Building investment, the expected negative impact of transactional currency exchange on cost of goods sold in the first quarter , and costs related to a Brazilian trucking strike in the second quarter. The positive impact of foreign currency translation was mostly offset by the higher restructuring charges.  Currency-neutral adjusted operating profit decreased 26.7%, after excluding the impact of restructuring charges and foreign currency.

Asia Pacific

As reported net sales improved 36% due to the consolidation of Multipro results and favorable foreign currency partially offset by unfavorable price/mix. Currency-neutral net sales increased 39%, after excluding the impact of foreign currency. Organic net sales increased 5.6% after also excluding the impact of Multipro.

Cereal and wholesome snacks businesses experienced growth across Asia and Africa, including double-digit growth in India, as well as growth in South East Asia and Korea. To achieve this growth, we are executing our emerging market cereal category development model: leveraging the Kellogg master brand, launching affordable and locally relevant innovation, offering the right price/pack combination across retail channels, and expanding the quantity and quality of our distribution.

Our Pringles business posted high single-digit growth for the first half in Asia Pacific. We continue to expand product offerings in certain markets while launching new pack-formats in others, extending the brand's distribution reach.

Australia, our largest market in the region, posted share gains during the first half, continuing its stabilization trend.

As reported operating profit increased 39% due to higher net sales, which include two months of Multipro results, lower restructuring charges, and productivity and brand-building efficiencies as a result of Project K and ZBB initiatives, partially offset by a double-digit increase in brand building. Currency-neutral adjusted operating profit improved 34% after excluding the impact of restructuring and foreign currency.

Corporate

As reported operating profit increased $103 million due primarily to the favorable impact of year on year mark-to-market costs, and lower restructuring costs. Currency-neutral adjusted operating profit improved $20 million after excluding the impact of mark-to-market, restructuring charges, and foreign currency.

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Margin performance

Margin performance for the quarter and year-to-date periods of 2018 versus 2017 is as follows:

Quarter	2018		2017		Change vs. prior year (pts.)
Reported gross margin (a)	36.0	%	38.5	%	(2.5	)
Mark-to-market (COGS)	—	%	0.1	%	(0.1	)
Project K and cost reduction activities (COGS)	0.2	%	(0.7	)%	0.9
Foreign currency impact	0.1	%	—	%	0.1
Currency-neutral adjusted gross margin	35.7	%	39.1	%	(3.4	)
Reported SG&A%	(21.9	)%	(26.4	)%	4.5
Mark-to-market (SG&A)	0.1	%	0.1	%	—
Project K and cost reduction activities (SG&A)	(0.4	)%	(2.5	)%	2.1
Foreign currency impact	—	%	—	%	—
Currency-neutral adjusted SG&A%	(21.6	)%	(24.0	)%	2.4
Reported operating margin	14.1	%	12.1	%	2.0
Mark-to-market	0.1	%	0.2	%	(0.1	)
Project K and cost reduction activities	(0.2	)%	(3.2	)%	3.0
Foreign currency impact	0.1	%	—	%	0.1
Currency-neutral adjusted operating margin	14.1	%	15.1	%	(1.0	)

For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.

(a) Reported gross profit as a percentage of net sales. Gross profit is equal to net sales less cost of goods sold.

Reported gross margin for the quarter was unfavorable 250 basis points due primarily to the impact of U.S. Snacks transition out of DSD distribution, unfavorable mix, the consolidation of Multipro results, a substantial year-over-year increase in freight costs, and unfavorable mark-to-market impacts. The U.S. Snacks transition out of DSD distribution reflects the elimination of the list price premium, as DSD services are no longer provided, and the inclusion of logistics costs in COGS in a warehouse distribution model. Logistics costs were expensed to SG&A in the DSD model. These impacts were mitigated somewhat by lower restructuring charges and the impact of foreign currency. Currency-neutral adjusted gross margin was unfavorable 340 basis points compared to the second quarter of 2017 after eliminating the impact of mark-to-market, restructuring, and foreign currency.

Reported SG&A% for the quarter was favorable 450 basis points due primarily to overhead savings realized from Project K and lower Project K restructuring charges. Currency-neutral adjusted SG&A% was favorable 240 basis points after excluding the impact of restructuring.

Reported operating margin for the quarter was favorable 200 basis points due to significantly lower restructuring charges as well as productivity savings from Project K restructuring, which includes this year's exit from its U.S. Snacks segment's Direct Store Delivery sales and delivery system. These savings more than offset a substantial year-over-year increase in advertising and promotion investment. Currency-neutral adjusted operating margin was unfavorable 100 basis points after excluding the impact of mark-to-market, restructuring, and foreign currency.

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Year-to-date	2018		2017		Change vs. prior year (pts.)
Reported gross margin (a)	36.4	%	37.1	%	(0.7	)
Mark-to-market (COGS)	0.5	%	(0.6	)%	1.1
Project K and cost reduction activities (COGS)	(0.2	)%	(0.6	)%	0.4
Foreign currency impact	0.1	%	—	%	0.1
Currency-neutral adjusted gross margin	36.0	%	38.3	%	(2.3	)
Reported SG&A%	(21.8	)%	(26.7	)%	4.9
Mark-to-market (SG&A)	—	%	—	%	—
Project K and cost reduction activities (SG&A)	(0.1	)%	(3.1	)%	3.0
Foreign currency impact	(0.1	)%	—	%	(0.1	)
Currency-neutral adjusted SG&A%	(21.6	)%	(23.6	)%	2.0
Reported operating margin	14.6	%	10.4	%	4.2
Mark-to-market	0.5	%	(0.6	)%	1.1
Project K and cost reduction activities	(0.3	)%	(3.7	)%	3.4
Foreign currency impact	—	%	—	%	—
Currency-neutral adjusted operating margin	14.4	%	14.7	%	(0.3	)

For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.

(a) Reported gross profit as a percentage of net sales. Gross profit is equal to net sales less cost of goods sold.

Reported gross margin for the year-to-date period was unfavorable 70 basis points due primarily to the impact of U.S. Snacks transition out of DSD distribution, unfavorable mix, the impact of consolidating the Multipro business, and a substantial year-over-year increase in freight costs. The former reflects the elimination of the list price premium, as DSD services are no longer provided, and the inclusion of logistics costs in COGS in a warehouse distribution model. Logistics costs were expensed to SG&A in the DSD model. These impacts were partially mitigated by the favorable year-over-year impacts of mark-to-market, restructuring, and foreign currency. Currency-neutral adjusted gross margin was unfavorable 230 basis points compared to the first half of 2017 after eliminating the impact of mark-to-market, restructuring, and foreign currency.

Reported SG&A% for the year-to-date period was favorable 490 basis points due primarily to overhead savings realized from Project K and lower Project K restructuring charges, more than offsetting a double-digit increase in Brand Building. Currency-neutral adjusted SG&A% was favorable 200 basis points after excluding the impact of restructuring and foreign currency.

Reported operating margin for the year-to-date period was favorable 420 basis points due to significantly lower restructuring charges, favorable market-to-market impact, as well as productivity savings from Project K restructuring, which includes this year's exit from its U.S. Snacks segment's Direct Store Delivery sales and delivery system. These savings more than offset a substantial year-over-year increase in advertising and promotion investment. Currency-neutral adjusted operating margin was unfavorable 30 basis points after excluding the impact of mark-to-market and restructuring.

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Our currency-neutral adjusted gross profit, currency-neutral adjusted SG&A, and currency-neutral adjusted operating profit measures are reconciled to the directly comparable GAAP measures as follows:

	Quarter ended						Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Reported gross profit (a)	$	1,209		$	1,225		$	2,461		$	2,385
Mark-to-market (COGS)	2			6			32			(39		)
Project K and cost reduction activities (COGS)	4			(23		)	(9		)	(36		)
Foreign currency impact	—			—			29			—
Currency-neutral adjusted gross profit	$	1,203		$	1,242		$	2,409		$	2,460
Reported SG&A	$	735		$	840		$	1,477		$	1,720
Mark-to-market (SG&A)	(1		)	1			(1		)	3
Project K and cost reduction activities (SG&A)	9			75			16			200
Foreign currency impact	(2		)	—			16			—
Currency-neutral adjusted SG&A	$	729		$	764		$	1,446		$	1,517
Reported operating profit	$	474		$	385		$	984		$	665
Mark-to-market	3			5			33			(42		)
Project K and cost reduction activities	(5		)	(98		)	(25		)	(236		)
Foreign currency impact	2			—			13			—
Currency-neutral adjusted operating profit	$	474		$	478		$	963		$	943

For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.

(a) Reported gross profit as a percentage of net sales. Gross profit is equal to net sales less cost of goods sold.

Restructuring and cost reduction activities

We view our restructuring and cost reduction activities as part of our operating principles to provide greater visibility in achieving our long-term profit growth targets. Initiatives undertaken are currently expected to recover cash implementation costs within a five-year period of completion. Upon completion (or as each major stage is completed in the case of multi-year programs), the project begins to deliver cash savings and/or reduced depreciation.

Project K

Project K is expected to continue generating savings that may be invested in key strategic areas of focus for the business to drive future growth or utilized to achieve our growth initiatives.

Since inception, Project K has reduced the Company’s cost structure, and is expected to provide enduring benefits, including an optimized supply chain infrastructure, an efficient global business services model, a global focus on categories, increased agility from a more efficient organization design, and improved effectiveness in go-to-market models.  These benefits are intended to strengthen existing businesses in core markets, increase growth in developing and emerging markets, and drive an increased level of value-added innovation.

We currently anticipate that Project K will result in total pre-tax charges, once all phases are approved and implemented, on the lower end of a range of $1.5 to $1.6 billion, with after-tax cash costs, including incremental capital investments, estimated to be approximately $1.1 billion. Cash expenditures of approximately $950 million have been incurred through the end of fiscal year 2017. Total cash expenditures, as defined, are expected to be approximately $175 million for 2018. Total charges for Project K in 2018 are expected to be approximately $90 to $110 million.

We expect annual cost savings generated from Project K will be on the higher end of a range of approximately $600 to $700 million in 2019. The savings will be realized primarily in selling, general and administrative expense with additional benefit realized in gross profit as cost of goods sold savings are partially offset by negative volume and price impacts resulting from go-to-market business model changes. The overall savings profile of the project reflects our go-to-market initiatives that will impact both selling, general and administrative expense and gross profit. We have realized approximately $480 million of annual savings through the end of 2017. Cost savings have been utilized to increase margins and be strategically invested in areas such as in-store execution, sales capabilities, including adding sales representatives, re-establishing the Kashi business unit, and in the design and quality of our

50

products. We have also invested in production capacity in developing and emerging markets, and in global category teams.

We funded much of the initial cash requirements for Project K through improved working capital. We are now able to fund much of the cash costs for the project through cash on hand as we have started to realize cash savings from the project.

We also expect that the project will have an impact on our consolidated effective income tax rate during the execution of the project due to the timing of charges being taken in different tax jurisdictions. The impact of this project on our consolidated effective income tax rate will be excluded from the adjusted income tax rate that will be disclosed on a quarterly basis.

We will complete the implementation of Project K in 2018, with annual savings expected to increase through 2019. Project charges, after-tax cash costs and annual savings remain in line with expectations.

Refer to Note 4 within Notes to Consolidated Financial Statements for further information related to Project K and other restructuring activities.

Foreign currency translation

The reporting currency for our financial statements is the U.S. dollar. Certain of our assets, liabilities, expenses and revenues are denominated in currencies other than the U.S. dollar, including the euro, British pound, Australian dollar, Canadian dollar, Mexican peso, Russian ruble, Brazilian Real, and Nigerian Naira. To prepare our consolidated financial statements, we must translate those assets, liabilities, expenses and revenues into U.S. dollars at the applicable exchange rates. As a result, increases and decreases in the value of the U.S. dollar against these other currencies will affect the amount of these items in our consolidated financial statements, even if their value has not changed in their original currency. This could have a significant impact on our results if such increase or decrease in the value of the U.S. dollar is substantial.

Interest expense

For the year-to-date periods ended June 30, 2018 and July 1, 2017, interest expense was $141 million and $124 million, respectively. The increase from the comparable prior year period is due to higher interest rates on floating rate debt as well as Senior Notes issued in November 2017 in conjunction with our acquisition of the RXBAR business, and Senior Notes issued in May 2018 in conjunction with our purchase of additional equity interests in Tolaram Africa Foods, PTE LTD and Multipro.

Income taxes

Our reported effective tax rate for the quarters ended June 30, 2018 and July 1, 2017 was 15% and 26%, respectively. The effective tax rate for the second quarter benefited from the reduction of the U.S. corporate tax rate as well as a tax benefit of $31 million attributable to discretionary pension contributions made in the second quarter of 2018 totaling $250 million, which are designated as 2017 tax year contributions.

The reported effective tax rate for the year-to-date periods ended June 30, 2018 and July 1, 2017 was 14% and 21%, respectively. For the quarter ended June 30, 2018, the effective tax rate benefited from a discretionary pension contribution during the second quarter of 2018, a $44 million discrete tax benefit as a result of the remeasurement of deferred taxes following a legal entity restructuring, as well as the reduction in the U.S. corporate tax rate effective at the beginning of 2018. These impacts were mitigated somewhat by an increased weighting of taxable income in higher tax rate jurisdictions versus the prior year. The effective tax rate for the year-to-date period ended July 1, 2017, benefited from a deferred tax benefit of $38 million resulting from the intercompany transfer of intellectual property.

The adjusted effective income tax rate for the quarters ended June 30, 2018 and July 1, 2017 was 15% and 28%, respectively. The adjusted effective income tax rate for the year-to-date periods ended June 30, 2018 and July 1, 2017 was 14% and 24%, respectively. The decreases from the comparable prior year periods are due primarily to the reduction in the U.S. corporate tax rate.

For the full year 2018, we currently expect the effective income tax rate to be approximately 18-19%. Fluctuations in foreign currency exchange rates could impact the expected effective income tax rate as it is dependent upon U.S. dollar earnings of foreign subsidiaries doing business in various countries with differing statutory rates. Additionally, the rate could be impacted by tax legislation and if pending uncertain tax matters, including tax positions that could be affected by planning initiatives, are resolved more or less favorably than we currently expect.

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The following table provides a reconciliation of as reported to adjusted income taxes and effective tax rate for the quarter and year-to-date periods ended June 30, 2018 and July 1, 2017.

	Quarter ended						Year-to-date period ended
Consolidated results (dollars in millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Reported income taxes	$	70		$	102		$	137		$	145
Mark-to-market	1			3			8			(1		)
Project K and cost reduction activities	(1		)	(34		)	(5		)	(80		)
Adjusted income taxes	$	70		$	133		$	134		$	226
Reported effective income tax rate	15.0		%	26.4		%	14.0		%	20.9		%
Mark-to-market	—		%	0.1		%	0.2		%	0.2		%
Project K and cost reduction activities	(0.1		)%	(1.9		)%	(0.2		)%	(3.3		)%
Adjusted effective income tax rate	15.1		%	28.2		%	14.0		%	24.0		%

For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.

Liquidity and capital resources

Our principal source of liquidity is operating cash flows supplemented by borrowings for major acquisitions and other significant transactions. Our cash-generating capability is one of our fundamental strengths and provides us with substantial financial flexibility in meeting operating and investing needs.

We have historically reported negative working capital primarily as the result of our focus to improve core working capital by reducing our levels of trade receivables and inventory while extending the timing of payment of our trade payables.  The impacts of the extended customer terms programs and the of monetization,and securitization programs are included in our calculation of core working capital and are largely offsetting. Core working capital was improved by the extension of supplier payment terms. These programs are all part of our ongoing working capital management.

We have a substantial amount of indebtedness which results in current maturities of long-term debt and notes payable which can have a significant impact on working capital as a result of the timing of these required payments. These factors, coupled with the use of our ongoing cash flows from operations to service our debt obligations, pay dividends, fund acquisition opportunities, and repurchase our common stock, reduce our working capital amounts. We had negative working capital of $0.7 billion and $1.5 billion as of June 30, 2018 and July 1, 2017, respectively.

We believe that our operating cash flows, together with our credit facilities and other available debt financing, will be adequate to meet our operating, investing and financing needs in the foreseeable future. However, there can be no assurance that volatility and/or disruption in the global capital and credit markets will not impair our ability to access these markets on terms acceptable to us, or at all.

The following table sets forth a summary of our cash flows:

	Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017
Net cash provided by (used in):
Operating activities	$	447		$	92
Investing activities	(661		)	300
Financing activities	162			(372		)
Effect of exchange rates on cash and cash equivalents	28			34
Net increase (decrease) in cash and cash equivalents	$	(24	)	$	54

Operating activities

The principal source of our operating cash flow is net earnings, meaning cash receipts from the sale of our products, net of costs to manufacture and market our products.

52

Net cash provided by our operating activities for the year-to-date period ended June 30, 2018, totaled $447 million, an increase of $355 million over the same period in 2017, as restated, due primarily to the termination of our accounts receivable securitization program at the end of 2017. Collections of deferred purchase price on securitized trade receivables totaled $568 million in the first half of 2017 versus zero in the current period. The year-over-year impact of the accounts receivable securitization program was mitigated somewhat by discretionary pension contributions totaling $250 million during the second quarter of 2018. Exclusive of the impact of accounting changes and the discretionary pension contribution in 2018, year-over-year cash flow increased.

Our cash conversion cycle (defined as days of inventory and trade receivables outstanding less days of trade payables outstanding, based on a trailing 12 month average), is approximately negative 6 days and negative one day for the 12 month periods ended June 30, 2018 and July 1, 2017, respectively. Compared with the 12 month period ended July 1, 2017, the 2018 cash conversion cycle was positively impacted by an increase in the days of trade payables outstanding attributable to extended supplier payment terms.

Our pension and other postretirement benefit plan contributions amounted to $274 million and $28 million for the year-to-date periods ended June 30, 2018 and July 1, 2017, respectively. For the full year 2018, we currently expect that our contributions to pension and other postretirement plans will total approximately $287 million. Actual 2018 contributions could be different from our current projections, as influenced by potential discretionary funding of our benefit trusts versus other competing investment priorities.

We measure cash flow as net cash provided by operating activities reduced by expenditures for property additions. We use this non-GAAP financial measure of cash flow to focus management and investors on the amount of cash available for debt repayment, dividend distributions, acquisition opportunities, and share repurchases. Our cash flow metric is reconciled to the most comparable GAAP measure, as follows:

	Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017
Net cash provided by operating activities	$	447		$	92
Additions to properties	(270		)	(268		)
Cash flow	$	177		$	(176	)

Investing activities

Our net cash used in investing activities totaled $661 million for the year-to-date period ended June 30, 2018 compared to cash provided of $300 million in the same period of 2017, as restated. The decrease from the prior year was primarily due to the acquisition of an ownership interest in TAF for $381 million during the second quarter of 2018, and the impact of collections of deferred purchase price on securitized trade receivables during the first half of 2017. This program was terminated at the end of 2017.

Financing activities

Our net cash provided by financing activities for the year-to-date period ended June 30, 2018 totaled $162 million compared to net cash used of $372 million during the first half of 2017. The difference is primarily due to an increase in proceeds from net debt issuance during the first half of 2018 versus the comparable prior year period.

In May 2018, we issued $600 million of ten-year 4.30% Senior Notes due 2028 and $400 million of three-year 3.25% Senior Notes due 2021, resulting in aggregate net proceeds after debt discount of $994 million. The proceeds from these Notes were used for general corporate purposes, including the repayment of our $400 million,seven-year 3.25% U.S. Dollar Notes due 2018 at maturity, and the repayment of a portion of our commercial paper borrowings used to finance our acquisition of ownership interests in TAF and Multipro.

In November 2017, we issued $600 million of ten-year 3.4% Senior Notes to pay down commercial paper issued in conjunction with the purchase of Chicago Bar Co., LLC, manufacturer of RXBAR.

In May 2017, we issued €600 million of five-year 0.80% Euro Notes due 2022 and repaid our 1.75% fixed rate $400 million U.S. Dollar Notes due 2017 at maturity. Additionally, we repaid our 2.05% fixed rate Cdn. $300 million Canadian Dollar Notes at maturity.

53

In December 2017, the board of directors approved a new authorization to repurchase up to $1.5 billion in shares beginning in 2018 through December 2019. Total purchases for the year-to-date period ended June 30, 2018, were 1 million shares for $50 million. Total purchases for the year-to-date period ended July 1, 2017, were 6 million shares for $435 million, of which $390 million was paid during the year-to-date period and $45 million was payable at July 1, 2017.

We paid cash dividends of $374 million in the year-to-date period ended June 30, 2018, compared to $363 million during the same period in 2017. The increase in dividends paid reflects our third quarter 2017 increase in the quarterly dividend to $.54 per common share from the previous $.52 per common share. In July 2018, the board of directors declared a dividend of $.56 per common share, payable on September 17, 2018 to shareholders of record at the close of business on September 4, 2018.  The dividend is broadly in line with our current plan to maintain our long-term dividend pay-out of approximately 50% of adjusted net income.

We entered into an unsecured Five-Year Credit Agreement in February 2014, allowing us to borrow, on a revolving credit basis, up to $2.0 billion and expiring in 2019. In January 2018, we entered into an unsecured Five-Year Credit Agreement to replace the existing agreement allowing us to borrow up to $1.5 billion, on a revolving basis.

In January 2018, we entered into an unsecured 364-Day Credit Agreement to borrow, on a revolving credit basis, up to $1.0 billion at any time outstanding, to replace the $800 million 364-day facility that expired in January 2018.  The new credit facilities contains customary covenants and warranties, including specified restrictions on indebtedness, liens and a specified interest expense coverage ratio.  If an event of default occurs, then, to the extent permitted, the administrative agent may terminate the commitments under the credit facility, accelerate any outstanding loans under the agreement, and demand the deposit of cash collateral equal to the lender's letter of credit exposure plus interest.  There are no borrowings outstanding under the new credit facilities.

We are in compliance with all debt covenants. We continue to believe that we will be able to meet our interest and principal repayment obligations and maintain our debt covenants for the foreseeable future. We expect our access to public debt and commercial paper markets, along with operating cash flows, will be adequate to meet future operating, investing and financing needs, including the pursuit of selected acquisitions.

During 2016, we initiated a program in which customers could extend their payment terms in exchange for the elimination of early payment discounts (Extended Terms Program). In order to mitigate the net working capital impact of the Extended Terms Program for discrete customers, we entered into agreements to sell, on a revolving basis, certain trade accounts receivable balances to third party financial institutions (Monetization Programs). Transfers under the Monetization Programs are accounted for as sales of receivables resulting in the receivables being de-recognized from our Consolidated Balance Sheet. The Monetization Programs provide for the continuing sale of certain receivables on a revolving basis until terminated by either party; however the maximum funding from receivables that may be sold at any time is currently $1,033 million (increased from $988 million as of March 31, 2018, reflecting the execution of an amendment to the second monetization program on June 26, 2018), but may be increased as additional financial institutions are added to the Monetization Programs. Accounts receivable sold of $936 million and $601 million remained outstanding under this arrangement as of June 30, 2018 and December 30, 2017, respectively.

Previously, in order to mitigate the net working capital impact of the Extended Terms Program for certain customers, we entered into agreements with financial institutions (Securitization Program) to sell these receivables resulting in the receivables being de-recognized from our consolidated balance sheet. The maximum funding from receivables that may be sold at any time was $600 million. In December 2017, we terminated the Securitization Program, such that no receivables were sold after December 28, 2017. In March 2018 we substantially replaced the securitization program with a second monetization program. Terminating the Securitization Program had no impact on our Cash Flow.

As of December 30, 2017, approximately $433 million of accounts receivable sold under the Securitization Program remained outstanding, for which we received cash of approximately $412 million and a deferred purchase price asset of approximately $21 million.

Refer to Note 2 within Notes to Consolidated Financial Statements for further information related to the sale of accounts receivable.

54

Future outlook

The Company updated financial guidance for 2018 based on first half momentum, as well as a lower effective tax rate.

We expect currency-neutral net sales to be up 4-5% in 2018, up from our previous guidance of 3-4%. This reflects stronger-than-expected organic growth in the first half. The new guidance implies full-year organic net sales to be flat to down 1%, which still includes a negative impact of 1% from U.S. Snacks’ DSD transition, including its list-price adjustment and rationalization of SKUs. Acquisitions, namely RXBAR and Multipro, are still expected to account for 4-6 percentage points of growth.

We expect currency-neutral adjusted operating profit will be up 5-7% in 2018. While net sales outlook is increased, the Company is holding its operating profit forecast to its existing range to reflect a prudent view toward mix trends, cost pressures, and potential increases to brand investment. Less than half of this year-on-year growth remains related to the acquisitions of RXBAR and Multipro, while the rest of the growth is driven by our underlying business, even after a strong increase in Brand Building investment.

Finally, we expect currency-neutral adjusted EPS to grow in the range of 11-13% in 2018, from previous guidance of 9-11%, driven by various incremental tax benefits, including the tax benefit related to the second quarter discretionary pension contribution. Specifically, the Company's effective tax rate is now expected to be 18-19% in 2018.

During the second quarter, we elected to make a discretionary pension contribution of $250 million designated for the 2017 tax year to deduct at the pre-Tax Reform corporate tax rate. To reflect this contribution, the Company now projects Net cash provided by operating activities of approximately $1.5 billion in 2018, driven by higher net income, sustained working-capital improvement, and benefits from U.S. Tax Reform. Additionally, we are increasing planned capital expenditure by slightly less than $50 million, to fund growth initiatives such as single-serve pack formats and emerging market capacity.

Impact of certain items excluded from Non-GAAP guidance:	Net sales	Operating profit	EPS
Project K and cost reduction activities (pre-tax)		$90-110M	$0.27-$0.32
Income tax benefit applicable to adjustments, net**			$0.05 - $0.06
Currency-neutral adjusted guidance*	4-5%	5-7%	11-13%

* 2018 full year guidance for net sales, operating profit, and earnings per share are provided on a non-GAAP, currency-neutral adjusted basis only because certain information necessary to calculate such measures on a GAAP basis is unavailable, dependent on future events outside of our control and cannot be predicted without unreasonable efforts by the Company.  The Company is providing quantification of known adjustment items where available.

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

Reconciliation of Non-GAAP amounts - Cash Flow Guidance
	Approximate
(billions)	Full Year 2018
Net cash provided by (used in) operating activities	$1.5
Additions to properties	($.5)
Cash Flow	$1.0

55

Forward-looking statements

This Report contains “forward-looking statements” with projections concerning, among other things, the Company’s global growth and efficiency program (Project K), the integration of acquired businesses, our strategy, zero-based budgeting, financial principles, and plans; initiatives, improvements and growth; sales, gross margins, advertising, promotion, merchandising, brand building, operating profit, and earnings per share; innovation; investments; capital expenditures; asset write-offs and expenditures and costs related to productivity or efficiency initiatives; the impact of accounting changes and significant accounting estimates; our ability to meet interest and debt principal repayment obligations; minimum contractual obligations; future common stock repurchases or debt reduction; effective income tax rate; cash flow and core working capital improvements; interest expense; commodity, and energy prices; and employee benefit plan costs and funding. Forward-looking statements include predictions of future results or activities and may contain the words “expect,” “believe,” “will,” “can,” “anticipate,” “project,” “should,” “estimate,” or words or phrases of similar meaning. For example, forward-looking statements are found in Item 1 and in several sections of Management’s Discussion and Analysis. Our actual results or activities may differ materially from these predictions. Our future results could be affected by a variety of factors, including:

• the ability to implement Project K, including exiting our Direct-Store-Door distribution system, as planned, whether the expected amount of costs associated with Project K will exceed forecasts, whether the Company will be able to realize the anticipated benefits from Project K in the amounts and times expected;

• the ability to realize the benefits we expect from the adoption of zero-based budgeting in the amounts and at the times expected;

• the ability to realize the anticipated benefits from our implementation of a more formal revenue growth management discipline;

• the ability to realize the anticipated benefits and synergies from acquired businesses in the amounts and at the times expected;

• the impact of competitive conditions;

• the effectiveness of pricing, advertising, and promotional programs;

• the success of innovation, renovation and new product introductions;

• the recoverability of the carrying value of goodwill and other intangibles;

• the success of productivity improvements and business transitions;

• commodity and energy prices;

• labor and transportation costs;

• disruptions or inefficiencies in supply chain;

• the availability of and interest rates on short-term and long-term financing;

• actual market performance of benefit plan trust investments;

• the levels of spending on systems initiatives, properties, business opportunities, integration of acquired businesses, and other general and administrative costs;

• changes in consumer behavior and preferences;

• the effect of U.S. and foreign economic conditions on items such as interest rates, statutory tax rates, currency conversion and availability;

• legal and regulatory factors including changes in food safety, advertising and labeling laws and regulations;

• the ultimate impact of product recalls;

• adverse changes in global climate or extreme weather conditions;

• business disruption or other losses from natural disasters, war, terrorist acts, or political unrest; and,

• the risks and uncertainties described herein under Part II, Item 1A.

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

56

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our Company is exposed to certain market risks, which exist as a part of our ongoing business operations. We use derivative financial and commodity instruments, where appropriate, to manage these risks. Refer to Note 10 within Notes to Consolidated Financial Statements for further information on our derivative financial and commodity instruments.

Refer to disclosures contained within Item 7A of our 2017 Annual Report on Form 10-K. Other than changes noted here, there have been no material changes in the Company’s market risk as of June 30, 2018.

During 2018, we entered into forward starting interest rate swaps with notional amounts totaling $300 million, as hedges against interest rate volatility associated with a forecasted issuance of fixed rate debt to be used for general corporate purposes. These swaps were designated as cash flow hedges. The forward starting interest rate swaps were settled upon issuance of fixed rate debt. A resulting aggregate gain immaterial to the financial statements was recorded in accumulated other comprehensive income (loss) and will be amortized as interest expense over the life of the related fixed rate debt. Refer to Note 6 within Notes to Consolidated Financial Statements for further information related to the fixed rate debt issuance.

During 2018, we entered into cross currency swaps with notional amounts totaling approximately $696 million, as hedges against foreign currency volatility associated with our net investment in our wholly-owned foreign subsidiaries. These swaps were designated as net investment hedges. The cross currency swaps were still outstanding as of June 30, 2018, representing a settlement receivable of $29M.

We have interest rate swaps with notional amounts totaling $1.5 billion and $2.3 billion outstanding at June 30, 2018 and December 30, 2017, respectively, representing a net settlement obligation of $25 million and $54 million, respectively. The interest rate swaps are designated as fair value hedges of certain U.S. Dollar debt. During the year-to-date period ended June 30, 2018, we settled interest rate swaps with notional amounts totaling approximately $869 million which were previously designated as fair value hedges of certain U.S. Dollar Notes. We recorded an aggregate loss of $49 million related to the settled swaps that will be amortized as interest expense over the life of the related fixed rate debt. Assuming average variable rate debt levels during the year, a one percentage point increase in interest rates would have increased interest expense by approximately $21 million and $27 million at June 30, 2018 and December 30, 2017, respectively.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer as appropriate, to allow timely decisions regarding required disclosure under Rules 13a-15(e) and 15d-15(e). Disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, rather than absolute, assurance of achieving the desired control objectives.

As of June 30, 2018, we carried out an evaluation under the supervision and with the participation of our chief executive officer and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

Based on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

Kellogg’s Project K initiative which includes the reorganization and relocation of certain financial, information technology, and logistics and distribution processes; internal to the organization was initiated in 2014. This initiative is expected to continue through 2018 and will continue to impact the design of our control framework. During efforts associated with Project K, we have implemented additional controls to monitor and maintain appropriate internal controls over financial reporting. There were no other changes during the quarter ended June 30, 2018, that materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

57

KELLOGG COMPANY

PART II — OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended December 30, 2017. The risk factors disclosed under those Reports in addition to the other information set forth in this Report, could materially affect our business, financial condition, or results. Additional risks and uncertainties not currently known to us or that we deem to be immaterial could also materially adversely affect our business, financial condition, or results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In December 2017, the board of directors approved an authorization to repurchase of up to $1.5 billion of our common stock beginning in January 2018 through December 2019. This authorization is intended to allow us to repurchase shares for general corporate purposes and to offset issuances for employee benefit programs. During the second quarter of 2018, the Company repurchased 0.8 million shares for a total of $50 million.

The following table provides information with respect to purchases of common shares under programs authorized by our board of directors during the quarter ended June 30, 2018.

(c) Issuer Purchases of Equity Securities

(millions, except per share data)

Period	(a) Total Number of Shares Purchased	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
Month #1:
4/1/2018 - 4/28/2018	—	$	—	—	$	1,500
Month #2:
4/29/2018 - 5/26/2018	0.8	$	61.29	0.8	$	1,450
Month #3:
5/27/2018 - 6/30/2018	—	$	—	—	$	1,450
Total	0.8	$	61.29	0.8

Item 6. Exhibits

(a) Exhibits:

31.1	Rule 13a-14(e)/15d-14(a) Certification from Steven A. Cahillane
31.2	Rule 13a-14(e)/15d-14(a) Certification from Fareed Khan
32.1	Section 1350 Certification from Steven A. Cahillane
32.2	Section 1350 Certification from Fareed Khan
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

58

KELLOGG COMPANY

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

KELLOGG COMPANY

/s/ Fareed Khan

Fareed Khan

Principal Financial Officer;

Senior Vice President and Chief Financial Officer

/s/ Donald O. Mondano

Donald O. Mondano

Principal Accounting Officer;

Vice President and Corporate Controller

Date: August 3, 2018

59

KELLOGG COMPANY

EXHIBIT INDEX

Exhibit No.	Description	Electronic (E) Paper (P) Incorp. By Ref. (IBRF)
31.1	Rule 13a-14(e)/15d-14(a) Certification from Steven A. Cahillane	E
31.2	Rule 13a-14(e)/15d-14(a) Certification from Fareed Khan	E
32.1	Section 1350 Certification from Steven A. Cahillane	E
32.2	Section 1350 Certification from Fareed Khan	E
101.INS	XBRL Instance Document	E
101.SCH	XBRL Taxonomy Extension Schema Document	E
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	E
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	E
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	E
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	E

60

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Steven A. Cahillane, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kellogg Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Steven A. Cahillane

Chairman and Chief Executive Officer

Date: August 3, 2018

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Fareed Khan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kellogg Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Fareed Khan

Senior Vice President and Chief Financial Officer

Date: August 3, 2018

EX-32.1

Exhibit 32.1

SECTION 1350 CERTIFICATION

I, Steven A. Cahillane, hereby certify, on the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that

(1) the Quarterly Report on Form 10-Q of Kellogg Company for the quarter ended June 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Kellogg Company. 

/s/ Steven A. Cahillane
Name:	Steven A. Cahillane
Title:	Chairman and Chief Executive Officer

A signed copy of this original statement required by Section 906 has been provided to Kellogg Company and will be retained by Kellogg Company and furnished to the Securities and Exchange Commission or its staff on request.

Date: August 3, 2018

EX-32.2

Exhibit 32.2

SECTION 1350 CERTIFICATION

I, Fareed Khan, hereby certify, on the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that

(1) the Quarterly Report on Form 10-Q of Kellogg Company for the quarter ended June 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Kellogg Company.

/s/ Fareed Khan
Name:	Fareed Khan
Title:	Senior Vice President and Chief Financial Officer

A signed copy of this original statement required by Section 906 has been provided to Kellogg Company and will be retained by Kellogg Company and furnished to the Securities and Exchange Commission or its staff on request.

Date: August 3, 2018

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 28, 2018
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2018
Entity Registrant Name	KELLOGG CO
Entity Central Index Key	0000055067
Current Fiscal Year End Date	--12-29
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		346,672,653

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Consolidated Balance Sheet (Unaudited) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 30, 2017
Current assets
Cash and cash equivalents	$ 257	$ 281
Accounts receivable, net	1,530	1,389
Inventories	1,291	1,217
Other current assets	189	149
Total current assets	3,267	3,036
Property, net	3,638	3,716
Goodwill	6,072	5,504
Other intangibles, net	3,391	2,639
Investments in unconsolidated entities	421	429
Other assets	1,112	1,027
Total assets	17,901	16,351
Current liabilities
Current maturities of long-term debt	7	409
Notes payable	324	370
Accounts payable	2,306	2,269
Other current liabilities	1,329	1,474
Total current liabilities	3,966	4,522
Long-term debt	8,737	7,836
Deferred income taxes	714	355
Pension liability	532	839
Other liabilities	548	605
Commitments and contingencies
Equity
Common stock, $.25 par value	105	105
Capital in excess of par value	866	878
Retained earnings	7,743	7,069
Treasury stock, at cost	(4,375)	(4,417)
Accumulated other comprehensive income (loss)	(1,501)	(1,457)
Total Kellogg Company equity	2,838	2,178
Noncontrolling interests	566	16
Total equity	3,404	2,194
Total liabilities and equity	$ 17,901	$ 16,351

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Consolidated Balance Sheet (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 30, 2017
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.25	$ 0.25

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Consolidated Statement of Income (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Income Statement [Abstract]
Net sales	$ 3,360	$ 3,175	$ 6,761	$ 6,423
Cost of goods sold	2,151	1,950	4,300	4,038
Selling, general and administrative expense	735	840	1,477	1,720
Operating profit	474	385	984	665
Interest expense	72	63	141	124
Other income (expense), net	69	63	139	151
Income before income taxes	471	385	982	692
Income taxes	70	102	137	145
Earnings (loss) from unconsolidated entities	198	0	198	2
Net income	599	283	1,043	549
Net income (loss) attributable to noncontrolling interests	3	0	3	0
Net income attributable to Kellogg Company	$ 596	$ 283	$ 1,040	$ 549
Per share amounts:
Basic earnings (in dollars per share)	$ 1.72	$ 0.81	$ 3.00	$ 1.57
Diluted earnings (in dollars per share)	1.71	0.80	2.99	1.56
Dividends per share (in dollars per share)	$ 0.54	$ 0.52	$ 1.08	$ 1.04
Average shares outstanding:
Basic (in shares)	347	349	346	350
Diluted (in shares)	348	352	348	353
Actual shares outstanding at period end (in shares)	346	346	346	346

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Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 599	$ 283	$ 1,043	$ 549
Other comprehensive income (loss), pre-tax:
Foreign currency translation adjustments, pre-tax	(54)	(66)	(24)	10
Cash flow hedges, pre-tax:
Unrealized gain (loss) on cash flow hedges, pre-tax	3		3
Reclassification to net income, pre-tax	2	2	4	4
Postretirement and postemployment benefits reclassification to net income, pre-tax:
Net experience loss	(1)	0	(2)	1
Other comprehensive income (loss), pre-tax	(50)	(64)	(19)	15
Other comprehensive income (loss), tax (expense) benefit
Foreign currency translation adjustments, tax (expense) benefit	(46)	57	(27)	66
Cash flow hedges, tax (expense) benefit:
Unrealized gain (loss) on cash flow hedges, tax (expense) benefit	(1)		(1)
Reclassification to net income, tax (expense) benefit	(1)	0	(1)	(1)
Postretirement and postemployment benefits reclassification to net income, tax (expense) benefit:
Net experience loss, tax (expense) benefit	0	0	0	0
Other comprehensive income (loss), tax (expense) benefit	(48)	57	(29)	65
Other comprehensive income (loss), after tax:
Foreign currency translation adjustments, after-tax	(100)	(9)	(51)	76
Cash flow hedges, after tax
Unrealized gain (loss) on cash flow hedges, after-tax	2		2
Reclassification to net income, after-tax	1	2	3	3
Postretirement and postemployment benefits reclassification to net income, after-tax:
Net experience loss, after-tax	(1)	0	(2)	1
Other comprehensive income (loss)	(98)	(7)	(48)	80
Comprehensive income	501	276	995	629
Net income (loss) attributable to noncontrolling interests	3	$ 0	3	$ 0
Other comprehensive income (loss) attributable to noncontrolling interests	(4)		(4)
Comprehensive income attributable to Kellogg Company	$ 502		$ 996

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Consolidated Statement of Equity (Unaudited) - USD ($) shares in Millions, $ in Millions	Total	Common stock	Capital in excess of par value	Retained earnings	Treasury stock	Accumulated other comprehensive income (loss)	Total Kellogg Company equity	Non-controlling interests
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	$ 1,907							$ 16
Balance at Dec. 31, 2016		$ 105	$ 806	$ 6,552	$ (3,997)	$ (1,575)	$ 1,891
Balance (in shares) at Dec. 31, 2016		420			69
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock repurchases (in shares)					7
Common stock repurchases	(516)				$ (516)		(516)
Net income	1,254			1,254			1,254	0
Dividends	(736)			(736)			(736)
Other comprehensive income (loss)	118					118	118	0
Stock compensation	66		66				66
Stock options exercised and other (in shares)		1			(1)
Stock options exercised and other	101		6	(1)	$ 96		101
Balance (in shares) at Dec. 30, 2017		421			75
Balance at Dec. 30, 2017	2,178	$ 105	878	7,069	$ (4,417)	(1,457)	2,178
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	$ 2,194							16
Common stock repurchases (in shares)	1				1
Common stock repurchases	$ (50)				$ (50)		(50)
Net income	1,043			1,040			1,040	3
Acquisition of noncontrolling interest, net	552						0	552
Dividends	(375)			(374)			(374)	(1)
Other comprehensive income (loss)	(48)					(44)	(44)	(4)
Stock compensation	30		30				30
Stock options exercised and other (in shares)					(2)
Stock options exercised and other	58		(42)	8	$ 92		58
Balance (in shares) at Jun. 30, 2018		421			74
Balance at Jun. 30, 2018	2,838	$ 105	$ 866	$ 7,743	$ (4,375)	$ (1,501)	$ 2,838
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	$ 3,404							$ 566

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Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017
Operating activities
Net income	$ 1,043	$ 549
Adjustments to reconcile net income to operating cash flows:
Depreciation and amortization	234	240
Postretirement benefit plan expense (benefit)	(86)	(96)
Deferred income taxes	69	(66)
Stock compensation	30	36
Gain on unconsolidated entities, net	(200)	0
Other	(67)	36
Postretirement benefit plan contributions	(274)	(28)
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables	(83)	(716)
Inventories	(38)	63
Accounts payable	64	70
All other current assets and liabilities	(245)	4
Net cash provided by (used in) operating activities	447	92
Investing activities
Additions to properties	(270)	(268)
Collections of deferred purchase price on securitized trade receivables	0	568
Acquisitions, net of cash acquired	(28)	4
Investments in unconsolidated entities	(388)	0
Acquisition of cost method investment	(4)	0
Other	29	(4)
Net cash provided by (used in) investing activities	(661)	300
Financing activities
Net issuances (reductions) of notes payable	(76)	287
Issuances of long-term debt	993	655
Reductions of long-term debt	(401)	(626)
Net issuances of common stock	70	65
Common stock repurchases	(50)	(390)
Cash dividends	(374)	(363)
Net cash provided by (used in) financing activities	162	(372)
Effect of exchange rate changes on cash and cash equivalents	28	34
Increase (decrease) in cash and cash equivalents	(24)	54
Cash and cash equivalents at beginning of period	281	280
Cash and cash equivalents at end of period	257	334
Supplemental cash flow disclosures
Interest paid	151	138
Income taxes paid	76	205
Supplemental cash flow disclosures of non-cash investing activities [Abstract]
Beneficial interests obtained in exchange for securitized trade receivables	0	566
Additions to properties included in accounts payable	$ 77	$ 82

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Accounting Policies

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Accounting Policies

Accounting policies

Basis of presentation

The unaudited interim financial information of Kellogg Company (the Company) included in this report reflects all adjustments, all of which are of a normal and recurring nature, that management believes are necessary for a fair statement of the results of operations, comprehensive income, financial position, equity and cash flows for the periods presented. This interim information should be read in conjunction with the financial statements and accompanying footnotes within the Company’s 2017 Annual Report on Form 10-K.

The condensed balance sheet information at December 30, 2017 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. The results of operations for the quarterly period ended June 30, 2018 are not necessarily indicative of the results to be expected for other interim periods or the full year.

Accounts payable

The Company has agreements with certain third parties to provide accounts payable tracking systems which facilitates participating suppliers’ ability to monitor and, if elected, sell payment obligations from the Company to designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to sell one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s goal in entering into these agreements is to capture overall supplier savings, in the form of payment terms or vendor funding, created by facilitating suppliers’ ability to sell payment obligations, while providing them with greater working capital flexibility. We have no economic interest in the sale of these suppliers’ receivables and no direct financial relationship with the financial institutions concerning these services. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to sell amounts under these arrangements. However, the Company’s right to offset balances due from suppliers against payment obligations is restricted by this agreement for those payment obligations that have been sold by suppliers. As of June 30, 2018, $834 million of the Company’s outstanding payment obligations had been placed in the accounts payable tracking system, and participating suppliers had sold $572 million of those payment obligations to participating financial institutions. As of December 30, 2017, $850 million of the Company’s outstanding payment obligations had been placed in the accounts payable tracking system, and participating suppliers had sold $674 million of those payment obligations to participating financial institutions.

Revenue

The Company recognizes revenue from the sale of food products which are sold to retailers through direct sales forces, broker and distributor arrangements. The Company also recognizes revenue from the license of our trademarks granted to third parties who uses these trademarks on their merchandise. Revenue from these licenses are not material to the Company. Revenue, which includes shipping and handling charges billed to the customer, is reported net of applicable discounts, returns, allowances, and various government withholding taxes.

Contract balances where revenue is recognized in the current period that is not a result of current period performance is not material to the Company. The Company also does not incur costs to obtain or fulfill contracts.

Performance obligations

The Company recognizes revenue when (or as) performance obligations are satisfied by transferring control of the goods to customers. Control is transferred upon delivery of the goods to the customer. At the time of delivery, the customer is invoiced with payment terms which are commensurate with the customer’s credit profile. Shipping and/or handling costs that occur before the customer obtains control of the goods are deemed to be fulfillment activities and are accounted for as fulfillment costs.

The Company assesses the goods and services promised in its customers’ purchase orders and identifies a performance obligation for each promise to transfer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, the Company considers all the goods or services promised, whether explicitly stated or implied based on customary business practices. For a purchase order that has more than one performance obligation, the Company allocates the total consideration to each distinct performance obligation on a relative standalone selling price basis.

Significant Judgments

The Company offers various forms of trade promotions and the methodologies for determining these provisions are dependent on local customer pricing and promotional practices, which range from contractually fixed percentage price reductions to provisions based on actual occurrence or performance. Where applicable, future provisions are estimated based on a combination of historical patterns and future expectations regarding specific in-market product performance.

Our promotional activities are conducted either through the retail trade or directly with consumers and include activities such as in-store displays and events, feature price discounts, consumer coupons, contests and loyalty programs. The costs of these activities are generally recognized at the time the related revenue is recorded, which normally precedes the actual cash expenditure. The recognition of these costs therefore requires management judgment regarding the volume of promotional offers that will be redeemed by either the retail trade or consumer. These estimates are made using various techniques including historical data on performance of similar promotional programs. Differences between estimated expense and actual redemptions are normally insignificant and recognized as a change in management estimate in a subsequent period.

Practical expedients

The Company elected the following practical expedients in accordance with ASU 2014-09:

• Significant financing component - The Company elected not to adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between the transfer of a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

• Shipping and handling costs - The Company elected to account for shipping and handling activities that occur before the customer has obtained control of a good as fulfillment activities (i.e., an expense) rather than as a promised service.

• Measurement of transaction price - The Company has elected to exclude from the measurement of transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer for sales taxes.

New accounting standards

Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. In August 2017, the FASB issued an ASU intended to simplify hedge accounting by better aligning an entity’s financial reporting for hedging relationships with its risk management activities. The ASU also simplifies the application of the hedge accounting guidance. The new guidance is effective on January 1, 2019, with early adoption permitted. For cash flow hedges existing at the adoption date, the standard requires adoption on a modified retrospective basis with a cumulative-effect adjustment to the Consolidated Balance Sheet as of the beginning of the year of adoption. The amendments to presentation guidance and disclosure requirements are required to be adopted prospectively. The Company adopted the ASU in the first quarter of 2018. The impact of adoption was immaterial to the financial statements.

Improving the Presentation of net Periodic Pension Cost and net Periodic Postretirement Benefit Cost. In March 2017, the FASB issued an ASU to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The ASU requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The amendments in this ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The Company adopted the ASU in the first quarter of 2018.

Simplifying the test for goodwill impairment. In January 2017, the FASB issued an ASU to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. The ASU is effective for an entity's annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The amendments in this ASU should be applied on a prospective basis. The Company adopted the ASU in the first quarter of 2018 with no impact.

Statement of Cash Flows. In August 2016, the FASB issued an ASU to provide cash flow statement classification guidance for certain cash receipts and payments including (a) debt prepayment or extinguishment costs; (b) contingent consideration payments made after a business combination; (c) insurance settlement proceeds; (d) distributions from equity method investees; (e) beneficial interests in securitization transactions and (f) application of the predominance principle for cash receipts and payments with aspects of more than one class of cash flows.  The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period, in which case adjustments should be reflected as of the beginning of the fiscal year that includes the interim period.   The amendments in this ASU should be applied retrospectively.  The Company adopted the new ASU in the first quarter of 2018.

Recognition and measurement of financial assets and liabilities. In January 2016, the FASB issued an ASU which requires equity investments that are not accounted for under the equity method of accounting to be measured at fair value with changes recognized in net income and which updates certain presentation and disclosure requirements. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption can be elected for all financial statements of fiscal years and interim periods that have not yet been issued or that have not yet been made available for issuance. Entities should apply the update by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company adopted the updated standard in the first quarter of 2018. The impact of adoption was immaterial to the financial statements.

Revenue from contracts with customers. In May 2014, the FASB issued an ASU, as amended, which provides guidance for accounting for revenue from contracts with customers. The core principle of this ASU is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. To achieve that core principle, an entity would be required to apply the following five steps: 1) identify the contract(s) with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations in the contract and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company adopted the updated standard in the first quarter of 2018 using the full retrospective method and restated previously reported amounts. In connection with the adoption, the Company made reclassification of certain customer allowances. The adoption effects relate to the timing of recognition and classification of certain promotional allowances. The updated revenue standard also required additional disaggregated revenue disclosures. Refer to Impacts to Previously Reported Results below for the impact of adoption of the standard on our consolidated financial statements.

Impacts to Previously Reported Results

Adoption of the standards related to revenue recognition, pension and cash flow impacted our previously reported results as follows:

	As of December 30, 2017
Consolidated Balance Sheet	Previously Reported		Revenue Recognition ASU			Restated
Other assets	$	1,026	$	1		$	1,027
Other current liabilities	$	1,431	$	43		$	1,474
Deferred income taxes	$	363	$	(8	)	$	355
Retained earnings	$	7,103	$	(34	)	$	7,069

	Quarter ended July 1, 2017
Consolidated Statement of Income	Previously Reported			Revenue Recognition ASU			Pension ASU		Restated
Net sales	$	3,187		$	(12	)	$	—	$	3,175
Cost of goods sold	$	1,922		$	(17	)	$	45	$	1,950
Selling, general and administrative expense	$	812		$	4		$	24	$	840
Other income (expense), net	$	(6	)	$	—		$	69	$	63
Income taxes	$	102		$	—		$	—	$	102
Net income	$	282		$	1		$	—	$	283
Per share amounts:
Basic earnings	$	0.81		$	—		$	—	$	0.81
Diluted earnings	$	0.80		$	—		$	—	$	0.80

	Year-to-date period ended July 1, 2017
Consolidated Statement of Income	Previously Reported			Revenue Recognition ASU			Pension ASU		Restated
Net sales	$	6,441		$	(18	)	$	—	$	6,423
Cost of goods sold	$	3,972		$	(33	)	$	99	$	4,038
Selling, general and administrative expense	$	1,656		$	9		$	55	$	1,720
Other income (expense), net	$	(3	)	$	—		$	154	$	151
Income taxes	$	144		$	1		$	—	$	145
Net income	$	544		$	5		$	—	$	549
Per share amounts:
Basic earnings	$	1.56		$	0.01		$	—	$	1.57
Diluted earnings	$	1.54		$	0.02		$	—	$	1.56

	Year-to-date period ended July 1, 2017
Consolidated Statement of Cash Flows	Previously Reported			Revenue Recognition ASU			Cash Flow ASU			Restated
Net income	$	544		$	5		$	—		$	549
Deferred income taxes	$	(67	)	$	1		$	—		$	(66	)
Other	$	30		$	—		$	6		$	36
Trade receivables	$	(148	)	$	—		$	(568	)	$	(716	)
All other current assets and liabilities, net	$	10		$	(6	)	$	—		$	4
Net cash provided by (used in) operating activities	$	654		$	—		$	(562	)	$	92
Collections of deferred purchase price on securitized trade receivables	$	—		$	—		$	568		$	568
Investment in unconsolidated entities, net proceeds	$	6		$	—		$	(6	)	$	—
Net cash provided by (used in) investing activities	$	(262	)	$	—		$	562		$	300

Accounting standards to be adopted in future periods

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. In February 2018, the FASB issued an ASU permitting a company to reclassify the disproportionate income tax effects of the Tax Cuts and Jobs Act of 2017 on items within accumulated other comprehensive income (AOCI). The reclassification is optional. Regardless of whether or not a company opts to make the reclassification, the new guidance requires all companies to include certain disclosures in their financial statements. The guidance is effective for all fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing when to adopt the ASU and the impact of adoption.

Leases. In February 2016, the FASB issued an ASU which will require the recognition of lease assets and lease liabilities by lessees for all leases with terms greater than 12 months. The distinction between finance leases and operating leases will remain, with similar classification criteriaas current GAAP to distinguish between capital and operating leases. The principal difference from current guidance is that the lease assets and lease liabilities arising from operating leases will be recognized on the Consolidated Balance Sheet. Lessor accounting remains substantially similar to current GAAP. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company will adopt the ASU in the first quarter of 2019, and is currently evaluating the impact that implementing this ASU will have on its financial statements.

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Sale of Accounts Receivable

6 Months Ended

Jun. 30, 2018

Transfers and Servicing of Financial Assets [Abstract]

Transfers and Servicing of Financial Assets [Text Block]

Sale of accounts receivable

During 2016, The Company initiated a program in which a customer could extend their payment terms in exchange for the elimination of early payment discounts (Extended Terms Program).

The Company has two Receivable Sales Agreements (Monetization Programs) and previously had a separate U.S. accounts receivable securitization program (Securitization Program), both described below, which are intended to directly offset the impact the Extended Terms Program would have on the days-sales-outstanding (DSO) metric that is critical to the effective management of the Company's accounts receivable balance and overall working capital. The Company terminated the Securitization Program at the end of 2017 and entered into the second monetization program during the quarter ended March 31, 2018. The impact on working capital of the Extended Terms Program is effectively offset by the Monetization and Securitization Programs.

The Company has no retained interest in the receivables sold, however the Company does have collection and administrative responsibilities for the sold receivables. The Company has not recorded any servicing assets or liabilities as of June 30, 2018 and December 30, 2017 for these agreements as the fair value of these servicing arrangements as well as the fees earned were not material to the financial statements.

Monetization Programs

The Company has two Monetization Programs, for a discrete group of customers, to sell, on a revolving basis, certain trade accounts receivable invoices to third party financial institutions. Transfers under this agreement are accounted for as sales of receivables resulting in the receivables being de-recognized from the Consolidated Balance Sheet. The Monetization Programs provide for the continuing sale of certain receivables on a revolving basis until terminated by either party; however the maximum receivables that may be sold at any time is $1,033 million (increased from $988 million as of March 31, 2018, reflecting the execution of an amendment to the second monetization program on June 26, 2018).  Accounts receivable sold of $936 million and $601 million remained outstanding under these arrangements as of June 30, 2018 and December 30, 2017, respectively. The proceeds from these sales of receivables are included in cash from operating activities in the Consolidated Statement of Cash Flows. The recorded net loss on sale of receivables was $6 million and $12 million for the quarter and year-to-date periods ended June 30, 2018, respectively and was $3 million and $5 million for the quarter and year-to-date periods ended July 1, 2017, respectively. The recorded loss is included in Other income and expense.

Securitization Program

Between July 2016 and December 2017, the Company had a Securitization Program with a third party financial institution. Under the program, the Company received cash consideration of up to $600 million and a deferred purchase price asset for the remainder of the purchase price. Transfers under the Securitization Program were accounted for as sales of receivables resulting in the receivables being de-recognized from the Consolidated Balance Sheet. This Securitization Program utilized Kellogg Funding Company (Kellogg Funding), a wholly-owned subsidiary of the Company. Kellogg Funding's sole business consisted of the purchase of receivables, from its parent or other subsidiary and subsequent transfer of such receivables and related assets to financial institutions. Although Kellogg Funding is included in the Company's consolidated financial statements, it is a separate legal entity with separate creditors who will be entitled, upon its liquidation, to be satisfied out of Kellogg Funding assets prior to any assets or value in Kellogg Funding becoming available to the Company or its subsidiaries. The assets of Kellogg Funding are not available to pay creditors of the Company or its subsidiaries. The Securitization Program was structured to expire in July 2018, but was terminated at the end of 2017. In March 2018 the Company substantially replaced the securitization program with the second monetization program. Kellogg Funding had no creditors and held no assets at June 30, 2018.

As of December 30, 2017, approximately $433 million of accounts receivable sold to Kellogg Funding under the Securitization Program remained outstanding, for which the Company received net cash proceeds of approximately $412 million and a deferred purchase price asset of approximately $21 million. The portion of the purchase price for the receivables which is not paid in cash by the financial institutions is a deferred purchase price asset, which is paid to Kellogg Funding as payments on the receivables are collected from customers. The deferred purchase price asset represents a beneficial interest in the transferred financial assets and is recognized at fair value as part of the sale transaction. The deferred purchase price asset is included in Other current assets on the Consolidated Balance Sheet. Upon final settlement of the program in March 2018, the outstanding deferred purchase price asset of $21 million was exchanged for previously sold trade accounts receivable.

The recorded net loss on sale of receivables for the year-to-date period ended July 1, 2017 is included in Other income and expense and is not material.

Other programs

Additionally, from time to time certain of the Company's foreign subsidiaries will transfer, without recourse, accounts receivable balances of certain customers to financial institutions. These transactions are accounted for as sales of the receivables resulting in the receivables being de-recognized from the Consolidated Balance Sheet. Accounts receivable sold of $26 million and $86 million remained outstanding under these programs as of June 30, 2018 and December 30, 2017, respectively. The proceeds from these sales of receivables are included in cash from operating activities in the Consolidated Statement of Cash Flows. The recorded net loss on the sale of these receivables is included in Other income and expense and is not material.

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Acquisitions, West Africa Investments, Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2018

Acquisitions, West Africa Investments, Goodwill and Other Intangible Assets [Abstract]

Acquisitions, West Africa Investments, Goodwill and Other Intangible Assets

Acquisitions, West Africa investments, goodwill and other intangible assets

Multipro acquisition

On May 2, 2018, the Company (i) acquired an incremental 1% ownership interest in Multipro, a leading distributor of a variety of food products in Nigeria and Ghana, and (ii) exercised its call option (Purchase Option) to acquire a 50% interest in Tolaram Africa Foods, PTE LTD (TAF), a holding company with a 49% equity interest in an affiliated food manufacturer, resulting in the Company having a 24.5% interest in the affiliated food manufacturer. The aggregate cash consideration paid was approximately $419 million and was funded through cash on hand and short-term borrowings, which was refinanced with long-term borrowings in May 2018. As part of the consideration for the acquisition, an escrow established in connection with the original Multipro investment in 2015, which represented a significant portion of the amount paid for the Company’s initial investment, was released by the Company. The amount paid to exercise the Purchase Option is subject to certain working capital and net debt adjustments based on the actual working capital and net debt existing on the exercise date compared to targeted amounts.

As a result of the Company’s incremental ownership interest in Multipro and concurrent changes to the shareholders' agreement, the Company now has a 51% controlling interest in and began consolidating Multipro. Accordingly, the acquisition was accounted for as a business combination and the assets and liabilities of Multipro were included in the June 30, 2018 Consolidated Balance Sheet and the results of its operations have been included in the Consolidated Statement of Income subsequent to the acquisition date. The aggregate of the consideration paid and the fair value of previously held equity interest totaled $626 million, or $617 million net of cash acquired. The Multipro investment was previously accounted for under the equity method of accounting and the Company recorded our share of equity income or loss from Multipro within Earnings (loss) from unconsolidated entities. In connection with the business combination, the Company recognized a one-time, non-cash gain on the disposition of our previously held equity interest in Multipro of $245 million, which is included within Earnings (loss) from unconsolidated entities.  

The assets and liabilities are included in the Consolidated Balance Sheet as of June 30, 2018 within the Asia-Pacific reporting segment. The acquired assets and assumed liabilities include the following:

(millions)	May 2, 2018
Current assets	$	118
Property	41
Goodwill	616
Intangible assets subject to amortization, primarily customer relationships	425
Intangible assets not subject to amortization, primarily distribution rights	373
Deferred tax liability	(256		)
Other liabilities	(148		)
Noncontrolling interest	(552		)
	$	617

The amounts in the above table represent the preliminary allocation of purchase price and are subject to revision when valuations are finalized for intangible assets, which are expected in 2018. The goodwill from the acquisition is not expected to be deductible for income tax purposes.

Multipro contributed net revenues of $129 million and net earnings of $2 million since the acquisition, including transaction fees and integration costs. The unaudited pro forma historical net sales, as if Multipro had been acquired at the beginning of 2017 are estimated as follows:

	Quarter ended				Year-to-date period ended
(millions)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Net sales	$	3,433	$	3,326	$	7,043	$	6,739

The impact of the business combination as if Multipro had been acquired at the beginning of 2017, on the unaudited pro forma historical net income and net income attributable to Kellogg Company, exclusive of the non-cash $245 million gain on the disposition of the equity interest, was immaterial.

Investment in TAF

The investment in TAF is accounted for under the equity method of accounting with the Company’s share of equity income or loss being recognized within Earnings (loss) from unconsolidated entities. The $458 million aggregate of the consideration paid upon exercise and the historical cost value of the Put Option was compared to the estimated fair value of the Company’s ownership percentage of TAF and the Company recognized a one-time, non-cash loss of $45 million within Earnings (loss) from unconsolidated entities, which represents an other than temporary excess of cost over fair value of the investment. The difference between the carrying amount of TAF and the underlying equity in net assets is primarily attributable to brand and customer list intangible assets, a portion of which is being amortized over future periods, and goodwill.

RXBAR acquisition

In October 2017, the Company completed its acquisition of Chicago Bar Co., LLC, the manufacturer of RXBAR, for $600 million, or $596 million net of cash and cash equivalents. The purchase price was subject to certain working capital adjustments based on the actual working capital on the acquisition date compared to targeted amounts. These adjustments were finalized during the quarter ended March 31, 2018 and resulted in a purchase price reduction of $1 million. The acquisition was accounted for under the purchase price method and was financed with short-term borrowings.

For the year-to-date period ended June 30, 2018, the acquisition added net sales in the Company's North America Other reporting segment totaling $110 million and net earnings totaling $6 million, respectively.

The assets and liabilities are included in the Consolidated Balance Sheet as of June 30, 2018 within the North America Other reporting segment. The acquired assets and assumed liabilities include the following:

(millions)	October 27, 2017
Current assets	$	42
Goodwill	373
Intangible assets, primarily indefinite-lived brands	203
Current liabilities	(23		)
	$	595

The amounts in the above table represent the final allocation of purchase price as of June 30, 2018, which resulted in a $2 million increase in amortizable intangible assets with a corresponding reduction of goodwill during the first quarter of 2018.

Goodwill and Intangible Assets

Changes in the carrying amount of goodwill, intangible assets subject to amortization, consisting primarily of customer lists, and indefinite-lived intangible assets, consisting of brands and distribution agreements, are presented in the following tables:

Carrying amount of goodwill

(millions)	U.S. Snacks		U.S. Morning Foods		U.S. Specialty Channels		North America Other			Europe			Latin America			Asia Pacific			Consoli- dated
December 30, 2017	$	3,568	$	131	$	82	$	836		$	414		$	244		$	229		$	5,504
Additions	—		—		—		—			—			—			616			616
Purchase price allocation adjustment	—		—		—		(1		)	—			—			—			(1		)
Purchase price adjustment	—		—		—		(1		)	—			—			—			(1		)
Currency translation adjustment	—		—		—		(2		)	(12		)	(25		)	(7		)	(46		)
June 30, 2018	$	3,568	$	131	$	82	$	832		$	402		$	219		$	838		$	6,072

Intangible assets subject to amortization

Gross carrying amount
(millions)	U.S. Snacks			U.S. Morning Foods		U.S. Specialty Channels		North America Other			Europe			Latin America			Asia Pacific			Consoli- dated
December 30, 2017	$	42		$	8	$	—	$	22		$	45		$	74		$	10		$	201
Additions	—			—		—		—			—			—			425			425
Purchase price allocation adjustment	—			—		—		2			—			—			—			2
Currency translation adjustment	—			—		—		—			(1		)	(10		)	(3		)	(14		)
June 30, 2018	$	42		$	8	$	—	$	24		$	44		$	64		$	432		$	614
Accumulated Amortization
December 30, 2017	$	22		$	8	$	—	$	5		$	18		$	10		$	4		$	67
Amortization	2			—		—		1			1			2			3			9
Currency translation adjustment	—			—		—		—			—			(1		)	—			(1		)
June 30, 2018	$	24		$	8	$	—	$	6		$	19		$	11		$	7		$	75
Intangible assets subject to amortization, net
December 30, 2017	$	20		$	—	$	—	$	17		$	27		$	64		$	6		$	134
Additions	—			—		—		—			—			—			425			425
Purchase price allocation adjustment	—			—		—		2			—			—			—			2
Amortization	(2		)	—		—		(1		)	(1		)	(2		)	(3		)	(9		)
Currency translation adjustment	—			—		—		—			(1		)	(9		)	(3		)	(13		)
June 30, 2018	$	18		$	—	$	—	$	18		$	25		$	53		$	425		$	539

For intangible assets in the preceding table, amortization was $9 million and $4 million for the year-to-date periods ended June 30, 2018 and July 1, 2017, respectively. The currently estimated aggregate annual amortization expense for full-year 2018 is approximately $23 million.

Intangible assets not subject to amortization

(millions)	U.S. Snacks		U.S. Morning Foods		U.S. Specialty Channels		North America Other		Europe			Latin America			Asia Pacific			Consoli- dated
December 30, 2017	$	1,625	$	—	$	—	$	360	$	434		$	86		$	—		$	2,505
Additions	—		—		—		—		—			—			373			373
Currency translation adjustment	—		—		—		—		(10		)	(13		)	(3		)	(26		)
June 30, 2018	$	1,625	$	—	$	—	$	360	$	424		$	73		$	370		$	2,852

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Restructuring and Cost Reduction Activities

6 Months Ended

Jun. 30, 2018

Restructuring and Related Activities [Abstract]

Restructuring and Cost Reduction Activities

Restructuring and cost reduction activities

The Company views its restructuring and cost reduction activities as part of its operating principles to provide greater visibility in achieving its long-term profit growth targets. Initiatives undertaken are currently expected to recover cash implementation costs within a five-year period of completion. Upon completion (or as each major stage is completed in the case of multi-year programs), the project begins to deliver cash savings and/or reduced depreciation.

Total Projects

During the quarter ended June 30, 2018, the Company recorded total net charges of $5 million across all restructuring and cost reduction activities. The charges were comprised of $(4) million net gain recorded in cost of goods sold (COGS) and a $9 million expense recorded in selling, general and administrative (SG&A) expense. During the year-to-date period ended June 30, 2018, the Company recorded total charges of $25 million across all restructuring and cost reduction activities. The charges were comprised of $9 million recorded in COGS and $16 million recorded in SG&A expense.

During the quarter ended July 1, 2017, the Company recorded total charges of $96 million across all restructuring and cost reduction activities. The charges were comprised of $24 million recorded in COGS, $75 million recorded in SG&A expense and $(3) million net gain recorded in other (income) expense, net (OIE). During the year-to-date period ended July 1, 2017, the Company recorded total charges of $238 million across all restructuring and cost reduction activities. The charges were comprised of $37 million recorded in COGS, $200 million recorded in SG&A expense and $1 million recorded in OIE.

Project K

Project K is expected to continue generating savings that may be invested in key strategic areas of focus for the business or utilized to achieve our growth initiatives.

Since inception, Project K has reduced the Company’s cost structure, and is expected to provide enduring benefits, including an optimized supply chain infrastructure, an efficient global business services model, a global focus on categories, increased agility from a more efficient organization design, and improved effectiveness in go-to-market models.  These benefits are intended to strengthen existing businesses in core markets, increase growth in developing and emerging markets, and drive an increased level of value-added innovation.

The Company currently anticipates that the program will result in total pre-tax charges, once all phases are approved and implemented, on the lower end of a range of $1.5 to $1.6 billion, with after-tax cash costs, including incremental capital investments, estimated to be approximately $1.1 billion. Based on current estimates and actual charges to date, the Company expects the total project charges will consist of asset-related costs of approximately $500 million which will consist primarily of asset impairments, accelerated depreciation and other exit-related costs; employee-related costs of approximately $500 million which will include severance, pension and other termination benefits; and other costs of approximately $600 million which consists primarily of charges related to the design and implementation of global business capabilities and a more efficient go-to-market model.

The Company currently expects that total pre-tax charges related to Project K will impact reportable segments as follows: U.S. Snacks (approximately 34%), U.S. Morning Foods (approximately 17%), U.S. Specialty Channels (approximately 1%), North America Other (approximately 13%), Europe (approximately 22%), Latin America (approximately 2%), Asia-Pacific (approximately 6%), and Corporate (approximately 5%).

Since the inception of Project K, the Company has recognized charges of $1,402 million that have been attributed to the program. The charges consist of $6 million recorded as a reduction of revenue, $803 million recorded in COGS, $730 million recorded in SG&A, and ($137 million) recorded in OIE.

The tables below provide the details for charges incurred during the quarters and year-to-date periods ended June 30, 2018 and July 1, 2017 and program costs to date for programs currently active as of June 30, 2018.

	Quarter ended						Year-to-date period ended					Program costs to date
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017		June 30, 2018
Employee related costs	$	1		$	28		$	5		$	135	$	539
Pension curtailment (gain) loss, net	—			(3		)	—			1		(137		)
Asset related costs	(14		)	20			(10		)	30		259
Asset impairment	—			—			—			—		155
Other costs	18			51			30			72		586
Total	$	5		$	96		$	25		$	238	$	1,402
	Quarter ended						Year-to-date period ended					Program costs to date
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017		June 30, 2018
U.S. Snacks	$	3		$	79		9			$	199	$	512
U.S. Morning Foods	10			1			12			2		263
U.S. Specialty Channels	—			1			—			1		21
North America Other	(1		)	2			1			9		141
Europe	(13		)	2			(6		)	8		324
Latin America	2			3			4			4		31
Asia Pacific	3			3			3			4		90
Corporate	1			5			2			11		20
Total	$	5		$	96		$	25		$	238	$	1,402

Employee related costs consist primarily of severance and related benefits. Pension curtailment (gain) loss consists of curtailment gains or losses that resulted from project initiatives. Asset related costs consist primarily of accelerated depreciation. During the quarter ended June 30, 2018, a gain was recognized related to the sale of a manufacturing facility in Europe that was previously impacted as part of Project K. Asset impairments were recorded for fixed assets that were determined to be impaired and were written down to their estimated fair value. Other costs consist of lease termination costs as well as third-party incremental costs related to the development and implementation of global business capabilities and a more efficient go-to-market model.

At June 30, 2018 total project reserves were $76 million, related to severance payments and other costs of which a substantial portion will be paid in 2018 and 2019. The following table provides details for exit cost reserves.

	Employee Related Costs			Pension curtailment (gain) loss, net		Asset Impairment		Asset Related Costs			Other Costs			Total
Liability as of December 31, 2017	$	97		$	—	$	—	$	—		$	63		$	160
2018 restructuring charges	5			—		—		(10		)	30			25
Cash payments	(43		)	—		—		—			(76		)	(119		)
Non-cash charges and other	—			—		—		10			—			10
Liability as of June 30, 2018	$	59		$	—	$	—	$	—		$	17		$	76

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Equity

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Equity

Equity

Earnings per share

Basic earnings per share is determined by dividing net income 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, restricted stock units, 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. There were 9 million and 6 million anti-dilutive potential common shares excluded from the reconciliation for the quarter and year-to-date periods ended June 30, 2018, respectively. There were 5 million anti-dilutive potential common shares excluded from the reconciliation for the quarter and year-to-date periods ended July 1, 2017, respectively.

Quarters ended June 30, 2018 and July 1, 2017:

(millions, except per share data)	Net income		Average shares outstanding	Earnings per share
2018
Basic	$	596	347	$	1.72
Dilutive potential common shares			1	(0.01		)
Diluted	$	596	348	$	1.71
2017
Basic	$	283	349	$	0.81
Dilutive potential common shares			3	(0.01		)
Diluted	$	283	352	$	0.80

Year-to-date periods ended June 30, 2018 and July 1, 2017:

(millions, except per share data)	Net income		Average shares outstanding	Earnings per share
2018
Basic	$	1,040	346	$	3.00
Dilutive potential common shares			2	(0.01		)
Diluted	$	1,040	348	$	2.99
2017
Basic	$	549	350	$	1.57
Dilutive potential common shares			3	(0.01		)
Diluted	$	549	353	$	1.56

In December 2017, the board of directors approved a new authorization to repurchase up to $1.5 billion of our common stock beginning in January 2018 through December 2019. As of June 30, 2018, $1.45 billion remains available under the authorization.

During the year-to-date period ended June 30, 2018, the Company repurchased less than 1 million shares of common stock for a total of $50 million. During the year-to-date period ended July 1, 2017, the Company repurchased 6 million shares of common stock for a total of $435 million, of which $390 million was paid and $45 million was payable at July 1, 2017.

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 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, net of related tax effects.

Reclassifications out of AOCI for the quarter and year-to-date periods ended June 30, 2018 and July 1, 2017, consisted of the following:

(millions)
Details about AOCI components	Amount reclassified from AOCI						Line item impacted within Income Statement
	Quarter ended June 30, 2018			Year-to-date period ended June 30, 2018
(Gains) losses on cash flow hedges:
Foreign currency exchange contracts	$	—		$	—		COGS
Interest rate contracts	2			4			Interest expense
	$	2		$	4		Total before tax
	(1		)	(1		)	Tax expense (benefit)
	$	1		$	3		Net of tax
Amortization of postretirement and postemployment benefits:
Net experience loss	$	(1	)	$	(2	)	OIE
	$	(1	)	$	(2	)	Total before tax
	—			—			Tax expense (benefit)
	$	(1	)	$	(2	)	Net of tax
Total reclassifications	$	—		$	1		Net of tax

(millions)
Details about AOCI components	Amount reclassified from AOCI					Line item impacted within Income Statement
	Quarter ended July 1, 2017		Year-to-date period ended July 1, 2017
(Gains) losses on cash flow hedges:
Foreign currency exchange contracts	$	—	$	(1	)	COGS
Foreign currency exchange contracts	—		—			SGA
Interest rate contracts	2		5			Interest expense
Commodity contracts	—		—			COGS
	$	2	$	4		Total before tax
	—		(1		)	Tax expense (benefit)
	$	2	$	3		Net of tax
Amortization of postretirement and postemployment benefits:
Net experience loss	$	—	$	1		See Note 8 for further details
Prior service cost	—		—			See Note 8 for further details
	$	—	$	1		Total before tax
	—		—			Tax expense (benefit)
	$	—	$	1		Net of tax
Total reclassifications	$	2	$	4		Net of tax

Accumulated other comprehensive income (loss), net of tax, as of June 30, 2018 and December 30, 2017 consisted of the following:

(millions)	June 30, 2018			December 30, 2017
Foreign currency translation adjustments	$	(1,473	)	$	(1,426	)
Cash flow hedges — unrealized net gain (loss)	(56		)	(61		)
Postretirement and postemployment benefits:
Net experience loss	32			34
Prior service cost	(4		)	(4		)
Total accumulated other comprehensive income (loss)	$	(1,501	)	$	(1,457	)

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Debt

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Debt

Debt

The following table presents the components of notes payable at June 30, 2018 and December 30, 2017:

	June 30, 2018				December 30, 2017
(millions)	Principal amount		Effective interest rate		Principal amount		Effective interest rate (a)
U.S. commercial paper	$	197	2.26	%	$	196	1.76	%
Europe commercial paper	—		—	%	96		(0.32	)%
Bank borrowings	127				78
Total	$	324			$	370

(a) Negative effective interest rates on certain borrowings in Europe are the result of efforts by the European Central Bank to stimulate the economy in the eurozone.

In May 2018, the Company issued $600 million of ten-year 4.30% Senior Notes due 2028 and $400 million of three-year 3.25% Senior Notes due 2021, resulting in aggregate net proceeds after debt discount of $994 million. The proceeds from these Notes were used for general corporate purposes, including the repayment of the Company's $400 million, seven-year 3.25% U.S. Dollar Notes due 2018 at maturity, and the repayment of a portion of the Company's commercial paper borrowings used to finance the acquisition of ownership interests in TAF and Multipro. The Notes contain customary covenants that limit the ability of the Company and its restricted subsidiaries (as defined) to incur certain liens or enter into certain sale and lease-back transactions, as well as a change of control provision.

In May 2017, the Company issued €600 million (approximately $685 million USD at July 1, 2017, which reflects the discount and translation adjustments) of five-year 0.80% Euro Notes due 2022, resulting in aggregate net proceeds after debt discount of $656 million. The proceeds from these Notes were used for general corporate purposes, including, together with cash on hand and additional commercial paper borrowings, repayment of the Company's $400 million, five-year 1.75% U.S. Dollar Notes due 2017 at maturity. The Notes contain customary covenants that limit the ability of the Company and its restricted subsidiaries (as defined) to incur certain liens or enter into certain sale and lease-back transactions, as well as a change of control provision. The Notes were designated as a net investment hedge of the Company's investment in its Europe subsidiary when issued.

During the second quarter of 2017, the Company repaid its Cdn.$300 million three year 2.05% Canadian Dollar Notes.

The Company has entered into interest rate swaps with notional amounts totaling $1.5 billion, which effectively converts a portion of the associated U.S. Dollar Notes and Euro Notes from fixed rate to floating rate obligations. These derivative instruments are designated as fair value hedges. The effective interest rates on debt obligations resulting from the Company’s interest rate swaps as of June 30, 2018 were as follows: (a) ten-year 4.15% U.S. Dollar Notes due 2019 – 3.50%; (b) ten-year 4.00% U.S. Dollar Notes due 2020 – 3.39%; (c) ten-year 3.125% U.S. Dollar Notes due 2022 – 3.87%; (d) ten-year 2.75% U.S. Dollar Notes due 2023 – 4.00%; (e) seven-year 2.65% U.S. Dollar Notes due 2023 – 3.42%; (f) eight-year 1.00% Euro Notes due 2024 – 0.72%; (g) ten-year 1.25% Euro Notes due 2025 - 1.30% and (h) ten-year 3.25% U.S. Notes due 2026 – 4.06%.

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Stock Compensation

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Compensation

Stock compensation

The Company uses various equity-based compensation programs to provide long-term performance incentives for its global workforce. Currently, these incentives consist principally of stock options, restricted stock units, and to a lesser extent, executive performance shares and restricted stock grants. The Company also sponsors a discounted stock purchase plan in the United States and matching-grant programs in several international locations. Additionally, the Company awards restricted stock to its outside directors. The interim information below should be read in conjunction with the disclosures included within the stock compensation footnote of the Company’s 2017 Annual Report on Form 10-K.

The Company classifies pre-tax stock compensation expense in COGS and SG&A expense principally within its Corporate segment. For the periods presented, compensation expense for all types of equity-based programs and the related income tax benefit recognized was as follows:

	Quarter ended				Year-to-date period ended
(millions)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Pre-tax compensation expense	$	16	$	21	$	33	$	39
Related income tax benefit	$	4	$	8	$	8	$	14

As of June 30, 2018, total stock-based compensation cost related to non-vested awards not yet recognized was $112 million and the weighted-average period over which this amount is expected to be recognized was 2 years.

Stock options

During the year-to-date periods ended June 30, 2018 and July 1, 2017, the Company granted non-qualified stock options to eligible employees as presented in the following activity tables. Terms of these grants and the Company’s methods for determining grant-date fair value of the awards were consistent with that described within the stock compensation footnote in the Company’s 2017 Annual Report on Form 10-K.

Year-to-date period ended June 30, 2018:

Employee and director stock options	Shares (millions)		Weighted- average exercise price		Weighted- average remaining contractual term (yrs.)	Aggregate intrinsic value (millions)
Outstanding, beginning of period	14		$	64
Granted	3		70
Exercised	(1	)	57
Forfeitures and expirations	(1	)	70
Outstanding, end of period	15		$	65	6.6	$	92
Exercisable, end of period	11		$	63	5.7	$	91

Year-to-date period ended July 1, 2017:

Employee and director stock options	Shares (millions)		Weighted- average exercise price		Weighted- average remaining contractual term (yrs.)	Aggregate intrinsic value (millions)
Outstanding, beginning of period	15		$	62
Granted	2		73
Exercised	(1	)	57
Forfeitures and expirations	—		—
Outstanding, end of period	16		$	64	7.0	$	109
Exercisable, end of period	11		$	60	6.1	$	104

The weighted-average grant date fair value of options granted was $10.00 per share and $10.14 per share for the year-to-date periods ended June 30, 2018 and July 1, 2017, respectively. The fair value was estimated using the following assumptions:

	Weighted- average expected volatility		Weighted- average expected term (years)	Weighted- average risk-free interest rate		Dividend yield
Grants within the year-to-date period ended June 30, 2018:	18	%	6.6	2.82	%	3.00	%
Grants within the year-to-date period ended July 1, 2017:	18	%	6.6	2.26	%	2.80	%

The total intrinsic value of options exercised was $13 million and $17 million for the year-to-date periods ended June 30, 2018 and July 1, 2017, respectively.

Performance shares

In the first quarter of 2018, the Company granted performance shares to a limited number of senior executive-level employees, which entitle these employees to receive a specified number of shares of the Company’s common stock upon vesting. The number of shares earned could range between 0% and 200% of the target amount depending upon performance achieved over the three year vesting period. The performance conditions of the award include adjusted net sales growth and total shareholder return (TSR) of the Company’s common stock relative to a select group of peer companies.

A Monte Carlo valuation model was used to determine the fair value of the awards. The TSR performance metric is a market condition. Therefore, compensation cost of the TSR condition is fixed at the measurement date and is not revised based on actual performance. The TSR metric was valued as a multiplier of possible levels of adjusted net sales growth achievement. Compensation cost related to adjusted net sales growth performance is revised for changes in the expected outcome. The 2018 target grant currently corresponds to approximately 188,000 shares, with a grant-date fair value of $72 per share.

Based on the market price of the Company’s common stock at June 30, 2018, the maximum future value that could be awarded to employees on the vesting date for all outstanding performance share awards was as follows:

(millions)	June 30, 2018
2016 Award	$	18
2017 Award	$	16
2018 Award	$	26

The 2015 performance share award, payable in stock, was settled at 75% of target in February 2018 for a total dollar equivalent of $8 million.

Other stock-based awards

During the year-to-date period ended June 30, 2018, the Company granted restricted stock units and a nominal number of restricted stock awards to eligible employees as presented in the following table. Terms of these grants and the Company’s method of determining grant-date fair value were consistent with that described within the stock compensation footnote in the Company’s 2017 Annual Report on Form 10-K.

Year-to-date period ended June 30, 2018:

Employee restricted stock units	Shares (thousands)		Weighted-average grant-date fair value
Non-vested, beginning of year	1,673		$	65
Granted	697		63
Vested	(416	)	59
Forfeited	(151	)	63
Non-vested, end of period	1,803		$	66

Year-to-date period ended July 1, 2017:

Employee restricted stock and restricted stock units	Shares (thousands)		Weighted-average grant-date fair value
Non-vested, beginning of year	1,166		$	63
Granted	654		67
Vested	(35	)	57
Forfeited	(72	)	65
Non-vested, end of period	1,713		$	65

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Employee Benefits

6 Months Ended

Jun. 30, 2018

Retirement Benefits [Abstract]

Employee Benefits

Employee benefits

The Company sponsors a number of U.S. and foreign pension plans as well as other nonpension postretirement and postemployment plans to provide various benefits for its employees. These plans are described within the footnotes to the Consolidated Financial Statements included in the Company’s 2017 Annual Report on Form 10-K. Components of Company plan benefit expense for the periods presented are included in the tables below.

Pension

	Quarter ended						Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Service cost	$	22		$	25		$	44		$	50
Interest cost	41			42			83			83
Expected return on plan assets	(90		)	(90		)	(182		)	(180		)
Amortization of unrecognized prior service cost	2			2			4			4
Recognized net (gain) loss	(2		)	(2		)	(11		)	1
Net periodic benefit cost	(27		)	(23		)	(62		)	(42		)
Curtailment (gain) loss	—			(3		)	—			(2		)
Total pension (income) expense	$	(27	)	$	(26	)	$	(62	)	$	(44	)

Other nonpension postretirement

	Quarter ended						Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Service cost	$	4		$	4		$	9		$	9
Interest cost	9			9			18			18
Expected return on plan assets	(23		)	(25		)	(47		)	(49		)
Amortization of unrecognized prior service (gain)	(2		)	(2		)	(4		)	(4		)
Recognized net (gain) loss	—			—			—			(29		)
Net periodic benefit cost	(12		)	(14		)	(24		)	(55		)
Curtailment loss	—			—			—			3
Total postretirement benefit (income) expense	$	(12	)	$	(14	)	$	(24	)	$	(52	)

Postemployment

	Quarter ended					Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017		June 30, 2018			July 1, 2017
Service cost	$	1		$	2	$	2		$	3
Interest cost	—			1		—			2
Recognized net (gain) loss	(1		)	—		(2		)	1
Total postemployment benefit expense	$	—		$	3	$	—		$	6

During the year-to-date period ended June 30, 2018, the Company recognized a gain of $11 million related to the remeasurement of a U.S. pension plan as current year distributions are expected to exceed service and interest costs resulting in settlement accounting for that particular plan. The amount of the remeasurement gain recognized during the quarter was due primarily to a favorable change in the discount rate relative to prior year end.

During the second quarter of 2017, the Company recognized a curtailment gain of $3 million within a pension plan in conjunction with Project K restructuring activity. The Company remeasured the benefit obligation for the impacted pension plan resulting in a mark-to-market gain of $2 million. The gain was due primarily to plan asset returns in excess of the expected rate of return.

During the first quarter of 2017, the Company recognized curtailment losses of $1 million and $3 million within pension and nonpension postretirement plan, respectively, in conjunction with Project K restructuring activity. In addition, the Company remeasured the benefit obligation for impacted pension and nonpension postretirement plans. The remeasurement resulted in a mark-to-market loss of $3 million on a pension plan due primarily to a lower discount rate and a $29 million gain on a nonpension postretirement plan primarily due to plan asset investment returns slightly mitigated by the impact of a lower discount rate.

Company contributions to employee benefit plans are summarized as follows:

(millions)	Pension		Nonpension postretirement		Total
Quarter ended:
June 30, 2018	$	251	$	4	$	255
July 1, 2017	$	2	$	2	$	4
Year-to-date period ended:
June 30, 2018	$	266	$	8	$	274
July 1, 2017	$	23	$	5	$	28
Full year:
Fiscal year 2018 (projected)	$	274	$	13	$	287
Fiscal year 2017 (actual)	$	31	$	13	$	44

During the second quarter of 2018, the Company made discretionary contributions to certain U.S. pension plans totaling $250 million. Plan funding strategies may be modified in response to management's evaluation of tax deductibility, market conditions, and competing investment alternatives.

Additionally, during the first quarter of 2017, the Company recognized expense totaling $26 million related to the exit of several multi-employer plans associated with Project K restructuring activity. This amount represents management's best estimate, actual results could differ. The cash obligation is payable over a maximum 20-year period; management has not determined the actual period over which the payments will be made.

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Income Taxes

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income taxes

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (Tax Act). The Tax Act makes broad and complex changes to the U.S. tax code including but not limited to, reducing the corporate tax rate from 35% to 21%, requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that may be electively paid over eight years, and accelerating first year expensing of certain capital expenditures.

The SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which provides guidance on accounting for the Tax Act’s impact. SAB 118 provides a measurement period, which in no case should extend beyond one year from the Tax Act enactment date, during which a company may complete the accounting for the impacts of the Tax Act under ASC Topic 740. Per SAB 118, the Company must reflect the income tax effects of the Tax Act in the reporting period in which the accounting under ASC Topic 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete, the Company can determine a reasonable estimate for those effects and record a provisional estimate in the financial statements in the first reporting period in which a reasonable estimate can be determined. If a Company cannot determine a provisional estimate to be included in the financial statements, the Company should continue to apply ASC 740 based on the provisions of the tax laws that were in effect immediately prior to the Tax Act being enacted. If a Company is unable to provide a reasonable estimate of the impacts of the Tax Act in a reporting period, a provisional amount must be recorded in the first reporting period in which a reasonable estimate can be determined.

The transition tax is on previously untaxed accumulated and current earnings and profits of certain of our foreign subsidiaries. In order to determine the amount of the transition tax, the Company must determine, in addition to other factors, the amount of post-1986 earnings and profits (E&P) of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. E&P is similar to retained earnings of the subsidiary, but requires other adjustments to conform to U.S. tax rules. The Company's estimate was unchanged during the second quarter of 2018. The Company is awaiting further interpretative guidance, continuing to assess available tax methods and elections, and continuing to gather additional information in order to finalize calculations and complete the accounting for the transition tax liability.

In addition to the transition tax, the Tax Act introduced a territorial tax system, which was effective beginning in 2018. The territorial tax system will impact the Company’s overall global capital and legal entity structure, working capital, and repatriation plan on a go-forward basis. In light of the territorial tax system, and other new international provisions within the Tax Act effective beginning in 2018, the Company is currently analyzing its global capital and legal entity structure, working capital requirements, and repatriation plans. Based on the Company's analysis of the territorial tax system and other new international tax provisions as of June 30, 2018, the Company continues to support the assertion to indefinitely reinvest $2.6 billion of accumulated foreign earnings and profits in Europe and other non-U.S. jurisdictions. As a result, as a reasonable provisional estimate, the Company did not record any new deferred tax liabilities associated with the territorial tax system or any changes to the indefinite reinvestment assertion. Further, it is impracticable for the Company to estimate any future tax costs for any unrecognized deferred tax liabilities associated with its indefinite reinvestment assertion as of June 30, 2018, because the actual tax liability, if any, would be dependent on complex analysis and calculations considering various tax laws, exchange rates, circumstances existing when a repatriation, sale, or liquidation occurs, or other factors. If there are any changes to our indefinite reinvestment assertion as a result of finalizing our assessment of the new Tax Act, the Company will adjust its provisional estimates, record, and disclose any tax impacts in the appropriate period, pursuant to SAB 118.

The consolidated effective tax rate for the quarter ended June 30, 2018 was 15% as compared to 26% in the same quarter of the prior year. The effective tax rate for the second quarter benefited from the reduction of the U.S. corporate tax rate as well as a tax benefit of $31 million attributable to discretionary pension contributions made in the second quarter of 2018 totaling $250 million, which are designated as 2017 tax year contributions.

The consolidated effective tax rate for the year-to-date periods ended June 30, 2018 and July 1, 2017 was 14% and 21%, respectively. The effective tax rate for the year-to-date period ended June 30, 2018 benefited from a discretionary pension contribution during the second quarter of 2018, a $44 million discrete tax benefit as a result of the remeasurement of deferred taxes following a legal entity restructuring in the first quarter of 2018, as well as the reduction in the U.S. corporate tax rate effective at the beginning of 2018. These impacts were mitigated somewhat by an increased weighting of taxable income in higher tax rate jurisdictions versus the prior year. The effective tax rate for the year-to-date period ended July 1, 2017 benefited from a deferred tax benefit of $38 million resulting from intercompany transfers of intellectual property.

As of June 30, 2018, the Company classified $8 million of unrecognized tax benefits as a net current liability. Management’s estimate of reasonably possible changes in unrecognized tax benefits during the next twelve months consists of the current liability balance expected to be settled within one year, offset by approximately $6 million of projected additions related primarily to ongoing intercompany transfer pricing activity. Management is currently unaware of any issues under review that could result in significant additional payments, accruals or other material deviation in this estimate.

Following is a reconciliation of the Company’s total gross unrecognized tax benefits for the year-to-date period ended June 30, 2018; $45 million of this total represents the amount that, if recognized, would affect the Company’s effective income tax rate in future periods.

(millions)
December 30, 2017	$	60
Tax positions related to current year:
Additions	3
Reductions	—
Tax positions related to prior years:
Additions	2
Reductions	(6		)
Settlements	(2		)
Lapse in statute of limitations	—
June 30, 2018	$	57

The accrual balance for tax-related interest was approximately $25 million at June 30, 2018.

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Derivative Instruments and Fair Value Measurements

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Fair Value Measurements [Abstract]

Derivative Instruments and Fair Value Measurements

Derivative instruments and fair value measurements

The Company is exposed to certain market risks such as changes in interest rates, foreign currency exchange rates, and commodity prices, which exist as a part of its ongoing business operations. Management uses derivative and nonderivative financial instruments and commodity instruments, including futures, options, and swaps, where appropriate, to manage these risks. Instruments used as hedges must be effective at reducing the risk associated with the exposure being hedged.

The Company designates derivatives and nonderivative hedging instruments as cash flow hedges, fair value hedges, net investment hedges, and uses other contracts to reduce volatility in interest rates, foreign currency and commodities. As a matter of policy, the Company does not engage in trading or speculative hedging transactions.

Total notional amounts of the Company’s derivative instruments as of June 30, 2018 and December 30, 2017 were as follows:

(millions)	June 30, 2018		December 30, 2017
Foreign currency exchange contracts	$	1,518	$	2,172
Cross-currency contracts	696		—
Interest rate contracts	1,468		2,250
Commodity contracts	348		544
Total	$	4,030	$	4,966

Following is a description of each category in the fair value hierarchy and the financial assets and liabilities of the Company that were included in each category at June 30, 2018 and December 30, 2017, measured on a recurring basis.

Level 1 – Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market. For the Company, level 1 financial assets and liabilities consist primarily of commodity derivative contracts.

Level 2 – Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. For the Company, level 2 financial assets and liabilities consist of interest rate swaps, cross-currency swaps and over-the-counter commodity and currency contracts.

The Company’s calculation of the fair value of interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve. Over-the-counter commodity derivatives are valued using an income approach based on the commodity index prices less the contract rate multiplied by the notional amount. Foreign currency contracts are valued using an income approach based on forward rates less the contract rate multiplied by the notional amount. The Company’s calculation of the fair value of level 2 financial assets and liabilities takes into consideration the risk of nonperformance, including counterparty credit risk.

Level 3 – Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability. The Company did not have any level 3 financial assets or liabilities as of June 30, 2018 or December 30, 2017.

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheet on a recurring basis as of June 30, 2018 and December 30, 2017:

Derivatives designated as hedging instruments

	June 30, 2018								December 30, 2017
(millions)	Level 1		Level 2			Total			Level 1		Level 2			Total
Assets:
Cross-currency contracts
Other current assets	$	—	$	27		$	27		$	—	$	—		$	—
Interest rate contracts:
Other assets (a)	—		4			4			—		—			—
Total assets	$	—	$	31		$	31		$	—	$	—		$	—
Liabilities:
Interest rate contracts:
Other liabilities (a)	—		(29		)	(29		)	—		(54		)	(54		)
Total liabilities	$	—	$	(29	)	$	(29	)	$	—	$	(54	)	$	(54	)

(a) The fair value of the related hedged portion of the Company's long-term debt, a level 2 liability, was $1.5 billion and $2.3 billion as of June 30, 2018 and December 30, 2017, respectively.

Derivatives not designated as hedging instruments

	June 30, 2018									December 30, 2017
(millions)	Level 1			Level 2			Total			Level 1			Level 2			Total
Assets:
Foreign currency exchange contracts:
Other current assets	$	—		$	26		$	26		$	—		$	10		$	10
Commodity contracts:
Other current assets	3			—			3			6			—			6
Total assets	$	3		$	26		$	29		$	6		$	10		$	16
Liabilities:
Foreign currency exchange contracts:
Other current liabilities	$	—		$	(14	)	$	(14	)	$	—		$	(14	)	$	(14	)
Commodity contracts:
Other current liabilities	(10		)	—			(10		)	$	(7	)	$	—		$	(7	)
Total liabilities	$	(10	)	$	(14	)	$	(24	)	$	(7	)	$	(14	)	$	(21	)

The Company has designated its outstanding foreign currency denominated long-term debt as a net investment hedge of a portion of the Company’s investment in its subsidiaries’ foreign currency denominated net assets. The carrying value of this debt was approximately $2.7 billion as of June 30, 2018 and December 30, 2017.

The following amounts were recorded on the Consolidated Balance Sheet related to cumulative basis adjustments for existing fair value hedges as of June 30, 2018 and December 30, 2017.

(millions)	Line Item in the Consolidated Balance Sheet in which the hedged item is included	Carrying amount of the hedged liabilities				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities (a)
		June 30, 2018		December 30, 2017		June 30, 2018			December 30, 2017
Interest rate contracts	Current maturities of long-term debt	$	—	$	402	$	—		$	2
Interest rate contracts	Long-term debt	$	3,357	$	3,481	$	(45	)	$	(22	)

(a) The current maturities of hedged long-term debt includes $2 million of hedging adjustment on discontinued hedging relationships as of December 30, 2017. The hedged long-term debt includes $(19) million and $32 millionof hedging adjustment on discontinued hedging relationships as of June 30, 2018 and December 30, 2017, respectively.

The Company has elected to not offset the fair values of derivative assets and liabilities executed with the same counterparty that are generally subject to enforceable netting agreements. However, if the Company were to offset and record the asset and liability balances of derivatives on a net basis, the amounts presented in the Consolidated Balance Sheet as of June 30, 2018 and December 30, 2017 would be adjusted as detailed in the following table:

As of June 30, 2018:
				Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet			Financial Instruments			Cash Collateral Received/ Posted		Net Amount
Total asset derivatives	$	60		$	(28	)	$	—	$	32
Total liability derivatives	$	(53	)	$	28		$	25	$	—

As of December 30, 2017:
				Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet			Financial Instruments			Cash Collateral Received/ Posted		Net Amount
Total asset derivatives	$	16		$	(15	)	$	—	$	1
Total liability derivatives	$	(75	)	$	15		$	37	$	(23	)

The effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the quarters ended June 30, 2018 and July 1, 2017 was as follows:

Derivatives and non-derivatives in net investment hedging relationships

(millions)	Gain (loss) recognized in AOCI					Gain (loss) excluded from assessment of hedge effectiveness				Location of gain (loss) in income of excluded component
	June 30, 2018		July 1, 2017			June 30, 2018		July 1, 2017
Foreign currency denominated long-term debt	$	146	$	(157	)	$	—	$	—
Cross-currency contracts	35		—			$	3	—		Other income (expense), net
Total	$	181	$	(157	)	$	3	$	—

Derivatives not designated as hedging instruments

(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income
		June 30, 2018			July 1, 2017
Foreign currency exchange contracts	COGS	$	4		$	(4	)
Foreign currency exchange contracts	Other income (expense), net	—			(3		)
Foreign currency exchange contracts	SG&A	—			(1		)
Commodity contracts	COGS	(8		)	10
Total		$	(4	)	$	2

The effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the year-to-date periods ended June 30, 2018 and July 1, 2017 was as follows:

Derivatives and non-derivatives in net investment hedging relationships

(millions)	Gain (loss) recognized in AOCI					Gain (loss) excluded from assessment of hedge effectiveness				Location of gain (loss) in income of excluded component
	June 30, 2018		July 1, 2017			June 30, 2018		July 1, 2017
Foreign currency denominated long-term debt	$	73	$	(182	)	$	—	$	—
Cross-currency contracts	27		—			6		—		Other income (expense), net
Total	$	100	$	(182	)	$	6	$	—

Derivatives not designated as hedging instruments

(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income
		June 30, 2018			July 1, 2017
Foreign currency exchange contracts	COGS	$	7		$	(13	)
Foreign currency exchange contracts	Other income (expense), net	(4		)	(8		)
Foreign currency exchange contracts	SGA	1			(1		)
Commodity contracts	COGS	(3		)	(3		)
Commodity contracts	SGA	—			1
Total		$	1		$	(24	)

The effect of fair value and cash flow hedge accounting on the Consolidated Income Statement for the quarters ended June 30, 2018 and July 1, 2017:

		June 30, 2018			July 1, 2017
(millions)		Interest Expense			Interest Expense
Total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value or cash flow hedges are recorded		$	72		$	63
	Gain (loss) on fair value hedging relationships:
	Interest contracts:
	Hedged items	(7		)	(3		)
	Derivatives designated as hedging instruments	7			8
	Gain (loss) on cash flow hedging relationships:
	Interest contracts:
	Amount of gain (loss) reclassified from AOCI into income	(2		)	(3		)
	Foreign exchange contracts:
	Amount of gain (loss) reclassified from AOCI into income	—			—

The effect of fair value and cash flow hedge accounting on the Consolidated Income Statement for the year-to-date periods ended June 30, 2018 and July 1, 2017:

		June 30, 2018			July 1, 2017
(millions)		Interest Expense			COGS		Interest Expense
Total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value or cash flow hedges are recorded		$	141		$	4,038	$	124
	Gain (loss) on fair value hedging relationships:
	Interest contracts:
	Hedged items	25			—		6
	Derivatives designated as hedging instruments	(21		)	—		4
	Gain (loss) on cash flow hedging relationships:
	Interest contracts:
	Amount of gain (loss) reclassified from AOCI into income	(4		)	—		(5		)
	Foreign exchange contracts:
	Amount of gain (loss) reclassified from AOCI into income	—			1		—

During the next 12 months, the Company expects $7 million of net deferred losses reported in AOCI at June 30, 2018 to be reclassified to income, assuming market rates remain constant through contract maturities.

Certain of the Company’s derivative instruments contain provisions requiring the Company to post collateral on those derivative instruments that are in a liability position if the Company’s credit rating is at or below BB+ (S&P), or Baa1 (Moody’s). The fair value of all derivative instruments with credit-risk-related contingent features in a liability position on June 30, 2018 was $15 million. If the credit-risk-related contingent features were triggered as of June 30, 2018, the Company would be required to post additional collateral of $10 million. In addition, certain derivative instruments contain provisions that would be triggered in the event the Company defaults on its debt agreements. There were no collateral posting as of June 30, 2018 triggered by credit-risk-related contingent features.

Financial instruments

The carrying values of the Company’s short-term items, including cash, cash equivalents, accounts receivable, accounts payable, notes payable and current maturities of long-term debt approximate fair value. The fair value of the Company’s long-term debt, which are level 2 liabilities, is calculated based on broker quotes. The fair value and carrying value of the Company's long-term debt was $8.9 billion and $8.7 billion, respectively, as of June 30, 2018.

Counterparty credit risk concentration and collateral requirements

The Company is exposed to credit loss in the event of nonperformance by counterparties on derivative financial and commodity contracts. Management believes a concentration of credit risk with respect to derivative counterparties is limited due to the credit ratings and use of master netting and reciprocal collateralization agreements with the counterparties and the use of exchange-traded commodity contracts.

Master netting agreements apply in situations where the Company executes multiple contracts with the same counterparty. Certain counterparties represent a concentration of credit risk to the Company. If those counterparties fail to perform according to the terms of derivative contracts, this would result in a loss to the Company. As of June 30, 2018, the Company was not in a significant net asset position with any counterparties with which a master netting agreement would apply.

For certain derivative contracts, reciprocal collateralization agreements with counterparties call for the posting of collateral in the form of cash, treasury securities or letters of credit if a fair value loss position to the Company or its counterparties exceeds a certain amount. In addition, the Company is required to maintain cash margin accounts in connection with its open positions for exchange-traded commodity derivative instruments executed with the counterparty that are subject to enforceable netting agreements. As of June 30, 2018, the Company posted $5 million related to reciprocal collateralization agreements. As of June 30, 2018 the Company posted $17 million in margin deposits for exchange-traded commodity derivative instruments, which was reflected as an increase in accounts receivable, net on the Consolidated Balance Sheet.

Management believes concentrations of credit risk with respect to accounts receivable is limited due to the generally high credit quality of the Company’s major customers, as well as the large number and geographic dispersion of smaller customers. However, the Company conducts a disproportionate amount of business with a small number of large multinational grocery retailers, with the five largest accounts encompassing approximately 22% of consolidated trade receivables at June 30, 2018.

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Reportable Segments

6 Months Ended

Jun. 30, 2018

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, veggie foods and noodles. Kellogg products are manufactured and marketed globally. Principal markets for these products include the United States and United Kingdom.

The Company manages its operations through ten 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.

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

U.S. Morning Foods includes primarily cereal and toaster pastries.

U.S. Specialty Channels 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, Canada, and RXBAR 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, the Middle east and Northern Africa; 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. Certain immaterial reclassifications have been made to the prior year amounts to conform with current year presentation.

	Quarter ended						Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Net sales
U.S. Snacks	$	745		$	815		$	1,507		$	1,610
U.S. Morning Foods	643			664			1,334			1,372
U.S. Specialty Channels	277			275			675			668
North America Other	462			390			941			782
Europe	621			567			1,208			1,080
Latin America	239			232			471			452
Asia Pacific	373			232			625			459
Consolidated	$	3,360		$	3,175		$	6,761		$	6,423
Operating profit
U.S. Snacks	$	111		$	29		$	213		$	(7	)
U.S. Morning Foods	138			170			288			327
U.S. Specialty Channels	60			70			140			166
North America Other	76			59			143			108
Europe	97			77			171			143
Latin America	20			26			42			59
Asia Pacific	28			18			55			40
Total Reportable Segments	530			449			1,052			836
Corporate	(56		)	(64		)	(68		)	(171		)
Consolidated	$	474		$	385		$	984		$	665

Supplemental product information is provided below for net sales to external customers:

	Quarter ended				Year-to-date period ended
(millions)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Snacks	$	1,684	$	1,635	$	3,458	$	3,351
Cereal	1,304		1,305		2,655		2,603
Frozen and other	372		235		648		469
Consolidated	$	3,360	$	3,175	$	6,761	$	6,423

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Supplemental Financial Statement Data Supplemental Financial Statement Data

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supplemental Balance Sheet Disclosures [Text Block]

Supplemental Financial Statement Data

Consolidated Balance Sheet
(millions)	June 30, 2018 (unaudited)			December 30, 2017
Trade receivables	$	1,339		$	1,250
Allowance for doubtful accounts	(10		)	(10		)
Refundable income taxes	18			23
Other receivables	183			126
Accounts receivable, net	$	1,530		$	1,389
Raw materials and supplies	$	337		$	333
Finished goods and materials in process	954			884
Inventories	$	1,291		$	1,217
Property	$	9,063		$	9,366
Accumulated depreciation	(5,425		)	(5,650		)
Property, net	$	3,638		$	3,716
Pension	$	290		$	252
Deferred income taxes	242			246
Other	580			529
Other assets	$	1,112		$	1,027
Accrued income taxes	$	32		$	30
Accrued salaries and wages	225			311
Accrued advertising and promotion	570			582
Other	502			551
Other current liabilities	$	1,329		$	1,474
Income taxes payable	$	182		$	192
Nonpension postretirement benefits	39			40
Other	327			373
Other liabilities	$	548		$	605

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Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation

The unaudited interim financial information of Kellogg Company (the Company) included in this report reflects all adjustments, all of which are of a normal and recurring nature, that management believes are necessary for a fair statement of the results of operations, comprehensive income, financial position, equity and cash flows for the periods presented. This interim information should be read in conjunction with the financial statements and accompanying footnotes within the Company’s 2017 Annual Report on Form 10-K.

The condensed balance sheet information at December 30, 2017 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. The results of operations for the quarterly period ended June 30, 2018 are not necessarily indicative of the results to be expected for other interim periods or the full year.

Accounts payable

Accounts payable

The Company has agreements with certain third parties to provide accounts payable tracking systems which facilitates participating suppliers’ ability to monitor and, if elected, sell payment obligations from the Company to designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to sell one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s goal in entering into these agreements is to capture overall supplier savings, in the form of payment terms or vendor funding, created by facilitating suppliers’ ability to sell payment obligations, while providing them with greater working capital flexibility. We have no economic interest in the sale of these suppliers’ receivables and no direct financial relationship with the financial institutions concerning these services. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to sell amounts under these arrangements. However, the Company’s right to offset balances due from suppliers against payment obligations is restricted by this agreement for those payment obligations that have been sold by suppliers.

Revenue Recognition, Policy [Policy Text Block]

Revenue

The Company recognizes revenue from the sale of food products which are sold to retailers through direct sales forces, broker and distributor arrangements. The Company also recognizes revenue from the license of our trademarks granted to third parties who uses these trademarks on their merchandise. Revenue from these licenses are not material to the Company. Revenue, which includes shipping and handling charges billed to the customer, is reported net of applicable discounts, returns, allowances, and various government withholding taxes.

Contract balances where revenue is recognized in the current period that is not a result of current period performance is not material to the Company. The Company also does not incur costs to obtain or fulfill contracts.

Performance obligations

The Company recognizes revenue when (or as) performance obligations are satisfied by transferring control of the goods to customers. Control is transferred upon delivery of the goods to the customer. At the time of delivery, the customer is invoiced with payment terms which are commensurate with the customer’s credit profile. Shipping and/or handling costs that occur before the customer obtains control of the goods are deemed to be fulfillment activities and are accounted for as fulfillment costs.

The Company assesses the goods and services promised in its customers’ purchase orders and identifies a performance obligation for each promise to transfer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, the Company considers all the goods or services promised, whether explicitly stated or implied based on customary business practices. For a purchase order that has more than one performance obligation, the Company allocates the total consideration to each distinct performance obligation on a relative standalone selling price basis.

Significant Judgments

The Company offers various forms of trade promotions and the methodologies for determining these provisions are dependent on local customer pricing and promotional practices, which range from contractually fixed percentage price reductions to provisions based on actual occurrence or performance. Where applicable, future provisions are estimated based on a combination of historical patterns and future expectations regarding specific in-market product performance.

Our promotional activities are conducted either through the retail trade or directly with consumers and include activities such as in-store displays and events, feature price discounts, consumer coupons, contests and loyalty programs. The costs of these activities are generally recognized at the time the related revenue is recorded, which normally precedes the actual cash expenditure. The recognition of these costs therefore requires management judgment regarding the volume of promotional offers that will be redeemed by either the retail trade or consumer. These estimates are made using various techniques including historical data on performance of similar promotional programs. Differences between estimated expense and actual redemptions are normally insignificant and recognized as a change in management estimate in a subsequent period.

Practical expedients

The Company elected the following practical expedients in accordance with ASU 2014-09:

• Significant financing component - The Company elected not to adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between the transfer of a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

• Shipping and handling costs - The Company elected to account for shipping and handling activities that occur before the customer has obtained control of a good as fulfillment activities (i.e., an expense) rather than as a promised service.

• Measurement of transaction price - The Company has elected to exclude from the measurement of transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer for sales taxes.

New accounting standards adopted and accounting standards to be adopted in future periods

New accounting standards

Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. In August 2017, the FASB issued an ASU intended to simplify hedge accounting by better aligning an entity’s financial reporting for hedging relationships with its risk management activities. The ASU also simplifies the application of the hedge accounting guidance. The new guidance is effective on January 1, 2019, with early adoption permitted. For cash flow hedges existing at the adoption date, the standard requires adoption on a modified retrospective basis with a cumulative-effect adjustment to the Consolidated Balance Sheet as of the beginning of the year of adoption. The amendments to presentation guidance and disclosure requirements are required to be adopted prospectively. The Company adopted the ASU in the first quarter of 2018. The impact of adoption was immaterial to the financial statements.

Improving the Presentation of net Periodic Pension Cost and net Periodic Postretirement Benefit Cost. In March 2017, the FASB issued an ASU to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The ASU requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The amendments in this ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The Company adopted the ASU in the first quarter of 2018.

Simplifying the test for goodwill impairment. In January 2017, the FASB issued an ASU to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. The ASU is effective for an entity's annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The amendments in this ASU should be applied on a prospective basis. The Company adopted the ASU in the first quarter of 2018 with no impact.

Statement of Cash Flows. In August 2016, the FASB issued an ASU to provide cash flow statement classification guidance for certain cash receipts and payments including (a) debt prepayment or extinguishment costs; (b) contingent consideration payments made after a business combination; (c) insurance settlement proceeds; (d) distributions from equity method investees; (e) beneficial interests in securitization transactions and (f) application of the predominance principle for cash receipts and payments with aspects of more than one class of cash flows.  The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period, in which case adjustments should be reflected as of the beginning of the fiscal year that includes the interim period.   The amendments in this ASU should be applied retrospectively.  The Company adopted the new ASU in the first quarter of 2018.

Recognition and measurement of financial assets and liabilities. In January 2016, the FASB issued an ASU which requires equity investments that are not accounted for under the equity method of accounting to be measured at fair value with changes recognized in net income and which updates certain presentation and disclosure requirements. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption can be elected for all financial statements of fiscal years and interim periods that have not yet been issued or that have not yet been made available for issuance. Entities should apply the update by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company adopted the updated standard in the first quarter of 2018. The impact of adoption was immaterial to the financial statements.

Revenue from contracts with customers. In May 2014, the FASB issued an ASU, as amended, which provides guidance for accounting for revenue from contracts with customers. The core principle of this ASU is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. To achieve that core principle, an entity would be required to apply the following five steps: 1) identify the contract(s) with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations in the contract and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company adopted the updated standard in the first quarter of 2018 using the full retrospective method and restated previously reported amounts. In connection with the adoption, the Company made reclassification of certain customer allowances. The adoption effects relate to the timing of recognition and classification of certain promotional allowances. The updated revenue standard also required additional disaggregated revenue disclosures. Refer to Impacts to Previously Reported Results below for the impact of adoption of the standard on our consolidated financial statements.

Impacts to Previously Reported Results

Adoption of the standards related to revenue recognition, pension and cash flow impacted our previously reported results as follows:

	As of December 30, 2017
Consolidated Balance Sheet	Previously Reported		Revenue Recognition ASU			Restated
Other assets	$	1,026	$	1		$	1,027
Other current liabilities	$	1,431	$	43		$	1,474
Deferred income taxes	$	363	$	(8	)	$	355
Retained earnings	$	7,103	$	(34	)	$	7,069

	Quarter ended July 1, 2017
Consolidated Statement of Income	Previously Reported			Revenue Recognition ASU			Pension ASU		Restated
Net sales	$	3,187		$	(12	)	$	—	$	3,175
Cost of goods sold	$	1,922		$	(17	)	$	45	$	1,950
Selling, general and administrative expense	$	812		$	4		$	24	$	840
Other income (expense), net	$	(6	)	$	—		$	69	$	63
Income taxes	$	102		$	—		$	—	$	102
Net income	$	282		$	1		$	—	$	283
Per share amounts:
Basic earnings	$	0.81		$	—		$	—	$	0.81
Diluted earnings	$	0.80		$	—		$	—	$	0.80

	Year-to-date period ended July 1, 2017
Consolidated Statement of Income	Previously Reported			Revenue Recognition ASU			Pension ASU		Restated
Net sales	$	6,441		$	(18	)	$	—	$	6,423
Cost of goods sold	$	3,972		$	(33	)	$	99	$	4,038
Selling, general and administrative expense	$	1,656		$	9		$	55	$	1,720
Other income (expense), net	$	(3	)	$	—		$	154	$	151
Income taxes	$	144		$	1		$	—	$	145
Net income	$	544		$	5		$	—	$	549
Per share amounts:
Basic earnings	$	1.56		$	0.01		$	—	$	1.57
Diluted earnings	$	1.54		$	0.02		$	—	$	1.56

	Year-to-date period ended July 1, 2017
Consolidated Statement of Cash Flows	Previously Reported			Revenue Recognition ASU			Cash Flow ASU			Restated
Net income	$	544		$	5		$	—		$	549
Deferred income taxes	$	(67	)	$	1		$	—		$	(66	)
Other	$	30		$	—		$	6		$	36
Trade receivables	$	(148	)	$	—		$	(568	)	$	(716	)
All other current assets and liabilities, net	$	10		$	(6	)	$	—		$	4
Net cash provided by (used in) operating activities	$	654		$	—		$	(562	)	$	92
Collections of deferred purchase price on securitized trade receivables	$	—		$	—		$	568		$	568
Investment in unconsolidated entities, net proceeds	$	6		$	—		$	(6	)	$	—
Net cash provided by (used in) investing activities	$	(262	)	$	—		$	562		$	300

Accounting standards to be adopted in future periods

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. In February 2018, the FASB issued an ASU permitting a company to reclassify the disproportionate income tax effects of the Tax Cuts and Jobs Act of 2017 on items within accumulated other comprehensive income (AOCI). The reclassification is optional. Regardless of whether or not a company opts to make the reclassification, the new guidance requires all companies to include certain disclosures in their financial statements. The guidance is effective for all fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing when to adopt the ASU and the impact of adoption.

Leases. In February 2016, the FASB issued an ASU which will require the recognition of lease assets and lease liabilities by lessees for all leases with terms greater than 12 months. The distinction between finance leases and operating leases will remain, with similar classification criteriaas current GAAP to distinguish between capital and operating leases. The principal difference from current guidance is that the lease assets and lease liabilities arising from operating leases will be recognized on the Consolidated Balance Sheet. Lessor accounting remains substantially similar to current GAAP. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company will adopt the ASU in the first quarter of 2019, and is currently evaluating the impact that implementing this ASU will have on its financial statements.

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Accounting Policies Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block]

Impacts to Previously Reported Results

Adoption of the standards related to revenue recognition, pension and cash flow impacted our previously reported results as follows:

	As of December 30, 2017
Consolidated Balance Sheet	Previously Reported		Revenue Recognition ASU			Restated
Other assets	$	1,026	$	1		$	1,027
Other current liabilities	$	1,431	$	43		$	1,474
Deferred income taxes	$	363	$	(8	)	$	355
Retained earnings	$	7,103	$	(34	)	$	7,069

	Quarter ended July 1, 2017
Consolidated Statement of Income	Previously Reported			Revenue Recognition ASU			Pension ASU		Restated
Net sales	$	3,187		$	(12	)	$	—	$	3,175
Cost of goods sold	$	1,922		$	(17	)	$	45	$	1,950
Selling, general and administrative expense	$	812		$	4		$	24	$	840
Other income (expense), net	$	(6	)	$	—		$	69	$	63
Income taxes	$	102		$	—		$	—	$	102
Net income	$	282		$	1		$	—	$	283
Per share amounts:
Basic earnings	$	0.81		$	—		$	—	$	0.81
Diluted earnings	$	0.80		$	—		$	—	$	0.80

	Year-to-date period ended July 1, 2017
Consolidated Statement of Income	Previously Reported			Revenue Recognition ASU			Pension ASU		Restated
Net sales	$	6,441		$	(18	)	$	—	$	6,423
Cost of goods sold	$	3,972		$	(33	)	$	99	$	4,038
Selling, general and administrative expense	$	1,656		$	9		$	55	$	1,720
Other income (expense), net	$	(3	)	$	—		$	154	$	151
Income taxes	$	144		$	1		$	—	$	145
Net income	$	544		$	5		$	—	$	549
Per share amounts:
Basic earnings	$	1.56		$	0.01		$	—	$	1.57
Diluted earnings	$	1.54		$	0.02		$	—	$	1.56

	Year-to-date period ended July 1, 2017
Consolidated Statement of Cash Flows	Previously Reported			Revenue Recognition ASU			Cash Flow ASU			Restated
Net income	$	544		$	5		$	—		$	549
Deferred income taxes	$	(67	)	$	1		$	—		$	(66	)
Other	$	30		$	—		$	6		$	36
Trade receivables	$	(148	)	$	—		$	(568	)	$	(716	)
All other current assets and liabilities, net	$	10		$	(6	)	$	—		$	4
Net cash provided by (used in) operating activities	$	654		$	—		$	(562	)	$	92
Collections of deferred purchase price on securitized trade receivables	$	—		$	—		$	568		$	568
Investment in unconsolidated entities, net proceeds	$	6		$	—		$	(6	)	$	—
Net cash provided by (used in) investing activities	$	(262	)	$	—		$	562		$	300

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Acquisitions, West Africa Investments, Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2018

Acquisitions, West Africa Investments, Goodwill and Other Intangible Assets [Abstract]

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

The assets and liabilities are included in the Consolidated Balance Sheet as of June 30, 2018 within the Asia-Pacific reporting segment. The acquired assets and assumed liabilities include the following:

(millions)	May 2, 2018
Current assets	$	118
Property	41
Goodwill	616
Intangible assets subject to amortization, primarily customer relationships	425
Intangible assets not subject to amortization, primarily distribution rights	373
Deferred tax liability	(256		)
Other liabilities	(148		)
Noncontrolling interest	(552		)
	$	617

The assets and liabilities are included in the Consolidated Balance Sheet as of June 30, 2018 within the North America Other reporting segment. The acquired assets and assumed liabilities include the following:

(millions)	October 27, 2017
Current assets	$	42
Goodwill	373
Intangible assets, primarily indefinite-lived brands	203
Current liabilities	(23		)
	$	595

Business Acquisition, Pro Forma Information [Table Text Block]

The unaudited pro forma historical net sales, as if Multipro had been acquired at the beginning of 2017 are estimated as follows:

	Quarter ended				Year-to-date period ended
(millions)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Net sales	$	3,433	$	3,326	$	7,043	$	6,739

Carrying Amount of Goodwill

(millions)	U.S. Snacks		U.S. Morning Foods		U.S. Specialty Channels		North America Other			Europe			Latin America			Asia Pacific			Consoli- dated
December 30, 2017	$	3,568	$	131	$	82	$	836		$	414		$	244		$	229		$	5,504
Additions	—		—		—		—			—			—			616			616
Purchase price allocation adjustment	—		—		—		(1		)	—			—			—			(1		)
Purchase price adjustment	—		—		—		(1		)	—			—			—			(1		)
Currency translation adjustment	—		—		—		(2		)	(12		)	(25		)	(7		)	(46		)
June 30, 2018	$	3,568	$	131	$	82	$	832		$	402		$	219		$	838		$	6,072

Intangible Assets Subject to Amortization

Gross carrying amount
(millions)	U.S. Snacks			U.S. Morning Foods		U.S. Specialty Channels		North America Other			Europe			Latin America			Asia Pacific			Consoli- dated
December 30, 2017	$	42		$	8	$	—	$	22		$	45		$	74		$	10		$	201
Additions	—			—		—		—			—			—			425			425
Purchase price allocation adjustment	—			—		—		2			—			—			—			2
Currency translation adjustment	—			—		—		—			(1		)	(10		)	(3		)	(14		)
June 30, 2018	$	42		$	8	$	—	$	24		$	44		$	64		$	432		$	614
Accumulated Amortization
December 30, 2017	$	22		$	8	$	—	$	5		$	18		$	10		$	4		$	67
Amortization	2			—		—		1			1			2			3			9
Currency translation adjustment	—			—		—		—			—			(1		)	—			(1		)
June 30, 2018	$	24		$	8	$	—	$	6		$	19		$	11		$	7		$	75
Intangible assets subject to amortization, net
December 30, 2017	$	20		$	—	$	—	$	17		$	27		$	64		$	6		$	134
Additions	—			—		—		—			—			—			425			425
Purchase price allocation adjustment	—			—		—		2			—			—			—			2
Amortization	(2		)	—		—		(1		)	(1		)	(2		)	(3		)	(9		)
Currency translation adjustment	—			—		—		—			(1		)	(9		)	(3		)	(13		)
June 30, 2018	$	18		$	—	$	—	$	18		$	25		$	53		$	425		$	539

Intangible Assets Not Subject to Amortization

(millions)	U.S. Snacks		U.S. Morning Foods		U.S. Specialty Channels		North America Other		Europe			Latin America			Asia Pacific			Consoli- dated
December 30, 2017	$	1,625	$	—	$	—	$	360	$	434		$	86		$	—		$	2,505
Additions	—		—		—		—		—			—			373			373
Currency translation adjustment	—		—		—		—		(10		)	(13		)	(3		)	(26		)
June 30, 2018	$	1,625	$	—	$	—	$	360	$	424		$	73		$	370		$	2,852

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Restructuring and Cost Reduction Activities (Tables)

6 Months Ended

Jun. 30, 2018

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Cost Reduction Activities

	Quarter ended						Year-to-date period ended					Program costs to date
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017		June 30, 2018
Employee related costs	$	1		$	28		$	5		$	135	$	539
Pension curtailment (gain) loss, net	—			(3		)	—			1		(137		)
Asset related costs	(14		)	20			(10		)	30		259
Asset impairment	—			—			—			—		155
Other costs	18			51			30			72		586
Total	$	5		$	96		$	25		$	238	$	1,402
	Quarter ended						Year-to-date period ended					Program costs to date
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017		June 30, 2018
U.S. Snacks	$	3		$	79		9			$	199	$	512
U.S. Morning Foods	10			1			12			2		263
U.S. Specialty Channels	—			1			—			1		21
North America Other	(1		)	2			1			9		141
Europe	(13		)	2			(6		)	8		324
Latin America	2			3			4			4		31
Asia Pacific	3			3			3			4		90
Corporate	1			5			2			11		20
Total	$	5		$	96		$	25		$	238	$	1,402

Schedule of Exit Cost Reserves

	Employee Related Costs			Pension curtailment (gain) loss, net		Asset Impairment		Asset Related Costs			Other Costs			Total
Liability as of December 31, 2017	$	97		$	—	$	—	$	—		$	63		$	160
2018 restructuring charges	5			—		—		(10		)	30			25
Cash payments	(43		)	—		—		—			(76		)	(119		)
Non-cash charges and other	—			—		—		10			—			10
Liability as of June 30, 2018	$	59		$	—	$	—	$	—		$	17		$	76

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Equity (Tables)

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Schedule of Earnings Per Share

Quarters ended June 30, 2018 and July 1, 2017:

(millions, except per share data)	Net income		Average shares outstanding	Earnings per share
2018
Basic	$	596	347	$	1.72
Dilutive potential common shares			1	(0.01		)
Diluted	$	596	348	$	1.71
2017
Basic	$	283	349	$	0.81
Dilutive potential common shares			3	(0.01		)
Diluted	$	283	352	$	0.80

Year-to-date periods ended June 30, 2018 and July 1, 2017:

(millions, except per share data)	Net income		Average shares outstanding	Earnings per share
2018
Basic	$	1,040	346	$	3.00
Dilutive potential common shares			2	(0.01		)
Diluted	$	1,040	348	$	2.99
2017
Basic	$	549	350	$	1.57
Dilutive potential common shares			3	(0.01		)
Diluted	$	549	353	$	1.56

Reclassifications Out of AOCI

Reclassifications out of AOCI for the quarter and year-to-date periods ended June 30, 2018 and July 1, 2017, consisted of the following:

(millions)
Details about AOCI components	Amount reclassified from AOCI						Line item impacted within Income Statement
	Quarter ended June 30, 2018			Year-to-date period ended June 30, 2018
(Gains) losses on cash flow hedges:
Foreign currency exchange contracts	$	—		$	—		COGS
Interest rate contracts	2			4			Interest expense
	$	2		$	4		Total before tax
	(1		)	(1		)	Tax expense (benefit)
	$	1		$	3		Net of tax
Amortization of postretirement and postemployment benefits:
Net experience loss	$	(1	)	$	(2	)	OIE
	$	(1	)	$	(2	)	Total before tax
	—			—			Tax expense (benefit)
	$	(1	)	$	(2	)	Net of tax
Total reclassifications	$	—		$	1		Net of tax

(millions)
Details about AOCI components	Amount reclassified from AOCI					Line item impacted within Income Statement
	Quarter ended July 1, 2017		Year-to-date period ended July 1, 2017
(Gains) losses on cash flow hedges:
Foreign currency exchange contracts	$	—	$	(1	)	COGS
Foreign currency exchange contracts	—		—			SGA
Interest rate contracts	2		5			Interest expense
Commodity contracts	—		—			COGS
	$	2	$	4		Total before tax
	—		(1		)	Tax expense (benefit)
	$	2	$	3		Net of tax
Amortization of postretirement and postemployment benefits:
Net experience loss	$	—	$	1		See Note 8 for further details
Prior service cost	—		—			See Note 8 for further details
	$	—	$	1		Total before tax
	—		—			Tax expense (benefit)
	$	—	$	1		Net of tax
Total reclassifications	$	2	$	4		Net of tax

Summary of Accumulated Other Comprehensive Income (Loss)

(millions)	June 30, 2018			December 30, 2017
Foreign currency translation adjustments	$	(1,473	)	$	(1,426	)
Cash flow hedges — unrealized net gain (loss)	(56		)	(61		)
Postretirement and postemployment benefits:
Net experience loss	32			34
Prior service cost	(4		)	(4		)
Total accumulated other comprehensive income (loss)	$	(1,501	)	$	(1,457	)

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Debt (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Components of Notes Payable

	June 30, 2018				December 30, 2017
(millions)	Principal amount		Effective interest rate		Principal amount		Effective interest rate (a)
U.S. commercial paper	$	197	2.26	%	$	196	1.76	%
Europe commercial paper	—		—	%	96		(0.32	)%
Bank borrowings	127				78
Total	$	324			$	370

(a) Negative effective interest rates on certain borrowings in Europe are the result of efforts by the European Central Bank to stimulate the economy in the eurozone.

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Stock Compensation (Tables)

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Compensation Expense for Equity-Based Programs and Related Income Tax Benefits

	Quarter ended				Year-to-date period ended
(millions)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Pre-tax compensation expense	$	16	$	21	$	33	$	39
Related income tax benefit	$	4	$	8	$	8	$	14

Summary of Stock Option Activity

Year-to-date period ended June 30, 2018:

Employee and director stock options	Shares (millions)		Weighted- average exercise price		Weighted- average remaining contractual term (yrs.)	Aggregate intrinsic value (millions)
Outstanding, beginning of period	14		$	64
Granted	3		70
Exercised	(1	)	57
Forfeitures and expirations	(1	)	70
Outstanding, end of period	15		$	65	6.6	$	92
Exercisable, end of period	11		$	63	5.7	$	91

Year-to-date period ended July 1, 2017:

Employee and director stock options	Shares (millions)		Weighted- average exercise price		Weighted- average remaining contractual term (yrs.)	Aggregate intrinsic value (millions)
Outstanding, beginning of period	15		$	62
Granted	2		73
Exercised	(1	)	57
Forfeitures and expirations	—		—
Outstanding, end of period	16		$	64	7.0	$	109
Exercisable, end of period	11		$	60	6.1	$	104

Schedule of Fair Value Assumptions

	Weighted- average expected volatility		Weighted- average expected term (years)	Weighted- average risk-free interest rate		Dividend yield
Grants within the year-to-date period ended June 30, 2018:	18	%	6.6	2.82	%	3.00	%
Grants within the year-to-date period ended July 1, 2017:	18	%	6.6	2.26	%	2.80	%

Maximum Future Value of Performance Shares

(millions)	June 30, 2018
2016 Award	$	18
2017 Award	$	16
2018 Award	$	26

Schedule of Restricted Stock Activity

Year-to-date period ended June 30, 2018:

Employee restricted stock units	Shares (thousands)		Weighted-average grant-date fair value
Non-vested, beginning of year	1,673		$	65
Granted	697		63
Vested	(416	)	59
Forfeited	(151	)	63
Non-vested, end of period	1,803		$	66

Year-to-date period ended July 1, 2017:

Employee restricted stock and restricted stock units	Shares (thousands)		Weighted-average grant-date fair value
Non-vested, beginning of year	1,166		$	63
Granted	654		67
Vested	(35	)	57
Forfeited	(72	)	65
Non-vested, end of period	1,713		$	65

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Employee Benefits (Tables)

6 Months Ended

Jun. 30, 2018

Retirement Benefits [Abstract]

Components of Plan Benefit Expense

Pension

	Quarter ended						Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Service cost	$	22		$	25		$	44		$	50
Interest cost	41			42			83			83
Expected return on plan assets	(90		)	(90		)	(182		)	(180		)
Amortization of unrecognized prior service cost	2			2			4			4
Recognized net (gain) loss	(2		)	(2		)	(11		)	1
Net periodic benefit cost	(27		)	(23		)	(62		)	(42		)
Curtailment (gain) loss	—			(3		)	—			(2		)
Total pension (income) expense	$	(27	)	$	(26	)	$	(62	)	$	(44	)

Other nonpension postretirement

	Quarter ended						Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Service cost	$	4		$	4		$	9		$	9
Interest cost	9			9			18			18
Expected return on plan assets	(23		)	(25		)	(47		)	(49		)
Amortization of unrecognized prior service (gain)	(2		)	(2		)	(4		)	(4		)
Recognized net (gain) loss	—			—			—			(29		)
Net periodic benefit cost	(12		)	(14		)	(24		)	(55		)
Curtailment loss	—			—			—			3
Total postretirement benefit (income) expense	$	(12	)	$	(14	)	$	(24	)	$	(52	)

Postemployment

	Quarter ended					Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017		June 30, 2018			July 1, 2017
Service cost	$	1		$	2	$	2		$	3
Interest cost	—			1		—			2
Recognized net (gain) loss	(1		)	—		(2		)	1
Total postemployment benefit expense	$	—		$	3	$	—		$	6

Contributions to Employee Benefit Plans

(millions)	Pension		Nonpension postretirement		Total
Quarter ended:
June 30, 2018	$	251	$	4	$	255
July 1, 2017	$	2	$	2	$	4
Year-to-date period ended:
June 30, 2018	$	266	$	8	$	274
July 1, 2017	$	23	$	5	$	28
Full year:
Fiscal year 2018 (projected)	$	274	$	13	$	287
Fiscal year 2017 (actual)	$	31	$	13	$	44

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Reconciliation of Total Gross Unrecognized Tax Benefits

(millions)
December 30, 2017	$	60
Tax positions related to current year:
Additions	3
Reductions	—
Tax positions related to prior years:
Additions	2
Reductions	(6		)
Settlements	(2		)
Lapse in statute of limitations	—
June 30, 2018	$	57

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Derivative Instruments and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Fair Value Measurements [Abstract]

Schedule of Total Notional Amounts of Derivative Instruments

(millions)	June 30, 2018		December 30, 2017
Foreign currency exchange contracts	$	1,518	$	2,172
Cross-currency contracts	696		—
Interest rate contracts	1,468		2,250
Commodity contracts	348		544
Total	$	4,030	$	4,966

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheet on a recurring basis as of June 30, 2018 and December 30, 2017:

Derivatives designated as hedging instruments

	June 30, 2018								December 30, 2017
(millions)	Level 1		Level 2			Total			Level 1		Level 2			Total
Assets:
Cross-currency contracts
Other current assets	$	—	$	27		$	27		$	—	$	—		$	—
Interest rate contracts:
Other assets (a)	—		4			4			—		—			—
Total assets	$	—	$	31		$	31		$	—	$	—		$	—
Liabilities:
Interest rate contracts:
Other liabilities (a)	—		(29		)	(29		)	—		(54		)	(54		)
Total liabilities	$	—	$	(29	)	$	(29	)	$	—	$	(54	)	$	(54	)

(a) The fair value of the related hedged portion of the Company's long-term debt, a level 2 liability, was $1.5 billion and $2.3 billion as of June 30, 2018 and December 30, 2017, respectively.

Derivatives not designated as hedging instruments

	June 30, 2018									December 30, 2017
(millions)	Level 1			Level 2			Total			Level 1			Level 2			Total
Assets:
Foreign currency exchange contracts:
Other current assets	$	—		$	26		$	26		$	—		$	10		$	10
Commodity contracts:
Other current assets	3			—			3			6			—			6
Total assets	$	3		$	26		$	29		$	6		$	10		$	16
Liabilities:
Foreign currency exchange contracts:
Other current liabilities	$	—		$	(14	)	$	(14	)	$	—		$	(14	)	$	(14	)
Commodity contracts:
Other current liabilities	(10		)	—			(10		)	$	(7	)	$	—		$	(7	)
Total liabilities	$	(10	)	$	(14	)	$	(24	)	$	(7	)	$	(14	)	$	(21	)

Schedule of Derivative Instruments in Statement of Financial Position Fair Value

The following amounts were recorded on the Consolidated Balance Sheet related to cumulative basis adjustments for existing fair value hedges as of June 30, 2018 and December 30, 2017.

(millions)	Line Item in the Consolidated Balance Sheet in which the hedged item is included	Carrying amount of the hedged liabilities				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities (a)
		June 30, 2018		December 30, 2017		June 30, 2018			December 30, 2017
Interest rate contracts	Current maturities of long-term debt	$	—	$	402	$	—		$	2
Interest rate contracts	Long-term debt	$	3,357	$	3,481	$	(45	)	$	(22	)

(a) The current maturities of hedged long-term debt includes $2 million of hedging adjustment on discontinued hedging relationships as of December 30, 2017. The hedged long-term debt includes $(19) million and $32 millionof hedging adjustment on discontinued hedging relationships as of June 30, 2018 and December 30, 2017, respectively.

Schedule of Offsetting Assets

As of June 30, 2018:
				Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet			Financial Instruments			Cash Collateral Received/ Posted		Net Amount
Total asset derivatives	$	60		$	(28	)	$	—	$	32
Total liability derivatives	$	(53	)	$	28		$	25	$	—

As of December 30, 2017:
				Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet			Financial Instruments			Cash Collateral Received/ Posted		Net Amount
Total asset derivatives	$	16		$	(15	)	$	—	$	1
Total liability derivatives	$	(75	)	$	15		$	37	$	(23	)

Schedule of Offsetting Liabilities

As of June 30, 2018:
				Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet			Financial Instruments			Cash Collateral Received/ Posted		Net Amount
Total asset derivatives	$	60		$	(28	)	$	—	$	32
Total liability derivatives	$	(53	)	$	28		$	25	$	—

As of December 30, 2017:
				Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet			Financial Instruments			Cash Collateral Received/ Posted		Net Amount
Total asset derivatives	$	16		$	(15	)	$	—	$	1
Total liability derivatives	$	(75	)	$	15		$	37	$	(23	)

Schedule of the Effect of Derivative Instruments on the Consolidated Statements of Income and Comprehensive Income

The effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the quarters ended June 30, 2018 and July 1, 2017 was as follows:

Derivatives and non-derivatives in net investment hedging relationships

(millions)	Gain (loss) recognized in AOCI					Gain (loss) excluded from assessment of hedge effectiveness				Location of gain (loss) in income of excluded component
	June 30, 2018		July 1, 2017			June 30, 2018		July 1, 2017
Foreign currency denominated long-term debt	$	146	$	(157	)	$	—	$	—
Cross-currency contracts	35		—			$	3	—		Other income (expense), net
Total	$	181	$	(157	)	$	3	$	—

Derivatives not designated as hedging instruments

(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income
		June 30, 2018			July 1, 2017
Foreign currency exchange contracts	COGS	$	4		$	(4	)
Foreign currency exchange contracts	Other income (expense), net	—			(3		)
Foreign currency exchange contracts	SG&A	—			(1		)
Commodity contracts	COGS	(8		)	10
Total		$	(4	)	$	2

The effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the year-to-date periods ended June 30, 2018 and July 1, 2017 was as follows:

Derivatives and non-derivatives in net investment hedging relationships

(millions)	Gain (loss) recognized in AOCI					Gain (loss) excluded from assessment of hedge effectiveness				Location of gain (loss) in income of excluded component
	June 30, 2018		July 1, 2017			June 30, 2018		July 1, 2017
Foreign currency denominated long-term debt	$	73	$	(182	)	$	—	$	—
Cross-currency contracts	27		—			6		—		Other income (expense), net
Total	$	100	$	(182	)	$	6	$	—

Derivatives not designated as hedging instruments

(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income
		June 30, 2018			July 1, 2017
Foreign currency exchange contracts	COGS	$	7		$	(13	)
Foreign currency exchange contracts	Other income (expense), net	(4		)	(8		)
Foreign currency exchange contracts	SGA	1			(1		)
Commodity contracts	COGS	(3		)	(3		)
Commodity contracts	SGA	—			1
Total		$	1		$	(24	)

The effect of fair value and cash flow hedge accounting on the Consolidated Income Statement for the quarters ended June 30, 2018 and July 1, 2017:

		June 30, 2018			July 1, 2017
(millions)		Interest Expense			Interest Expense
Total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value or cash flow hedges are recorded		$	72		$	63
	Gain (loss) on fair value hedging relationships:
	Interest contracts:
	Hedged items	(7		)	(3		)
	Derivatives designated as hedging instruments	7			8
	Gain (loss) on cash flow hedging relationships:
	Interest contracts:
	Amount of gain (loss) reclassified from AOCI into income	(2		)	(3		)
	Foreign exchange contracts:
	Amount of gain (loss) reclassified from AOCI into income	—			—

The effect of fair value and cash flow hedge accounting on the Consolidated Income Statement for the year-to-date periods ended June 30, 2018 and July 1, 2017:

		June 30, 2018			July 1, 2017
(millions)		Interest Expense			COGS		Interest Expense
Total amounts of income and expense line items presented in the Consolidated Income Statement in which the effects of fair value or cash flow hedges are recorded		$	141		$	4,038	$	124
	Gain (loss) on fair value hedging relationships:
	Interest contracts:
	Hedged items	25			—		6
	Derivatives designated as hedging instruments	(21		)	—		4
	Gain (loss) on cash flow hedging relationships:
	Interest contracts:
	Amount of gain (loss) reclassified from AOCI into income	(4		)	—		(5		)
	Foreign exchange contracts:
	Amount of gain (loss) reclassified from AOCI into income	—			1		—

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Reportable Segments (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Schedule of Reportable Segment Information

	Quarter ended						Year-to-date period ended
(millions)	June 30, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Net sales
U.S. Snacks	$	745		$	815		$	1,507		$	1,610
U.S. Morning Foods	643			664			1,334			1,372
U.S. Specialty Channels	277			275			675			668
North America Other	462			390			941			782
Europe	621			567			1,208			1,080
Latin America	239			232			471			452
Asia Pacific	373			232			625			459
Consolidated	$	3,360		$	3,175		$	6,761		$	6,423
Operating profit
U.S. Snacks	$	111		$	29		$	213		$	(7	)
U.S. Morning Foods	138			170			288			327
U.S. Specialty Channels	60			70			140			166
North America Other	76			59			143			108
Europe	97			77			171			143
Latin America	20			26			42			59
Asia Pacific	28			18			55			40
Total Reportable Segments	530			449			1,052			836
Corporate	(56		)	(64		)	(68		)	(171		)
Consolidated	$	474		$	385		$	984		$	665

Revenue from External Customers by Products and Services

Supplemental product information is provided below for net sales to external customers:

	Quarter ended				Year-to-date period ended
(millions)	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Snacks	$	1,684	$	1,635	$	3,458	$	3,351
Cereal	1,304		1,305		2,655		2,603
Frozen and other	372		235		648		469
Consolidated	$	3,360	$	3,175	$	6,761	$	6,423

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Supplemental Financial Statement Data Supplemental Financial Statement Data (Tables)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supplemental Financial Data Consolidated Balance Sheet [Table Text Block]

Consolidated Balance Sheet
(millions)	June 30, 2018 (unaudited)			December 30, 2017
Trade receivables	$	1,339		$	1,250
Allowance for doubtful accounts	(10		)	(10		)
Refundable income taxes	18			23
Other receivables	183			126
Accounts receivable, net	$	1,530		$	1,389
Raw materials and supplies	$	337		$	333
Finished goods and materials in process	954			884
Inventories	$	1,291		$	1,217
Property	$	9,063		$	9,366
Accumulated depreciation	(5,425		)	(5,650		)
Property, net	$	3,638		$	3,716
Pension	$	290		$	252
Deferred income taxes	242			246
Other	580			529
Other assets	$	1,112		$	1,027
Accrued income taxes	$	32		$	30
Accrued salaries and wages	225			311
Accrued advertising and promotion	570			582
Other	502			551
Other current liabilities	$	1,329		$	1,474
Income taxes payable	$	182		$	192
Nonpension postretirement benefits	39			40
Other	327			373
Other liabilities	$	548		$	605

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Accounting Policies - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 30, 2017
Impact of new accounting standards
Obligations placed in accounts payable tracking system	$ 834	$ 850
Obligations sold by participating suppliers	$ 572	$ 674

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Accounting Policies Impacts of Adoption of Standards Related to Revenue Recognition, Leases and Cash Flow to Previously Reported Results (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Dec. 30, 2017
Consolidated Balance Sheet
Other assets	$ 1,112		$ 1,112		$ 1,027
Other current liabilities	1,329		1,329		1,474
Deferred income taxes	714		714		355
Retained earnings	7,743		7,743		7,069
Consolidated Statement of Income
Net sales	3,360	$ 3,175	6,761	$ 6,423
Cost of goods sold	2,151	1,950	4,300	4,038
Selling, general and administrative expense	735	840	1,477	1,720
Other income (expense), net	69	63	139	151
Income taxes	70	102	137	145
Net income attributable to Kellogg Company	$ 596	$ 283	$ 1,040	$ 549
Per share amounts:
Basic earnings (in dollars per share)	$ 1.72	$ 0.81	$ 3.00	$ 1.57
Diluted earnings (in dollars per share)	$ 1.71	$ 0.80	$ 2.99	$ 1.56
Consolidated Statement of Cash Flows
Net income	$ 599	$ 283	$ 1,043	$ 549	1,254
Deferred income taxes			69	(66)
Trade receivables			(83)	(716)
Other			(67)	36
All other current assets and liabilities			(245)	4
Net cash provided by (used in) operating activities			447	92
Collections of deferred purchase price on securitized trade receivables			0	568
Investment in unconsolidated entities, net proceeds				0
Net cash provided by (used in) investing activities			$ (661)	300
As previously reported
Consolidated Balance Sheet
Other assets					1,026
Other current liabilities					1,431
Deferred income taxes					363
Retained earnings					7,103
Consolidated Statement of Income
Net sales		3,187		6,441
Cost of goods sold		1,922		3,972
Selling, general and administrative expense		812		1,656
Other income (expense), net		(6)		(3)
Income taxes		102		144
Net income attributable to Kellogg Company		$ 282		$ 544
Per share amounts:
Basic earnings (in dollars per share)		$ 0.81		$ 1.56
Diluted earnings (in dollars per share)		$ 0.80		$ 1.54
Consolidated Statement of Cash Flows
Net income				$ 544
Deferred income taxes				(67)
Trade receivables				(148)
Other				30
All other current assets and liabilities				10
Net cash provided by (used in) operating activities				654
Collections of deferred purchase price on securitized trade receivables				0
Investment in unconsolidated entities, net proceeds				6
Net cash provided by (used in) investing activities				(262)
Revenue recognition ASU
Consolidated Balance Sheet
Other assets					1
Other current liabilities					43
Deferred income taxes					(8)
Retained earnings					$ (34)
Consolidated Statement of Income
Net sales		$ (12)		(18)
Cost of goods sold		(17)		(33)
Selling, general and administrative expense		4		9
Other income (expense), net		0		0
Income taxes		0		1
Net income attributable to Kellogg Company		$ 1		$ 5
Per share amounts:
Basic earnings (in dollars per share)		$ 0.00		$ 0.01
Diluted earnings (in dollars per share)		$ 0.00		$ 0.02
Consolidated Statement of Cash Flows
Net income				$ 5
Deferred income taxes				1
Trade receivables				0
Other				0
All other current assets and liabilities				(6)
Net cash provided by (used in) operating activities				0
Collections of deferred purchase price on securitized trade receivables				0
Investment in unconsolidated entities, net proceeds				0
Net cash provided by (used in) investing activities				0
Pension ASU
Consolidated Statement of Income
Net sales		$ 0		0
Cost of goods sold		45		99
Selling, general and administrative expense		24		55
Other income (expense), net		69		154
Income taxes		0		0
Net income attributable to Kellogg Company		$ 0		$ 0
Per share amounts:
Basic earnings (in dollars per share)		$ 0.00		$ 0.00
Diluted earnings (in dollars per share)		$ 0.00		$ 0.00
Cash Flow ASU
Consolidated Statement of Cash Flows
Net income				$ 0
Deferred income taxes				0
Trade receivables				(568)
Other				6
All other current assets and liabilities				0
Net cash provided by (used in) operating activities				(562)
Collections of deferred purchase price on securitized trade receivables				568
Investment in unconsolidated entities, net proceeds				(6)
Net cash provided by (used in) investing activities				$ 562

XML

Sale of Accounts Receivable - Narrative (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2018	Mar. 31, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Dec. 30, 2017	Jul. 31, 2016
Receivables Sales Agreement
Transfer of Financial Assets Accounted for as Sales [Line Items]
Gain (Loss) on Sale of Accounts Receivable	$ (6)		$ (3)	$ (12)	$ (5)
Receivables Sales Agreement | Maximum [Member]
Transfer of Financial Assets Accounted for as Sales [Line Items]
Transfers of Accounts Receivable Agreements	1,033	$ 988		1,033
Receivables Sales Agreement | Sold And Outstanding
Transfer of Financial Assets Accounted for as Sales [Line Items]
Transfer of Financial Assets Accounted for as Sales, Amount Derecognized	936			936		$ 601
Kellogg Funding Company Program
Transfer of Financial Assets Accounted for as Sales [Line Items]
Cash Proceeds Received for Assets Derecognized						412
Deferred Purchase Price		$ 21				21
Kellogg Funding Company Program | Maximum [Member]
Transfer of Financial Assets Accounted for as Sales [Line Items]
Transfers of Accounts Receivable Agreements							$ 600
Kellogg Funding Company Program | Sold And Outstanding
Transfer of Financial Assets Accounted for as Sales [Line Items]
Transfer of Financial Assets Accounted for as Sales, Amount Derecognized						433
Kellogg Foreign Subsidiaries Other Program
Transfer of Financial Assets Accounted for as Sales [Line Items]
Transfers of Accounts Receivable Agreements	$ 26			$ 26		$ 86

XML

Acquisitions, West Africa Investments, Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Millions		1 Months Ended		3 Months Ended			6 Months Ended
	May 02, 2018	May 31, 2018	Oct. 31, 2017	Jun. 30, 2018	Mar. 31, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Business Acquisition [Line Items]
Purchase price adjustment							$ (1)
Amortization							9	$ 4
Equity Method Investment, Realized Gain (Loss) on Disposal							200	0
Net sales				$ 3,360		$ 3,175	6,761	6,423
Net income attributable to Kellogg Company				596		283	1,040	549
Operating profit				474		385	984	665
Tolaram Africa Foods (TAF) PTE LTD
Business Acquisition [Line Items]
Equity method investment, ownership percentage	50.00%
Payments to acquire business, gross	$ 419
Equity method investment aggregate cost	458
Equity Method Investment, Other than Temporary Impairment	$ 45
TAF Investment in Affiliated Food Manufacturer
Business Acquisition [Line Items]
Equity method investment, ownership percentage	49.00%
Affiliated Food Manufacturer
Business Acquisition [Line Items]
Equity method investment, ownership percentage	24.50%
Multipro
Business Acquisition [Line Items]
Equity method investment incremental ownership percentage change	1.00%
Business Acquisition, Pro Forma Revenue				$ 3,433		$ 3,326	7,043	$ 6,739
Equity method investment, ownership percentage	51.00%
Business combination fair value of equity interest		$ 626
Business combination fair value of equity interest, net of cash acquired		$ 617
Equity Method Investment, Realized Gain (Loss) on Disposal	$ 245
RXBAR
Business Acquisition [Line Items]
Payments to acquire business, net of cash			$ 596
Payments to acquire business, gross			$ 600
Purchase price adjustment					$ (1)
Asia Pacific
Business Acquisition [Line Items]
Purchase price adjustment							0
Amortization							3
Asia Pacific | Multipro
Business Acquisition [Line Items]
Net sales							129
Net income attributable to Kellogg Company							2
North America Other
Business Acquisition [Line Items]
Purchase price adjustment							(1)
Amortization							1
North America Other | RXBAR
Business Acquisition [Line Items]
Net sales							110
Net income attributable to Kellogg Company							$ 6

XML

Acquistions, West Africa Investments, Goodwill and Other Intangible Assets Schedule of Acquired Assets and Assumed Liabilities (Details) - USD ($) $ in Millions	Jun. 30, 2018	May 02, 2018	Dec. 30, 2017	Oct. 27, 2017
Business Acquisition [Line Items]
Goodwill	$ 6,072		$ 5,504
Multipro
Business Acquisition [Line Items]
Current Assets		$ 118
Property		41
Goodwill		616
Intangible assets subject to amortization, primarily distribution rights		425
Intangible assets not subject to amortization, primarily customer relationships		373
Current liabilities		(148)
Deferred tax liability		(256)
Noncontrolling interest		(552)
Total acquired assets, goodwill and assumed liabilities, net		$ 617
RXBAR
Business Acquisition [Line Items]
Current Assets				$ 42
Goodwill	(2)			373
Intangible Assets	$ 2			203
Current liabilities				(23)
Total acquired assets, goodwill and assumed liabilities, net				$ 595

XML

Acquisitions, West Africa Investments, Goodwill and Other Intangible Assets - Carrying Amount of Goodwill (Details) $ in Millions	6 Months Ended
	Jun. 30, 2018 USD ($)
Change in carrying amount of goodwill
Beginning Balance	$ 5,504
Additions	616
Purchase price allocation adjustment	(1)
Purchase price adjustment	(1)
Currency translation adjustment	(46)
Ending Balance	6,072
U.S. Snacks
Change in carrying amount of goodwill
Beginning Balance	3,568
Additions	0
Purchase price allocation adjustment	0
Purchase price adjustment	0
Currency translation adjustment	0
Ending Balance	3,568
U.S. Morning Foods
Change in carrying amount of goodwill
Beginning Balance	131
Additions	0
Purchase price allocation adjustment	0
Purchase price adjustment	0
Currency translation adjustment	0
Ending Balance	131
U.S. Specialty Channels
Change in carrying amount of goodwill
Beginning Balance	82
Additions	0
Purchase price allocation adjustment	0
Purchase price adjustment	0
Currency translation adjustment	0
Ending Balance	82
North America Other
Change in carrying amount of goodwill
Beginning Balance	836
Additions	0
Purchase price allocation adjustment	(1)
Purchase price adjustment	(1)
Currency translation adjustment	(2)
Ending Balance	832
Europe
Change in carrying amount of goodwill
Beginning Balance	414
Additions	0
Purchase price allocation adjustment	0
Purchase price adjustment	0
Currency translation adjustment	(12)
Ending Balance	402
Latin America
Change in carrying amount of goodwill
Beginning Balance	244
Additions	0
Purchase price allocation adjustment	0
Purchase price adjustment	0
Currency translation adjustment	(25)
Ending Balance	219
Asia Pacific
Change in carrying amount of goodwill
Beginning Balance	229
Additions	616
Purchase price allocation adjustment	0
Purchase price adjustment	0
Currency translation adjustment	(7)
Ending Balance	$ 838

XML

Acquisitions, West Africa Investments, Goodwill and Other Intangible Assets - Intangible Assets Subject to Amortization (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017
Finite-lived Intangible Assets [Roll Forward]
Gross carrying amount, beginning balance	$ 201
Additions	425
Purchase price allocation adjustment	2
Currency translation adjustment	(14)
Gross carrying amount, ending balance	614
Accumulated amortization, beginning balance	67
Amortization	9	$ 4
Currency translation adjustment	(1)
Accumulated amortization, ending balance	75
Intangible assets subject to amortization net, beginning balance	134
Additions	425
Purchase price allocation adjustment	2
Amortization	(9)
Currency translation adjustment	(13)
Intangible assets subject to amortization net, ending balance	539
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months	23
U.S. Snacks
Finite-lived Intangible Assets [Roll Forward]
Gross carrying amount, beginning balance	42
Additions	0
Purchase price allocation adjustment	0
Currency translation adjustment	0
Gross carrying amount, ending balance	42
Accumulated amortization, beginning balance	22
Amortization	2
Currency translation adjustment	0
Accumulated amortization, ending balance	24
Intangible assets subject to amortization net, beginning balance	20
Additions	0
Purchase price allocation adjustment	0
Amortization	(2)
Currency translation adjustment	0
Intangible assets subject to amortization net, ending balance	18
U.S. Morning Foods
Finite-lived Intangible Assets [Roll Forward]
Gross carrying amount, beginning balance	8
Additions	0
Purchase price allocation adjustment	0
Currency translation adjustment	0
Gross carrying amount, ending balance	8
Accumulated amortization, beginning balance	8
Amortization	0
Currency translation adjustment	0
Accumulated amortization, ending balance	8
Intangible assets subject to amortization net, beginning balance	0
Additions	0
Purchase price allocation adjustment	0
Amortization	0
Currency translation adjustment	0
Intangible assets subject to amortization net, ending balance	0
U.S. Specialty Channels
Finite-lived Intangible Assets [Roll Forward]
Gross carrying amount, beginning balance	0
Additions	0
Purchase price allocation adjustment	0
Currency translation adjustment	0
Gross carrying amount, ending balance	0
Accumulated amortization, beginning balance	0
Amortization	0
Currency translation adjustment	0
Accumulated amortization, ending balance	0
Intangible assets subject to amortization net, beginning balance	0
Additions	0
Purchase price allocation adjustment	0
Amortization	0
Currency translation adjustment	0
Intangible assets subject to amortization net, ending balance	0
North America Other
Finite-lived Intangible Assets [Roll Forward]
Gross carrying amount, beginning balance	22
Additions	0
Purchase price allocation adjustment	2
Currency translation adjustment	0
Gross carrying amount, ending balance	24
Accumulated amortization, beginning balance	5
Amortization	1
Currency translation adjustment	0
Accumulated amortization, ending balance	6
Intangible assets subject to amortization net, beginning balance	17
Additions	0
Purchase price allocation adjustment	2
Amortization	(1)
Currency translation adjustment	0
Intangible assets subject to amortization net, ending balance	18
Europe
Finite-lived Intangible Assets [Roll Forward]
Gross carrying amount, beginning balance	45
Additions	0
Purchase price allocation adjustment	0
Currency translation adjustment	(1)
Gross carrying amount, ending balance	44
Accumulated amortization, beginning balance	18
Amortization	1
Currency translation adjustment	0
Accumulated amortization, ending balance	19
Intangible assets subject to amortization net, beginning balance	27
Additions	0
Purchase price allocation adjustment	0
Amortization	(1)
Currency translation adjustment	(1)
Intangible assets subject to amortization net, ending balance	25
Latin America
Finite-lived Intangible Assets [Roll Forward]
Gross carrying amount, beginning balance	74
Additions	0
Purchase price allocation adjustment	0
Currency translation adjustment	(10)
Gross carrying amount, ending balance	64
Accumulated amortization, beginning balance	10
Amortization	2
Currency translation adjustment	(1)
Accumulated amortization, ending balance	11
Intangible assets subject to amortization net, beginning balance	64
Additions	0
Purchase price allocation adjustment	0
Amortization	(2)
Currency translation adjustment	(9)
Intangible assets subject to amortization net, ending balance	53
Asia Pacific
Finite-lived Intangible Assets [Roll Forward]
Gross carrying amount, beginning balance	10
Additions	425
Purchase price allocation adjustment	0
Currency translation adjustment	(3)
Gross carrying amount, ending balance	432
Accumulated amortization, beginning balance	4
Amortization	3
Currency translation adjustment	0
Accumulated amortization, ending balance	7
Intangible assets subject to amortization net, beginning balance	6
Additions	425
Purchase price allocation adjustment	0
Amortization	(3)
Currency translation adjustment	(3)
Intangible assets subject to amortization net, ending balance	$ 425

XML

Acquisitions, West Africa Investments, Goodwill and Other Intangible Assets - Intangible Assets Not Subject to Amortization (Details) $ in Millions	6 Months Ended
	Jun. 30, 2018 USD ($)
Indefinite-lived Intangible Assets [Roll Forward]
Intangible assets not subject to amortization, beginning balance	$ 2,505
Purchase price allocation adjustment	373
Currency translation adjustment	(26)
Intangible assets not subject to amortization, ending balance	2,852
U.S. Snacks
Indefinite-lived Intangible Assets [Roll Forward]
Intangible assets not subject to amortization, beginning balance	1,625
Purchase price allocation adjustment	0
Currency translation adjustment	0
Intangible assets not subject to amortization, ending balance	1,625
U.S. Morning Foods
Indefinite-lived Intangible Assets [Roll Forward]
Intangible assets not subject to amortization, beginning balance	0
Purchase price allocation adjustment	0
Currency translation adjustment	0
Intangible assets not subject to amortization, ending balance	0
U.S. Specialty Channels
Indefinite-lived Intangible Assets [Roll Forward]
Intangible assets not subject to amortization, beginning balance	0
Purchase price allocation adjustment	0
Currency translation adjustment	0
Intangible assets not subject to amortization, ending balance	0
North America Other
Indefinite-lived Intangible Assets [Roll Forward]
Intangible assets not subject to amortization, beginning balance	360
Purchase price allocation adjustment	0
Currency translation adjustment	0
Intangible assets not subject to amortization, ending balance	360
Europe
Indefinite-lived Intangible Assets [Roll Forward]
Intangible assets not subject to amortization, beginning balance	434
Purchase price allocation adjustment	0
Currency translation adjustment	(10)
Intangible assets not subject to amortization, ending balance	424
Latin America
Indefinite-lived Intangible Assets [Roll Forward]
Intangible assets not subject to amortization, beginning balance	86
Purchase price allocation adjustment	0
Currency translation adjustment	(13)
Intangible assets not subject to amortization, ending balance	73
Asia Pacific
Indefinite-lived Intangible Assets [Roll Forward]
Intangible assets not subject to amortization, beginning balance	0
Purchase price allocation adjustment	373
Currency translation adjustment	(3)
Intangible assets not subject to amortization, ending balance	$ 370

XML

Restructuring and Cost Reduction Activities - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Dec. 30, 2017
Restructuring Cost and Reserve [Line Items]
Restructuring and related activities cash implementation costs recovery time frame			5 years
Restructuring and related costs since inception of program	$ 1,402		$ 1,402
Restructuring charges	5	$ 96	25	$ 238
Exit cost reserves	76		76		$ 160
COGS
Restructuring Cost and Reserve [Line Items]
Restructuring charges	(4)	24	9	37
Selling General and Administrative Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring charges	9	75	16	200
Other (income) expense, net
Restructuring Cost and Reserve [Line Items]
Restructuring charges		(3)		1
Employee related costs
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs since inception of program	539		539
Restructuring charges	1	28	5	135
Exit cost reserves	59		59		97
Asset related costs
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs since inception of program	259		259
Restructuring charges	(14)	20	(10)	30
Exit cost reserves	0		0		0
Asset impairment
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs since inception of program	155		155
Restructuring charges	0	0	0	0
Exit cost reserves	0		0		0
Other costs
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs since inception of program	586		586
Restructuring charges	18	51	30	72
Exit cost reserves	17		17		$ 63
Project K [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs since inception of program	1,402		1,402
Project K [Member] | Revenue
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs since inception of program	6		6
Project K [Member] | COGS
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs since inception of program	803		803
Project K [Member] | Selling General and Administrative Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs since inception of program	730		730
Project K [Member] | Other (income) expense, net
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs since inception of program	(137)		(137)
Project K [Member] | Minimum [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs, expected cost	1,500		1,500
Project K [Member] | Maximum [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs, expected cost	1,600		1,600
Estimated after-tax cash costs for program, including incremental capital investments			$ 1,100
Project K [Member] | U.S. Snacks
Restructuring Cost and Reserve [Line Items]
Restructuring and related cost, expected cost allocation			34.00%
Project K [Member] | U.S. Morning Foods
Restructuring Cost and Reserve [Line Items]
Restructuring and related cost, expected cost allocation			17.00%
Project K [Member] | U.S. Specialty Channels
Restructuring Cost and Reserve [Line Items]
Restructuring and related cost, expected cost allocation			1.00%
Project K [Member] | North America Other
Restructuring Cost and Reserve [Line Items]
Restructuring and related cost, expected cost allocation			13.00%
Project K [Member] | Europe
Restructuring Cost and Reserve [Line Items]
Restructuring and related cost, expected cost allocation			22.00%
Project K [Member] | Latin America
Restructuring Cost and Reserve [Line Items]
Restructuring and related cost, expected cost allocation			2.00%
Project K [Member] | Asia Pacific
Restructuring Cost and Reserve [Line Items]
Restructuring and related cost, expected cost allocation			6.00%
Project K [Member] | Employee related costs | Maximum [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs, expected cost	500		$ 500
Project K [Member] | Asset related costs | Maximum [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs, expected cost	500		500
Project K [Member] | Other costs | Maximum [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs, expected cost	600		600
Corporate
Restructuring Cost and Reserve [Line Items]
Restructuring and related costs since inception of program	20		20
Restructuring charges	$ 1	$ 5	$ 2	$ 11
Corporate | Project K [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and related cost, expected cost allocation			5.00%

XML

Restructuring and Cost Reduction Activities - Schedule of Restructuring and Cost Reduction Activities (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 5	$ 96	$ 25	$ 238
Program costs to date	1,402		1,402
Employee related costs
Restructuring Cost and Reserve [Line Items]
Restructuring charges	1	28	5	135
Program costs to date	539		539
Pension curtailment (gain) loss, net
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	(3)	0	1
Program costs to date	(137)		(137)
Asset impairment
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	0	0	0
Program costs to date	155		155
Asset related costs
Restructuring Cost and Reserve [Line Items]
Restructuring charges	(14)	20	(10)	30
Program costs to date	259		259
Other costs
Restructuring Cost and Reserve [Line Items]
Restructuring charges	18	51	30	72
Program costs to date	586		586
Operating Segments | U.S. Snacks
Restructuring Cost and Reserve [Line Items]
Restructuring charges	3	79	9	199
Program costs to date	512		512
Operating Segments | U.S. Morning Foods
Restructuring Cost and Reserve [Line Items]
Restructuring charges	10	1	12	2
Program costs to date	263		263
Operating Segments | U.S. Specialty Channels
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	1	0	1
Program costs to date	21		21
Operating Segments | North America Other
Restructuring Cost and Reserve [Line Items]
Restructuring charges	(1)	2	1	9
Program costs to date	141		141
Operating Segments | Europe
Restructuring Cost and Reserve [Line Items]
Restructuring charges	(13)	2	(6)	8
Program costs to date	324		324
Operating Segments | Latin America
Restructuring Cost and Reserve [Line Items]
Restructuring charges	2	3	4	4
Program costs to date	31		31
Operating Segments | Asia Pacific
Restructuring Cost and Reserve [Line Items]
Restructuring charges	3	3	3	4
Program costs to date	90		90
Corporate
Restructuring Cost and Reserve [Line Items]
Restructuring charges	1	$ 5	2	$ 11
Program costs to date	$ 20		$ 20

XML

Restructuring and Cost Reduction Activities - Restructuring and Cost Reduction Reserves Rollforward (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Restructuring Reserve [Roll Forward]
Liability, beginning balance			$ 160
Restructuring charges	$ 5	$ 96	25	$ 238
Cash payments			(119)
Restructuring Reserve, Accrual Adjustment			10
Liability, ending balance	76		76
Employee related costs
Restructuring Reserve [Roll Forward]
Liability, beginning balance			97
Restructuring charges	1	28	5	135
Cash payments			(43)
Restructuring Reserve, Accrual Adjustment			0
Liability, ending balance	59		59
Pension curtailment (gain) loss, net
Restructuring Reserve [Roll Forward]
Liability, beginning balance			0
Restructuring charges	0	(3)	0	1
Cash payments			0
Restructuring Reserve, Accrual Adjustment			0
Liability, ending balance	0		0
Asset impairment
Restructuring Reserve [Roll Forward]
Liability, beginning balance			0
Restructuring charges	0	0	0	0
Cash payments			0
Restructuring Reserve, Accrual Adjustment			0
Liability, ending balance	0		0
Asset related costs
Restructuring Reserve [Roll Forward]
Liability, beginning balance			0
Restructuring charges	(14)	20	(10)	30
Cash payments			0
Restructuring Reserve, Accrual Adjustment			10
Liability, ending balance	0		0
Other costs
Restructuring Reserve [Roll Forward]
Liability, beginning balance			63
Restructuring charges	18	$ 51	30	$ 72
Cash payments			(76)
Restructuring Reserve, Accrual Adjustment			0
Liability, ending balance	$ 17		$ 17

XML

Equity - Narrative (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Dec. 30, 2017
Equity, Class of Treasury Stock [Line Items]
Anti-dilutive potential common shares excluded from reconciliation	9	5	6	5
Common stock repurchased (in shares)			1	6
Common stock repurchased			$ 50	$ 435	$ 516
Common stock repurchases - cash paid			$ 50	390
Accrued Liabilities		$ 45		$ 45
Treasury stock
Equity, Class of Treasury Stock [Line Items]
Common stock repurchased (in shares)			1		7
Common stock repurchased			$ 50		$ 516
December 2017 Share Repurchase Program
Equity, Class of Treasury Stock [Line Items]
Stock repurchase program, authorized amount					$ 1,500
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 1,450		$ 1,450

XML

Equity - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Equity [Abstract]
Net Income, Basic	$ 596	$ 283	$ 1,040	$ 549
Average shares outstanding, Basic (in shares)	347	349	346	350
Earnings per share, Basic (in dollars per share)	$ 1.72	$ 0.81	$ 3.00	$ 1.57
Average shares outstanding, Dilutive potential common shares (in shares)	1	3	2	3
Earnings per share, Dilutive potential common shares (in dollars per share)	$ (0.01)	$ (0.01)	$ (0.01)	$ (0.01)
Net Income, Diluted	$ 596	$ 283	$ 1,040	$ 549
Average shares outstanding, Diluted (in shares)	348	352	348	353
Earnings per share, Diluted (in dollars per share)	$ 1.71	$ 0.80	$ 2.99	$ 1.56

XML

Equity - Reclassifications Out of AOCI (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Dec. 30, 2017
Derivative Instruments, Gain (Loss) [Line Items]
COGS	$ 2,151	$ 1,950	$ 4,300	$ 4,038
SG&A	(735)	(840)	(1,477)	(1,720)
Interest expense	72	63	141	124
Net experience loss	1	0	2	(1)
Total before tax	471	385	982	692
Tax expense (benefit)	(70)	(102)	(137)	(145)
Net income	599	283	1,043	549	$ 1,254
Reclassification out of Accumulated Other Comprehensive Income
Derivative Instruments, Gain (Loss) [Line Items]
Net income	0	2	1	4
Reclassification out of Accumulated Other Comprehensive Income | (Gains) losses on cash flow hedges
Derivative Instruments, Gain (Loss) [Line Items]
Total before tax	2	2	4	4
Tax expense (benefit)	(1)	0	(1)	(1)
Net income	1	2	3	3
Reclassification out of Accumulated Other Comprehensive Income | (Gains) losses on cash flow hedges | Foreign currency exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
COGS	0	0	0	(1)
SG&A		0		0
Reclassification out of Accumulated Other Comprehensive Income | (Gains) losses on cash flow hedges | Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Interest expense	2	2	4	5
Reclassification out of Accumulated Other Comprehensive Income | (Gains) losses on cash flow hedges | Commodity contracts
Derivative Instruments, Gain (Loss) [Line Items]
COGS		0		0
Reclassification out of Accumulated Other Comprehensive Income | Amortization of postretirement and postemployment benefits
Derivative Instruments, Gain (Loss) [Line Items]
Net experience loss		0		1
Prior service cost		0		0
Total before tax	(1)	0	(2)	1
Tax expense (benefit)	0	0	0	0
Net income	(1)	$ 0	(2)	$ 1
Reclassification out of Accumulated Other Comprehensive Income | Amortization of postretirement and postemployment benefits | Other income (expense), net
Derivative Instruments, Gain (Loss) [Line Items]
Net experience loss	$ (1)		$ (2)

XML

Equity - Summary of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 30, 2017
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Foreign currency translation adjustments	$ (1,473)	$ (1,426)
Cash flow hedges — unrealized net gain (loss)	(56)	(61)
Postretirement and postemployment benefits:
Net experience loss	32	34
Prior service cost	(4)	(4)
Total accumulated other comprehensive income (loss)	$ (1,501)	$ (1,457)

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Debt - Components of Notes Payable (Details) - USD ($) $ in Millions		Jun. 30, 2018	Dec. 30, 2017
Short-term Debt [Line Items]
Principal amount		$ 324	$ 370
U.S. commercial paper
Short-term Debt [Line Items]
Principal amount		$ 197	$ 196
Effective interest rate		2.26%	1.76%
Europe commercial paper
Short-term Debt [Line Items]
Principal amount		$ 0	$ 96
Effective interest rate	[1]	0.00%	(0.32%)
Bank borrowings
Short-term Debt [Line Items]
Principal amount		$ 127	$ 78

[1] Negative effective interest rates on certain borrowings in Europe are the result of efforts by the European Central Bank to stimulate the economy in the eurozone.

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Debt - Narrative (Details) € in Millions, $ in Millions, $ in Millions	1 Months Ended		3 Months Ended		6 Months Ended
	May 31, 2018 USD ($)	May 31, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jul. 01, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jul. 01, 2017 USD ($)	Dec. 30, 2017 USD ($)	Jul. 01, 2017 CAD ($)	May 31, 2017 EUR (€)
Debt Instrument [Line Items]
Proceeds from debt, net of issuance costs	$ 994
Interest Expense, Debt			$ 72	$ 63	$ 141	$ 124
Notional amounts of interest rate swaps			4,030		4,030		$ 4,966
US Dollar Interest Rate Swap [Member]
Debt Instrument [Line Items]
Notional amounts of interest rate swaps			$ 1,500		$ 1,500
4.30% U.S. Dollar Notes Due 2028
Debt Instrument [Line Items]
Debt instrument, face amount	$ 600
Debt instrument, stated interest rate	4.30%
3.25% U.S. Dollar Notes Due 2021
Debt Instrument [Line Items]
Debt instrument, face amount	$ 400
Debt instrument, stated interest rate	3.25%
3.25% U.S. Dollar Notes Due 2018
Debt Instrument [Line Items]
Debt instrument, face amount	$ 400
Debt instrument, stated interest rate	3.25%
0.80% Euro Notes Due 2022
Debt Instrument [Line Items]
Debt instrument, face amount				$ 685		$ 685			€ 600
Proceeds from debt, net of issuance costs		$ 656
Debt instrument, stated interest rate		0.80%							0.80%
1.75% U.S. Dollar Notes Due 2017
Debt Instrument [Line Items]
Debt instrument, face amount		$ 400
Debt instrument, stated interest rate		1.75%							1.75%
2.05% Canadian Dollar Notes Due 2017
Debt Instrument [Line Items]
Debt instrument, face amount								$ 300
Debt instrument, stated interest rate				2.05%		2.05%		2.05%
Notes Payable, Other Payables | 4.30% U.S. Dollar Notes Due 2028
Debt Instrument [Line Items]
Debt instrument term	10 years
Notes Payable, Other Payables | 3.25% U.S. Dollar Notes Due 2021
Debt Instrument [Line Items]
Debt instrument term	3 years
Notes Payable, Other Payables | 3.25% U.S. Dollar Notes Due 2018
Debt Instrument [Line Items]
Debt instrument term					7 years
Notes Payable, Other Payables | 0.80% Euro Notes Due 2022
Debt Instrument [Line Items]
Debt instrument term					5 years
Notes Payable, Other Payables | 1.75% U.S. Dollar Notes Due 2017
Debt Instrument [Line Items]
Debt instrument term						5 years
Notes Payable, Other Payables | 2.05% Canadian Dollar Notes Due 2017
Debt Instrument [Line Items]
Debt instrument term						3 years
Notes Payable, Other Payables | 4.15% U.S. Dollar Notes Due 2019
Debt Instrument [Line Items]
Debt instrument term					10 years
Debt instrument, stated interest rate			4.15%		4.15%
Effective interest rate			3.50%		3.50%
Notes Payable, Other Payables | 4.0% U.S. Dollar Notes Due 2020
Debt Instrument [Line Items]
Debt instrument term					10 years
Debt instrument, stated interest rate			4.00%		4.00%
Effective interest rate			3.39%		3.39%
Notes Payable, Other Payables | 3.125% U.S. Dollar Notes Due 2022
Debt Instrument [Line Items]
Debt instrument term					10 years
Debt instrument, stated interest rate			3.13%		3.13%
Effective interest rate			3.87%		3.87%
Notes Payable, Other Payables | 2.75% U.S. Dollar Notes Due 2023
Debt Instrument [Line Items]
Debt instrument term					10 years
Debt instrument, stated interest rate			2.75%		2.75%
Effective interest rate			4.00%		4.00%
Notes Payable, Other Payables | 2.65% U.S. Dollar Note Due 2023
Debt Instrument [Line Items]
Debt instrument term					7 years
Debt instrument, stated interest rate			2.65%		2.65%
Effective interest rate			3.42%		3.42%
Notes Payable, Other Payables | 1.00% Euro Notes Due 2024
Debt Instrument [Line Items]
Debt instrument term					8 years
Debt instrument, stated interest rate			1.00%		1.00%
Effective interest rate			0.72%		0.72%
Notes Payable, Other Payables | 1.25% Euro Notes Due 2025
Debt Instrument [Line Items]
Debt instrument term					10 years
Debt instrument, stated interest rate			1.25%		1.25%
Effective interest rate			1.30%		1.30%
Notes Payable, Other Payables | 3.25% U.S. Dollar Notes Due 2026
Debt Instrument [Line Items]
Debt instrument term					10 years
Debt instrument, stated interest rate			3.25%		3.25%
Effective interest rate			4.06%		4.06%

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Stock Compensation - Compensation Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation cost not yet recognized	$ 112		$ 112
Stock-based compensation cost, period of recognition			2 years
Selling General and Administrative Expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Pre-tax compensation expense	16	$ 21	$ 33	$ 39
Related income tax benefit	$ 4	$ 8	$ 8	$ 14

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Stock Compensation - Stock Options (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	14	15
Granted (in shares)	3	2
Exercised (in shares)	(1)	(1)
Forfeitures and expirations (in shares)	(1)	0
Outstanding, end of period (in shares)	15	16
Exercisable, end of period (in shares)	11	11
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Outstanding, beginning of period, weighted-average exercise price (in dollars per share)	$ 64	$ 62
Granted, weighted-average exercise price (in dollars per share)	70	73
Exercised, weighted-average exercise price (in dollars per share)	57	57
Forfeitures and expirations, weighted-average exercise price (in dollars per share)	70	0
Outstanding, end of period, weighted-average exercise price (in dollars per share)	65	64
Exercisable, end of period, weighted-average exercise price (in dollars per share)	$ 63	$ 60
Outstanding, end of period, weighted-average remaining contractual term	6 years 7 months 6 days	7 years
Exercisable, end of period, weighted-average remaining contractual term	5 years 8 months 12 days	6 years 1 month 6 days
Outstanding, end of period, aggregate intrinsic value	$ 92	$ 109
Exercisable, end of period, aggregate intrinsic value	$ 91	$ 104
Weighted-average fair value of options granted (in dollars per share)	$ 10.00	$ 10.14

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Stock Compensation - Schedule of Fair Value Assumptions (Details) - Stock Options - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted- average expected volatility	18.00%	18.00%
Weighted- average expected term (years)	6 years 7 months 6 days	6 years 7 months 6 days
Weighted- average risk-free interest rate	2.82%	2.26%
Dividend yield	3.00%	2.80%
Total intrinsic value of options exercised	$ 13	$ 17

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Stock Compensation - Performance Shares (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended	3 Months Ended
	Feb. 28, 2018	Mar. 31, 2018	Jun. 30, 2018
2016 Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum fair value of performance shares			$ 18
2017 Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum fair value of performance shares			16
2018 Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		3 years
Performance shares target grant distribution (in shares)		188,000
Grant-date fair value of shares that correspond with target grants		$ 72
Maximum fair value of performance shares			$ 26
2015 Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of performance shares that may be earned upon performance	75.00%
Performance share award settlement	$ 8
Minimum [Member] | 2018 Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of performance shares that may be earned upon performance		0.00%
Maximum [Member] | 2018 Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of performance shares that may be earned upon performance		200.00%

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Stock Compensation - Restricted Stock (Details) - Restricted Stock and Restricted Stock Units - $ / shares shares in Thousands	6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Non-vested, beginning of year (in shares)	1,673	1,166
Granted (in shares)	697	654
Vested (in shares)	(416)	(35)
Forfeited (in shares)	(151)	(72)
Non-vested, end of year (in shares)	1,803	1,713
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Non-vested, beginning of year, weighted-average grant-date fair value (in dollars per share)	$ 65	$ 63
Granted, weighted-average grant-date fair value (in dollars per share)	63	67
Vested, weighted-average grant-date fair value (in dollars per share)	59	57
Forfeited, weighted-average grant-date fair value (in dollars per share)	63	65
Non-vested, end of year, weighted-average grant-date fair value (in dollars per share)	$ 66	$ 65

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Employee Benefits - Components of Plan Benefit Expense (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Apr. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Pension
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 22	$ 25		$ 44	$ 50
Interest cost	41	42		83	83
Expected return on plan assets	(90)	(90)		(182)	(180)
Amortization of unrecognized prior service (gain)	2	2		4	4
Recognized net (gain) loss	(2)	(2)	$ 3	(11)	1
Net periodic benefit cost	(27)	(23)		(62)	(42)
Curtailment (gain) loss	0	(3)	1	0	(2)
Total plan benefit (income) expense	(27)	(26)		(62)	(44)
Other Nonpension Postretirement
Defined Benefit Plan Disclosure [Line Items]
Service cost	4	4		9	9
Interest cost	9	9		18	18
Expected return on plan assets	(23)	(25)		(47)	(49)
Amortization of unrecognized prior service (gain)	(2)	(2)		(4)	(4)
Recognized net (gain) loss	0	0	(29)	0	(29)
Net periodic benefit cost	(12)	(14)		(24)	(55)
Curtailment (gain) loss	0	0	$ 3	0	3
Total plan benefit (income) expense	(12)	(14)		(24)	(52)
Postemployment
Defined Benefit Plan Disclosure [Line Items]
Service cost	1	2		2	3
Interest cost	0	1		0	2
Recognized net (gain) loss	(1)	0		(2)	1
Total plan benefit (income) expense	$ 0	$ 3		$ 0	$ 6

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Employee Benefits - Contributions to Employee Benefit Plans (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Dec. 30, 2017
Defined Benefit Plan Disclosure [Line Items]
Restructuring charges	$ 5	$ 96	$ 25	$ 238
Employer contributions to employee benefit plans	255	4	274	28	$ 44
Total current year projected employer contributions	287		287
Employer discretionary contribution amount	250
Pension
Defined Benefit Plan Disclosure [Line Items]
Employer contributions to employee benefit plans	251	2	266	23	31
Total current year projected employer contributions	274		274
Employer discretionary contribution amount		250
Nonpension postretirement
Defined Benefit Plan Disclosure [Line Items]
Employer contributions to employee benefit plans	4	2	8	5	$ 13
Total current year projected employer contributions	13		13
Employee related costs
Defined Benefit Plan Disclosure [Line Items]
Restructuring charges	$ 1	28	$ 5	$ 135
Employee related costs | Multiemployer Plans
Defined Benefit Plan Disclosure [Line Items]
Restructuring charges		$ 26
Cash Obligation Period		20 years

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Income Taxes - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017	Dec. 30, 2017	Dec. 22, 2017
Income Tax Contingency [Line Items]
U.S. Federal Corporate Tax Rate prior to Tax Cuts and Jobs Act of 2017						35.00%
U.S. Federal Corporate Tax Rate after Tax Cuts and Jobs Act of 2017						21.00%
Effective income tax rate	15.00%	26.00%	14.00%	21.00%
Tax benefit attributable to discretionary pension contribution	$ 31
Employer discretionary contribution amount	250
Discrete tax benefit	44
Undistributed earnings of foreign subsidiaries	2,600		$ 2,600
Reductions Credited To Income Tax Expense		$ 38
Unrecognized tax benefits	57		57		$ 60
Unrecognized tax benefits that would affect the effective income tax rate	45		45
Tax-related interest and penalties accrual	25		25
Other current liabilities
Income Tax Contingency [Line Items]
Unrecognized tax benefits	8		8
Projected additions to unrecognized tax benefits	$ 6		$ 6

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Income Taxes - Reconciliation of Total Gross Unrecognized Tax Benefits (Details) $ in Millions	6 Months Ended
	Jun. 30, 2018 USD ($)
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Beginning balance	$ 60
Additions, current year	3
Reductions, current year	0
Additions, prior years	2
Reductions, prior years	(6)
Settlements	(2)
Unrecognized Tax Benefits, Reduction Resulting from Lapse of Applicable Statute of Limitations	0
Ending balance	$ 57

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Derivative Instruments and Fair Value Measurements - Narrative (Details) $ in Millions	6 Months Ended
	Jun. 30, 2018 USD ($)
Derivative [Line Items]
Net deferred losses reported in AOCI to be reclassified into income in the next twelve months	$ (7)
Fair value of derivative instruments with credit-risk-related contingent features in a liability position	15
Additional collateral required to be posted if the credit risk related contingent features were triggered	10
Collateral posted	0
Accounts Receivable, Net
Derivative [Line Items]
Collateral posted	5
Accounts Receivable, Net | Exchange-traded commodity
Derivative [Line Items]
Margin deposits	$ 17
Five Largest Accounts | Customer Concentration Risk | Accounts Receivable, Net
Derivative [Line Items]
Concentration percentage	22.00%

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Derivative Instruments and Fair Value Measurements - Schedule of Total Notional Amounts of Derivative Instruments(Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 30, 2017
Derivatives, Fair Value [Line Items]
Notional amount of derivatives	$ 4,030	$ 4,966
Foreign currency exchange contracts
Derivatives, Fair Value [Line Items]
Notional amount of derivatives	1,518	2,172
Cross Currency Interest Rate Contract [Member]
Derivatives, Fair Value [Line Items]
Notional amount of derivatives	696	0
Interest rate contracts
Derivatives, Fair Value [Line Items]
Notional amount of derivatives	1,468	2,250
Commodity contracts
Derivatives, Fair Value [Line Items]
Notional amount of derivatives	$ 348	$ 544

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Derivative Instruments and Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Millions		Jun. 30, 2018	Dec. 30, 2017
Derivatives, Fair Value [Line Items]
Fair Value Of Related Hedge Portion Of Long Term Debt		$ 1,500	$ 2,300
Long-term debt total, carrying value		8,700
Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		31	0
Liabilities		(29)	(54)
Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		29	16
Liabilities		(24)	(21)
Level 1 | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		0	0
Liabilities		0	0
Level 1 | Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		3	6
Liabilities		(10)	(7)
Level 2 | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		31	0
Liabilities		(29)	(54)
Level 2 | Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		26	10
Liabilities		(14)	(14)
Foreign currency exchange contracts | Other current assets | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		27	0
Foreign currency exchange contracts | Other current assets | Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		26	10
Foreign currency exchange contracts | Other current assets | Level 1 | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		0	0
Foreign currency exchange contracts | Other current assets | Level 1 | Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		0	0
Foreign currency exchange contracts | Other current assets | Level 2 | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		27	0
Foreign currency exchange contracts | Other current assets | Level 2 | Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		26	10
Foreign currency exchange contracts | Other current liabilities | Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Liabilities		(14)	(14)
Foreign currency exchange contracts | Other current liabilities | Level 1 | Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Liabilities		0	0
Foreign currency exchange contracts | Other current liabilities | Level 2 | Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Liabilities		(14)	(14)
Interest rate contracts | Other assets | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		4	0
Interest rate contracts | Other assets | Level 1 | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		0	0
Interest rate contracts | Other assets | Level 2 | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets	[1]	4	0
Interest rate contracts | Other liabilities | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Liabilities		(29)	(54)
Interest rate contracts | Other liabilities | Level 1 | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Liabilities		0	0
Interest rate contracts | Other liabilities | Level 2 | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Liabilities	[1]	(29)	(54)
Commodity contracts | Other current assets | Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		3	6
Commodity contracts | Other current assets | Level 1 | Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		3	6
Commodity contracts | Other current assets | Level 2 | Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Assets		0	0
Commodity contracts | Other current liabilities | Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Liabilities		(10)	(7)
Commodity contracts | Other current liabilities | Level 1 | Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Liabilities		(10)	(7)
Commodity contracts | Other current liabilities | Level 2 | Not Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Liabilities		0	0
Net Investment Hedging
Derivatives, Fair Value [Line Items]
Long-term debt total, carrying value		$ 2,700	$ 2,700

[1] The fair value of the related hedged portion of the Company's long-term debt, a level 2 liability, was $1.5 billion and $2.3 billion as of June 30, 2018 and December 30, 2017, respectively.

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Derivative Instruments and Fair Value Measurements Derivative Instruments and Fair Value Measurements - Schedule of Cumulative Basis Adjustments for Fair Value Hedges (Details) - USD ($) $ in Millions		Jun. 30, 2018	Dec. 30, 2017
Derivatives, Fair Value [Line Items]
Current maturities of long-term debt		$ 7	$ 409
Long-term debt		8,737	7,836
Carrying amount of hedged liability | Fair Value Hedges | Interest rate contracts | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Current maturities of long-term debt		0	402
Long-term debt		3,357	3,481
Cumulative fair value adjustment | Fair Value Hedges | Interest rate contracts | Designated as Hedging Instrument
Derivatives, Fair Value [Line Items]
Current maturities of long-term debt	[1]	0	2
Long-term debt	[1]	(45)	(22)
Hedging adjustment | Discontinued Hedges | Interest rate contracts
Derivatives, Fair Value [Line Items]
Current maturities of long-term debt			2
Long-term debt		$ (19)	$ 32

[1] The current maturities of hedged long-term debt includes $2 million of hedging adjustment on discontinued hedging relationships as of December 30, 2017. The hedged long-term debt includes $(19) million and $32 million of hedging adjustment on discontinued hedging relationships as of June 30, 2018 and December 30, 2017, respectively.

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Derivative Instruments and Fair Value Measurements - Schedule of Offsetting Assets and Liabilities (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 30, 2017
Offsetting [Abstract]
Asset derivatives, Amounts Presented in the Consolidated Balance Sheet	$ 60	$ 16
Asset derivatives, Financial Instruments, Gross Amounts Not Offset in the Consolidated Balance Sheet	(28)	(15)
Asset derivatives, Cash Collateral Posted, Gross Amounts Not Offset in the Consolidated Balance Sheet	0	0
Asset derivatives, Net Amount	32	1
Liability derivatives, Amounts Presented in the Consolidated Balance Sheet	(53)	(75)
Liability derivatives, Financial Instruments, Gross Amounts Not Offset in the Consolidated Balance Sheet	28	15
Liability derivatives, Cash Collateral Received, Gross Amounts Not Offset in the Consolidated Balance Sheet	25	37
Liability derivatives, net amount	$ 0	$ (23)

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Derivative Instruments and Fair Value Measurements - Effect of Derivative Instruments on the Consolidated Statements of Income and Comprehensive Income (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Not Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income	$ (4)	$ 2	$ 1	$ (24)
Not Designated as Hedging Instrument | Foreign currency exchange contracts | COGS
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income	4	(4)	7	(13)
Not Designated as Hedging Instrument | Foreign currency exchange contracts | Selling, General and Administrative Expenses [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income	0	(1)	1	(1)
Not Designated as Hedging Instrument | Foreign currency exchange contracts | Other income (expense), net
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income	0	(3)	(4)	(8)
Not Designated as Hedging Instrument | Commodity contracts | COGS
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income	(8)	10	(3)	(3)
Not Designated as Hedging Instrument | Commodity contracts | Selling, General and Administrative Expenses [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income			0	1
Net Investment Hedging
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in AOCI	181	(157)	100	(182)
Gain (Loss) from Components Excluded from Assessment of Fair Value Hedge Effectiveness, Net	3	0	6	0
Net Investment Hedging | Foreign currency denominated long-term debt
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in AOCI	146	(157)	73	(182)
Gain (Loss) from Components Excluded from Assessment of Fair Value Hedge Effectiveness, Net	0	0	0	0
Net Investment Hedging | Cross Currency Interest Rate Contract [Member] | Other income (expense), net
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in AOCI	35	0	27	0
Gain (Loss) from Components Excluded from Assessment of Fair Value Hedge Effectiveness, Net	$ 3	$ 0	$ 6	$ 0

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Derivative Instruments and Fair Value Measurements Derivative Instruments and Fair Value Measurements - Schedule of Effect of Fair Value and Cash Flow Hedge Accounting on Consolidated Statement of Income (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Derivative Instruments, Gain (Loss) [Line Items]
Cost of goods sold	$ 2,151	$ 1,950	$ 4,300	$ 4,038
Interest Expense, Debt	72	63	141	124
Foreign currency exchange contracts | COGS | Designated as Hedging Instrument | Cash Flow Hedging
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) reclassified from AOCI into income				1
Foreign currency exchange contracts | Interest expense | Designated as Hedging Instrument | Cash Flow Hedging
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) reclassified from AOCI into income	0	0	0	0
Interest rate contracts | COGS | Designated as Hedging Instrument | Fair Value Hedges
Derivative Instruments, Gain (Loss) [Line Items]
Hedged items				0
Derivatives designated as hedging instruments				0
Interest rate contracts | COGS | Designated as Hedging Instrument | Cash Flow Hedging
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) reclassified from AOCI into income				0
Interest rate contracts | Interest expense | Designated as Hedging Instrument | Fair Value Hedges
Derivative Instruments, Gain (Loss) [Line Items]
Hedged items	(7)	(3)	25	6
Derivatives designated as hedging instruments	7	8	(21)	4
Interest rate contracts | Interest expense | Designated as Hedging Instrument | Cash Flow Hedging
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) reclassified from AOCI into income	$ (2)	$ (3)	$ (4)	$ (5)

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Derivative Instruments and Fair Value Measurements - Schedule of Fair Value of Long-term Debt (Details) $ in Millions	Jun. 30, 2018 USD ($)
Derivative Instruments and Fair Value Measurements [Abstract]
Long-term debt, fair value	$ 8,900
Long-term debt total, carrying value	$ 8,700

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Reportable Segments (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($)	Jul. 01, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jul. 01, 2017 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments			10
Number of remaining reportable segments based on geographical locations			3
Net sales	$ 3,360	$ 3,175	$ 6,761	$ 6,423
Operating profit	474	385	984	665
Operating Segments
Segment Reporting Information [Line Items]
Operating profit	530	449	1,052	836
Operating Segments | U.S. Snacks
Segment Reporting Information [Line Items]
Net sales	745	815	1,507	1,610
Operating profit	111	29	213	(7)
Operating Segments | U.S. Morning Foods
Segment Reporting Information [Line Items]
Net sales	643	664	1,334	1,372
Operating profit	138	170	288	327
Operating Segments | U.S. Specialty Channels
Segment Reporting Information [Line Items]
Net sales	277	275	675	668
Operating profit	60	70	140	166
Operating Segments | North America Other
Segment Reporting Information [Line Items]
Net sales	462	390	941	782
Operating profit	76	59	143	108
Operating Segments | Europe
Segment Reporting Information [Line Items]
Net sales	621	567	1,208	1,080
Operating profit	97	77	171	143
Operating Segments | Latin America
Segment Reporting Information [Line Items]
Net sales	239	232	471	452
Operating profit	20	26	42	59
Operating Segments | Asia Pacific
Segment Reporting Information [Line Items]
Net sales	373	232	625	459
Operating profit	28	18	55	40
Corporate
Segment Reporting Information [Line Items]
Operating profit	$ (56)	$ (64)	$ (68)	$ (171)

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Reportable Segments Reportable Segments Supplemental Product Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jul. 01, 2017	Jun. 30, 2018	Jul. 01, 2017
Segment Reporting Information [Line Items]
Net sales	$ 3,360	$ 3,175	$ 6,761	$ 6,423
Snacks
Segment Reporting Information [Line Items]
Net sales	1,684	1,635	3,458	3,351
Cereal
Segment Reporting Information [Line Items]
Net sales	1,304	1,305	2,655	2,603
Frozen and other
Segment Reporting Information [Line Items]
Net sales	$ 372	$ 235	$ 648	$ 469

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Supplemental Financial Statement Data Consolidated Balance Sheet (Unaudited) (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Trade receivables	$ 1,339	$ 1,250
Allowance for doubtful accounts	(10)	(10)
Redundable income taxes	18	23
Other receivables	183	126
Accounts receivable, net	1,530	1,389
Raw materials and supplies	337	333
Finished goods and materials in process	954	884
Inventories	1,291	1,217
Property	9,063	9,366
Accumulated depreciation	(5,425)	(5,650)
Property, net	3,638	3,716
Pension	290	252
Deferred income taxes	242	246
Other	580	529
Other assets	1,112	1,027
Accrued income taxes	32	30
Accrued salaries and wages	225	311
Accrued advertising and promotion	570	582
Other	502	551
Other current liabilities	1,329	1,474
Income taxes payable	182	192
Nonpension postretirement benefits	39	40
Other	327	373
Other liabilities	$ 548	$ 605