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