QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
State of Incorporation— | IRS Employer Identification No. |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | |
☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | Emerging growth company |
Page | ||
Financial Statements | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||
Quantitative and Qualitative Disclosures about Market Risk | ||
Controls and Procedures | ||
Legal Proceedings | ||
Risk Factors | ||
Unregistered Sales of Equity Securities and Use of Proceeds | ||
Exhibits | ||
June 29, 2019 (unaudited) | December 29, 2018 | |||||
Current assets | ||||||
Cash and cash equivalents | $ | $ | ||||
Accounts receivable, net | ||||||
Inventories | ||||||
Other current assets | ||||||
Current assets held for sale | ||||||
Total current assets | ||||||
Property, net | ||||||
Operating lease right-of-use assets | ||||||
Goodwill | ||||||
Other intangibles, net | ||||||
Investments in unconsolidated entities | ||||||
Other assets | ||||||
Noncurrent assets held for sale | ||||||
Total assets | $ | $ | ||||
Current liabilities | ||||||
Current maturities of long-term debt | $ | $ | ||||
Notes payable | ||||||
Accounts payable | ||||||
Current operating lease liabilities | ||||||
Other current liabilities | ||||||
Total current liabilities | ||||||
Long-term debt | ||||||
Operating lease liabilities | ||||||
Deferred income taxes | ||||||
Pension liability | ||||||
Other liabilities | ||||||
Commitments and contingencies | ||||||
Equity | ||||||
Common stock, $.25 par value | ||||||
Capital in excess of par value | ||||||
Retained earnings | ||||||
Treasury stock, at cost | ( | ) | ( | ) | ||
Accumulated other comprehensive income (loss) | ( | ) | ( | ) | ||
Total Kellogg Company equity | ||||||
Noncontrolling interests | ||||||
Total equity | ||||||
Total liabilities and equity | $ | $ |
Quarter ended | Year-to-date period ended | ||||||||||||
(Results are unaudited) | June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | |||||||||
Net sales | $ | $ | $ | $ | |||||||||
Cost of goods sold | |||||||||||||
Selling, general and administrative expense | |||||||||||||
Operating profit | |||||||||||||
Interest expense | |||||||||||||
Other income (expense), net | |||||||||||||
Income before income taxes | |||||||||||||
Income taxes | |||||||||||||
Earnings (loss) from unconsolidated entities | ( | ) | ( | ) | |||||||||
Net income | |||||||||||||
Net income attributable to noncontrolling interests | |||||||||||||
Net income attributable to Kellogg Company | $ | $ | $ | $ | |||||||||
Per share amounts: | |||||||||||||
Basic earnings | $ | $ | $ | $ | |||||||||
Diluted earnings | $ | $ | $ | $ | |||||||||
Average shares outstanding: | |||||||||||||
Basic | |||||||||||||
Diluted | |||||||||||||
Actual shares outstanding at period end |
Quarter ended June 29, 2019 | Year-to-date period ended June 29, 2019 | ||||||||||||||||||
(Results are unaudited) | Pre-tax amount | Tax (expense) benefit | After-tax amount | Pre-tax amount | Tax (expense) benefit | After-tax amount | |||||||||||||
Net income | $ | $ | |||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||||
Foreign currency translation adjustments during period | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||
Cash flow hedges: | |||||||||||||||||||
Reclassification to net income | ( | ) | ( | ) | |||||||||||||||
Postretirement and postemployment benefits: | |||||||||||||||||||
Reclassification to net income: | |||||||||||||||||||
Net experience (gain) loss | ( | ) | ( | ) | ( | ) | |||||||||||||
Unrealized gain (loss) on available-for-sale securities | |||||||||||||||||||
Other comprehensive income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||
Comprehensive income | $ | $ | |||||||||||||||||
Net Income attributable to noncontrolling interests | |||||||||||||||||||
Other comprehensive income (loss) attributable to noncontrolling interests | |||||||||||||||||||
Comprehensive income attributable to Kellogg Company | $ | $ | |||||||||||||||||
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 | $ | $ | |||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Foreign currency translation adjustments | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | ( | ) | |||
Cash flow hedges: | |||||||||||||||||||
Unrealized gain (loss) on cash flow hedges | ( | ) | ( | ) | |||||||||||||||
Reclassification to net income | ( | ) | ( | ) | |||||||||||||||
Postretirement and postemployment benefits: | |||||||||||||||||||
Reclassification to net income: | |||||||||||||||||||
Net experience (gain) loss | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Other comprehensive income (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |
Comprehensive income | $ | $ | |||||||||||||||||
Net Income attributable to noncontrolling interests | |||||||||||||||||||
Other comprehensive income (loss) attributable to noncontrolling interests | ( | ) | ( | ) | |||||||||||||||
Comprehensive income attributable to Kellogg Company | $ | $ |
Quarter ended June 29, 2019 | ||||||||||||||||||||||||||||
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, March 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||
Net income | ||||||||||||||||||||||||||||
Sale of subsidiary shares to noncontrolling interest | ||||||||||||||||||||||||||||
Dividends declared ($0.56 per share) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Distributions to noncontrolling interest | ( | ) | ( | ) | ||||||||||||||||||||||||
Other comprehensive income | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Stock compensation | ||||||||||||||||||||||||||||
Stock options exercised and other | ( | ) | ||||||||||||||||||||||||||
Balance, June 29, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||
Year-to-date period ended June 29, 2019 | ||||||||||||||||||||||||||||
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 29, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||
Common stock repurchases | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||
Sale of subsidiary shares to noncontrolling interest | ||||||||||||||||||||||||||||
Dividends declared ($1.12 per share) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Distributions to noncontrolling interest | ( | ) | ( | ) | ||||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||||||||
Reclassification of tax effects relating to U.S. tax reform | ( | ) | ||||||||||||||||||||||||||
Stock compensation | ||||||||||||||||||||||||||||
Stock options exercised and other | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Balance, June 29, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||
Quarter ended June 30, 2018 | ||||||||||||||||||||||||||||
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, March 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||
Common stock repurchases | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||
Acquisition of noncontrolling interest - Multipro | ||||||||||||||||||||||||||||
Dividends declared ($0.54 per share) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Distributions to noncontrolling interest | ( | ) | ( | ) | ||||||||||||||||||||||||
Other comprehensive income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Stock compensation | ||||||||||||||||||||||||||||
Stock options exercised and other | ( | ) | ||||||||||||||||||||||||||
Balance, June 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ |
Year-to-date period ended June 30, 2018 | ||||||||||||||||||||||||||||
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 30, 2017 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||
Common stock repurchases | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||
Acquisition of noncontrolling interest - Multipro | ||||||||||||||||||||||||||||
Dividends declared ($1.08 per share) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Distributions to noncontrolling interest | ( | ) | ( | ) | ||||||||||||||||||||||||
Other comprehensive income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Stock compensation | ||||||||||||||||||||||||||||
Stock options exercised and other | ( | ) | ( | ) | ||||||||||||||||||||||||
Balance, June 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ |
Year-to-date period ended | ||||||
(unaudited) | June 29, 2019 | June 30, 2018 | ||||
Operating activities | ||||||
Net income | $ | $ | ||||
Adjustments to reconcile net income to operating cash flows: | ||||||
Depreciation and amortization | ||||||
Postretirement benefit plan expense (benefit) | ( | ) | ( | ) | ||
Deferred income taxes | ||||||
Stock compensation | ||||||
Gain on unconsolidated entities, net | ( | ) | ||||
Other | ( | ) | ||||
Postretirement benefit plan contributions | ( | ) | ( | ) | ||
Changes in operating assets and liabilities, net of acquisitions: | ||||||
Trade receivables | ( | ) | ( | ) | ||
Inventories | ( | ) | ( | ) | ||
Accounts payable | ||||||
All other current assets and liabilities | ( | ) | ( | ) | ||
Net cash provided by (used in) operating activities | ||||||
Investing activities | ||||||
Additions to properties | ( | ) | ( | ) | ||
Acquisitions, net of cash acquired | ( | ) | ( | ) | ||
Investments in unconsolidated entities | ( | ) | ||||
Acquisition of cost method investments | ( | ) | ||||
Purchases of available for sale securities | ( | ) | ||||
Sales of available for sale securities | ||||||
Other | ( | ) | ||||
Net cash provided by (used in) investing activities | ( | ) | ( | ) | ||
Financing activities | ||||||
Net issuances (reductions) of notes payable | ( | ) | ||||
Issuances of long-term debt | ||||||
Reductions of long-term debt | ( | ) | ||||
Net issuances of common stock | ||||||
Common stock repurchases | ( | ) | ( | ) | ||
Cash dividends | ( | ) | ( | ) | ||
Other | ( | ) | ||||
Net cash provided by (used in) financing activities | ( | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | ||||||
Increase (decrease) in cash and cash equivalents | ( | ) | ||||
Cash and cash equivalents at beginning of period | ||||||
Cash and cash equivalents at end of period | $ | $ | ||||
Supplemental cash flow disclosures | ||||||
Interest paid | $ | $ | ||||
Income taxes paid | $ | $ | ||||
Supplemental cash flow disclosures of non-cash investing activities: | ||||||
Additions to properties included in accounts payable | $ | $ |
(millions) | June 29, 2019 | |||||
Inventory and other assets | $ | |||||
Total current assets | ||||||
Property and equipment | ||||||
Goodwill and intangible assets | ||||||
Operating lease right-of-use assets | ||||||
Total noncurrent assets | ||||||
Total assets | $ | |||||
Current operating lease liabilities | $ | |||||
Total current liabilities | ||||||
Operating lease liabilities | ||||||
Total liabilities | $ | |||||
Quarter ended | Year-to-date period ended | ||||||
(millions) | June 30, 2018 | June 30, 2018 | |||||
Net sales | $ | $ | |||||
Net Income attributable to Kellogg Company | $ | $ |
(millions) | North America | Europe | Latin America | AMEA | Consoli- dated | ||||||||||
December 29, 2018 | $ | $ | $ | $ | $ | ||||||||||
Held for sale | ( | ) | ( | ) | |||||||||||
Currency translation adjustment | |||||||||||||||
June 29, 2019 | $ | $ | $ | $ | $ |
Gross carrying amount | |||||||||||||||
(millions) | North America | Europe | Latin America | AMEA | Consoli- dated | ||||||||||
December 29, 2018 | $ | $ | $ | $ | $ | ||||||||||
Held for sale | ( | ) | ( | ) | |||||||||||
Currency translation adjustment | ( | ) | |||||||||||||
June 29, 2019 | $ | $ | $ | $ | $ | ||||||||||
Accumulated Amortization | |||||||||||||||
December 29, 2018 | $ | $ | $ | $ | $ | ||||||||||
Amortization | |||||||||||||||
Held for sale | ( | ) | ( | ) | |||||||||||
Currency translation adjustment | ( | ) | ( | ) | |||||||||||
June 29, 2019 | $ | $ | $ | $ | $ | ||||||||||
Intangible assets subject to amortization, net | |||||||||||||||
December 29, 2018 | $ | $ | $ | $ | $ | ||||||||||
Amortization | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Currency translation adjustment | ( | ) | |||||||||||||
June 29, 2019 | $ | $ | $ | $ | $ |
(millions) | North America | Europe | Latin America | AMEA | Consoli- dated | ||||||||||
December 29, 2018 | $ | $ | $ | $ | $ | ||||||||||
Held for sale | ( | ) | ( | ) | |||||||||||
Currency translation adjustment | ( | ) | |||||||||||||
June 29, 2019 | $ | $ | $ | $ | $ |
Quarter ended | Year-to-date period ended | Program costs to date | |||||||||||||||
(millions) | June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | June 29, 2019 | ||||||||||||
Employee related costs | $ | $ | $ | $ | $ | ||||||||||||
Pension curtailment (gain) loss, net | ( | ) | |||||||||||||||
Asset related costs | ( | ) | ( | ) | |||||||||||||
Asset impairment | |||||||||||||||||
Other costs | |||||||||||||||||
Total | $ | $ | $ | $ | $ | ||||||||||||
Quarter ended | Year-to-date period ended | Program costs to date | |||||||||||||||
(millions) | June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | June 29, 2019 | ||||||||||||
North America | $ | $ | $ | $ | $ | ||||||||||||
Europe | ( | ) | ( | ) | |||||||||||||
Latin America | |||||||||||||||||
AMEA | |||||||||||||||||
Corporate | |||||||||||||||||
Total | $ | $ | $ | $ | $ |
Employee Related Costs | Pension curtailment (gain) loss, net | Asset Impairment | Asset Related Costs | Other Costs | Total | |||||||||||||
Liability as of December 29, 2018 | $ | $ | $ | $ | $ | $ | ||||||||||||
2019 restructuring charges | ||||||||||||||||||
Cash payments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
Non-cash charges and other | ( | ) | ( | ) | ||||||||||||||
Liability as of June 29, 2019 | $ | $ | $ | $ | $ | $ |
(millions) | |||||||
Details about AOCI components | Amount reclassified from AOCI | Line item impacted within Income Statement | |||||
Quarter ended June 29, 2019 | Year-to-date period ended June 29, 2019 | ||||||
(Gains) losses on cash flow hedges: | |||||||
Interest rate contracts | $ | $ | Interest expense | ||||
$ | $ | Total before tax | |||||
( | ) | ( | ) | Tax expense (benefit) | |||
$ | $ | Net of tax | |||||
Amortization of postretirement and postemployment benefits: | |||||||
Net experience (gain) loss | $ | ( | ) | $ | ( | ) | OIE |
$ | ( | ) | $ | ( | ) | Total before tax | |
Tax expense (benefit) | |||||||
$ | $ | ( | ) | Net of tax | |||
Total reclassifications | $ | $ | Net of tax |
(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: | |||||||
Interest rate contracts | $ | $ | Interest expense | ||||
$ | $ | Total before tax | |||||
( | ) | ( | ) | Tax expense (benefit) | |||
$ | $ | Net of tax | |||||
Amortization of postretirement and postemployment benefits: | |||||||
Net experience loss | $ | ( | ) | $ | ( | ) | See Note 8 for further details |
$ | ( | ) | $ | ( | ) | Total before tax | |
Tax expense (benefit) | |||||||
$ | ( | ) | $ | ( | ) | Net of tax | |
Total reclassifications | $ | $ | Net of tax |
(millions) | June 29, 2019 | December 29, 2018 | ||||
Foreign currency translation adjustments | $ | ( | ) | $ | ( | ) |
Cash flow hedges — unrealized net gain (loss) | ( | ) | ( | ) | ||
Postretirement and postemployment benefits: | ||||||
Net experience gain (loss) | ||||||
Prior service credit (cost) | ( | ) | ||||
Available-for-sale securities unrealized net gain (loss) | ||||||
Total accumulated other comprehensive income (loss) | $ | ( | ) | $ | ( | ) |
(millions) | Quarter ended June 29, 2019 | Year-to-date period ended June 29, 2019 | ||||||
Other information | ||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | $ | ||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ | ||||||
Weighted-average remaining lease term - operating leases | ||||||||
Weighted-average discount rate - operating leases |
(millions) | Operating leases | |||
2019 (six months remaining) | ||||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
2024 and beyond | ||||
Total minimum payments | $ | |||
Less interest | $ | ( | ) | |
Less leases accounted for as held for sale | $ | ( | ) | |
Present value of lease liabilities | $ |
(millions) | Operating leases | |||
2019 | ||||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
2024 and beyond | ||||
Total minimum payments | $ |
June 29, 2019 | December 29, 2018 | ||||||||||
(millions) | Principal amount | Effective interest rate | Principal amount | Effective interest rate (a) | |||||||
U.S. commercial paper | $ | % | $ | % | |||||||
Bank borrowings | |||||||||||
Total | $ | $ |
Quarter ended | Year-to-date period ended | ||||||||||||
(millions) | June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | |||||||||
Pre-tax compensation expense | $ | $ | $ | $ | |||||||||
Related income tax benefit | $ | $ | $ | $ |
Quarter ended | Year-to-date period ended | ||||||||||||
(millions) | June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | |||||||||
Service cost | $ | $ | $ | $ | |||||||||
Interest cost | |||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Amortization of unrecognized prior service cost | |||||||||||||
Recognized net (gain) loss | ( | ) | ( | ) | |||||||||
Net periodic benefit cost | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Quarter ended | Year-to-date period ended | ||||||||||||
(millions) | June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | |||||||||
Service cost | $ | $ | $ | $ | |||||||||
Interest cost | |||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Amortization of unrecognized prior service (gain) | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Total postretirement benefit (income) expense | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Quarter ended | Year-to-date period ended | ||||||||||||
(millions) | June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | |||||||||
Service cost | $ | $ | $ | $ | |||||||||
Interest cost | |||||||||||||
Recognized net (gain) loss | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Total postemployment benefit expense | $ | $ | $ | $ |
(millions) | Pension | Nonpension postretirement | Total | ||||||
Quarter ended: | |||||||||
June 29, 2019 | $ | $ | $ | ||||||
June 30, 2018 | $ | $ | $ | ||||||
Year-to-date period ended: | |||||||||
June 29, 2019 | $ | $ | $ | ||||||
June 30, 2018 | $ | $ | $ | ||||||
Full year: | |||||||||
Fiscal year 2019 (projected) | $ | $ | $ | ||||||
Fiscal year 2018 (actual) | $ | $ | $ |
(millions) | June 29, 2019 | December 29, 2018 | ||||
Foreign currency exchange contracts | $ | $ | ||||
Cross-currency contracts | ||||||
Interest rate contracts | ||||||
Commodity contracts | ||||||
Total | $ | $ |
June 29, 2019 | December 29, 2018 | ||||||||||||||||||
(millions) | Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |||||||||||||
Assets: | |||||||||||||||||||
Cross-currency contracts: | |||||||||||||||||||
Other assets | $ | $ | $ | $ | $ | $ | |||||||||||||
Interest rate contracts: | |||||||||||||||||||
Other assets (a) | |||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | $ | |||||||||||||
Liabilities: | |||||||||||||||||||
Interest rate contracts: | |||||||||||||||||||
Other liabilities (a) | ( | ) | ( | ) | |||||||||||||||
Total liabilities | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) |
June 29, 2019 | December 29, 2018 | ||||||||||||||||||
(millions) | Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |||||||||||||
Assets: | |||||||||||||||||||
Foreign currency exchange contracts: | |||||||||||||||||||
Other current assets | $ | $ | $ | $ | $ | $ | |||||||||||||
Commodity contracts: | |||||||||||||||||||
Other current assets | |||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | $ | |||||||||||||
Liabilities: | |||||||||||||||||||
Foreign currency exchange contracts: | |||||||||||||||||||
Other current liabilities | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||
Other liabilities | ( | ) | ( | ) | |||||||||||||||
Interest rate contracts: | |||||||||||||||||||
Other liabilities | ( | ) | ( | ) | |||||||||||||||
Commodity contracts: | |||||||||||||||||||
Other current liabilities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Total liabilities | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(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 29, 2019 | December 29, 2018 | June 29, 2019 | December 29, 2018 | |||||||||||||
Interest rate contracts | Current maturities of long-term debt | $ | $ | $ | $ | |||||||||||
Interest rate contracts | Long-term debt | $ | $ | $ | $ | ( | ) |
As of June 29, 2019: | 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 | $ | $ | ( | ) | $ | ( | ) | $ | ||||
Total liability derivatives | $ | ( | ) | $ | $ | $ | ( | ) |
As of December 29, 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 | $ | $ | ( | ) | $ | ( | ) | $ | ||||
Total liability derivatives | $ | ( | ) | $ | $ | $ | ( | ) |
(millions) | Gain (loss) recognized in AOCI | Gain (loss) excluded from assessment of hedge effectiveness | Location of gain (loss) in income of excluded component | |||||||||||||
June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | |||||||||||||
Foreign currency denominated long-term debt | $ | ( | ) | $ | $ | $ | ||||||||||
Cross-currency contracts | Interest expense | |||||||||||||||
Total | $ | ( | ) | $ | $ | $ |
(millions) | Location of gain (loss) recognized in income | Gain (loss) recognized in income | ||||||
June 29, 2019 | June 30, 2018 | |||||||
Foreign currency exchange contracts | COGS | $ | $ | |||||
Commodity contracts | COGS | ( | ) | |||||
Total | $ | $ | ( | ) |
(millions) | Gain (loss) recognized in AOCI | Gain (loss) excluded from assessment of hedge effectiveness | Location of gain (loss) in income of excluded component | |||||||||||||
June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | |||||||||||||
Foreign currency denominated long-term debt | $ | $ | $ | $ | ||||||||||||
Cross-currency contracts | Other income (expense), net | |||||||||||||||
Total | $ | $ | $ | $ |
(millions) | Location of gain (loss) recognized in income | Gain (loss) recognized in income | ||||||
June 29, 2019 | June 30, 2018 | |||||||
Foreign currency exchange contracts | COGS | $ | ( | ) | $ | |||
Foreign currency exchange contracts | Other income (expense), net | ( | ) | ( | ) | |||
Foreign currency exchange contracts | SGA | |||||||
Commodity contracts | COGS | ( | ) | |||||
Total | $ | ( | ) | $ | ||||
June 29, 2019 | June 30, 2018 | |||||||||
(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 | $ | $ | ||||||||
Gain (loss) on fair value hedging relationships: | ||||||||||
Interest contracts: | ||||||||||
Hedged items | ( | ) | ( | ) | ||||||
Derivatives designated as hedging instruments | ||||||||||
Gain (loss) on cash flow hedging relationships: | ||||||||||
Interest contracts: | ||||||||||
Amount of gain (loss) reclassified from AOCI into income | ( | ) | ( | ) |
June 29, 2019 | June 30, 2018 | |||||||||
(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 | $ | $ | ||||||||
Gain (loss) on fair value hedging relationships: | ||||||||||
Interest contracts: | ||||||||||
Hedged items | ( | ) | ||||||||
Derivatives designated as hedging instruments | ( | ) | ||||||||
Gain (loss) on cash flow hedging relationships: | ||||||||||
Interest contracts: | ||||||||||
Amount of gain (loss) reclassified from AOCI into income | ( | ) | ( | ) |
June 29, 2019 | December 29, 2018 | ||||||||||||||||||
Unrealized | Unrealized | ||||||||||||||||||
(millions) | Cost | Gain (Loss) | Market Value | Cost | Gain (Loss) | Market Value | |||||||||||||
Corporate bonds | $ | $ | $ | $ | $ | $ |
Quarter ended | Year-to-date period ended | ||||||||||||
(millions) | June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | |||||||||
Net sales | |||||||||||||
North America | $ | $ | $ | $ | |||||||||
Europe | |||||||||||||
Latin America | |||||||||||||
AMEA | |||||||||||||
Consolidated | $ | $ | $ | $ | |||||||||
Operating profit | |||||||||||||
North America* | $ | $ | $ | $ | |||||||||
Europe | |||||||||||||
Latin America | |||||||||||||
AMEA | |||||||||||||
Total Reportable Segments | |||||||||||||
Corporate* | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Consolidated | $ | $ | $ | $ |
Quarter ended | Year-to-date period ended | |||||||||||||
(millions) | June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | ||||||||||
Snacks | $ | $ | $ | $ | ||||||||||
Cereal | ||||||||||||||
Frozen | ||||||||||||||
Noodles and other | ||||||||||||||
Consolidated | $ | $ | $ | $ |
Consolidated Balance Sheet | ||||||
(millions) | June 29, 2019 (unaudited) | December 29, 2018 | ||||
Trade receivables | $ | $ | ||||
Allowance for doubtful accounts | ( | ) | ( | ) | ||
Refundable income taxes | ||||||
Other receivables | ||||||
Accounts receivable, net | $ | $ | ||||
Raw materials and supplies | $ | $ | ||||
Finished goods and materials in process | ||||||
Inventories | $ | $ | ||||
Property | $ | $ | ||||
Accumulated depreciation | ( | ) | ( | ) | ||
Property, net | $ | $ | ||||
Pension | $ | $ | ||||
Deferred income taxes | ||||||
Other | ||||||
Other assets | $ | $ | ||||
Accrued income taxes | $ | $ | ||||
Accrued salaries and wages | ||||||
Accrued advertising and promotion | ||||||
Current liabilities held for sale | ||||||
Other | ||||||
Other current liabilities | $ | $ | ||||
Income taxes payable | $ | $ | ||||
Nonpension postretirement benefits | ||||||
Noncurrent liabilities held for sale | ||||||
Other | ||||||
Other liabilities | $ | $ |
• | 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, 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. |
• | Adjusted: operating profit, net income, and diluted EPS: We adjust the GAAP financial measures to exclude the effect of restructuring programs, 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, 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, operating profit, net income, and diluted EPS: We adjust the GAAP financial measures to exclude the effect of restructuring programs, 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, 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 restructuring programs, 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. 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. |
Quarter ended | Year-to-date period ended | |||||||||||
Consolidated results (dollars in millions, except per share data) | June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | ||||||||
Reported net income | $ | 286 | $ | 596 | $ | 568 | $ | 1,040 | ||||
Mark-to-market (pre-tax) | 35 | 5 | (6 | ) | 44 | |||||||
Project K (pre-tax) | (15 | ) | (5 | ) | (23 | ) | (25 | ) | ||||
Brexit impacts (pre-tax) | (3 | ) | — | (6 | ) | — | ||||||
Business and portfolio realignment (pre-tax) | (83 | ) | — | (114 | ) | — | ||||||
Income tax impact applicable to adjustments, net* | 15 | — | 34 | (3 | ) | |||||||
Gain from unconsolidated entities, net | — | 200 | — | 200 | ||||||||
Adjusted net income | $ | 337 | $ | 396 | $ | 683 | $ | 824 | ||||
Foreign currency impact | (6 | ) | (17 | ) | ||||||||
Currency-neutral adjusted net income | $ | 343 | $ | 396 | $ | 700 | $ | 824 | ||||
Reported diluted EPS | $ | 0.84 | $ | 1.71 | $ | 1.66 | $ | 2.99 | ||||
Mark-to-market (pre-tax) | 0.10 | 0.01 | (0.02 | ) | 0.13 | |||||||
Project K (pre-tax) | (0.05 | ) | (0.01 | ) | (0.07 | ) | (0.07 | ) | ||||
Brexit impacts (pre-tax) | (0.01 | ) | — | (0.02 | ) | — | ||||||
Business and portfolio realignment (pre-tax) | (0.24 | ) | — | (0.33 | ) | — | ||||||
Income tax impact applicable to adjustments, net* | 0.05 | — | 0.10 | (0.01 | ) | |||||||
Gain from unconsolidated entities, net | — | 0.57 | — | 0.57 | ||||||||
Adjusted diluted EPS | $ | 0.99 | $ | 1.14 | $ | 2.00 | $ | 2.37 | ||||
Foreign currency impact | (0.01 | ) | (0.05 | ) | ||||||||
Currency-neutral adjusted diluted EPS | $ | 1.00 | $ | 1.14 | $ | 2.05 | $ | 2.37 | ||||
Currency-neutral adjusted diluted EPS growth | (12.3 | )% | (13.5 | )% |
Quarter ended June 29, 2019 | ||||||||||||||||||||||||
(millions) | North America | Europe | Latin America | AMEA | Corporate | Kellogg Consolidated | ||||||||||||||||||
Reported net sales | $ | 2,148 | $ | 541 | $ | 239 | $ | 533 | $ | — | $ | 3,461 | ||||||||||||
Foreign currency impact on total business (inc)/dec | (4 | ) | (28 | ) | (5 | ) | (25 | ) | — | (62 | ) | |||||||||||||
Currency-neutral net sales | $ | 2,151 | $ | 569 | $ | 245 | $ | 558 | $ | — | $ | 3,524 | ||||||||||||
Acquisitions | — | — | — | 73 | — | 73 | ||||||||||||||||||
Foreign currency impact on acquisitions (inc)/dec | — | — | — | 13 | — | 13 | ||||||||||||||||||
Organic net sales | $ | 2,151 | $ | 569 | $ | 245 | $ | 471 | $ | — | $ | 3,437 | ||||||||||||
Quarter ended June 30, 2018 | ||||||||||||||||||||||||
(millions) | North America | Europe | Latin America | AMEA | Corporate | Kellogg Consolidated | ||||||||||||||||||
Reported net sales | $ | 2,127 | $ | 559 | $ | 239 | $ | 435 | $ | — | $ | 3,360 | ||||||||||||
% change - 2019 vs. 2018: | ||||||||||||||||||||||||
Reported growth | 1.0 | % | (3.2 | )% | 0.2 | % | 22.6 | % | — | % | 3.0 | % | ||||||||||||
Foreign currency impact on total business (inc)/dec | (0.1 | )% | (5.0 | )% | (2.1 | )% | (5.8 | )% | — | % | (1.9 | )% | ||||||||||||
Currency-neutral growth | 1.1 | % | 1.8 | % | 2.3 | % | 28.4 | % | — | % | 4.9 | % | ||||||||||||
Acquisitions | — | % | — | % | — | % | 16.9 | % | — | % | 2.2 | % | ||||||||||||
Foreign currency impact on acquisitions (inc)/dec | — | % | — | % | — | % | 3.0 | % | — | % | 0.4 | % | ||||||||||||
Organic growth | 1.1 | % | 1.8 | % | 2.3 | % | 8.5 | % | — | % | 2.3 | % | ||||||||||||
Volume (tonnage) | (1.8 | )% | 1.3 | % | (2.1 | )% | — | % | — | % | (1.0 | )% | ||||||||||||
Pricing/mix | 2.9 | % | 0.5 | % | 4.4 | % | 8.5 | % | — | % | 3.3 | % |
Quarter ended June 29, 2019 | ||||||||||||||||||||||||
(millions) | North America* | Europe | Latin America | AMEA | Corporate* | Kellogg Consolidated | ||||||||||||||||||
Reported operating profit | $ | 322 | $ | 36 | $ | 17 | $ | 45 | $ | (23 | ) | $ | 397 | |||||||||||
Mark-to-market | — | — | — | — | 46 | 46 | ||||||||||||||||||
Project K | (10 | ) | — | (2 | ) | (3 | ) | — | (15 | ) | ||||||||||||||
Brexit impacts | — | (3 | ) | — | — | — | (3 | ) | ||||||||||||||||
Business and portfolio realignment | (42 | ) | (32 | ) | (2 | ) | (2 | ) | (5 | ) | (83 | ) | ||||||||||||
Adjusted operating profit | $ | 374 | $ | 72 | $ | 22 | $ | 49 | $ | (64 | ) | $ | 452 | |||||||||||
Foreign currency impact | — | (3 | ) | — | (2 | ) | — | (6 | ) | |||||||||||||||
Currency-neutral adjusted operating profit | $ | 373 | $ | 75 | $ | 22 | $ | 51 | $ | (64 | ) | $ | 458 | |||||||||||
Quarter ended June 30, 2018 | ||||||||||||||||||||||||
(millions) | North America* | Europe | Latin America | AMEA | Corporate* | Kellogg Consolidated | ||||||||||||||||||
Reported operating profit | $ | 385 | $ | 87 | $ | 20 | $ | 38 | $ | (56 | ) | $ | 474 | |||||||||||
Mark-to-market | — | — | — | — | 3 | 3 | ||||||||||||||||||
Project K | (12 | ) | 13 | (2 | ) | (3 | ) | (1 | ) | (5 | ) | |||||||||||||
Adjusted operating profit | $ | 397 | $ | 74 | $ | 22 | $ | 41 | $ | (58 | ) | $ | 476 | |||||||||||
% change - 2019 vs. 2018: | ||||||||||||||||||||||||
Reported growth | (16.6 | )% | (58.4 | )% | (12.8 | )% | 16.3 | % | 60.8 | % | (16.2 | )% | ||||||||||||
Mark-to-market | — | % | — | % | — | % | — | % | 77.2 | % | 9.4 | % | ||||||||||||
Project K | (0.2 | )% | (7.7 | )% | (0.6 | )% | (0.2 | )% | 2.2 | % | (2.7 | )% | ||||||||||||
Brexit impacts | — | % | (3.6 | )% | — | % | — | % | — | % | (0.5 | )% | ||||||||||||
Business and portfolio realignment | (10.5 | )% | (43.8 | )% | (8.4 | )% | (5.0 | )% | (8.0 | )% | (17.3 | )% | ||||||||||||
Adjusted growth | (5.9 | )% | (3.3 | )% | (3.8 | )% | 21.5 | % | (10.6 | )% | (5.1 | )% | ||||||||||||
Foreign currency impact | — | % | (5.0 | )% | 0.7 | % | (5.6 | )% | 0.2 | % | (1.3 | )% | ||||||||||||
Currency-neutral adjusted growth | (5.9 | )% | 1.7 | % | (4.5 | )% | 27.1 | % | (10.8 | )% | (3.8 | )% |
Net sales % change - second quarter 2019 vs. 2018: | ||||||
North America | Reported net sales | Foreign currency | Currency-neutral net sales | |||
Snacks | 3.6 | % | (0.1 | )% | 3.7 | % |
Cereal | (4.8 | )% | (0.3 | )% | (4.5 | )% |
Frozen | 3.1 | % | (0.1 | )% | 3.2 | % |
Year-to-date period ended June 29, 2019 | ||||||||||||||||||||||||
(millions) | North America | Europe | Latin America | AMEA | Corporate | Kellogg Consolidated | ||||||||||||||||||
Reported net sales | $ | 4,437 | $ | 1,038 | $ | 464 | $ | 1,044 | $ | — | $ | 6,983 | ||||||||||||
Foreign currency impact on total business (inc)/dec | (10 | ) | (74 | ) | (22 | ) | (80 | ) | — | (185 | ) | |||||||||||||
Currency-neutral net sales | $ | 4,446 | $ | 1,112 | $ | 487 | $ | 1,124 | $ | — | $ | 7,169 | ||||||||||||
Acquisitions | — | — | — | 271 | — | 271 | ||||||||||||||||||
Foreign currency impact on acquisitions (inc)/dec | — | — | — | 49 | — | 49 | ||||||||||||||||||
Organic net sales | $ | 4,446 | $ | 1,112 | $ | 487 | $ | 803 | $ | — | $ | 6,848 | ||||||||||||
Year-to-date period ended June 30, 2018 | ||||||||||||||||||||||||
(millions) | North America | Europe | Latin America | AMEA | Corporate | Kellogg Consolidated | ||||||||||||||||||
Reported net sales | $ | 4,457 | $ | 1,079 | $ | 471 | $ | 754 | $ | — | $ | 6,761 | ||||||||||||
% change - 2019 vs. 2018: | ||||||||||||||||||||||||
Reported growth | (0.5 | )% | (3.8 | )% | (1.4 | )% | 38.6 | % | — | % | 3.3 | % | ||||||||||||
Foreign currency impact on total business (inc)/dec | (0.2 | )% | (6.8 | )% | (4.7 | )% | (10.6 | )% | — | % | (2.7 | )% | ||||||||||||
Currency-neutral growth | (0.3 | )% | 3.0 | % | 3.3 | % | 49.2 | % | — | % | 6.0 | % | ||||||||||||
Acquisitions | — | % | — | % | — | % | 36.0 | % | — | % | 4.0 | % | ||||||||||||
Foreign currency impact on acquisitions (inc)/dec | — | % | — | % | — | % | 6.6 | % | — | % | 0.7 | % | ||||||||||||
Organic growth | (0.3 | )% | 3.0 | % | 3.3 | % | 6.6 | % | — | % | 1.3 | % | ||||||||||||
Volume (tonnage) | (1.7 | )% | 2.0 | % | (0.8 | )% | 0.2 | % | — | % | (0.7 | )% | ||||||||||||
Pricing/mix | 1.4 | % | 1.0 | % | 4.1 | % | 6.4 | % | — | % | 2.0 | % |
Year-to-date period ended June 29, 2019 | ||||||||||||||||||||||||
(millions) | North America* | Europe | Latin America | AMEA | Corporate* | Kellogg Consolidated | ||||||||||||||||||
Reported operating profit | $ | 702 | $ | 96 | $ | 38 | $ | 92 | $ | (150 | ) | $ | 778 | |||||||||||
Mark-to-market | — | — | — | — | 4 | 4 | ||||||||||||||||||
Project K | (14 | ) | (1 | ) | (4 | ) | (4 | ) | — | (23 | ) | |||||||||||||
Brexit impacts | — | (6 | ) | — | — | — | (6 | ) | ||||||||||||||||
Business and portfolio realignment | (53 | ) | (36 | ) | (2 | ) | (2 | ) | (21 | ) | (114 | ) | ||||||||||||
Adjusted operating profit | $ | 769 | $ | 139 | $ | 44 | $ | 97 | $ | (132 | ) | $ | 917 | |||||||||||
Foreign currency impact | (1 | ) | (10 | ) | (1 | ) | (6 | ) | — | (18 | ) | |||||||||||||
Currency-neutral adjusted operating profit | $ | 769 | $ | 149 | $ | 45 | $ | 103 | $ | (132 | ) | $ | 935 | |||||||||||
Year-to-date period June 30, 2018 | ||||||||||||||||||||||||
(millions) | North America* | Europe | Latin America | AMEA | Corporate* | Kellogg Consolidated | ||||||||||||||||||
Reported operating profit | $ | 784 | $ | 147 | $ | 42 | $ | 79 | $ | (68 | ) | $ | 984 | |||||||||||
Mark-to-market | — | — | — | — | 33 | 33 | ||||||||||||||||||
Project K | (22 | ) | 6 | (4 | ) | (3 | ) | (2 | ) | (25 | ) | |||||||||||||
Adjusted operating profit | $ | 806 | $ | 141 | $ | 46 | $ | 82 | $ | (99 | ) | $ | 976 | |||||||||||
% change - 2019 vs. 2018: | ||||||||||||||||||||||||
Reported growth | (10.5 | )% | (34.9 | )% | (10.3 | )% | 16.0 | % | (117.8 | )% | (20.9 | )% | ||||||||||||
Mark-to-market | — | % | — | % | — | % | — | % | (67.9 | )% | (2.3 | )% | ||||||||||||
Project K | 0.8 | % | (3.8 | )% | (0.8 | )% | (0.8 | )% | 2.9 | % | (0.3 | )% | ||||||||||||
Brexit impacts | — | % | (4.0 | )% | — | % | — | % | — | % | (0.6 | )% | ||||||||||||
Business and portfolio realignment | (6.6 | )% | (25.7 | )% | (4.1 | )% | (2.6 | )% | (20.8 | )% | (11.7 | )% | ||||||||||||
Adjusted growth | (4.7 | )% | (1.4 | )% | (5.4 | )% | 19.4 | % | (32.0 | )% | (6.0 | )% | ||||||||||||
Foreign currency impact | (0.1 | )% | (7.0 | )% | (1.9 | )% | (7.5 | )% | 0.1 | % | (1.8 | )% | ||||||||||||
Currency-neutral adjusted growth | (4.6 | )% | 5.6 | % | (3.5 | )% | 26.9 | % | (32.1 | )% | (4.2 | )% |
Net sales % change - second quarter year-to-date 2019 vs. 2018: | ||||||
North America | Reported net sales | Foreign currency | Currency-neutral net sales | |||
Snacks | 1.6 | % | (0.2 | )% | 1.8 | % |
Cereal | (4.8 | )% | (0.3 | )% | (4.5 | )% |
Frozen | 0.7 | % | (0.1 | )% | 0.8 | % |
Quarter ended | June 29, 2019 | June 30, 2018 | GM change vs. prior year (pts.) | ||||||||||
Gross Profit (a) | Gross Margin (b) | Gross Profit (a) | Gross Margin (b) | ||||||||||
Reported | $ | 1,186 | 34.3 | % | $ | 1,209 | 36.0 | % | (1.7 | ) | |||
Mark-to-market | 47 | 1.4 | % | 2 | — | % | 1.4 | ||||||
Project K | (11 | ) | (0.3 | )% | 4 | 0.2 | % | (0.5 | ) | ||||
Brexit impacts | (3 | ) | (0.1 | )% | — | — | % | (0.1 | ) | ||||
Business and portfolio realignment | (4 | ) | (0.1 | )% | — | — | % | (0.1 | ) | ||||
Foreign currency impact | (19 | ) | — | % | — | — | % | — | |||||
Currency-neutral adjusted | $ | 1,176 | 33.4 | % | $ | 1,203 | 35.8 | % | (2.4 | ) |
Year-to-date period ended | June 29, 2019 | June 30, 2018 | GM change vs. prior year (pts.) | ||||||||||
Gross Profit (a) | Gross Margin (b) | Gross Profit (a) | Gross Margin (b) | ||||||||||
Reported | $ | 2,293 | 32.8 | % | $ | 2,461 | 36.4 | % | (3.6 | ) | |||
Mark-to-market | 5 | — | % | 32 | 0.5 | % | (0.5 | ) | |||||
Project K | (17 | ) | (0.2 | )% | (9 | ) | (0.2 | )% | — | ||||
Brexit impacts | (6 | ) | (0.1 | )% | — | — | % | (0.1 | ) | ||||
Business and portfolio realignment | (8 | ) | (0.1 | )% | — | — | % | (0.1 | ) | ||||
Foreign currency impact | (55 | ) | 0.1 | % | — | — | % | 0.1 | |||||
Currency-neutral adjusted | $ | 2,374 | 33.1 | % | $ | 2,438 | 36.1 | % | (3.0 | ) |
Quarter ended | Year-to-date period ended | |||||||||||
Consolidated results (dollars in millions) | June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | ||||||||
Reported income taxes | $ | 74 | $ | 70 | $ | 146 | $ | 137 | ||||
Mark-to-market | 10 | 1 | (2 | ) | 8 | |||||||
Project K | (4 | ) | (1 | ) | (4 | ) | (5 | ) | ||||
Brexit impacts | (1 | ) | — | (1 | ) | — | ||||||
Business and portfolio realignment | (20 | ) | — | (27 | ) | — | ||||||
Adjusted income taxes | $ | 89 | $ | 70 | $ | 180 | $ | 134 | ||||
Reported effective income tax rate | 20.1 | % | 15.0 | % | 20.1 | % | 14.0 | % | ||||
Mark-to-market | 0.7 | % | — | % | (0.1 | )% | 0.2 | % | ||||
Project K | (0.3 | )% | (0.1 | )% | 0.1 | % | (0.2 | )% | ||||
Brexit impacts | — | % | — | % | 0.1 | % | — | % | ||||
Business and portfolio realignment | (0.8 | )% | — | % | (0.5 | )% | — | % | ||||
Adjusted effective income tax rate | 20.5 | % | 15.1 | % | 20.5 | % | 14.0 | % |
Year-to-date period ended | ||||||
(millions) | June 29, 2019 | June 30, 2018 | ||||
Net cash provided by (used in): | ||||||
Operating activities | $ | 520 | $ | 447 | ||
Investing activities | (327 | ) | (661 | ) | ||
Financing activities | (177 | ) | 162 | |||
Effect of exchange rates on cash and cash equivalents | 3 | 28 | ||||
Net increase (decrease) in cash and cash equivalents | $ | 19 | $ | (24 | ) |
Year-to-date period ended | ||||||
(millions) | June 29, 2019 | June 30, 2018 | ||||
Net cash provided by operating activities | $ | 520 | $ | 447 | ||
Additions to properties | (294 | ) | (270 | ) | ||
Cash flow | $ | 226 | $ | 177 |
Impact of certain items excluded from Non-GAAP guidance: | Net Sales | Operating Profit | Earnings Per Share |
Project K (pre-tax) | $45-55M | $0.13-0.16 | |
Business and portfolio realignment (pre-tax) | $170-190M | $0.50-0.56 | |
Multi-employer pension plan withdrawal liability | ~$110M | ~$0.29 | |
Income tax impact applicable to adjustments, net** | $0.22-0.24 | ||
Currency-neutral adjusted guidance* | 1-2% | (4)-(5)% | (10)-(11)% |
Subtract: Acquisitions | 2% | ||
Add Back: Divestiture | ~(2)-(3)% | ||
Organic guidance | 1-2% |
Reconciliation of Non-GAAP amounts - Cash Flow Guidance | |
(billions) | Full Year 2019 |
Net cash provided by (used in) operating activities | ~$1.0 |
Additions to properties | ~(0.5) |
Cash Flow | ~$0.5 |
• | the expected benefits and costs of the divestiture of selected cookies, fruit and fruit flavored-snacks, pie crusts, and ice-cream cones businesses of the Company, the risk that disruptions from the divestiture will divert management's focus or harm the Company’s business, risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects, risks associated with the Company’s provision of transition services to the divested businesses post-closing; |
• | the ability to implement restructuring and reorganization plans, as planned, whether the expected amount of costs associated with these plans will exceed forecasts, whether the Company will be able to realize the anticipated benefits from these plans in the amounts and 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. |
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: | ||||||||||
3/31/2019 - 4/27/2019 | — | $ | — | — | $ | 960 | ||||
Month #2: | ||||||||||
4/28/2019 - 5/25/2019 | — | $ | — | — | $ | 960 | ||||
Month #3: | ||||||||||
5/26/2019 - 6/29/2019 | — | $ | — | — | $ | 960 | ||||
Total | — | $ | — | — |
(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 Amit Banati |
32.1 | Section 1350 Certification from Steven A. Cahillane |
32.2 | Section 1350 Certification from Amit Banati |
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 |
KELLOGG COMPANY |
/s/ Amit Banati |
Amit Banati |
Principal Financial Officer; Senior Vice President and Chief Financial Officer |
/s/ Kurt Forche |
Kurt Forche |
Principal Accounting Officer; Vice President and Corporate Controller |
Exhibit No. | Description | Electronic (E) Paper (P) Incorp. By Ref. (IBRF) |
Rule 13a-14(e)/15d-14(a) Certification from Steven A. Cahillane | E | |
Rule 13a-14(e)/15d-14(a) Certification from Amit Banati | E | |
Section 1350 Certification from Steven A. Cahillane | E | |
Section 1350 Certification from Amit Banati | 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 |
1. | I have reviewed this quarterly report on Form 10-Q of Kellogg Company; |
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 |
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 |
1. | I have reviewed this quarterly report on Form 10-Q of Kellogg Company; |
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 |
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/ Amit Banati | |
Senior Vice President and Chief Financial Officer |
(1) | the Quarterly Report on Form 10-Q of Kellogg Company for the quarter ended June 29, 2019 (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 |
(1) | the Quarterly Report on Form 10-Q of Kellogg Company for the quarter ended June 29, 2019 (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/ Amit Banati | |
Name: | Amit Banati |
Title: | Senior Vice President and Chief Financial Officer |
Consolidated Balance Sheet (Unaudited) (Parenthetical) - $ / shares |
Jun. 29, 2019 |
Dec. 29, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.25 | $ 0.25 |
Consolidated Statement of Equity Consolidated Statement of Equity (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
Jun. 29, 2019 |
Jun. 30, 2018 |
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Statement of Stockholders' Equity [Abstract] | ||||
Dividends declared | $ 0.56 | $ 0.54 | $ 1.12 | $ 1.08 |
Accounting Policies |
6 Months Ended |
---|---|
Jun. 29, 2019 | |
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 2018 Annual Report on Form 10-K. The condensed balance sheet information at December 29, 2018 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 29, 2019 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 29, 2019, $823 million of the Company’s outstanding payment obligations had been placed in the accounts payable tracking system, and participating suppliers had sold $595 million of those payment obligations to participating financial institutions. As of December 29, 2018, $893 million of the Company’s outstanding payment obligations had been placed in the accounts payable tracking system, and participating suppliers had sold $701 million of those payment obligations to participating financial institutions. New accounting standards adopted in the period Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. In February 2018, the Financial Accounting Standards Board (FASB) issued an Accounting Standard Update (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) to retained earnings. We elected to adopt the ASU effective in the first quarter of 2019 and reclassified the disproportionate income tax effect recorded within AOCI to retained earnings. This resulted in a decrease to AOCI and an increase to retained earnings of $22 million. The adjustment primarily related to deferred taxes previously recorded for pension and other postretirement benefits, as well as hedging positions for debt and net investment hedges. Leases. In February 2016, the FASB issued an ASU requiring 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 remains, with similar classification criteria as current GAAP to distinguish between capital and operating leases. The principal difference from prior guidance is that the lease assets and lease liabilities arising from operating leases will be recognized on the Consolidated Balance Sheet. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company adopted the ASU in the first quarter of 2019, using the optional transition method that allows for a cumulative-effect adjustment in the period of adoption with no restatement of prior periods. The Company elected the package of practical expedients permitted under the transition guidance that allows for the carry forward of historical lease classifications and consistent treatment of initial direct costs for existing leases. The Company also elected to apply the practical expedient that allows the continued historical treatment of land easements. The Company did not elect the practical expedient for the use of hindsight in evaluating the expected lease term of existing leases. The adoption of the ASU resulted in the recording of operating lease assets and operating lease liabilities of approximately $453 million and $461 million, respectively, as of December 30, 2018. The difference between the additional lease assets and lease liabilities, represents existing deferred rent and prepaid lease balances that were reclassified on the balance sheet. The adoption of the ASU did not have a material impact to the Company’s Consolidated Statements of Income or Cash Flows. Accounting standards to be adopted in future periods Cloud Computing Arrangements. In August 2018, the FASB issued ASU 2018-15: Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. The ASU allows companies to capitalize implementation costs incurred in a hosting arrangement that is a service contract over the term of the hosting arrangement, including periods covered by renewal options that are reasonably certain to be exercised. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019 and can be applied retrospectively or prospectively. Early adoption is permitted. The Company is currently assessing the impact of adoption.
|
Sale of Accounts Receivable |
6 Months Ended |
---|---|
Jun. 29, 2019 | |
Transfers and Servicing of Financial Assets [Abstract] | |
Transfers and Servicing of Financial Assets [Text Block] | Sale of accounts receivable The Company has a program in which a discrete group of customers are allowed to 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) 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 Monetization Programs are designed to effectively offset the impact on working capital of the Extended Terms Program. The Monetization Programs sell, on a revolving basis, certain trade accounts receivable invoices to third party financial institutions. Transfers under these agreements 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. 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 29, 2019 and December 29, 2018 for these agreements as the fair value of these servicing arrangements as well as the fees earned were not material to the financial statements. Accounts receivable sold of $947 million and $900 million remained outstanding under these arrangements as of June 29, 2019 and December 29, 2018, respectively. The proceeds from these sales of receivables are included in cash from operating activities in the Consolidated Statement of Cash Flows in the period of sale. The recorded net loss on sale of receivables was $7 million and $15 million for the quarter and year-to-date periods ended June 29, 2019, respectively and was $6 million and $12 million for the quarter and year-to-date periods ended June 30, 2018, respectively. The recorded loss is included in Other income and expense. Other programs Additionally, from time to time certain of the Company's foreign subsidiaries will transfer, without recourse, accounts receivable invoices 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 $21 million and $93 million remained outstanding under these programs as of June 29, 2019 and December 29, 2018, respectively. The proceeds from these sales of receivables are included in cash from operating activities in the Consolidated Statement of Cash Flows in the period of sale. The recorded net loss on the sale of these receivables is included in Other income and expense (OIE) and is not material.
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Divestitures and held for sale |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | Divestitures and held for sale On March 31, 2019, the Company entered into a definitive agreement to sell selected cookies, fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses to Ferrero International S.A. (Ferrero) for approximately $1.3 billion in cash, subject to a working capital adjustment mechanism. Both the total assets and net assets of the businesses, including a targeted working capital amount is estimated to be approximately $1.3 billion, and is expected to result in an immaterial pre-tax gain when recognized upon closing. The net assets and liabilities of these businesses were classified as held for sale during the second quarter of 2019. The following table presents the major classes of assets and liabilities classified as held for sale on the Consolidated Balance Sheet as of June 29, 2019:
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Acquisitions, West Africa Investments, Goodwill and Other Intangible Assets |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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. As a result of the Company’s incremental ownership interest in Multipro and concurrent changes to the shareholders' agreement, the Company has a 51% controlling interest in and is consolidating Multipro. The acquisition was accounted for as a business combination and the assets and liabilities of Multipro were included in the June 29, 2019 and December 29, 2018 Consolidated Balance Sheet and the results of its operations have been included in the Consolidated Statement of Income subsequent to the acquisition date within the AMEA reporting segment. 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 in the second quarter of 2018 on the disposition of our previously held equity interest in Multipro of $245 million, which is included within Earnings (loss) from unconsolidated entities. The Company's June 30, 2018 quarter-to-date and year-to-date consolidated unaudited pro forma historical net sales and net income, as if Multipro had been acquired at the beginning of 2018, exclusive of the non-cash $245 million gain on the disposition of the equity interest recognized in the second quarter of 2018, are estimated as follows:
Investment in TAF The investment in TAF, our interest in an affiliated food manufacturer, 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 in the second quarter of 2018 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. Goodwill and Intangible Assets Changes in the carrying amount of goodwill, intangible assets subject to amortization, consisting primarily of customer relationships, distribution agreements, and indefinite-lived intangible assets, consisting of brands, are presented in the following tables: Carrying amount of goodwill
Intangible assets subject to amortization
For intangible assets in the preceding table, amortization was $14 million and $9 million for the year-to-date periods ended June 29, 2019 and June 30, 2018, respectively. The currently estimated aggregate annual amortization expense for full-year 2019 is approximately $27 million. Intangible assets not subject to amortization
Impairment Testing Goodwill is tested for impairment at least annually or whenever events or changes in circumstances indicate the carrying value of the asset may be impaired, including a change in reporting units or composition of reporting units as a result of a re-organization in internal reporting structures. For the goodwill impairment test, the fair value of the reporting units are estimated based on market multiples. This approach employs market multiples based on either sales or earnings before interest, taxes, depreciation and amortization for companies that are comparable to the Company’s reporting units. In the event the fair value determined using the market multiple approach is close to carrying value, the Company may supplement the fair value determination using discounted cash flows. The assumptions used for the impairment test are consistent with those utilized by a market participant performing similar valuations for the Company’s reporting units. These estimates are made using various inputs including historical data, current and anticipated market conditions, management plans, and market comparables. On December 30, 2018 the Company reorganized our North American business. The reorganization eliminated the legacy business unit structure and internal reporting. In addition, the Company changed the internal reporting provided to the chief operating decision maker (CODM) and segment manager. As a result, the Company reevaluated its operating segments and reporting units. In addition, we transferred the management of our Middle East, North Africa, and Turkey businesses from Kellogg Europe to Kellogg AMEA, effective December 30, 2018. Refer to Note 12, Reportable Segments for further details on these changes. As a result of these changes in operating segments and related reporting units, the Company re-allocated goodwill between reporting units where necessary and compared the carrying value to the fair value of each impacted reporting unit on a before and after basis. This evaluation was only required to be performed on reporting units impacted by the changes noted above. Effective December 30, 2018 in North America, the previous U.S. Snacks, U.S. Morning Foods, U.S. Specialty Channels, U.S. Frozen Foods, Kashi, Canada and RX operating segments are now a single operating segment (Kellogg North America). At the beginning of 2019, the Company evaluated the related impacted reporting units for impairment on a before and after basis and concluded that the fair values of each reporting unit exceeded their carrying values. On a before basis, the previous Kashi reporting unit's percentage of excess of fair value over carrying value was approximately 18% using the same methodology as the 2018 annual impairment analysis, which was performed as of the beginning of the fourth quarter of 2018. The fair value of the previous Kashi reporting unit was estimated primarily based on a multiple of net sales and discounted cash flows. Approximately $46 million of goodwill was re-allocated between the impacted reporting units within Kellogg Europe and Kellogg AMEA related to the transfer of businesses between these operating segments. The Company performed a goodwill evaluation of the impacted reporting units on a before and after basis and concluded that the fair value of the impacted reporting units exceeded their carrying values. |
Restructuring and Cost Reduction Activities |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Cost Reduction Activities | Restructuring Programs The Company views its restructuring programs 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 3 to 5-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 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 approved all remaining Project K initiatives as of the end of 2018 and implementation of these remaining initiatives will be completed in 2019. Project charges, after-tax costs and annual savings remain in line with expectations. The Company currently anticipates that the program will result in total pre-tax charges, once all phases are implemented, of $1.6 billion, with after-tax cash costs, including incremental capital investments, estimated to be approximately $1.2 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 $400 million which includes severance, pension and other termination benefits; and other costs of approximately $700 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: North America (approximately 65%), Europe (approximately 22%), Latin America (approximately 3%), AMEA (approximately 6%), and Corporate (approximately 4%). During the quarter and year-to-date period ended June 29, 2019, the Company recorded total net charges of $15 million and $23 million, respectively related to Project K. During the quarter and year-to-date period ended June 30, 2018, the Company recorded total net charges of $5 million and $25 million, respectively related to Project K. Since the inception of Project K, the Company has recognized charges of $1,543 million that have been attributed to the program. The charges consist of $6 million recorded as a reduction of revenue, $910 million recorded in cost of goods sold (COGS), $794 million recorded in selling, general and administrative (SG&A) expense, and $(167) million recorded in OIE. Other Programs During the second quarter of 2019, the Company announced a reorganization plan for the European reportable segment designed to simplify the organization, increase organizational efficiency, and enhance key processes. The overall project is expected to be substantially completed by December 31, 2020. The project is expected to result in cumulative pretax net charges of approximately $50 million, including certain non-cash credits. Cash costs are expected to be approximately $57 million. The total expected charges will include severance and other termination benefits and charges related to relocation, third party legal and consulting fees, and contract termination costs. During the quarter ended June 29, 2019, the Company recorded total charges of $32 million related to this initiative. The charges were recorded in SG&A expense. Additionally during the second quarter of 2019, the Company announced a reorganization plan which primarily impacts the North America reportable segment. The reorganization plan is designed to simplify the organization that supports the remaining North America reportable segment after the divestiture and related transition. The overall project is expected to be substantially completed by December 31, 2020. The overall project is expected to result in cumulative pretax charges of approximately $35 million. Cash costs are expected to approximate the pretax charges. Total expected charges will include severance and other termination benefits and charges related to third party consulting fees. During the quarter ended June 29, 2019, the Company recorded total charges of $18 million related to this initiative. The charges were recorded in SG&A expense. All Programs During the quarter ended June 29, 2019, the Company recorded total net charges of $65 million across all restructuring programs. The charges were comprised of $11 million of expense recorded in COGS, $54 million of expense recorded in SG&A expense. During the year-to-date period ended June 29, 2019, the Company recorded total charges of $73 million across all restructuring programs. The charges were comprised of $17 million recorded in COGS and $56 million recorded in SG&A expense. During the quarter ended June 30, 2018, the Company recorded total net charges of $5 million across all restructuring programs. The charges were comprised of $(4) million net gain recorded in COGS, $9 million recorded in SG&A expense. During the year-to-date period ended June 30, 2018, the Company recorded total charges of $25 million across all restructuring programs. The charges were comprised of $9 million recorded in COGS and $16 million recorded in SG&A expense. The tables below provide the details for charges incurred during the quarters ended June 29, 2019 and June 30, 2018 and program costs to date for all programs currently active as of June 29, 2019.
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. 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 third-party incremental costs related to the development and implementation of enhanced global structures and capabilities. At June 29, 2019 total project reserves were $104 million, related to severance payments and other costs of which a substantial portion will be paid in 2019. The following table provides details for exit cost reserves.
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Equity |
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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. There were 15 million and 14 million anti-dilutive potential common shares excluded from the reconciliation for the quarter and year-to-date periods ended June 29, 2019. 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. Please refer to the Consolidated Statement of Income for basic and diluted earnings per share for the quarters ended June 29, 2019 and June 30, 2018. Share repurchases 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 29, 2019, $960 million remains available under the authorization. During the year-to-date period ended June 29, 2019, the Company repurchased approximately 4 million shares of common stock for a total of $220 million. 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. 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 29, 2019 and June 30, 2018, consisted of the following:
Accumulated other comprehensive income (loss), net of tax, as of June 29, 2019 and December 29, 2018 consisted of the following:
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Leases |
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Leases | Leases The Company leases certain warehouses, equipment, vehicles, and office space primarily through operating lease agreements. Finance lease obligations and activity are not material to the Consolidated Financial Statements. Lease obligations are primarily for real estate assets, with the remainder related to manufacturing and distribution related equipment, vehicles, information technology equipment, and rail cars. Leases with an initial term of 12 months or less are not recorded on the balance sheet. A portion of the Company's real estate leases include future variable rental payments that include inflationary adjustment factors. The future variability of these adjustments is unknown and therefore not included in the minimum lease payments. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. The leases have remaining terms which range from less than 1 year to 10 years and the majority of leases provide the Company with the option to exercise one or more renewal terms. The length of the lease term used in recording lease assets and lease liabilities is based on the contractually required lease term adjusted for any options to renew or early terminate the lease that are reasonably certain of being executed. The Company combines lease and non-lease components together in determining the minimum lease payments for the majority of leases. The Company has elected to not combine lease and non-lease components for certain asset types in service-related agreements that include significant production related costs. The Company has closely analyzed these agreements to ensure any embedded costs related to the securing of the leased asset is properly segregated and accounted for in measuring the lease assets and liabilities. The majority of the leases do not include a stated interest rate, and therefore the Company's periodic incremental borrowing rate is used to determine the present value of lease payments. This rate is calculated based on a collateralized rate for the specific currencies used in leasing activities and the borrowing ability of the applicable Company legal entity. For the initial implementation of the lease standard, the incremental borrowing rate at December 29, 2018 was used to present value operating lease assets and liabilities. The Company recorded operating lease costs of $32 million and $64 million for the quarter and year-to-date periods ended June 29, 2019. Lease related costs associated with variable rent, short-term leases, and sale-leaseback arrangements, as well as sublease income, are each immaterial.
At June 29, 2019, future maturities of operating leases were as follows:
Operating lease payments presented in the table above exclude $144 million of minimum lease payments for real-estate leases signed but not yet commenced. The leases are expected to commence in 2019 and 2020. As previously disclosed in our 2018 Annual Report on Form 10-K and under previous lease standard (Topic 840), at December 29, 2018, future minimum annual lease commitments under non-cancelable operating leases were as follows:
Rent expense on operating leases for the year ended December 29, 2018 was $133 million.
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Debt | Debt The following table presents the components of notes payable at June 29, 2019 and December 29, 2018:
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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 2018 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:
During the year-to-date period ended June 29, 2019, the Company granted approximately 0.9 million restricted stock units at a weighted average cost of $56 per share and 2.8 million non-qualified stock options at a weighted average cost of $7 per share. 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 2018 Annual Report on Form 10-K. Performance shares In the first quarter of 2019, 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 organic 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 organic net sales growth achievement. Compensation cost related to organic net sales growth performance is revised for changes in the expected outcome. The 2019 target grant currently corresponds to approximately 239,000 shares, with a grant-date fair value of $59 per share. The 2016 performance share award, payable in stock, was settled at 85% of target in February 2019 for a total dollar equivalent of $6 million.
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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 2018 Annual Report on Form 10-K. Components of Company plan benefit expense for the periods presented are included in the tables below. Pension
Other nonpension postretirement
Postemployment
For the year-to-date period ended June 29, 2019, the Company recognized a loss 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 loss recognized was due primarily to an unfavorable change in the discount rate. Company contributions to employee benefit plans are summarized as follows:
Prior year contributions included $250 million of pre-tax discretionary contributions to U.S. plans in the second quarter of 2018 designated for the 2017 tax year. Plan funding strategies may be modified in response to management's evaluation of tax deductibility, market conditions, and competing investment alternatives.
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Income Taxes |
6 Months Ended | ||||||
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Jun. 29, 2019 | |||||||
Income Tax Disclosure [Abstract] | |||||||
Income Taxes | Income taxes The consolidated effective tax rate for the quarter ended June 29, 2019 was 20% as compared to 15% in the same quarter of the prior year. The effective tax rate for the second quarter of 2018 benefited $31 million due to discretionary pension contributions made in the second quarter of 2018 totaling $250 million, which were designated as 2017 tax year contributions. The consolidated effective tax rate for the year-to-date periods ended June 29, 2019 and June 30, 2018 was 20% and 14%, respectively. The effective tax rate for the year-to-date period ended June 30, 2018 benefited from a discretionary pension contribution and a $44 million discrete tax benefit as a result of the remeasurement of deferred taxes following a legal entity restructuring. As of June 29, 2019, the Company classified $10 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 $2 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. The Company’s total gross unrecognized tax benefits as of June 29, 2019 was $97 million, unchanged from year-end. Of this balance, $87 million represents the amount that, if recognized, would affect the Company’s effective income tax rate in future periods. The accrual balance for tax-related interest was approximately $22 million at June 29, 2019.
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Derivative Instruments and Fair Value Measurements |
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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 29, 2019 and December 29, 2018 were as follows:
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 29, 2019 and December 29, 2018, 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. Cross-currency contracts are valued based on changes in the spot rate at the time of valuation compared to the spot rate at the time of execution, as well as the change in the interest differential between the two currencies. 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 29, 2019 or December 29, 2018. 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 29, 2019 and December 29, 2018: Derivatives designated as hedging instruments
(a) The fair value of the related hedged portion of the Company's long-term debt, a level 2 liability, was $0.7 billion and $1.6 billion as of June 29, 2019 and December 29, 2018, respectively. Derivatives not designated as hedging instruments
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 $2.6 billion as of June 29, 2019 and December 29, 2018. The following amounts were recorded on the Consolidated Balance Sheet related to cumulative basis adjustments for existing fair value hedges as of June 29, 2019 and December 29, 2018.
(a) The current maturities of hedged long-term debt includes $1 million and $3 million of hedging adjustment on discontinued hedging relationships as of June 29, 2019 and December 29, 2018, respectively. The hedged long-term debt includes $16 million and $(12) million of hedging adjustment on discontinued hedging relationships as of June 29, 2019 and December 29, 2018, 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 29, 2019 and December 29, 2018 would be adjusted as detailed in the following table:
The effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the quarters ended June 29, 2019 and June 30, 2018 was as follows: Derivatives and non-derivatives in net investment hedging relationships
Derivatives not designated as hedging instruments
The effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the year-to-date periods ended June 29, 2019 and June 30, 2018 was as follows: Derivatives and non-derivatives in net investment hedging relationships
Derivatives not designated as hedging instruments
The effect of fair value and cash flow hedge accounting on the Consolidated Income Statement for the quarters ended June 29, 2019 and June 30, 2018:
The effect of fair value and cash flow hedge accounting on the Consolidated Income Statement for the year-to-date periods ended June 29, 2019 and June 30, 2018:
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 29, 2019 was not material. 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 29, 2019 triggered by credit-risk-related contingent features. Other fair value measurements The following is a summary of the carrying and market values of the Company's available for sale securities:
The market values of the Company's investments in level 2 corporate bonds are based on matrices or models from pricing vendors. Unrealized gains and losses are included in the Consolidated Statement of Comprehensive Income. The Company reviews its investment portfolio for any unrealized losses that would be deemed other-than-temporary and requires the recognition of an impairment loss in earnings. If the cost of an investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, the duration and extent to which the fair value is less than its cost, the Company's intent to hold the investment, and whether it is more likely than not that the Company will be required to sell the investment before recovery of the cost basis. The Company also considers the type of security, related industry and sector performance, and published investment ratings. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is established. If conditions within individual markets, industry segments, or macro-economic environments deteriorate, the Company could incur future impairments. The investments are recorded within Other current assets and Other assets on the Consolidated Balance Sheet, based on the maturity of the individual security. The maturity dates of the securities range from 2020 to 2028. 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 $8.7 billion and $8.3 billion, respectively, as of June 29, 2019. The fair value and carrying value of the Company's long-term debt were both $8.2 billion as of December 29, 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 29, 2019, the Company was not in a material 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 29, 2019, the Company had no collateral posting requirements related to reciprocal collateralization agreements and collected approximately $19 million of collateral related to reciprocal collaterization agreements which is reflected as an increase in other liabilities. As of June 29, 2019 the Company posted $12 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 20% of consolidated trade receivables at June 29, 2019.
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Reportable Segments |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segments | Reportable segments Kellogg Company is the world’s leading producer of cereal, second largest producer of crackers, and a leading producer of savory snacks and frozen foods. Additional product offerings include toaster pastries, cereal bars, cookies, veggie foods and noodles. Kellogg products are manufactured and marketed globally. Principal markets for these products include the United States, United Kingdom, and Nigeria. On December 30, 2018 the Company reorganized its North American business. The reorganization eliminated the legacy business unit structure and internal reporting. In addition, the Company changed the internal reporting provided to the chief operating decision maker (CODM) and segment manager. As a result, the Company reevaluated its operating segments. In conjunction with the reorganization, certain global research and development resources and related activities were transferred from the North America business to Corporate. Prior period segment results were not restated for the transfer as the impacts were not considered material. In addition, the Company transferred its Middle East, North Africa, and Turkey businesses from Kellogg Europe to Kellogg AMEA, effective December 30, 2018. This consolidated the Company's Africa business under a single regional management team. All comparable prior periods have been restated to reflect the change. For the quarter and year-to-date periods ended June 30, 2018, the change resulted in $62 million and $129 million, respectively, of reported net sales and $10 million and $24 million, respectively, of reported operating profit transferring from Kellogg Europe to Kellogg AMEA. The Company manages its operations through four operating segments that are based on geographic location – North America which includes U.S. businesses and Canada; Europe which consists principally of European countries; Latin America which consists of Central and South America and includes Mexico; and AMEA (Asia Middle East Africa) which consists of Africa, Middle East, Australia and other Asian and Pacific markets. These operating segments also represent our reportable segments. 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. Reportable segment results were as follows:
* Corporate in 2019 includes the cost of certain global research and development activities that were previously included in the North America reportable segment in 2018 that totaled approximately $12 million and $24 million for the quarter and year-to-date periods, respectively. Supplemental product information is provided below for net sales to external customers:
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Supplemental Financial Statement Data |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Balance Sheet Disclosures [Text Block] | Supplemental Financial Statement Data
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Subsequent Event |
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Jun. 29, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Event [Text Block] | Subsequent events On July 24, 2019, the Company announced a tender offer to purchase for cash any and all of the $$500 million 4.15% Senior Notes due November 2019, plus up to $500 million of aggregate principal of its 4.0% Senior Notes due December 2020, 3.25% Senior Notes due May 2021, 2.65% Senior Notes due May 2023, and 3.4% Senior Notes due November 2027. On July 28, 2019, the Company completed its sale of selected cookies, fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses to Ferrero for approximately $1.3 billion in cash, subject to a working capital adjustment mechanism. Both the total assets and net assets of the businesses, including a targeted working capital amount is estimated to be approximately $1.3 billion, and resulted in an immaterial pre-tax gain upon closing. After-tax proceeds from the divestiture are expected to be utilized to repay debt. In conjunction with the completion of the sale, the Company incurred closing costs of approximately $15 million in the third quarter and expects to incur a cash tax liability of approximately $260 million to be paid in the fourth quarter of 2019. Subsequent to quarter end, the Company is no longer obligated to contribute to certain multi-employer pension plans and it is probable it will incur a withdrawal liability estimated at $110 million related to its exit from these plans. This amount represents management's best estimate. Actual results could differ. The cash obligation is payable over a maximum period of 20 years; management has not determined the actual period over which payments will be made.
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Accounting Policies (Policies) |
6 Months Ended |
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Jun. 29, 2019 | |
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 2018 Annual Report on Form 10-K. The condensed balance sheet information at December 29, 2018 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 29, 2019 are not necessarily indicative of the results to be expected for other interim periods or the full year.
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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.
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New accounting standards adopted and accounting standards to be adopted in future periods | New accounting standards adopted in the period Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. In February 2018, the Financial Accounting Standards Board (FASB) issued an Accounting Standard Update (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) to retained earnings. We elected to adopt the ASU effective in the first quarter of 2019 and reclassified the disproportionate income tax effect recorded within AOCI to retained earnings. This resulted in a decrease to AOCI and an increase to retained earnings of $22 million. The adjustment primarily related to deferred taxes previously recorded for pension and other postretirement benefits, as well as hedging positions for debt and net investment hedges. Leases. In February 2016, the FASB issued an ASU requiring 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 remains, with similar classification criteria as current GAAP to distinguish between capital and operating leases. The principal difference from prior guidance is that the lease assets and lease liabilities arising from operating leases will be recognized on the Consolidated Balance Sheet. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company adopted the ASU in the first quarter of 2019, using the optional transition method that allows for a cumulative-effect adjustment in the period of adoption with no restatement of prior periods. The Company elected the package of practical expedients permitted under the transition guidance that allows for the carry forward of historical lease classifications and consistent treatment of initial direct costs for existing leases. The Company also elected to apply the practical expedient that allows the continued historical treatment of land easements. The Company did not elect the practical expedient for the use of hindsight in evaluating the expected lease term of existing leases. The adoption of the ASU resulted in the recording of operating lease assets and operating lease liabilities of approximately $453 million and $461 million, respectively, as of December 30, 2018. The difference between the additional lease assets and lease liabilities, represents existing deferred rent and prepaid lease balances that were reclassified on the balance sheet. The adoption of the ASU did not have a material impact to the Company’s Consolidated Statements of Income or Cash Flows. Accounting standards to be adopted in future periods Cloud Computing Arrangements. In August 2018, the FASB issued ASU 2018-15: Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. The ASU allows companies to capitalize implementation costs incurred in a hosting arrangement that is a service contract over the term of the hosting arrangement, including periods covered by renewal options that are reasonably certain to be exercised. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019 and can be applied retrospectively or prospectively. Early adoption is permitted. The Company is currently assessing the impact of adoption.
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Divestitures and held for sale (Tables) |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities held for sale | The net assets and liabilities of these businesses were classified as held for sale during the second quarter of 2019. The following table presents the major classes of assets and liabilities classified as held for sale on the Consolidated Balance Sheet as of June 29, 2019:
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Acquisitions, West Africa Investments, Goodwill and Other Intangible Assets (Tables) |
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Acquisitions, West Africa Investments, Goodwill and Other Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition, Pro Forma Information [Table Text Block] | The Company's June 30, 2018 quarter-to-date and year-to-date consolidated unaudited pro forma historical net sales and net income, as if Multipro had been acquired at the beginning of 2018, exclusive of the non-cash $245 million gain on the disposition of the equity interest recognized in the second quarter of 2018, are estimated as follows:
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Carrying Amount of Goodwill |
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Intangible Assets Subject to Amortization |
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Intangible Assets Not Subject to Amortization |
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Restructuring and Cost Reduction Activities (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring and Cost Reduction Activities |
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Schedule of Exit Cost Reserves | The following table provides details for exit cost reserves.
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Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassifications Out of AOCI | Reclassifications out of AOCI for the quarter and year-to-date periods ended June 29, 2019 and June 30, 2018, consisted of the following:
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Summary of Accumulated Other Comprehensive Income (Loss) | Accumulated other comprehensive income (loss), net of tax, as of June 29, 2019 and December 29, 2018 consisted of the following:
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Leases (Tables) |
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Jun. 29, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of supplemental operating lease information |
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Operating leases future maturities | As previously disclosed in our 2018 Annual Report on Form 10-K and under previous lease standard (Topic 840), at December 29, 2018, future minimum annual lease commitments under non-cancelable operating leases were as follows:
At June 29, 2019, future maturities of operating leases were as follows:
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Notes Payable | The following table presents the components of notes payable at June 29, 2019 and December 29, 2018:
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Stock Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compensation Expense for Equity-Based Programs and Related Income Tax Benefits |
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Employee Benefits (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Plan Benefit Expense | Pension
Other nonpension postretirement
Postemployment
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Contributions to Employee Benefit Plans | Company contributions to employee benefit plans are summarized as follows:
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Derivative Instruments and Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Total Notional Amounts of Derivative Instruments | Total notional amounts of the Company’s derivative instruments as of June 29, 2019 and December 29, 2018 were as follows:
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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 29, 2019 and December 29, 2018: Derivatives designated as hedging instruments
(a) The fair value of the related hedged portion of the Company's long-term debt, a level 2 liability, was $0.7 billion and $1.6 billion as of June 29, 2019 and December 29, 2018, respectively. Derivatives not designated as hedging instruments
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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 29, 2019 and December 29, 2018.
(a) The current maturities of hedged long-term debt includes $1 million and $3 million of hedging adjustment on discontinued hedging relationships as of June 29, 2019 and December 29, 2018, respectively. The hedged long-term debt includes $16 million and $(12) million of hedging adjustment on discontinued hedging relationships as of June 29, 2019 and December 29, 2018, respectively.
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Schedule of Offsetting Assets |
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Schedule of Offsetting Liabilities |
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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 29, 2019 and June 30, 2018 was as follows: Derivatives and non-derivatives in net investment hedging relationships
Derivatives not designated as hedging instruments
The effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the year-to-date periods ended June 29, 2019 and June 30, 2018 was as follows: Derivatives and non-derivatives in net investment hedging relationships
Derivatives not designated as hedging instruments
The effect of fair value and cash flow hedge accounting on the Consolidated Income Statement for the quarters ended June 29, 2019 and June 30, 2018:
The effect of fair value and cash flow hedge accounting on the Consolidated Income Statement for the year-to-date periods ended June 29, 2019 and June 30, 2018:
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Available-for-sale securities | The following is a summary of the carrying and market values of the Company's available for sale securities:
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Reportable Segments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reportable Segment Information |
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Revenue from External Customers by Products and Services | Supplemental product information is provided below for net sales to external customers:
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Supplemental Financial Statement Data (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Financial Data Consolidated Balance Sheet [Table Text Block] |
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Accounting Policies - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 30, 2019 |
Jun. 29, 2019 |
Dec. 30, 2018 |
Dec. 29, 2018 |
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Impact of new accounting standards | ||||
Reclassification of tax effects relating to U.S. tax reform | $ 0 | |||
Operating lease right-of-use assets | 415 | $ 453 | $ 0 | |
Operating lease liabilities | 424 | $ 461 | ||
Obligations placed in accounts payable tracking system | 823 | 893 | ||
Obligations sold by participating suppliers | 595 | $ 701 | ||
AOCI | ||||
Impact of new accounting standards | ||||
Reclassification of tax effects relating to U.S. tax reform | $ (22) | |||
Retained earnings | ||||
Impact of new accounting standards | ||||
Reclassification of tax effects relating to U.S. tax reform | $ 22 | $ 22 |
Sale of Accounts Receivable - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
Jun. 29, 2019 |
Jun. 30, 2018 |
Dec. 29, 2018 |
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Monetization Program | Other income (expense) | |||||
Transfer of Financial Assets Accounted for as Sales [Line Items] | |||||
Gain (Loss) on Sale of Accounts Receivable | $ (7) | $ (6) | $ (15) | $ (12) | |
Monetization Program | Maximum [Member] | |||||
Transfer of Financial Assets Accounted for as Sales [Line Items] | |||||
Transfers of Accounts Receivable Agreements | 1,033 | 1,033 | |||
Monetization Program | Sold And Outstanding | |||||
Transfer of Financial Assets Accounted for as Sales [Line Items] | |||||
Transfer of Financial Assets Accounted for as Sales, Amount Derecognized | 947 | 947 | $ 900 | ||
Kellogg Foreign Subsidiaries Other Program | |||||
Transfer of Financial Assets Accounted for as Sales [Line Items] | |||||
Transfers of Accounts Receivable Agreements | $ 21 | $ 21 | $ 93 |
Divestitures and held for sale - Narrative (Details) - Cookies, fruit and fruit snacks businesses - USD ($) $ in Millions |
Jul. 28, 2019 |
Mar. 31, 2019 |
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Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Cash proceeds from sale of businesses | $ 1,300 | $ 1,300 |
Net assets | $ 1,300 | $ 1,300 |
Divestitures and held for sale - Assets and liabilities held for sale table (Details) - USD ($) $ in Millions |
Jun. 29, 2019 |
Dec. 29, 2018 |
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Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Total current assets | $ 112 | $ 0 |
Total noncurrent assets | 1,188 | 0 |
Total Current liabilities | 1 | $ 0 |
North America | Cookies, fruit and fruit snacks businesses | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Inventory and other assets | 112 | |
Total current assets | 112 | |
Property and equipment | 227 | |
Goodwill and intangibles assets | 956 | |
Operating lease right-of-use assets | 5 | |
Total noncurrent assets | 1,188 | |
Total assets | 1,300 | |
Current operating lease liabilities | 1 | |
Total Current liabilities | 1 | |
Operating lease liabilities | 4 | |
Total liabilities | $ 5 |
Acquisitions, West Africa Investments, Goodwill and Other Intangible Assets - Carrying Amount of Goodwill (Details) $ in Millions |
6 Months Ended |
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Jun. 29, 2019
USD ($)
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Change in carrying amount of goodwill | |
Beginning Balance | $ 6,050 |
Held for sale | (191) |
Currency translation adjustment | 12 |
Ending Balance | 5,871 |
North America | |
Change in carrying amount of goodwill | |
Beginning Balance | 4,611 |
Held for sale | (191) |
Currency translation adjustment | 2 |
Ending Balance | 4,422 |
Europe | |
Change in carrying amount of goodwill | |
Beginning Balance | 346 |
Held for sale | 0 |
Currency translation adjustment | 1 |
Ending Balance | 347 |
Latin America | |
Change in carrying amount of goodwill | |
Beginning Balance | 218 |
Held for sale | 0 |
Currency translation adjustment | 2 |
Ending Balance | 220 |
AMEA | |
Change in carrying amount of goodwill | |
Beginning Balance | 875 |
Held for sale | 0 |
Currency translation adjustment | 7 |
Ending Balance | $ 882 |
Acquistions, West Africa Investments, Goodwill and Other Intangible Assets Acquisitions, West Africa Investments, Goodwill and Other Intangible Assets - Impairment Testing (Details) - USD ($) $ in Millions |
Jun. 29, 2019 |
Dec. 29, 2018 |
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Goodwill [Line Items] | ||
Goodwill | $ 5,871 | $ 6,050 |
Kashi | ||
Goodwill [Line Items] | ||
Reporting Unit, Percentage of Fair Value in Excess of Carrying Amount | 18.00% | |
Europe transfer to AMEA | ||
Goodwill [Line Items] | ||
Goodwill | 46 | |
North America | ||
Goodwill [Line Items] | ||
Goodwill | 4,422 | $ 4,611 |
Held for sale goodwill | 191 | |
Held for sale net intangibles | $ 765 |
Restructuring and Cost Reduction Activities - Narrative (Details) |
6 Months Ended |
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Jun. 29, 2019 | |
Minimum [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and related activities cash implementation costs recovery time frame | 3 years |
Maximum [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and related activities cash implementation costs recovery time frame | 5 years |
Restructuring and Cost Reduction Activities - Project K Anticipated Costs Narrative (Details) - Maximum [Member] - Project K [Member] $ in Millions |
3 Months Ended |
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Jun. 29, 2019
USD ($)
| |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and related costs, expected cost | $ 1,600 |
Estimated after-tax cash costs for program, including incremental capital investments | 1,200 |
Asset related costs | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and related costs, expected cost | 500 |
Employee related costs | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and related costs, expected cost | 400 |
Other costs | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and related costs, expected cost | $ 700 |
Restructuring and Cost Reduction Activities - Project K Expected Program Costs by Reportable Segment Narrative (Details) - Project K [Member] |
6 Months Ended |
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Jun. 29, 2019 | |
North America | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and related cost, expected cost allocation | 65.00% |
Europe | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and related cost, expected cost allocation | 22.00% |
Latin America | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and related cost, expected cost allocation | 3.00% |
AMEA | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and related cost, expected cost allocation | 6.00% |
Corporate | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and related cost, expected cost allocation | 4.00% |
Restructuring and Cost Reduction Activities Restructuring and Cost Reduction Activities - Project K Program Costs Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 65 | $ 5 | $ 73 | $ 25 |
Project K [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 15 | $ 5 | $ 23 | $ 25 |
Restructuring and Cost Reduction Activities Restructuring and Cost Reduction Activities - Total Projects Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 65 | $ 5 | $ 73 | $ 25 |
COGS | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 11 | (4) | 17 | 9 |
Selling, General and Administrative Expenses | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 54 | $ 9 | $ 56 | $ 16 |
Restructuring and Cost Reduction Activities Restructuring and Cost Reduction Activities - Schedule of Restructuring and Cost Reduction Activities Project Reserves Narrative (Details) - USD ($) $ in Millions |
Jun. 29, 2019 |
Dec. 29, 2018 |
---|---|---|
Restructuring and Related Activities [Abstract] | ||
Project reserve | $ 104 | $ 104 |
Equity - Narrative (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
Jun. 29, 2019 |
Jun. 30, 2018 |
Dec. 30, 2017 |
|
Equity, Class of Treasury Stock [Line Items] | |||||
Anti-dilutive potential common shares excluded from reconciliation | 15 | 9 | 14 | 6 | |
Common stock repurchased | $ 50 | $ 220 | $ 50 | ||
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 | $ 960 | $ 960 | |||
Common stock repurchased (in shares) | 4 | 1 | |||
Common stock repurchased | $ 220 | $ 50 |
Equity - Summary of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions |
Jun. 29, 2019 |
Dec. 29, 2018 |
---|---|---|
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Foreign currency translation adjustments | $ (1,431) | $ (1,467) |
Cash flow hedges — unrealized net gain (loss) | (65) | (53) |
Postretirement and postemployment benefits: | ||
Net experience gain (loss) | 21 | 23 |
Prior service credit (cost) | 3 | (3) |
Available-for-sale securities unrealized net gain (loss) | 3 | 0 |
Total accumulated other comprehensive income (loss) | $ (1,469) | $ (1,500) |
Leases - Narrative (Details) |
Jun. 29, 2019 |
---|---|
Minimum [Member] | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Term of Contract | 1 year |
Maximum [Member] | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Term of Contract | 10 years |
Leases - Supplemental Operating Lease Information Table Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 29, 2019 |
Jun. 29, 2019 |
|
Leases [Abstract] | ||
Operating lease costs | $ 32 | $ 64 |
Leases - Supplemental Operating Leases Information Table (Details) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 29, 2019
USD ($)
|
Jun. 29, 2019
USD ($)
|
|
Leases [Abstract] | ||
Operating Lease, Payments | $ 32 | $ 63 |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | $ 8 | $ 20 |
Operating Lease, Weighted Average Remaining Lease Term | 6 years | 6 years |
Operating Lease, Weighted Average Discount Rate, Percent | 3.10% | 3.10% |
Leases - Operating Leases Future Maturities (Details) - USD ($) $ in Millions |
Jun. 29, 2019 |
Dec. 30, 2018 |
---|---|---|
Leases [Abstract] | ||
Operating leases, 2019 (six months remaining) | $ 65 | |
Operating leases, 2020 | 99 | |
Operating leases, 2021 | 75 | |
Operating leases, 2022 | 59 | |
Operating leases, 2023 | 47 | |
Operating leases, 2024 and beyond | 124 | |
Operating leases, total minimum payments | 469 | |
Operating leases, interest | (40) | |
Leases accounted for as held for sale | (5) | |
Operating Leases, present value of lease liabilities | $ 424 | $ 461 |
Leases - Operating Leases Future Minimum Lease Commitments (Details) $ in Millions |
Dec. 29, 2018
USD ($)
|
---|---|
Leases [Abstract] | |
Operating leases, future minimum payments due 2019 | $ 121 |
Operating leases, future minimum payments due 2020 | 97 |
Operating leases, future minimum payments due 2021 | 73 |
Operating leases, future minimum payments due 2022 | 57 |
Operating leases, future minimum payments due 2023 | 48 |
Operating leases, future minimum payments due 2024 and beyond | 129 |
Operating leases, total minimum payments | $ 525 |
Leases - Operating Leases Future Minimum Lease Commitments Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 29, 2018 |
Jun. 29, 2019 |
|
Leases [Abstract] | ||
Minimum lease payments for real-estate leases signed but not yet commenced | $ 144 | |
Operating lease rent expense | $ 133 |
Debt - Components of Notes Payable (Details) - USD ($) $ in Millions |
Jun. 29, 2019 |
Dec. 29, 2018 |
---|---|---|
Short-term Debt [Line Items] | ||
Principal amount | $ 568 | $ 176 |
U.S. commercial paper | ||
Short-term Debt [Line Items] | ||
Principal amount | $ 355 | $ 15 |
Effective interest rate | 2.55% | 2.75% |
Bank borrowings | ||
Short-term Debt [Line Items] | ||
Principal amount | $ 213 | $ 161 |
Stock Compensation - Compensation Expense (Details) - Selling General and Administrative Expenses - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Pre-tax compensation expense | $ 18 | $ 16 | $ 32 | $ 33 |
Related income tax benefit | $ 5 | $ 4 | $ 8 | $ 8 |
Stock Compensation - Restricted Stock (Details) - Restricted stock units shares in Millions |
6 Months Ended |
---|---|
Jun. 29, 2019
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Granted (in shares) | shares | 0.9 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Granted, weighted-average grant-date fair value (in dollars per share) | $ / shares | $ 56 |
Stock Compensation - Stock Options (Details) shares in Millions |
6 Months Ended |
---|---|
Jun. 29, 2019
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Granted (in shares) | shares | 2.8 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |
Granted, weighted-average exercise price (in dollars per share) | $ / shares | $ 7 |
Stock Compensation - Performance Shares (Details) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Feb. 28, 2019 |
Mar. 30, 2019 |
Jun. 29, 2019 |
|
2019 Award | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 3 years | ||
Performance shares target grant distribution (in shares) | 239,000 | ||
Grant-date fair value of shares that correspond with target grants | $ 59 | ||
2016 Award | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of performance shares that may be earned upon performance | 85.00% | ||
Performance share award settlement | $ 6 | ||
Minimum [Member] | 2019 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] | 2019 Award | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of performance shares that may be earned upon performance | 200.00% |
Employee Benefits - Components of Plan Benefit Expense Narrative (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 29, 2019
USD ($)
| |
United States | Pension | |
Defined Benefit Plan Disclosure [Line Items] | |
Recognized net loss | $ 11 |
Employee Benefits - Contributions to Employee Benefit Plans (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
Jun. 29, 2019 |
Jun. 30, 2018 |
Dec. 29, 2018 |
|
Defined Benefit Plan Disclosure [Line Items] | |||||
Employer contributions to employee benefit plans | $ 7 | $ 255 | $ 12 | $ 274 | $ 287 |
Total current year projected employer contributions | 25 | 25 | |||
Employer discretionary contribution amount | 250 | ||||
Pension | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Employer contributions to employee benefit plans | 3 | 251 | 4 | 266 | 270 |
Total current year projected employer contributions | 7 | 7 | |||
Nonpension postretirement | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Employer contributions to employee benefit plans | 4 | 4 | 8 | $ 8 | $ 17 |
Total current year projected employer contributions | $ 18 | $ 18 | |||
United States | Pension | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Employer discretionary contribution amount | $ 250 |
Income Taxes - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Income Tax Contingency [Line Items] | ||||
Effective income tax rate | 20.00% | 15.00% | 20.00% | 14.00% |
Employer discretionary contribution amount | $ 250 | |||
Discrete tax benefit | $ 31 | $ 44 | ||
Unrecognized tax benefits | $ 97 | $ 97 | ||
Unrecognized tax benefits that would affect the effective income tax rate | 87 | 87 | ||
Tax-related interest and penalties accrual | 22 | 22 | ||
Other current liabilities | ||||
Income Tax Contingency [Line Items] | ||||
Unrecognized tax benefits | 10 | 10 | ||
Projected additions to unrecognized tax benefits | $ 2 | $ 2 |
Derivative Instruments and Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 29, 2019 |
Dec. 29, 2018 |
|
Derivative [Line Items] | ||
Net deferred losses reported in AOCI to be reclassified into income in the next twelve months | $ (5) | |
Collateral posted | 0 | |
Derivative, Collateral, Obligation to Return Cash | 7 | $ 2 |
Other liabilities | ||
Derivative [Line Items] | ||
Derivative, Collateral, Obligation to Return Cash | 19 | |
Accounts Receivable, Net | ||
Derivative [Line Items] | ||
Collateral posted | 0 | |
Accounts Receivable, Net | Exchange-traded commodity | ||
Derivative [Line Items] | ||
Margin deposits | $ 12 | |
Five Largest Accounts | Customer Concentration Risk | Accounts Receivable, Net | ||
Derivative [Line Items] | ||
Concentration percentage | 20.00% |
Derivative Instruments and Fair Value Measurements - Schedule of Total Notional Amounts of Derivative Instruments (Details) - USD ($) $ in Millions |
Jun. 29, 2019 |
Dec. 29, 2018 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Notional amount of derivatives | $ 4,815 | $ 5,085 |
Foreign currency exchange contracts | ||
Derivatives, Fair Value [Line Items] | ||
Notional amount of derivatives | 1,623 | 1,863 |
Cross currency interest rate contract | ||
Derivatives, Fair Value [Line Items] | ||
Notional amount of derivatives | 1,363 | 1,197 |
Interest rate contracts | ||
Derivatives, Fair Value [Line Items] | ||
Notional amount of derivatives | 1,507 | 1,608 |
Commodity contracts | ||
Derivatives, Fair Value [Line Items] | ||
Notional amount of derivatives | $ 322 | $ 417 |
Derivative Instruments and Fair Value Measurements - Schedule of Cumulative Basis Adjustments for Fair Value Hedges (Details) - USD ($) $ in Millions |
Jun. 29, 2019 |
Dec. 29, 2018 |
|||
---|---|---|---|---|---|
Derivatives, Fair Value [Line Items] | |||||
Current maturities of long-term debt | $ 508 | $ 510 | |||
Long-term debt | 8,262 | 8,207 | |||
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 | 501 | 503 | |||
Long-term debt | 3,388 | 3,354 | |||
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] | 1 | 3 | ||
Long-term debt | [1] | 22 | (18) | ||
Hedging adjustment | Discontinued Hedges | Interest rate contracts | |||||
Derivatives, Fair Value [Line Items] | |||||
Current maturities of long-term debt | 1 | 3 | |||
Long-term debt | $ 16 | $ (12) | |||
|
Derivative Instruments and Fair Value Measurements - Schedule of Offsetting Assets and Liabilities (Details) - USD ($) $ in Millions |
Jun. 29, 2019 |
Dec. 29, 2018 |
---|---|---|
Offsetting [Abstract] | ||
Asset derivatives, Amounts Presented in the Consolidated Balance Sheet | $ 114 | $ 102 |
Asset derivatives, Financial Instruments, Gross Amounts Not Offset in the Consolidated Balance Sheet | (25) | (27) |
Asset derivatives, Cash Collateral Posted, Gross Amounts Not Offset in the Consolidated Balance Sheet | (7) | (2) |
Asset derivatives, Net Amount | 82 | 73 |
Liability derivatives, Amounts Presented in the Consolidated Balance Sheet | (33) | (35) |
Liability derivatives, Financial Instruments, Gross Amounts Not Offset in the Consolidated Balance Sheet | 25 | 27 |
Liability derivatives, Cash Collateral Received, Gross Amounts Not Offset in the Consolidated Balance Sheet | 0 | 0 |
Liability derivatives, net amount | $ (8) | $ (8) |
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. 29, 2019 |
Jun. 30, 2018 |
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in AOCI | $ 3 | $ 3 | ||
Not Designated as Hedging Instrument | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in income | $ 41 | (4) | $ (3) | 1 |
Not Designated as Hedging Instrument | Foreign currency exchange contracts | COGS | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in income | 1 | 4 | (10) | 7 |
Not Designated as Hedging Instrument | Foreign currency exchange contracts | Selling, General and Administrative Expenses | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in income | 0 | 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 | (1) | (4) | ||
Not Designated as Hedging Instrument | Commodity contracts | COGS | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in income | 40 | (8) | 8 | (3) |
Net Investment Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in AOCI | (12) | 181 | 31 | 100 |
Gain (Loss) from Components Excluded from Assessment of Fair Value Hedge Effectiveness, Net | 8 | 3 | 16 | 6 |
Net Investment Hedging | Foreign currency denominated long-term debt | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in AOCI | (35) | 146 | 16 | 73 |
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 | Interest expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in AOCI | 23 | 35 | ||
Gain (Loss) from Components Excluded from Assessment of Fair Value Hedge Effectiveness, Net | $ 8 | $ 3 | ||
Net Investment Hedging | Cross currency interest rate contract | Other income (expense), net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in AOCI | 15 | 27 | ||
Gain (Loss) from Components Excluded from Assessment of Fair Value Hedge Effectiveness, Net | $ 16 | $ 6 |
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. 29, 2019 |
Jun. 30, 2018 |
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Interest Expense, Debt | $ 75 | $ 72 | $ 149 | $ 141 |
Interest rate contracts | Interest expense | Designated as Hedging Instrument | Fair Value Hedges | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Hedged items | (13) | (7) | (37) | 25 |
Derivatives designated as hedging instruments | 13 | 7 | 37 | (21) |
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) | $ (2) | $ (3) | $ (4) |
Derivative Instruments and Fair Value Measurements - Schedule of Other Fair Value Measurements (Details) - Corporate bonds - USD ($) $ in Millions |
Jun. 29, 2019 |
Dec. 29, 2018 |
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Available-for-sale securities, cost | $ 60 | $ 59 |
Available-for-sale securities, unrealized gain (loss) | 3 | 0 |
Available-for-sale securities, market value | $ 63 | $ 59 |
Derivative Instruments and Fair Value Measurements - Schedule of Fair Value of Long-term Debt (Details) - USD ($) $ in Billions |
Jun. 29, 2019 |
Dec. 29, 2018 |
---|---|---|
Derivative Instruments and Fair Value Measurements [Abstract] | ||
Long-term debt, fair value | $ 8.7 | $ 8.2 |
Long-term debt total, carrying value | $ 8.3 | $ 8.2 |
Reportable Segments (Details) $ in Millions |
3 Months Ended | 6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 29, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 29, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
|||||||
Segment Reporting Information [Line Items] | ||||||||||
Number of operating segments | 4 | |||||||||
Net sales | $ 3,461 | $ 3,360 | $ 6,983 | $ 6,761 | ||||||
Operating profit | 397 | 474 | 778 | 984 | ||||||
Europe transfer to AMEA | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net sales | 62 | 129 | ||||||||
Operating profit | 10 | 24 | ||||||||
Operating Segments | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Operating profit | 420 | 530 | 928 | 1,052 | ||||||
Operating Segments | North America | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net sales | 2,148 | 2,127 | 4,437 | 4,457 | ||||||
Operating profit | 322 | 385 | [1] | 702 | 784 | [1] | ||||
Research and development expense | 12 | 24 | ||||||||
Operating Segments | Europe | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net sales | 541 | 559 | 1,038 | 1,079 | ||||||
Operating profit | 36 | 87 | 96 | 147 | ||||||
Operating Segments | Latin America | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net sales | 239 | 239 | 464 | 471 | ||||||
Operating profit | 17 | 20 | 38 | 42 | ||||||
Operating Segments | AMEA | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Net sales | 533 | 435 | 1,044 | 754 | ||||||
Operating profit | 45 | 38 | 92 | 79 | ||||||
Corporate | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Operating profit | $ (23) | [1] | $ (56) | $ (150) | [1] | $ (68) | ||||
|
Reportable Segments Supplemental Product Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 29, 2019 |
Jun. 30, 2018 |
Jun. 29, 2019 |
Jun. 30, 2018 |
|
Segment Reporting Information [Line Items] | ||||
Net sales | $ 3,461 | $ 3,360 | $ 6,983 | $ 6,761 |
Snacks | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,741 | 1,684 | 3,521 | 3,458 |
Cereal | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,256 | 1,304 | 2,531 | 2,655 |
Frozen | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 256 | 247 | 527 | 523 |
Noodles and other | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | $ 208 | $ 125 | $ 404 | $ 125 |
Consolidated Balance Sheet (Unaudited) (Details) - USD ($) $ in Millions |
Jun. 29, 2019 |
Dec. 29, 2018 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Trade receivables | $ 1,409 | $ 1,163 |
Allowance for doubtful accounts | (9) | (10) |
Redundable income taxes | 18 | 28 |
Other receivables | 225 | 194 |
Accounts receivable, net | 1,643 | 1,375 |
Raw materials and supplies | 327 | 339 |
Finished goods and materials in process | 907 | 991 |
Inventories | 1,234 | 1,330 |
Property | 8,814 | 9,173 |
Accumulated depreciation | (5,288) | (5,442) |
Property, net | 3,526 | 3,731 |
Pension | 267 | 228 |
Deferred income taxes | 256 | 246 |
Other | 648 | 594 |
Other assets | 1,171 | 1,068 |
Accrued income taxes | 10 | 48 |
Accrued salaries and wages | 243 | 309 |
Accrued advertising and promotion | 603 | 557 |
Current liabilities held for sale | 1 | 0 |
Other | 552 | 502 |
Other current liabilities | 1,409 | 1,416 |
Income taxes payable | 118 | 115 |
Nonpension postretirement benefits | 36 | 34 |
Noncurrent liabilities held for sale | 4 | 0 |
Other | 330 | 355 |
Other liabilities | $ 488 | $ 504 |
Subsequent Events (Details) - USD ($) $ in Millions |
Jul. 28, 2019 |
Mar. 31, 2019 |
Jul. 24, 2019 |
---|---|---|---|
Subsequent Event [Line Items] | |||
Closing costs | $ 15 | ||
Deferred tax liability | 260 | ||
Multiemployer plans, withdrawal obligation | $ 110 | ||
Multiemployer plan withdrawal obligation term | 20 years | ||
Senior Notes Due November 2019 | |||
Subsequent Event [Line Items] | |||
Debt repurchase amount | $ 500 | ||
Debt instrument interest rate stated percentage | 4.15% | ||
Senior Notes Due December 2020 | |||
Subsequent Event [Line Items] | |||
Debt repurchase amount | $ 500 | ||
Debt instrument interest rate stated percentage | 4.00% | ||
Senior Notes Due May 2021 | |||
Subsequent Event [Line Items] | |||
Debt instrument interest rate stated percentage | 3.25% | ||
Senior Notes Due May 2023 | |||
Subsequent Event [Line Items] | |||
Debt instrument interest rate stated percentage | 2.65% | ||
Senior Notes Due November 2027 | |||
Subsequent Event [Line Items] | |||
Debt instrument interest rate stated percentage | 3.40% | ||
Cookies, fruit and fruit snacks businesses | |||
Subsequent Event [Line Items] | |||
Cash proceeds from sale of businesses | $ 1,300 | $ 1,300 | |
Net assets | $ 1,300 | $ 1,300 |
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