Kellogg Company Reports First Quarter 2015 Results, Reaffirms Full-Year Currency-Neutral Comparable Guidance

BATTLE CREEK, Mich., May 5, 2015 /PRNewswire/ -- Kellogg Company K today announced currency-neutral comparable first-quarter results for net sales, operating profit, and earnings per share that were greater than the company's expectations. 

Financial Summary:

Quarter ended

(millions, except per share data)

April 4,
2015

March 29,
2014

% Change









Reported Net Sales

$ 3,556

$    3,742

-5.0%

Comparable Net Sales *

$ 3,553

$    3,740

-5.0%

Currency Neutral Comparable Net Sales *

$ 3,729

$    3,740

-0.3%









Reported Operating Profit

$    384

$       614

-37.5%

Comparable Operating Profit *

$    527

$       559

-5.8%

Currency Neutral Comparable Operating Profit *

$    548

$       559

-1.9%









Reported Net Income (Loss) Attributable to Kellogg Company

$    227

$       406

-44.0%

Comparable Net Income (Loss) Attributable to Kellogg Company *

$    351

$       367

-4.3%

Currency Neutral Comparable Net Income (Loss) Attributable to Kellogg Company *

$    370

$       367

0.9%









Reported  Earnings Per Share

$   0.64

$      1.12

-42.9%

Comparable Earnings Per Share *

$   0.98

$      1.01

-3.0%

Currency Neutral Comparable Earnings Per Share *

$   1.04

$      1.01

3.0%

























*    Non-GAAP financial measures.  See the tables herein for important information regarding these measures and a 

 full reconciliation to the most comparable GAAP measure.

As detailed above, first quarter 2015 reported net sales decreased by 5.0 percent to $3.6 billion, primarily due to the effect of currency translation.  Currency-neutral comparable net sales decreased by 0.3 percent over the same period; this result included growth in each of the international regions.  First quarter 2015 reported operating profit was $384 million, a decline of 37.5 percent; this decrease was driven primarily by the impact that asset returns and changes in interest rates had on pension plans.  The decline in currency-neutral comparable operating profit was largely the result of slightly lower net sales.

Reported earnings for the first quarter of 2015 were $227 million, or $0.64 per share, a decrease of 43 percent from the $1.12 per share reported in the first quarter of last year.  This quarter's reported earnings per share included negative impacts from mark-to-market of $0.13 per share and costs associated with the Project K efficiency and effectiveness program of $0.13 per share.  In addition, reported results included $0.01 per share of integration costs related to the acquisition of Pringles and Bisco Misr and $0.07 of other costs.  Excluding these items, comparable first quarter 2015 earnings were $0.98 per share, greater than the company's expectations.  This result included a negative impact of $0.06 per share from currency translation; comparable earnings per share excluding the impact of currencies would have been $1.04 per share.

Reconciliation of Reported to Currency-Neutral Comparable Earnings Per Share













First Quarter 2015 ($)










Reported EPS


0.64



Mark-to-Market


(0.13)



Project K


(0.13)



Integration


(0.01)



Other Items


(0.07)



53rd Week


-











Comparable EPS


0.98



Foreign Exchange


(0.06)



















Currency-Neutral
Comparable* EPS


1.04











"We were pleased to report improved sales trends in the first quarter.  In fact, our results exceeded our expectations and we are on-track for the year," said John Bryant, Kellogg Company's chairman and chief executive officer.  "We've made great progress with Project K and are reinvesting to drive profitable sales growth."

North America

Net sales posted by Kellogg North America were $2.4 billion in the first quarter, a reported decrease of 3.7 percent; currency-neutral comparable net sales decreased by 2.8 percent.  The U.S. Morning Foods segment posted a currency-neutral comparable net sales decline of 2.9 percent, which included improved trends in the Cereal business.  Currency-neutral comparable net sales in the U.S. Snacks segment decreased by 1.1 percent, also reflecting an improvement in sales trends.  The U.S. Specialty Channels segment posted a 2.5 percent decline in currency-neutral comparable net sales in the quarter due to a discrete item.  The North America Other segment, which is now composed of the U.S. Frozen Foods, Kashi, and Canadian businesses, posted a 6.1 percent decrease in currency-neutral comparable net sales.  Reported operating profit in North America decreased by 9.9 percent; currency-neutral comparable operating profit declined by 8.0 percent, largely as the result of lower sales.

International

Reported net sales decreased by 13.8 percent in Europe in the quarter; currency-neutral comparable net sales increased by 1.0 percent including double-digit currency-neutral comparable net sales growth for the Pringles business.  In Latin America, reported net sales increased by 6.3 percent; currency-neutral comparable net sales increased by 15.7 percent, including broad-based growth across the region.  Reported net sales in Asia Pacific decreased by 5.3 percent; currency-neutral comparable net sales increased by 4.0 percent due to good rates of growth in the Asian businesses.

Interest and Tax

Kellogg's interest expense was $54 million in the first quarter.  The comparable effective tax rate* in the first quarter of 2015 was 25.4 percent, lower than last year due to certain discrete items.

Cash flow

Cash flow,* a non-GAAP measure defined as cash from operating activities less capital expenditures, was $12 million for the quarter.  This year-over-year decline was primarily due to earnings results, the timing of an interest payment, and increased cash costs associated with Project K.  The company continues to expect that cash flow for the full year will be approximately $1.0 billion.  Kellogg repurchased $285 million of shares during the first quarter.

Kellogg Reaffirms Full-Year Currency-Neutral Comparable 2015 Guidance

The company reaffirmed previous guidance for currency-neutral comparable net sales, operating profit, and earnings per share in 2015; the company also reaffirmed guidance for full-year cash flow.  Currency-neutral comparable net sales are expected to remain approximately unchanged year-over-year.  Kellogg expects full-year 2015 currency-neutral comparable operating profit to decrease at a rate between two and four percent.  Full-year 2015 currency-neutral comparable earnings per share are anticipated to be in a range between two percent lower and approximately unchanged.  The estimates for currency-neutral comparable operating profit and currency-neutral comparable earnings per share include a negative impact of between three and four percentage points from the rebasing of incentive compensation for 2015.  Guidance for both operating profit and earnings per share excludes the impact of mark-to-market adjustments, 2014's 53rd week, integration costs, costs related to Project K, acquisitions, dispositions, foreign-currency translation, and other items that could affect comparability.  Cash flow is expected to be approximately $1.0 billion, which includes the cash required by Project K.

Conference Call / Webcast

Kellogg will host a conference call to discuss these results on Tuesday, May 5th, 2015 at 9:30 a.m. Eastern Time.  The conference call and accompanying presentation slides will be broadcast live over the Internet at http://investor.kelloggs.com.  Analysts and institutional investors may participate in the Q&A session by dialing (855) 209-8258 in the U.S., and (412) 542-4104 outside of the U.S.  Members of the media and the public are invited to attend in a listen-only mode.  Information regarding the rebroadcast is available at http://investor.kelloggs.com.

About Kellogg Company

At Kellogg Company K, we are driven to enrich and delight the world through foods and brands that matter. With 2014 sales of approximately $14.6 billion, Kellogg is the world's leading cereal company; second largest producer of cookies and crackers; a leading producer of savory snacks; and a leading North American frozen foods company.  Every day, our well-loved brands nourish families so they can flourish and thrive. These brands include Kellogg's®, Keebler®, Special K®, Pringles®, Kellogg's Frosted Flakes®, Pop-Tarts®, Kellogg's Corn Flakes®, Rice Krispies®, Kashi®, Cheez-It®, Eggo®, Coco Pops®, Mini-Wheats®, and many more. To learn more about our responsible business leadership, foods that delight and how we strive to make a difference in our communities around the world, visit www.kelloggcompany.com.

Use of Non-GAAP Financial Measures

Certain financial measures have been provided on a non-GAAP (Generally Accepted Accounting Principles) basis.  Management believes the use of such non-GAAP measures provides increased transparency and assists investors in understanding the underlying operating performance of the company and its segments and in the analysis of ongoing operating trends.  All non-GAAP financial measures have been reconciled with the most directly comparable GAAP financial measures in the attachments provided with the release.

Forward-Looking Statements Disclosure

This news release contains, or incorporates by reference, "forward-looking statements" with projections concerning, among other things, the Company's efficiency-and-effectiveness program (Project K), the integration of acquired businesses, the Company's strategy, and the Company's sales, earnings, margin, operating profit, costs and expenditures, interest expense, tax rate, capital expenditure, dividends, cash flow, debt reduction, share repurchases, costs, charges, rates of return, brand building, ROIC, working capital, growth, new products, innovation, cost reduction projects, workforce reductions, savings, and competitive pressures.  Forward-looking statements include predictions of future results or activities and may contain the words "expects," "believes," "should," "will," "anticipates," "projects," "estimates,"  "implies," "can," or words or phrases of similar meaning.

The Company's actual results or activities may differ materially from these predictions.  The Company's future results could also be affected by a variety of factors, including the ability to implement Project K as planned, whether the expected amount of costs associated with Project K will differ from forecasts, whether the Company will be able to realize the anticipated benefits from Project K in the amounts and times expected, the ability to realize the anticipated benefits and synergies from business acquisitions 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 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; business disruption or other losses from war, terrorist acts or political unrest; and other items. 

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

[Kellogg Company Financial News]

 

Kellogg Company and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME

(millions, except per share data)







Quarter ended



April 4,

March 29,

(Results are unaudited)

2015

2014





Net sales

$3,556

$3,742





Cost of goods sold

2,311

2,238

Selling, general and administrative expense

861

890





Operating profit

384

614





Interest expense

54

52

Other income (expense), net

(26)

10





Income before income taxes 

304

572

Income taxes

76

165

Earnings (loss) from joint ventures

(1)

(1)

Net income

$227

$406

Net income (loss) attributable to noncontrolling interests 

-

-

Net income attributable to Kellogg Company 

$227

$406





Per share amounts:




Basic

$.64

$1.13


Diluted

$.64

$1.12





Dividends per share

$.49

$.46





Average shares outstanding:




Basic

355

360


Diluted

357

362





Actual shares outstanding at period end

353

358





 

 

Kellogg Company and Subsidiaries

SELECTED OPERATING SEGMENT DATA





(millions)





Quarter ended



April 4,

March 29,

(Results are unaudited)

2015

2014





Net sales




U.S. Morning Foods

$776

$799


U.S. Snacks

854

864


U.S. Specialty

361

372


North America Other

433

482


Europe 

607

705


Latin America 

295

278


Asia Pacific

230

242


Consolidated

$3,556

$3,742









Operating profit 




U.S. Morning Foods

$127

$126


U.S. Snacks

80

86


U.S. Specialty

78

87


North America Other

59

83


Europe 

61

65


Latin America 

51

48


Asia Pacific

12

16


Total Reportable Segments

468

511


Corporate 

(84)

103


Consolidated

$384

$614





 

 

Kellogg Company and Subsidiaries

CONSOLIDATED STATEMENT OF CASH FLOWS

(millions)







Quarter ended



April 4,

March 29,

(unaudited)


2015

2014





Operating activities




Net income


$227

$406

Adjustments to reconcile net income to 




operating cash flows:




  Depreciation and amortization


131

116

  Postretirement benefit plan expense (benefit)


(21)

(22)

  Deferred income taxes


(2)

45

  Other 


46

6

Postretirement benefit plan contributions


(12)

(28)

Changes in operating assets and liabilities, net of acquisitions


(274)

(255)





Net cash provided by (used in) operating activities


95

268





Investing activities




Additions to properties


(83)

(97)

Acquisitions, net of cash acquired


(117)

-

Other


3

(2)





Net cash provided by (used in) investing activities


(197)

(99)





Financing activities




Net issuances (reductions) of notes payable


(19)

986

Issuances of long-term debt


672

-

Reductions of long-term debt


(243)

(682)

Net issuances of common stock


57

37

Common stock repurchases 


(285)

(321)

Cash dividends


(174)

(166)

Other


5

(1)





Net cash provided by (used in) financing activities


13

(147)





Effect of exchange rate changes on cash and cash equivalents


(5)

(11)





Increase (decrease) in cash and cash equivalents


(94)

11

Cash and cash equivalents at beginning of period


443

273





Cash and cash equivalents at end of period


$349

$284









Supplemental financial data:








Net cash provided by (used in) operating activities


$95

$268

Additions to properties


(83)

(97)

Cash Flow (operating cash flow less property additions) (a)


$12

$171









(a) We use this non-GAAP measure of cash flow to focus management and investors on the amount of cash

   available for debt reduction, dividend distributions, acquisition opportunities, and share repurchase.

 

 

Kellogg Company and Subsidiaries

CONSOLIDATED BALANCE SHEET

(millions, except per share data)









April 4,

January 3,




2015

2015




(unaudited)

*






Current assets





Cash and cash equivalents



$349

$443

Accounts receivable, net



1,503

1,276

Inventories:





    Raw materials and supplies



353

327

    Finished goods and materials in process



846

952

Deferred income taxes



170

184

Other prepaid assets



220

158






Total current assets



3,441

3,340






Property, net of accumulated depreciation





  of $5,466 and $5,526



3,719

3,769

Goodwill



4,993

4,971

Other intangibles, net of accumulated amortization





  of $45 and $43



2,282

2,295

Pension



254

250

Other assets



519

528






Total assets



$15,208

$15,153






Current liabilities





Current maturities of long-term debt



$360

$607

Notes payable



809

828

Accounts payable



1,537

1,528

Accrued advertising and promotion



453

446

Accrued income taxes



72

39

Accrued salaries and wages



237

320

Other current liabilities



543

596






Total current liabilities



4,011

4,364






Long-term debt



6,561

5,935

Deferred income taxes 



764

726

Pension liability



760

777

Nonpension postretirement benefits



75

82

Other liabilities



385

418






Commitments and contingencies










Equity





Common stock, $.25 par value



105

105

Capital in excess of par value



689

678

Retained earnings



6,739

6,689

Treasury stock, at cost



(3,696)

(3,470)

Accumulated other comprehensive income (loss) 



(1,291)

(1,213)






Total Kellogg Company equity



2,546

2,789






Noncontrolling interests 



106

62






Total equity



2,652

2,851






Total liabilities and equity



$15,208

$15,153

* Condensed from audited financial statements.

 

 

Kellogg Company and Subsidiaries

Analysis of net sales and operating profit performance



















First Quarter of 2015 versus 2014 

























U.S.

U.S.

U.S.

North America

North


Latin

Asia

Corp-

Consoli-

(dollars in millions)

Morning Foods

Snacks

Specialty

Other

America

Europe

America

Pacific

orate

dated

2015 net sales

$776

$854

$361

$433

$2,424

$607

$295

$230

$0

$3,556

2014 net sales

$799

$864

$372

$482

$2,517

$705

$278

$242

$0

$3,742

% change - 2015 vs. 2014:











As Reported

-2.9%

-1.1%

-3.0%

-10.2%

-3.7%

-13.8%

6.3%

-5.3%

0.0%

-5.0%


Project K (b)

0.0%

0.0%

0.0%

-0.5%

-0.1%

0.0%

0.0%

0.0%

0.0%

-0.1%


Acquisitions/divestitures (d)

0.0%

0.0%

-0.5%

0.0%

-0.1%

1.1%

0.0%

0.0%

0.0%

0.2%


Differences in shipping days

0.0%

0.0%

0.0%

0.0%

0.0%

-0.4%

0.0%

0.0%

0.0%

-0.1%

Comparable growth (e)

-2.9%

-1.1%

-2.5%

-9.7%

-3.5%

-14.5%

6.3%

-5.3%

0.0%

-5.0%


Foreign currency impact

0.0%

0.0%

0.0%

-3.6%

-0.7%

-15.5%

-9.4%

-9.3%

0.0%

-4.7%

Currency-Neutral Comparable growth (f)

-2.9%

-1.1%

-2.5%

-6.1%

-2.8%

1.0%

15.7%

4.0%

0.0%

-0.3%














      Volume (tonnage) (g)





-2.3%

1.4%

4.5%

5.0%

0.0%

-0.7%


      Pricing/mix





-0.5%

-0.4%

11.2%

-1.0%

0.0%

0.4%







































U.S.

U.S.

U.S.

North America

North


Latin

Asia

Corp-

Consoli-

(dollars in millions)

Morning Foods

Snacks

Specialty

Other

America

Europe

America

Pacific

orate

dated

2015 operating profit 

$127

$80

$78

$59

$344

$61

$51

$12

($84)

$384

2014 operating profit

$126

$86

$87

$83

$382

$65

$48

$16

$103

$614

% change - 2015 vs. 2014:











As Reported

0.2%

-7.3%

-10.2%

-27.9%

-9.9%

-5.8%

4.8%

-22.8%

-182.1%

-37.5%


Mark-to-market (a)

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

-154.1%

-28.1%


Project K (b)

1.8%

-3.1%

-0.1%

-4.2%

-1.2%

-9.4%

8.1%

2.3%

-213.8%

-3.5%


Integration impact (c)

0.0%

-0.1%

0.0%

0.0%

0.0%

0.9%

-0.1%

-8.9%

-24.8%

-0.2%


Acquisitions/divestitures (d)

0.0%

0.0%

0.1%

0.0%

0.0%

0.7%

0.0%

0.0%

0.0%

0.2%


Differences in shipping days

0.0%

0.0%

0.0%

0.0%

0.0%

-0.5%

0.0%

0.0%

0.0%

-0.1%

Comparable growth (e)

-1.6%

-4.1%

-10.2%

-23.7%

-8.7%

2.5%

-3.2%

-16.2%

210.6%

-5.8%


Foreign currency impact

0.4%

0.0%

0.0%

-4.3%

-0.7%

-10.3%

-8.4%

-13.0%

-87.1%

-3.9%

Currency-Neutral Comparable growth (f)

-2.0%

-4.1%

-10.2%

-19.4%

-8.0%

12.8%

5.2%

-3.2%

297.7%

-1.9%

























(a)

Includes mark-to-market adjustments for pension plans and commodity contracts as reflected in cost of goods sold and selling, general and administrative expense.  Actuarial gains/losses for pension plans are recognized in the year they occur.  A portion of these mark-to-market adjustments were capitalized as inventoriable cost at the end of 2014 and 2013. The amounts capitalized at the end of 2014 and 2013 have been recognized in the first quarter of 2015 and 2014, respectively. Mark-to-market adjustments for commodities reflect the changes in the fair value of contracts for the difference between contract and market prices for the underlying commodities. The resulting gains/losses are recognized in the quarter they occur. 

(b)

Costs incurred related primarily to execution of Project K, a four-year efficiency and effectiveness program. The focus of the program will be to strengthen existing businesses in core markets, increase growth in developing and emerging markets, and drive an increased level of value-added innovation.  The program is expected to provide a number of benefits, including an optimized supply chain infrastructure, the implementation of global business services, and a new global focus on categories.   

(c)

Includes impact of integration costs associated with the Bisco Misr and Pringles acquisitions.

(d)

Includes impact of Bisco Misr acquisition during the first quarter of 2015 and the divestiture of Loma Linda in 2014.

(e)

Comparable net sales growth and comparable operating profit growth are non-GAAP measures which are reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.  We believe the use of such non-GAAP measures provides increased transparency and assists in understanding our comparable operating performance.  

(f)

Currency-Neutral Comparable Net Sales growth and Currency Neutral Comparable Operating Profit growth are non-GAAP measures which are reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.  We believe the use of such non-GAAP measures provides increased transparency and assists in understanding our comparable operating performance.  

(g)

We measure the volume impact (tonnage) on revenues based on the stated weight of our product shipments.

 

 

Kellogg Company and Subsidiaries

Restructuring and cost reduction activities

$ millions











Quarter ended April 4, 2015




Net Sales

Cost of goods
sold

Selling, general and
administrative
expense

Total

2015







U.S. Morning Foods

$            -

$             5

$                            3

$    8


U.S. Snacks

-

5

4

9


U.S. Specialty

-

-

1

1


North America Other

2

2

2

6


Europe

-

16

3

19


Latin America

-

-

-

-


Asia Pacific

-

4

1

5


Corporate

-

-

20

20



Total

$           2

$           32

$                          34

$  68










Quarter ended March 29, 2014



Net Sales

Cost of goods
sold

Selling, general and
administrative
expense

Total

2014







U.S. Morning Foods

$            -

$             9

$                            2

$  11


U.S. Snacks

-

5

2

7


U.S. Specialty

-

-

1

1


North America Other

-

2

1

3


Europe

-

5

7

12


Latin America

-

-

4

4


Asia Pacific

-

4

2

6


Corporate

-

-

10

10



Total

$            -

$           25

$                          29

$  54








2015 Variance - better(worse) than 2014





U.S. Morning Foods

$            -

$             4

$                          (1)

$    3


U.S. Snacks

-

-

(2)

(2)


U.S. Specialty

-

-

-

-


North America Other

(2)

-

(1)

(3)


Europe

-

(11)

4

(7)


Latin America

-

-

4

4


Asia Pacific

-

-

1

1


Corporate

-

-

(10)

(10)



Total

$          (2)

$            (7)

$                          (5)

$ (14)

 

 


Kellogg Company and Subsidiaries

Integration Costs*

$ millions












Quarter ended April 4, 2015





Net Sales

Cost of goods
sold

Selling, general and
administrative
expense

Total


2015








Europe

$           -

$            3

$                          2

$  5



Asia Pacific

-

3

-

3



Corporate

-

-

-

-




Total

$           -

$            6

$                          2

$  8












Quarter ended March 29, 2014




Net Sales

Cost of goods
sold

Selling, general and
administrative
expense

Total


2014








Europe

$           -

$            4

$                          2

$  6



Asia Pacific

-

-

-

-



Corporate

-

-

1

1




Total

$           -

$            4

$                          3

$  7










2015 Variance - better(worse) than 2014






Europe

$           -

$            1

$                           -

$  1



Asia Pacific

-

(3)

-

(3)



Corporate

-

-

1

1




Total

$           -

$          (2)

$                          1

$ (1)










*

Integration costs are charges incurred by the Company as a direct result of the work performed
for the acquisition of the Pringles and Bisco Misr businesses.

 

 

Kellogg Company and Subsidiaries

Reconciliation of Non-GAAP Amounts - Reported Net Sales to Currency-Neutral Comparable Net Sales



































Quarter ended April 4, 2015













U.S.

U.S.

U.S.

North





Kellogg

(millions)

Morning Foods

Snacks

Specialty

America Other

Europe

Latin America

Asia Pacific

Corporate

Consolidated

Reported Net Sales

$                 776

$     854

$       361

$                433

$    607

$               295

$            230

$             -

$           3,556


Project K(a)

-

-

-

(2)

-

-

-

-

(2)


Acquisitions/divestitures(b)

-

-

-

-

8

-

-

-

8


Differences in shipping days

-

-

-

-

(3)

-

-

-

(3)

Comparable Net Sales(c)

$                 776

$     854

$       361

$                435

$    602

$               295

$            230

$             -

$           3,553


Foreign currency impact

-

-

-

(18)

(110)

(26)

(22)

-

(176)

Currency-Neutral Comparable Net Sales(d)

$                 776

$     854

$       361

$                453

$    712

$               321

$            252

$             -

$           3,729






















Quarter ended March 29, 2014













U.S.

U.S.

U.S.

North





Kellogg

(millions)

Morning Foods

Snacks

Specialty

America Other

Europe

Latin America

Asia Pacific

Corporate

Consolidated

Reported Net Sales

$                 799

$     864

$       372

$                482

$    705

$               278

$            242

$             -

$           3,742


Project K(a)

-

-

-

-

-

-

-

-

-


Acquisitions/divestitures(b)

-

-

2

-

-

-

-

-

2


Differences in shipping days

-

-

-

-

-

-

-

-

-

Comparable Net Sales(c)

$                 799

$     864

$       370

$                482

$    705

$               278

$            242

$             -

$           3,740


Foreign currency impact

-

-

-

-

-

-

-

-

-

Currency-Neutral Comparable Net Sales(d)

$                 799

$     864

$       370

$                482

$    705

$               278

$            242

$             -

$           3,740













(a)

Costs incurred related primarily to execution of Project K, a four-year efficiency and effectiveness program. The focus of the program will be to strengthen existing businesses in core markets, increase growth in developing and emerging markets, and drive an increased level of value-added innovation.  The program is expected to provide a number of benefits, including an optimized supply chain infrastructure, the implementation of global business services, and a new global focus on categories.   

(b)

Includes impact of Bisco Misr acquisition during Q1 2015 and the 2014 divestiture of Loma Linda.

(c)

Comparable net sales is a non-GAAP measure which is reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.  We believe the use of such non-GAAP measures provides increased transparency and assists in understanding our comparable operating performance.  

(d)

Currency-Neutral Comparable Net Sales is a non-GAAP measure which is reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.  We believe the use of such non-GAAP measures provides increased transparency and assists in understanding our comparable operating performance.  

 

 


Kellogg Company and Subsidiaries

Reconciliation of Non-GAAP Amounts - Reported Operating Profit to Currency-Neutral Comparable Operating Profit



































Quarter ended April 4, 2015













U.S.

U.S.

U.S.

North





Kellogg

(millions)

Morning Foods

Snacks

Specialty

America Other

Europe

Latin America

Asia Pacific

Corporate

Consolidated

Reported Operating Profit

$                  127

$       80

$          78

$                   59

$       61

$                  51

$              12

$         (84)

$              384


Mark-to-market(a)

-

-

-

-

-

-

-

(67)

(67)


Project K(b)

(8)

(9)

(1)

(6)

(19)

-

(5)

(20)

(68)


Integration impact(c)

-

-

-

-

(5)

-

(3)

-

(8)

Comparable Operating Profit(d)

$                  135

$       89

$          79

$                   65

$       85

$                  51

$              20

$             3

$              527


Foreign currency impact

1

-

-

(4)

(8)

(4)

(2)

(4)

(21)

Currency-Neutral Comparable Operating Profit(e)

$                  134

$       89

$          79

$                   69

$       93

$                  55

$              22

$             7

$              548






















Quarter ended March 29, 2014













U.S.

U.S.

U.S.

North





Kellogg

(millions)

Morning Foods

Snacks

Specialty

America Other

Europe

Latin America

Asia Pacific

Corporate

Consolidated

Reported Operating Profit

$                  126

$       86

$          87

$                   83

$       65

$                  48

$              16

$         103

$              614


Mark-to-market(a)

-

-

-

-

-

-

-

116

116


Project K(b)

(11)

(7)

(1)

(3)

(12)

(4)

(6)

(10)

(54)


Integration impact(c)

-

-

-

-

(6)

-

-

(1)

(7)

Comparable Operating Profit(d)

$                  137

$       93

$          88

$                   86

$       83

$                  52

$              22

$           (2)

$              559


Foreign currency impact

-

-

-

-

-

-

-

-

-

Currency-Neutral Comparable Operating Profit(e)

$                  137

$       93

$          88

$                   86

$       83

$                  52

$              22

$           (2)

$              559













(a)

Includes mark-to-market adjustments for pension plans and commodity contracts as reflected in cost of goods sold and selling, general and administrative expense.  Actuarial
gains/losses for pension plans are recognized in the year they occur.  A portion of these mark-to-market adjustments were capitalized as inventoriable cost at the end of 2014 and 2013.
The amounts capitalized at the end of 2014 and 2013 have been recognized in the first quarter of 2015 and 2014, respectively. Mark-to-market adjustments for commodities reflect the
changes in the fair value of contracts for the difference between contract and market prices for the underlying commodities. The resulting gains/losses are recognized in the quarter they
occur. 

(b)

Costs incurred related primarily to execution of Project K, a four-year efficiency and effectiveness program. The focus of the program will be to strengthen existing businesses in core
markets, increase growth in developing and emerging markets, and drive an increased level of value-added innovation.  The program is expected to provide a number of benefits,
including an optimized supply chain infrastructure, the implementation of global business services, and a new global focus on categories.  

(c)

Includes impact of integration costs associated with the Bisco Misr and Pringles acquisitions.

(d)

Comparable operating profit is a non-GAAP measure which is reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.  We believe the use of
such non-GAAP measures provides increased transparency and assists in understanding our comparable operating performance.  

(e)

Currency-Neutral Comparable operating profit is a non-GAAP measure which is reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.  We believe
the use of such non-GAAP measures provides increased transparency and assists in understanding our comparable operating performance.  

 

 


Kellogg Company and Subsidiaries

Reconciliation of Non-GAAP Amounts - Reported Net Income Attributable to Kellogg

to Currency-Neutral Comparable Net Income Attributable to Kellogg



















Quarter ended


(millions)


April 4,
2015


March 29,
2014








Reported Net Income Attributable to Kellogg


$   227


$      406


Mark-to-market(a)


(46)


80


Project K(b)


(47)


(36)


Other costs(c)


(25)


-


Integration costs(d)


(6)


(5)


Comparable Net Income Attributable to Kellogg(e)


$   351


$      367


Foreign currency impact


(19)


-


Currency-Neutral Comparable Net Income Attributable to Kellogg(f)


$   370


$      367

















(a)

Includes mark-to-market adjustments for pension plans and commodity contracts as reflected in cost of goods sold and selling, general and administrative expense.  Actuarial gains/losses for pension plans are recognized in the year they occur.  A portion of these mark-to-market adjustments were capitalized as inventoriable cost at the end of 2014 and 2013. The amounts capitalized at the end of 2014 and 2013 have been recognized in the first quarter of 2015 and 2014, respectively. Mark-to-market adjustments for commodities reflect the changes in the fair value of contracts for the difference between contract and market prices for the underlying commodities. The resulting gains/losses are recognized in the quarter they occur. 


(b)

Costs incurred related primarily to execution of Project K, a four-year efficiency and effectiveness program. The focus of the program will be to strengthen existing businesses in core markets, increase growth in developing and emerging markets, and drive an increased level of value-added innovation.  The program is expected to provide a number of benefits, including an optimized supply chain infrastructure, the implementation of global business services, and a new global focus on categories.  


(c)

During the quarter ended April 4, 2015, the Company has determined that certain assets related to a portion of the business may not be fully recoverable and has recorded a non-cash charge within other income (expense).


(d)

Includes impact of integration costs associated with the Bisco Misr and Pringles acquisitions.


(e)

Comparable Net Income Attributable to Kellogg are non-GAAP measures which are reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.  We believe the use of such non-GAAP measures provides increased transparency and assists in understanding our comparable operating performance.  


(f)

Currency-Neutral Comparable Net Income Attributable to Kellogg are non-GAAP measures which are reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.  We believe the use of such non-GAAP measures provides increased transparency and assists in understanding our comparable operating performance.  


 

 


Kellogg Company and Subsidiaries

Reconciliation of Non-GAAP Amounts - Reported EPS to Currency-Neutral

Comparable EPS












Quarter ended






April 4,
2015

March 29,
2014







Reported EPS


$  0.64

$      1.12


Mark-to-market(a)


(0.13)

0.22


Project K(b)


(0.13)

(0.10)


Other costs(c)


(0.07)

-


Integration impact(d)


(0.01)

(0.01)

Comparable EPS(e)


$  0.98

$      1.01


Foreign currency impact


(0.06)

-

Currency-Neutral Comparable EPS(f)


$  1.04

$      1.01














(a)

Includes mark-to-market adjustments for pension plans and commodity contracts as reflected in cost of goods sold and selling, general and administrative expense.  Actuarial gains/losses for pension plans are recognized in the year they occur.  A portion of these mark-to-market adjustments were capitalized as inventoriable cost at the end of 2014 and 2013. The amounts capitalized at the end of 2014 and 2013 have been recognized in the first quarter of 2015 and 2014, respectively. Mark-to-market adjustments for commodities reflect the changes in the fair value of contracts for the difference between contract and market prices for the underlying commodities. The resulting gains/losses are recognized in the quarter they occur. 

(b)

Costs incurred related primarily to execution of Project K, a four-year efficiency and effectiveness program. The focus of the program will be to strengthen existing businesses in core markets, increase growth in developing and emerging markets, and drive an increased level of value-added innovation.  The program is expected to provide a number of benefits, including an optimized supply chain infrastructure, the implementation of global business services, and a new global focus on categories.   

(c)

During the quarter ended April 4, 2015, the Company has determined that certain assets related to a portion of the business may not be fully recoverable and has recorded a non-cash charge within other income (expense).

(d)

Includes impact of integration costs associated with the Bisco Misr and Pringles acquisitions.

(e)

Comparable EPS is a non-GAAP measure which is reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.  We believe the use of such non-GAAP measures provides increased transparency and assists in understanding our comparable operating performance.  

(f)

Currency-Neutral Comparable EPS is a non-GAAP measure which is reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.  We believe the use of such non-GAAP measure provides increased transparency and assists in understanding our comparable operating performance.  

 

 

Kellogg Company and Subsidiaries

Reconciliation of Non-GAAP Amounts - Reported Effective Tax Rate

to Currency-Neutral Comparable Effective Tax Rate













Quarter ended






April 4, 2015


March 29, 2014










Reported Effective Tax Rate


25.1%


28.9%




Mark-to-market(a)


-1.0%


0.5%




Project K(b)


-0.8%


-0.4%




Other costs(c)


1.4%


0.0%




Integration impact


0.1%


0.0%



Comparable Effective Tax Rate(d)


25.4%


28.8%




Foreign currency impact


0.7%


0.0%



Currency-Neutral Comparable Effective Tax Rate(e)


24.7%


28.8%

















(a)

Mark-to-market adjustments, in general, were incurred in jurisdictions with tax rates higher than our reported effective tax rate during the quarters ended April 4, 2015 and March 29, 2014.

(b)

Costs incurred related to the execution of restructuring and cost reduction activities, in general, were incurred in jurisdictions with tax rates higher than our effective tax rate during the quarters ended April 4, 2015 and March 29, 2014.

(c)

During the quarter ended April 4, 2015, the Company has determined that certain assets related to a portion of the business may not be fully recoverable and has recorded a non-cash charge within other income (expense).

(d)

Comparable Effective Tax Rate is reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.

(e)

Currency-Neutral Comparable Effective Tax Rate is reconciled to the directly comparable measure in accordance with U.S. GAAP within this table.

 

 

Kellogg Company and Subsidiaries

RECAST OPERATING SEGMENT DATA














2014 (millions)


Quarter ended


Year-to-date period ended




March 29,
2014

June 28,
2014

September 27,
2014

January 3,
2015


June 28,
2014

September 27,
2014

January 3,
2015












Net Sales (Recast*)











U.S. Morning Foods


$      799

$    759

$              782

$       768


$ 1,558

$           2,340

$    3,108


U.S. Snacks


864

851

807

807


1,715

2,522

3,329


U.S. Specialty


372

276

270

280


648

918

1,198


North America Other


482

464

470

448


946

1,416

1,864


    North America Total


2,517

2,350

2,329

2,303


4,867

7,196

9,499


Europe


705

767

720

677


1,472

2,192

2,869


Latin America


278

320

320

287


598

918

1,205


Asia Pacific


242

248

270

247


490

760

1,007


Consolidated


$   3,742

$ 3,685

$           3,639

$    3,514


$ 7,427

$         11,066

$  14,580























Operating Profit (Recast*)











U.S. Morning Foods


$      126

$    137

$              115

$       101


$    263

$              378

$       479


U.S. Snacks


86

124

59

95


210

269

364


U.S. Specialty


87

63

59

57


150

209

266


North America Other


83

74

69

68


157

226

294


    North America Total


382

398

302

321


780

1,082

1,403


Europe


65

50

59

58


115

174

232


Latin America


48

47

50

24


95

145

169


Asia Pacific


16

5

18

14


21

39

53


    Total Reportable Segments


511

500

429

417


1,011

1,440

1,857


Corporate


103

(33)

(64)

(839)


70

6

(833)


Consolidated


$      614

$    467

$              365

$      (422)


$ 1,081

$           1,446

$    1,024

*  During the first quarter of 2015, the Kashi operating segment was established and is included in North America Other.  The Kashi financial results

    that were previously included in the U.S. Morning Foods, U.S. Snacks, and U.S. Frozen Foods operating segments are now reported in the Kashi

    operating segment which is reported in North America Other.  Other business unit re-organizations occurred between Europe and Asia Pacific.














2014 (millions)


Quarter ended


Year-to-date period ended




March 29,
2014

June 28,
2014

September 27,
2014

January 3,
2015


June 28,
2014

September 27,
2014

January 3,
2015












Net Sales (As originally reported)











U.S. Morning Foods


$      861

$    820

$              841

$       816


$ 1,681

$           2,522

$    3,338


U.S. Snacks


903

893

849

850


1,796

2,645

3,495


U.S. Specialty


372

276

270

280


648

918

1,198


North America Other


381

361

369

357


742

1,111

1,468


    North America Total


2,517

2,350

2,329

2,303


4,867

7,196

9,499


Europe


708

772

726

681


1,480

2,206

2,887


Latin America


278

320

320

287


598

918

1,205


Asia Pacific


239

243

264

243


482

746

989


Consolidated


$   3,742

$ 3,685

$           3,639

$    3,514


$ 7,427

$         11,066

$  14,580























Operating Profit (As originally reported)











U.S. Morning Foods


$      128

$    143

$              118

$       101


$    271

$              389

$       490


U.S. Snacks


95

130

67

103


225

292

395


U.S. Specialty


87

63

59

57


150

209

266


North America Other


72

62

58

60


134

192

252


    North America Total


382

398

302

321


780

1,082

1,403


Europe


67

53

61

59


120

181

240


Latin America


48

47

50

24


95

145

169


Asia Pacific


14

2

16

13


16

32

45


    Total Reportable Segments


511

500

429

417


1,011

1,440

1,857


Corporate


103

(33)

(64)

(839)


70

6

(833)


Consolidated


$      614

$    467

$              365

$      (422)


$ 1,081

$           1,446

$    1,024

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/kellogg-company-reports-first-quarter-2015-results-reaffirms-full-year-currency-neutral-comparable-guidance-300077080.html

SOURCE Kellogg Company

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: Press Releases
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!