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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended Commission File Number
December 31, 1993 1-4171
KELLOGG COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 38-0710690
STATE OF INCORPORATION I.R.S. EMPLOYER IDENTIFICATION NO.
ONE KELLOGG SQUARE
BATTLE CREEK, MICHIGAN 49016-3599
(Address of Principal Executive Offices)
Registrant's Telephone Number: (616) 961-2000
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS: ON WHICH REGISTERED:
Common Stock, $0.25 par value per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the common stock held by non-affiliates of the
registrant (assuming only for purposes of this computation that directors and
executive officers may be affiliates) was $6,132,749,157 as determined by the
March 1, 1994 closing price of $49.625 for one share of common stock on the New
York Stock Exchange.
As of March 1, 1994, 226,904,957 shares of the common stock of the registrant
were issued and outstanding.
Portions of the registrant's definitive Proxy Statement, dated March 22, 1994,
for the Annual Meeting of Stockholders to be held April 22, 1994, are
incorporated by reference into Part III of this Report.
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PART I
ITEM 1. BUSINESS
The Company. Kellogg Company, incorporated in Delaware in 1922, and its
subsidiaries are engaged in the manufacture and marketing of convenience food
products on a worldwide basis. The address of the principal business office of
Kellogg Company is One Kellogg Square, P.O. Box 3599, Battle Creek, Michigan
49016-3599. Unless otherwise indicated by the context, the term "Company" as
used in this report means Kellogg Company, its divisions and subsidiaries.
Principal Products. The Company's products are manufactured in 18 countries
and distributed in more than 150 countries. The principal products of the
Company are ready-to-eat cereals which are produced and marketed in Australia,
Canada, Japan, Mexico, South Africa, South and Central America, South Korea, the
United Kingdom, the United States, Europe and other countries. Ready-to-eat
cereals generally are marketed under the KELLOGG'S(R) name and are sold
principally to the grocery trade through direct sales forces for resale to
consumers and through broker and distribution arrangements in less developed
market areas.
Other Convenience Food Products. In the United States and Canada, in
addition to ready-to-eat cereals, the Company produces or processes and
distributes toaster pastries and frozen waffles. The Company also markets, in
the United States, cereal and granola bars, and markets a variety of other
convenience food products in various locations throughout the world. In March
1994, the Company entered into an agreement to sell the assets of its frozen pie
business to The J.M. Smucker Company.
Raw Materials. Agricultural commodities are the principal raw materials
used in the Company's products. World supplies and prices of such commodities
are constantly monitored, as are government trade policies. The cost of raw
materials used may fluctuate widely due to government policy and regulation,
weather conditions or other unforeseen circumstances. Continuous efforts are
made to maintain and improve the qualities and supplies of raw materials for
purposes of the Company's short-term and long-term requirements.
The principal ingredients in ready-to-eat cereals and cereal and granola
bars produced by the Company in the United States include corn grits, oats,
rice, various fruits, sweeteners, wheat and wheat derivatives. Ingredients are
purchased principally from sources in the United States. In producing toaster
pastries and frozen waffles, the Company may use dairy products, eggs, fruit and
other filling ingredients, flour, shortening and sweeteners, which ingredients
are obtained from various sources. Although the Company enters into some
long-term contracts, the bulk of such raw materials are purchased on the open
market. While the cost of raw materials may increase over time, the Company
believes that it will be able to purchase an adequate supply of such raw
materials as needed.
Raw materials and packaging needed for internationally based operations are
available in adequate supply and are sometimes imported from countries other
than those where used in manufacture.
Cereal processing ovens at major domestic and international facilities are
regularly fueled by natural gas or propane obtained from local utilities or
other local suppliers. Short-term standby propane storage exists at several
plants for use in the event of interruption in natural gas supplies.
Additionally, oil may be used to fuel certain plant operations in the event of
natural gas shortages at various plants or when its use presents economic
advantages.
Trademarks and Technology. The Company's products are marketed under
trademarks owned by the Company. The Company's principal trademarks are its
names and designs related to cereals and convenience food products manufactured
and marketed by the Company. These trademarks include Kellogg's(R), for cereals
and other products of the Company and the names of certain ready-to-eat cereals,
including All-Bran(R), Kellogg's(R) Squares(TM), Apple Jacks(R), Apple Raisin
Crisp(R), Apple Cinnamon Rice Krispies(TM), Bran Buds(R), Kellogg's(R)
Complete(R) Bran Flakes, Cocoa Krispies(R), Common Sense(R), Kellogg's Corn
Flakes(R), Cracklin' Oat Bran(R), Kellogg's(R) Cinnamon Mini-Buns, Crispix(R),
Double Dip Crunch(R), Froot Loops(R), Kellogg's Frosted Bran(TM), Kellogg's
Frosted Flakes(R), Frosted Krispies(R), Frosted Mini-Wheats(R), Fruitful
Bran(R), Fruity
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Marshmallow Krispies(R), Just Right(R), Kenmei(R), Kellogg's(R) Low Fat Granola,
Nut & Honey Crunch(R), Nut & Honey Crunch O's(R), Mueslix(R), Nutri-Grain(R),
Oatbake(R), Pops(R), Product 19(R), Kellogg's(R) Raisin Bran, Rice Krispies(R),
Rice Krispies Treats(TM), Smacks(R) and Special K(R). Additional Company
trademarks are the names of certain combinations of Kellogg's(R) ready-to-eat
cereals, including Handi-Pak(R), Snack-Pak(R), Fun Pak(R), Jumbo(R) and
Variety(R). Other Company trademarks include Kellogg's(R) Corn Flake Crumbs;
Croutettes(R) for herb season stuffing mix; Kellogg's(R) Nutri-Grain(R) for
cereal bars; Pop-Tarts(R) for toaster pastries; Mrs. Smith's(R) for pies and
certain other convenience foods and Old Fashioned(R) for pies; and Eggo(R),
Special K(R) and Nutri-Grain(R) for frozen waffles.
Company trademarks also include depictions of certain animated characters
in conjunction with certain cereals, including Snap!(R) Crackle!(R) Pop!(R) for
Kellogg's(R) Frosted Krispies(R), Fruity Marshmallow Krispies(R) and Rice
Krispies(R); Tony the Tiger(R) for Kellogg's Frosted Flakes(R); Toucan Sam(R)
for Froot Loops(R); Dig 'Em!(R) for Smacks(R); and Coco(TM) for Cocoa
Krispies(R).
The slogan "The Best To You Each Morning"(R), used in connection with the
Company's ready-to-eat cereals, is also an important Company trademark. The
Company's use of the advertising theme "Get A Taste For The Healthy Life"(TM)
represents part of its effort to establish throughout the United States and the
world the concept of a nutritious breakfast.
The Company considers that, taken as a whole, the rights under its various
patents, which expire from time to time, are a valuable asset, but the Company
does not believe that its businesses are materially dependent upon any single
patent or group of related patents. The Company's activities under licenses or
other franchises or concessions are not material.
Seasonality. Ready-to-eat cereals, cereal and granola bars, frozen waffles
and toaster pastries have approximately level demands throughout the year.
Working Capital. The Company generally requires payment for goods sold
eleven days subsequent to the date of invoice, with a 2% discount allowed for
payment within ten days. Receipts from goods sold, supplemented as required by
borrowings, provide for the Company's payment of dividends, capital expansion
and for other operating expenses and working capital needs.
Customers. The Company is not dependent on any single customer or a few
customers for a material part of its sales. Products of the Company are sold
through its own sales forces and through broker and distributor arrangements and
are generally resold to consumers in retail stores, restaurants and other food
service establishments.
Backlog. For the most part, orders are filled within a few days of their
receipt and are subject to cancellation at any time prior to shipment. The
backlog of any unfilled orders at any particular time is not material to the
Company.
Competition. The Company has experienced intense competition for sales of
all of its principal products in its major markets, both domestically and
internationally. The Company's products compete with advertised and branded
products of a similar nature as well as unadvertised and private label products,
which are typically distributed at lower prices, and generally with other food
products with different characteristics. Principal methods and factors of
competition include, among others, product quality, composition and nutritional
value, price, advertising and promotion. The Company is the world's largest
manufacturer and marketer of ready-to-eat cereals.
Research and Development. Research to support and expand the use of the
Company's existing products and to develop new food products is carried on at
the Company's research laboratories and pilot plant facilities in Battle Creek,
Michigan, and at other plant locations around the world. The Company's
expenditures for research and development were approximately $40 million in
1993, $37 million in 1992 and $35 million in 1991.
Environmental Matters. The Company's facilities are subject to various
foreign, federal, state and local laws and regulations regarding the discharge
of material into the environment and the protection of the
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environment in other ways. The Company is not a party to any material
proceedings arising under these regulations. The Company believes that
compliance with existing environmental laws and regulations will not require
material capital expenditures or otherwise materially affect the financial
condition or the competitive position of the Company. The Company is currently
in substantial compliance with all material environmental regulations affecting
the Company and its properties.
Employees. At December 31, 1993, the Company had approximately 16,150
employees.
Segment and Geographic Information. The Company operates in a single
industry, which is the manufacture and marketing of convenience food products
throughout the world. Net sales and net earnings for the years 1993, 1992 and
1991, and identifiable segment assets and corporate assets, consisting
principally of cash and temporary investments, at the related year-ends are
presented in Note 13 of the financial statements captioned "Operating Segments"
and contained in Item 8 of this Report.
ITEM 2. PROPERTIES
The Company's corporate headquarters and principal research and development
facilities are located in Battle Creek, Michigan.
The Company operates manufacturing plants and warehouses totalling more
than ten million (10,000,000) square feet of building area in the United States
and other countries. The Company's plants have been designed and constructed to
meet its specific production requirements, and the Company periodically invests
money for capital and technological improvements. At the time of its selection,
each location was considered to be favorable, based on the location of markets,
sources of raw materials, availability of suitable labor, transportation
facilities, location of other Company plants producing similar products and
other factors. Manufacturing facilities of the Company in the United States
include five cereal plants and warehouses located in Battle Creek, Michigan;
Lancaster, Pennsylvania; Memphis, Tennessee; Omaha, Nebraska; and San Leandro,
California. Other of the Company's convenience foods are also manufactured in
the United States at various plant locations.
Outside the United States, the Company has additional manufacturing
locations, some with warehousing facilities, in Australia, Canada, Europe,
Japan, Mexico, South Africa, South and Central America and South Korea.
The principal properties of the Company, including its major office
facilities, are held in fee and none is subject to any major encumbrance.
Distribution centers and offices of non-plant locations generally are leased.
The Company considers its facilities generally suitable, adequate and of
sufficient capacity for its current operations.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings which, if
decided adversely, would be material to the Company on a consolidated basis, nor
are any of the Company's properties or subsidiaries subject to any such
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
Executive Officers of the Registrant - The names, ages as of March 1, 1994
and positions of the executive officers of the Company are listed below together
with their business experience. Executive officers are elected annually by the
Board of Directors at the meeting immediately following the Annual Meeting of
Stockholders.
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EXECUTIVE OFFICERS
Arnold G. Langbo
Chairman of the Board, President and Chief Executive Officer..................56
Mr. Langbo has been employed by the Company and certain of its subsidiaries
since 1956. He was named President of the Company's U.S. Food Products Division
in 1978, a Vice President of the Company in 1979, Executive Vice President in
1981 and Group Executive Vice President and President of Mrs. Smith's Frozen
Foods Co., a subsidiary of the Company, in 1983. He was named Executive Vice
President and President, Kellogg International Division, in 1986. He was named
President and Chief Operating Officer in December 1990 and became Chairman of
the Board and Chief Executive Officer on January 1, 1992.
Charles W. Elliott
Executive Vice President - Administration, Chief Financial Officer............62
Mr. Elliott joined the Company as Executive Vice President - Administration
in February 1987. Previously, Mr. Elliott was employed for thirty years by Price
Waterhouse, an independent accounting firm. At Price Waterhouse, he held various
executive positions and most recently managed the tax department in its Chicago
offices and served as a member of its Policy Board. He was named Chief Financial
Officer of the Company in December 1988.
William A. Camstra
Executive Vice President, Area Director - Kellogg Latin America...............61
Mr. Camstra has been employed by the Company and certain of its
subsidiaries since 1956. He has worked in sales and various international
operations of the Company and was named a Vice President and Director of Latin
American Operations in 1983. He was named Executive Vice President of the
Company on January 1, 1992.
Gary E. Costley
Executive Vice President, Area Director - Kellogg North America...............50
Dr. Costley has been employed by the Company since 1970. He was named Vice
President - Public Affairs in 1975, Vice President - Assistant to the President
in 1978, Senior Vice President - Corporate Development in 1980, Senior Vice
President - Science and Quality in 1981, Executive Vice President - Science and
Technology in 1985, Executive Vice President, and President, U.S. Subsidiaries,
in 1986, Executive Vice President and President, U.S. Food Products Division, in
December 1988, and President of Kellogg USA, Inc., a subsidiary of the Company,
in 1992.
Donald G. Fritz
Executive Vice President, Area Director - Kellogg Asia Pacific................46
Mr. Fritz first joined Kellogg Canada Inc., a subsidiary of the Company, in
1979. He has worked in marketing and was named General Manager - Kellogg (Aust.)
Pty. Limited, a subsidiary of the Company, in 1984, and Director of Australasia
in 1989, and a Vice President of the Company in January 1990. He was named
Executive Vice President of the Company on January 1, 1992.
Thomas A. Knowlton
Executive Vice President, Area Director - Kellogg Europe......................47
Mr. Knowlton joined Kellogg Canada Inc. as Senior Vice President - Sales
and Marketing in 1980, became its Executive Vice President in 1981, and its
President and Chief Executive Officer and also a Vice President of the Company
in 1983. In January 1989, he was named Managing Director, Kellogg Company of
Great Britain Limited, a subsidiary of the Company, and continued as a Vice
President of the Company. He was named an Executive Vice President of the
Company on January 1, 1992.
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Donald W. Thomason
Executive Vice President - Corporate Services and Technology..................50
Mr. Thomason has been employed by the Company since 1966 and has worked in
production, plant management, logistics and manufacturing. He was named a Vice
President and Executive Vice President - Operations in the Company's U.S. Food
Products Division in January 1989. He was named Executive Vice President -
Corporate Services and Technology in 1990.
Richard M. Clark
Senior Vice President, General Counsel and Secretary..........................56
Mr. Clark joined the Company as Senior Vice President, General Counsel and
Secretary in September 1989. Prior to joining the Company, Mr. Clark was Vice
President, General Counsel and Secretary of SSMC Inc.
Robert L. Creviston
Senior Vice President - Human Resources.......................................52
Mr. Creviston joined the Company as Vice President - Employee Relations in
1982. He was named Senior Vice President - Human Resources in August 1991.
Daryl R. Schaller
Senior Vice President - Research, Quality and Nutrition.......................50
Dr. Schaller has been employed by the Company since 1972. He was named Vice
President - Director of Research in 1981, Vice President - Corporate Technology
in 1983, Senior Vice President - Science and Technology in 1986, and Senior Vice
President - Research, Quality and Nutrition in January 1990.
Joseph M. Stewart
Senior Vice President - Corporate Affairs.....................................51
Mr. Stewart has been employed by the Company since 1980. He has worked in
foodservice marketing and public affairs, and was named Vice President - Public
Affairs in 1985 and Senior Vice President - Corporate Affairs in 1988.
Charles E. French
Vice President - Finance and Treasurer........................................49
Mr. French has been employed by the Company and various subsidiaries of the
Company since 1966. In 1988, he was named Director - Administration, Kellogg
Company of Great Britain. In 1992, he also became Director - Finance of Kellogg
Europe, and in September 1993, he was named Vice President - Finance and
Treasurer of the Company.
Alan Taylor
Corporate Controller..........................................................42
Mr. Taylor has been employed by the Company and certain of its subsidiaries
since 1982. In 1987, he was named Director - Finance, Kellogg Canada Inc. He
served as Director - Finance of Kellogg (Aust.) Pty. Ltd. from 1988 until 1993.
He became Controller of the Company in August 1993.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The information called for by this Item is set forth in Note 12 to the
Consolidated Financial Statements on page F-16 of this Report.
ITEM 6. SELECTED FINANCIAL DATA
The information called for by this Item is set forth on page F-1 of this
Report. Such information should be read in conjunction with the Consolidated
Financial Statements and Notes thereto of the Company included in Item 8,
incorporated by reference from Item 14, of this Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
STRATEGIC AND FINANCIAL OBJECTIVES
Management's primary objective is to increase shareholder value over time.
To achieve this objective, the Company has implemented a long-term business
strategy which focuses on continuing aggressive investment in new cereal
markets, increasing returns on existing investments, maximizing cash flows, and
minimizing the cost of capital through appropriate financial policies. The
success of this strategy is reflected in the Company's superior earnings, return
on equity, total return to shareholders, and its overall strong financial
condition.
GLOBAL MARKETPLACE
Because of its strong global market share leadership, the Company is
uniquely positioned to benefit from the continued increase in cereal consumption
around the world. As of December 31, 1993, the Company's market share was 43%
globally, 38% in North America, 47% in Asia-Pacific, 50% in Europe, and 78% in
Latin America. This favorable positioning in existing markets is accompanied by
leadership in entering new markets with substantial long-term potential. The
Company opened a new cereal plant in Latvia in 1993 and has plants scheduled to
begin production in India in 1994 and in China in 1995. The Company plans to
make its products available to a billion new consumers by early in the next
century, more than doubling its present reach.
Lifestyle and demographic changes in major markets around the world favor a
continued increase in consumption of ready-to-eat cereal, the Company's core
product line. Two particularly important trends are ever-increasing recognition
by consumers around the world of the nutritional value of cereal and the
accelerating move of the "baby boom" generation from young adulthood, where
cereal consumption is relatively low, to middle age, where cereal consumption
grows steadily. The Company believes it has developed the worldwide
infrastructure and financial resources needed to continue its leadership of
category growth.
RESULTS OF OPERATIONS
1993 COMPARED TO 1992
Revenues
The Company's revenues are obtained primarily from the sale of ready-to-eat
cereals in more than 150 countries. The Company has been marketing cereals since
1906 and is the global market share leader by nearly a three-to-one advantage.
Increased revenues are obtained by reaching consumers in both new and developed
markets with products that are both nutritious and superior in quality. The
introduction of new products is vital to the Company's long-term financial
strength. For 1993, the Company introduced 24 new products worldwide.
Despite intense competition, continued recessions in several major markets,
and unfavorable currency movements, worldwide revenues increased by 2% for 1993,
marking the 49th consecutive annual increase. The increase was achieved through
higher selling prices and a 2% increase in cereal volume, being negatively
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impacted by foreign currency movements. Forty percent of all revenues are
derived from outside the United States and are subject to foreign currency
fluctuations. Excluding the negative effects of currency movements, 1993 sales
would have increased 6%. During 1993, sales within the United States rose by 6%
from increased selling prices and volume for both cereal and convenience foods.
1993 European sales, which were significantly affected by unfavorable
foreign currency fluctuations, were down 8%. If the effects of foreign currency
are excluded, European sales would have risen 4%. Sales for other areas grew by
2% from increased volume and higher selling prices, being partially offset by
the negative impact of currency fluctuations. Excluding the effects of negative
currency movements, other area sales would have increased 6%.
Other revenue for 1993 includes a total pre-tax gain of $65.9 million ($.20
per share) from the sale of the Company's British carton-container division
($.10 per share) and its Argentine snack food business ($.10 per share). In
recent years the Company has divested units that do not fit with its long-term
strategic plan. Other deductions for 1993 includes pre-tax charges of $64.3
million ($.18 per share) from the write-down of certain assets in Europe and
North America.
Expenses and profit margins
Cost of goods sold as a percent of sales was 47% for the year, the lowest
in the last decade. Higher selling prices, increased volume, and worldwide
productivity gains in factory operations are among the factors that contributed
to this lower ratio.
Intense global competition requires heavy investment in value-added
marketing. Selling and administrative expense represented 36% of each sales
dollar in 1993. The Company is committed to building strong, long-term brand
franchises through effective advertising.
Gross interest expense, prior to amounts capitalized, increased to $40.4
million for 1993, compared to $33.6 million for 1992. Higher debt levels caused
the increase. The Company expects average borrowing levels and related interest
expense to be slightly higher during 1994.
The Company's effective tax rate was 34.2% for the year, compared to 36.2%
for 1992. The tax rate declined for a number of reasons. Decreased statutory
rates in countries such as Germany, Australia, Canada, and South Africa more
than offset the United States tax rate increase of 1993. The Company's 1994
effective tax rate is expected to be approximately 38%.
For 1993, earnings per share were $2.94 and earnings were $680.7 million,
compared to 1992's earnings per share of $1.81 and earnings of $431.2 million.
Excluding all one-time events for both years, earnings per share were $2.92, up
6% over $2.75 in 1992; and net earnings were $675.5 million, up 3%. Without the
negative impact of foreign currency fluctuations, earnings per share would have
been up 10% and net earnings up 6%.
Geographically, earnings before the cumulative effect of an accounting
change were lower by 1% for the United States and by 1% for Europe, and up 7%
for other areas. Excluding all one-time events for both years, the United States
would have been up 7%, Europe down 9%, and other areas up 2%. Without the
negative impact of foreign currency movements, Europe would have been up 4%
rather than down 9%.
Statement of Financial Accounting Standards 112, "Employers' Accounting for
Postemployment Benefits," was issued in November 1992. This statement had no
material effect on the Company's financial condition or results of operations.
1992 COMPARED TO 1991
Worldwide revenues for 1992 increased 7% to $6.2 billion on the strength of
a 5% gain in cereal volume and higher selling prices. During January 1992, the
Company sold Fearn International Inc., a U.S. foodservice subsidiary. Excluding
1991 sales by Fearn, 1992 sales would have increased by 9% instead of 7%.
Foreign currency fluctuations had a minimal impact on 1992 worldwide revenues.
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Sales within the United States increased by 5%; however, excluding Fearn
sales from 1991, the increase was 8%. This increase resulted from increased
volume coupled with higher selling prices. European sales were up a solid 14%
for the year due to a volume gain of 6% coupled with higher selling prices and
the positive impact of foreign currency fluctuations. Sales for other areas grew
by 6% from improved volume and selling prices, partially offset by negative
foreign currency movements.
Other revenue includes a total pre-tax gain of $58.5 million ($.16 per
share) from the sale of Fearn International Inc. Other deductions includes a
pre-tax charge of $22.4 million ($.05 per share) from the disposition of
convenience foods operations in Canada and other North America assets.
Cost of goods sold as a percent of sales was 48%, compared to 49% in 1991.
Factors such as improved volume, positive inventory management, and improved
factory productivity contributed to the decline. Selling and administrative
expense represented 35% of each sales dollar in 1992, compared to 33% in 1991.
Gross interest expense, prior to amounts capitalized, decreased to $33.6
million, compared to $60.7 million in 1991. Lower interest rates and debt levels
led to the decline. The Company's effective tax rate was 36.2%, compared to
38.4% for 1991. The decline in the rate resulted from lower effective tax rates
in certain international locations.
For 1992, earnings per share were $1.81 and earnings were $431.2 million,
compared to earnings per share of $2.51 and earnings of $606 million in 1991.
Excluding all one-time events and the accounting change, earnings per share were
$2.75, up 10%, and earnings were $657.1 million, up 8%.
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards (FAS) 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." This standard requires that the estimated cost of
postretirement benefits, principally health care, be accrued over the period
earned rather than expensed as incurred. The transition effect of adopting FAS
106 on the immediate recognition basis, as of January 1, 1992, resulted in an
after-tax charge of $251.6 million or $1.05 per share.
Geographically, earnings before the cumulative effect of the accounting
change were up 18% for the United States, up 9% for Europe, and down 6% for
other areas. Excluding the sale of Fearn and the one-time asset writeoffs,
United States earnings would have been up 9% and other areas up 5%.
LIQUIDITY AND CAPITAL RESOURCES
The financial condition of the Company remained strong during 1993. Company
operations have historically provided a strong, positive cash flow which, along
with the program of issuing commercial paper and maintaining worldwide credit
facilities, provides adequate liquidity to meet the Company's operational needs.
Cash and cash equivalents totaled $98 million at December 31, 1993, compared to
$126 million at December 31, 1992.
Cash provided by operating activities amounted to $800 million in 1993,
compared to $742 million in 1992 and $934 million in 1991. The Company's current
ratio (current assets over current liabilities) was 1.0:1.0 for 1993 and 1.2:1.0
for 1992.
The Company maintains credit facilities with banking institutions in the
United States and other countries where it conducts business. At year-end, the
Company had $613 million of short-term lines of credit, of which $569 million
were available.
Funds expended for capital improvements in 1993 totaled $450 million,
compared to $474 million in 1992 and $333 million in 1991. In 1994, capital
expenditures are expected to be approximately $400 million as the Company
continues to invest globally in expansion and modernization of its facilities.
The capital program remains focused on producing the highest quality product at
the lowest possible cost.
The Company's debt to total capital ratio was 35% at December 31, 1993,
compared to 21% in 1992. The Company's increased share repurchase program led to
higher debt levels resulting in the higher ratio. The Company continues to enjoy
the highest available debt ratings on both its commercial paper and long-term
debt.
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At December 31, 1993, the Company had on file a "shelf registration" of
$200 million with the Securities and Exchange Commission to provide for the
issuance of debt in the United States. The net proceeds from any offering under
the "shelf" would be added to the Company's working capital and be available for
general corporate purposes.
In October of 1993, the Company issued $265 million Canadian Eurodollar
5-year Notes with a 6.25% interest rate. During 1992, $300 million 5-year Notes
were issued with a 5.9 % interest rate. The first two years of both notes were
swapped into variable rate debt. In March 1992, the Company's $200 million 9.5%
Eurodollar Notes matured.
Notes payable are comprised principally of floating interest rate
obligations that had an average interest rate of 4% in 1993, compared to 6%
during 1992.
Dividends paid per share of common stock rose 10% in 1993, marking the 37th
consecutive year of increase. The trend of increased dividends is expected to
continue in 1994.
During 1993, the Company purchased 9,487,508 shares of its common stock at
an average cost of $58 per share. In 1992, a total of 3,497,000 shares were
purchased at an average cost of $63 per share. Treasury stock purchases were
made under plans authorized by the Company's Board of Directors. At December 31,
1993, an additional $353 million of stock could be purchased through December
1994 under current Board authorization.
LOOKING FORWARD
Management is not aware of any adverse trends that would materially affect
the Company's strong financial position.
Should suitable investment opportunities or working capital needs arise
that would require additional financing, management believes that the Company's
triple A credit rating, strong balance sheet, and history of exceptional
earnings provides a solid base for obtaining additional financial resources at
competitive rates and terms.
The Company is a global market leader backed with a solid financial
infrastructure that provides a competitive advantage. The Company is committed
to long-term earnings per share growth with above average return on equity.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by this Item is contained in a separate section
of this Report. See Index of Consolidated Financial Statements and Consolidated
Financial Statement Schedules on page F-2 of this Report. Supplementary
quarterly financial data is set forth in Note 12 to the Consolidated Financial
Statements on page F-15 of this Report.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
10
<PAGE> 11
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors -- See the Company's Proxy Statement dated March 22, 1994 for the
Annual Meeting of Stockholders to be held on April 22, 1994, under the captions
"Nominees for Election to the Board of Directors" and "Continuing Directors of
the Company" on pages 5 through 8, which information is incorporated herein by
reference.
Executive Officers of the Registrant -- See "Executive Officers of the
Registrant" under Item 4A at pages 4 through 6 of this Report.
Compliance with Section 16(a) of the Securities Exchange Act -- See the
Company's Proxy Statement, dated March 22, 1994 for the Annual Meeting of
Stockholders to be held on April 22, 1994, at page 23, under the caption
"Compliance with Section 16(a) of the Securities Exchange Act of 1934," which
information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
See the Company's Proxy Statement dated March 22, 1994 for the Annual
Meeting of Stockholders to be held on April 22, 1994, under the captions
"Executive Compensation" and "Selected Benefit Plans and Agreements" at pages 9
and 10, 14 through 17, and 20 through 23, which information, except for those
portions captioned "Report of the Compensation Committee on Executive
Compensation" and "Stock Performance Graph," is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See the Company's Proxy Statement dated March 22, 1994 for the Annual
Meeting of Stockholders to be held on April 22, 1994, under the caption "Voting
Securities And Ownership Thereof By Certain Persons" at pages 1 through 4, which
information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See the Company's Proxy Statement dated March 22, 1994 for the Annual
Meeting of Stockholders to be held on April 22, 1994, under the captions "About
The Board of Directors" at page 10, and "Selected Benefit Plans and Agreements"
at page 22, which information, is incorporated herein by reference.
11
<PAGE> 12
PART IV
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES, AND REPORTS
ON FORM 8-K
(A)1. CONSOLIDATED FINANCIAL STATEMENTS
The Index of Consolidated Financial Statements is included on page F-2 of
this Report.
(A)2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
The Index of Consolidated Financial Statement Schedules is included on page
F-2 of this Report.
(A)3. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
3.01 Restated Certificate of Incorporation of Kellogg Company, as amended,
incorporated by reference to Exhibit 3.01 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991, Commission file number
1-4171.
3.02 Bylaws of Kellogg Company, as amended.
4.01 Indenture dated as of March 1, 1988 between the Company and Bankers Trust
Company, incorporated by reference to Exhibit 4(a) to the Company's
Registration Statement on Form S-3, Commission file number 33-20731.
4.02 Form of Debt Security, incorporated by reference to Exhibit 4(d) to the
Company's Registration Statement on Form S-3, Commission file number 33-20731.
4.03 Supplemental Indenture, dated January 30, 1989, between the Company and Bankers
Trust Company, incorporated by reference to Exhibit B to the Company's Current
Report on Form 8-K, Commission file number 1-4171, dated January 31, 1989.
4.04 Instrument of Resignation, Acceptance and Appointment, dated as of January 31,
1989, between the Company, Bankers Trust Company and NBD Bank, N.A. (formerly
known as National Bank of Detroit), incorporated by reference to Exhibit A to
the Company's Current Report on Form 8-K, Commission file number 1-4171, dated
January 31, 1989.
4.05 Agency Agreement, dated as of January 31, 1989, between NBD Bank, N.A.
(formerly known as National Bank of Detroit) and Bankers Trust Company,
incorporated by reference to Exhibit C to the Company's Current Report on Form
8-K, Commission file number 1-4171, dated January 31, 1989.
10.01 Employment Agreements between the Company and C. W. Elliott, made and entered
into as of January 30, 1987, incorporated by reference to Exhibit 10.02 to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1987, Commission file number 1-4171.*
10.02 Kellogg Company Excess Benefit Retirement Plan, incorporated by reference to
Exhibit 10.01 to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1983, Commission file number 1-4171.*
10.03 Kellogg Company Supplemental Retirement Plan, incorporated by reference to
Exhibit 10.05 to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission file number 1-4171.*
10.04 Kellogg Company Book Value Unit/Share Incentive Plan, incorporated by reference
to Exhibit 10.02 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1983, Commission file number 1-4171.*
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
10.05 Kellogg Company 1982 Stock Option Plan, as amended on December 7, 1990,
incorporated by reference to Exhibit 10.07 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1990, Commission file number
1-4171.*
10.06 Kellogg Company International Retirement Plan, incorporated by reference to
Exhibit 10.05 to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1984, Commission file number 1-4171.*
10.07 Kellogg Company Executive Survivor Income Plan, incorporated by reference to
Exhibit 10.06 to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1985, Commission file number 1-4171.*
10.08 Kellogg Company Key Executive Benefits Plan, incorporated by reference to
Exhibit 10.09 to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991, Commission file number 1-4171.*
10.09 Kellogg Company Key Employee Long Term Incentive Plan, incorporated by
reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991, Commission file number 1-4171.*
10.10 Deferred Compensation Plan for Non-Employee Directors.*
21.01 Domestic and Foreign Subsidiaries of the Company, incorporated by reference to
Exhibit 22.01 to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991, Commission file number 1-4171.
23.01 Consent of Price Waterhouse.
24.01 Powers of Attorney authorizing Richard M. Clark to execute the Company's Form
10-K Annual Report for the fiscal year ended December 31, 1993 on behalf of the
Board of Directors, and each of them.
99.01 Kellogg Company American Federation of Grain Millers Savings and Investment
Plan Form 11-K Annual Report for the fiscal year ended October 31, 1993.
99.02 Kellogg Company Salaried Savings and Investment Plan Form 11-K Annual Report
for the fiscal year ended October 31, 1993.
</TABLE>
*A management contract or compensatory plan required to be filed by Item 14(c)
of this report.
THE COMPANY AGREES TO FURNISH TO THE SECURITIES AND EXCHANGE COMMISSION, UPON
ITS REQUEST, A COPY OF ANY INSTRUMENT DEFINING THE RIGHTS OF HOLDERS OF
LONG-TERM DEBT OF THE COMPANY AND ITS SUBSIDIARIES AND ANY OF ITS UNCONSOLIDATED
SUBSIDIARIES FOR WHICH FINANCIAL STATEMENTS ARE REQUIRED TO BE FILED.
THE COMPANY WILL FURNISH ANY OF ITS STOCKHOLDERS A COPY OF ANY OF THE ABOVE
EXHIBITS NOT INCLUDED HEREIN UPON THE WRITTEN REQUEST OF SUCH STOCKHOLDER AND
THE PAYMENT TO THE COMPANY OF THE REASONABLE EXPENSES INCURRED BY THE COMPANY IN
FURNISHING SUCH COPY OR COPIES.
(B) REPORT ON FORM 8-K
No report on Form 8-K was filed during the Company's fourth quarter for the
fiscal year ended December 31, 1993.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, this 22nd day of March
1994.
KELLOGG COMPANY
/s/ ARNOLD G. LANGBO
By: Arnold G. Langbo
Chairman of the Board
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
- ------------------------------------------- ------------------------------ -----------------
<S> <C> <C>
/s/ ARNOLD G. LANGBO Chairman of the Board, Chief March 22, 1994
Arnold G. Langbo Executive Officer; Director
(Principal Executive Officer)
/s/ CHARLES W. ELLIOTT Executive Vice President, March 22, 1994
Charles W. Elliott Chief Financial Officer;
Director
(Principal Financial Officer)
/s/ ALAN TAYLOR Corporate Controller March 22, 1994
Alan Taylor (Principal Accounting Officer)
Norman A. Brown Director
Claudio X. Gonzalez Director
Gordon Gund Director
William E. LaMothe Director
Russell G. Mawby Director
Ann McLaughlin Director
J. Richard Munro Director
Harold A. Poling Director
Donald Rumsfeld Director
Timothy P. Smucker Director
Dolores D. Wharton Director
By: /s/ Richard M. Clark March 22, 1994
Richard M. Clark
As Attorney-in-Fact
</TABLE>
14
<PAGE> 15
SELECTED FINANCIAL DATA (ITEM 6)
SUMMARY OF OPERATIONS
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PER COMMON SHARE DATA
-----------------------
EARNINGS (A) EARNINGS (A)
NET % PRETAX % BEFORE ACCTG % NET % BEFORE ACCTG NET
SALES GROWTH EARNINGS GROWTH CHANGE GROWTH EARNINGS GROWTH CHANGE EARNINGS
-------- ------ -------- ------ ------------ ------ -------- ------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10-year Compound
Growth Rate 10% 9% 11% 11% 14% 14%
1993 $6,295.4 2 $1,034.1 (3) $680.7 -- $680.7 58 $ 2.94 $ 2.94
1992 6,190.6 7 1,070.4 9 682.8 13 431.2 (29) 2.86 1.81
1991 5,786.6 12 984.2 21 606.0 21 606.0 21 2.51 2.51
1990 5,181.4 11 814.7 22 502.8 19 502.8 7 2.08 2.08
1989 4,651.7 7 667.0 (14) 422.1 (12) 470.2 (2) 1.73 1.93
1988 4,348.8 15 774.7 16 480.4 21 480.4 21 1.95 1.95
1987 3,793.0 14 665.7 13 395.9 24 395.9 24 1.60 1.60
1986 3,340.7 14 586.6 11 318.9 13 318.9 13 1.29 1.29
1985 2,930.1 13 527.4 11 281.1 12 281.1 12 1.14 1.14
1984 2,602.4 9 476.1 7 250.5 3 250.5 3 .84 .84
1983 2,381.1 1 444.0 8 242.7 7 242.7 7 .79 .79
<CAPTION>
AVERAGE
SHARES
CASH BOOK OUTSTANDING SHAREHOLDERS'
DIVIDENDS VALUE (MILLIONS) EQUITY
--------- ----- -------------- -------------
<S> <C> <C> <C> <C>
10-year Compound
Growth Rate 13%
1993 $ 1.32 $7.52 231.5 $ 1,713.4
1992 1.20 8.20 238.9 1,945.2
1991 1.075 8.98 241.2 2,159.8
1990 .96 7.88 241.6 1,901.8
1989 .86 6.70 244.2 1,634.4
1988 .76 6.03 246.4 1,483.2
1987 .64 4.91 247.4 1,211.4
1986 .51 3.63 247.0 898.4
1985 .45 2.77 246.6 683.0
1984 .42 1.98 298.8 487.2
1983 .40 3.20 305.8 977.9
</TABLE>
OTHER INFORMATION AND FINANCIAL RATIOS
<TABLE>
<CAPTION>
FINANCIAL RATIOS
---------------------------
PRETAX INTEREST
PROPERTY, CAPITAL TOTAL NUMBER OF CURRENT COVERAGE
NET EXPENDITURES DEPRECIATION ASSETS EMPLOYEES RATIO (TIMES)
--------- ------------ ------------ -------- --------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1993 $2,768.4 $449.7 $265.2 $4,237.1 16,151 1.0 27
1992 2,662.7 473.6 231.5 4,015.0 16,551 1.2 33
1991 2,646.5 333.5 222.8 3,925.8 17,017 .9 17
1990 2,595.4 320.5 200.2 3,749.4 17,239 .9 11
1989 2,406.3 508.7 167.6 3,390.4 17,268 .9 10
1988 2,131.9 538.1 139.7 3,297.9 17,461 .9 13
1987 1,738.8 478.4 113.1 2,680.9 17,762 .9 14
1986 1,281.1 329.2 92.7 2,084.2 17,383 1.1 13
1985 1,035.9 245.6 75.4 1,726.1 17,082 1.4 11
1984 856.0 228.9 63.9 1,667.1 17,239 1.1 26
1983 743.2 156.7 62.8 1,467.2 18,293 1.8 64
<CAPTION>
RETURN ON DEBT TO CASH
AVERAGE TOTAL PROVIDED BY LONG-TERM
EQUITY CAPITAL OPERATIONS DEBT
--------- ------- ----------- ---------
<S> <<C> <C> <C> <C>
1993 37% 35% $ 800.2 $ 521.6
1992 21% 21% 741.9 314.9
1991 30% 18% 934.4 15.2
1990 28% 26% 819.2 295.6
1989 30% 34% 533.5 371.4
1988 36% 32% 492.3 272.1
1987 38% 27% 523.5 290.4
1986 40% 31% 542.7 264.1
1985 48% 38% 449.7 392.6
1984 27% 59% 331.5 364.1
1983 26% 4% 347.1 18.6
</TABLE>
- -------------------------
(a) Net earnings for 1992 include a $251.6 million charge ($1.05 per share)
resulting from the adoption of Statement of Financial Accounting Standards
106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," as of January 1, 1992. Net earnings for 1989 include a $48.1
million gain ($.20 per share) resulting from the adoption of Statement of
Financial Accounting Standards 96, "Accounting for Income Taxes," as of
January 1, 1989.
F-1
<PAGE> 16
KELLOGG COMPANY AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K
Items 8, 14(a) and 14(d)
Index of Consolidated Financial Statements
and Consolidated Financial Statement Schedules
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants....................................... F-3
Consolidated Earnings and Retained Earnings for 1993, 1992 and 1991..... F-4
Consolidated Balance Sheet at December 31, 1993 and 1992................ F-5
Consolidated Statement of Cash Flows for 1993, 1992 and 1991............ F-6
Notes to Consolidated Financial Statements.............................. F-7
CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
Schedule II - Amounts Receivable from Employees......................... S-1
Schedule V - Property................................................... S-2
Schedule VI - Accumulated Depreciation of Property...................... S-3
Schedule VIII - Valuation Reserve....................................... S-3
Schedule IX - Short-Term Borrowings..................................... S-4
Schedule X - Supplementary Earnings Statement Information............... S-4
</TABLE>
These Consolidated Financial Statement Schedules should be read in
conjunction with the Consolidated Financial Statements included in Item 8.
All other Consolidated financial statement schedules are omitted because
they are not applicable or the required data is shown in the Company's
Consolidated Financial Statements or the Notes thereto.
F-2
<PAGE> 17
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board
of Directors of Kellogg Company
In our opinion, the consolidated financial statements and schedules listed
in the index on page F-2 present fairly, in all material respects, the financial
position of Kellogg Company and its subsidiaries at December 31, 1993 and 1992,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Notes 9 and 10 to the financial statements, the Company
changed its methods of accounting for postretirement benefits other than
pensions and for income taxes during 1992.
PRICE WATERHOUSE
Battle Creek, Michigan
February 4, 1994
F-3
<PAGE> 18
KELLOGG COMPANY AND SUBSIDIARIES
CONSOLIDATED EARNINGS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Net sales................................................... $6,295.4 $6,190.6 $5,786.6
Other revenue (deductions), net........................... (1.5) 36.8 14.6
-------- -------- --------
6,293.9 6,227.4 5,801.2
-------- -------- --------
Cost of goods sold........................................ 2,989.0 2,987.7 2,828.7
Selling and administrative expense........................ 2,237.5 2,140.1 1,930.0
Interest expense.......................................... 33.3 29.2 58.3
-------- -------- --------
5,259.8 5,157.0 4,817.0
-------- -------- --------
Earnings before income taxes and cumulative effect of
accounting change......................................... 1,034.1 1,070.4 984.2
Income taxes.............................................. 353.4 387.6 378.2
-------- -------- --------
Earnings before cumulative effect of accounting change...... 680.7 682.8 606.0
Cumulative effect of change in method of accounting for
postretirement benefits other than pensions -- $1.05 a
share
(net of income tax benefit of $144.6).................. (251.6)
-------- -------- --------
Net earnings -- $2.94, $1.81, $2.51 a share................. 680.7 431.2 606.0
Retained earnings, beginning of year...................... 3,033.9 2,889.1 2,542.4
Dividends paid -- $1.32, $1.20, $1.075 a share............ (305.2) (286.4) (259.3)
-------- -------- --------
Retained earnings, end of year.............................. $3,409.4 $3,033.9 $2,889.1
-------- -------- --------
-------- -------- --------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 19
KELLOGG COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------------
1993 1992
--------- ---------
(IN MILLIONS)
<S> <C> <C>
CURRENT ASSETS
Cash and temporary investments......................................... $ 98.1 $ 126.3
Accounts receivable, less allowances of $6.0 and $6.2.................. 536.8 519.1
Inventories:
Raw materials and supplies........................................... 148.5 167.7
Finished goods and materials in process.............................. 254.6 248.7
Deferred income taxes.................................................. 85.5 66.2
Prepaid expenses....................................................... 121.6 108.6
--------- ---------
Total current assets............................................ 1,245.1 1,236.6
PROPERTY
Land................................................................... 40.6 40.5
Buildings.............................................................. 1,065.7 1,021.2
Machinery and equipment................................................ 2,857.6 2,629.4
Construction in progress............................................... 308.6 302.6
Accumulated depreciation............................................... (1,504.1) (1,331.0)
--------- ---------
Property, net................................................... 2,768.4 2,662.7
Intangible assets...................................................... 59.1 53.3
Other assets........................................................... 164.5 62.4
--------- ---------
Total assets.................................................... $ 4,237.1 $ 4,015.0
--------- ---------
--------- ---------
CURRENT LIABILITIES
Current maturities of long-term debt................................... $ 1.5 $ 1.9
Notes payable.......................................................... 386.7 210.0
Accounts payable....................................................... 308.8 313.8
Accrued liabilities:
Income taxes......................................................... 65.9 104.1
Salaries and wages................................................... 76.5 78.0
Advertising and promotion............................................ 233.8 228.0
Other................................................................ 141.4 135.2
--------- ---------
Total current liabilities....................................... 1,214.6 1,071.0
Long-term debt......................................................... 521.6 314.9
Nonpension postretirement benefits..................................... 450.9 407.6
Deferred income taxes.................................................. 188.9 184.6
Other liabilities...................................................... 147.7 91.7
SHAREHOLDERS' EQUITY
Common stock, $.25 par value
Authorized: 330,000,000 shares
Issued: 310,292,753 shares in 1993 and 310,193,228 in 1992........... 77.6 77.5
Capital in excess of par value......................................... 72.0 69.2
Retained earnings...................................................... 3,409.4 3,033.9
Treasury stock, at cost: 82,372,409 and 72,874,738 shares.............. (1,653.1) (1,105.0)
Minimum pension liability adjustment................................... (25.3)
Currency translation adjustment........................................ (167.2) (130.4)
--------- ---------
Total shareholders' equity...................................... 1,713.4 1,945.2
--------- ---------
Total liabilities and shareholders' equity...................... $ 4,237.1 $ 4,015.0
--------- ---------
--------- ---------
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 20
KELLOGG COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1993 1992 1991
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings..................................................... $ 680.7 $ 431.2 $ 606.0
Items in net earnings not requiring (providing) cash:
Cumulative effect of accounting change......................... 251.6
Depreciation................................................... 265.2 231.5 222.8
Pre-tax gain on sale of subsidiaries........................... (65.9) (58.5)
Deferred income taxes.......................................... 8.7 9.7 (5.4)
Other.......................................................... (19.1) 25.1 16.8
Change in operating assets and liabilities:
Accounts receivable............................................ (17.7) (99.1) 10.2
Inventories.................................................... 13.3 (15.3) (41.4)
Prepaid expenses............................................... (32.3) (0.9) (22.9)
Accounts payable............................................... (5.0) 24.0 42.7
Accrued liabilities............................................ (27.7) (57.4) 105.6
------- ------- -------
NET CASH PROVIDED FROM OPERATING ACTIVITIES................. 800.2 741.9 934.4
------- ------- -------
INVESTING ACTIVITIES
Additions to properties.......................................... (449.7) (473.6) (333.5)
Proceeds from sale of subsidiaries............................... 95.6 115.0
Property disposals............................................... 19.0 18.8 25.2
Other............................................................ (25.1) (10.6) (11.6)
------- ------- -------
NET CASH USED IN INVESTING ACTIVITIES....................... (360.2) (350.4) (319.9)
------- ------- -------
FINANCING ACTIVITIES
Borrowings of notes payable...................................... 468.2 192.3 182.1
Reduction of notes payable....................................... (291.5) (170.7) (274.0)
Issuance of long-term debt....................................... 208.3 311.7 4.3
Reduction of long-term debt...................................... (1.7) (270.2) (126.0)
Issuance of common stock......................................... 2.9 13.4 17.7
Purchase of treasury stock....................................... (548.1) (224.1) (83.6)
Cash dividends................................................... (305.2) (286.4) (259.3)
Other............................................................ 2.9 11.4 1.1
------- ------- -------
NET CASH USED IN FINANCING ACTIVITIES....................... (464.2) (422.6) (537.7)
------- ------- -------
Effect of exchange rate changes on cash.......................... (4.0) (20.6) 0.7
------- ------- -------
Increase (decrease) in cash and temporary investments............ (28.2) (51.7) 77.5
Cash and temporary investments at beginning of year.............. 126.3 178.0 100.5
------- ------- -------
CASH AND TEMPORARY INVESTMENTS AT END OF YEAR............... $ 98.1 $ 126.3 $ 178.0
------- ------- -------
------- ------- -------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 21
KELLOGG COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the accounts of Kellogg
Company and its wholly owned subsidiaries. Intercompany balances and
transactions are eliminated.
Certain amounts in the prior year financial statements have been
reclassified to conform to the current year presentation.
Cash and temporary investments
Highly liquid temporary investments with original maturities of less than
three months are considered to be cash equivalents. The carrying amount
approximates fair value.
Inventories
Inventories are valued at the lower of cost (principally average) or
market.
Property
Fixed assets are recorded at cost and depreciated over estimated useful
lives using straight-line methods for financial reporting and accelerated
methods for tax reporting. Interest cost capitalized as part of the construction
cost of capital assets amounted to $7.1 million in 1993, $4.4 million in 1992,
and $2.4 million in 1991.
Intangible assets
Intangible assets consist principally of the underfunded amount of certain
pension plans.
Notes payable and long-term debt
The carrying amounts of the Company's notes payable, long-term debt, and
other financial instruments approximate fair value. The fair values are based
primarily on quoted market prices.
Net earnings per share
Net earnings per share is determined by dividing net earnings by the
weighted average number of common shares outstanding. All per share amounts have
been restated to reflect the two-for-one stock split, effective December 4,
1991.
NOTE 2 -- LEASES
Operating leases generally are for equipment and warehouse space. Rent
expense on all operating leases, which generally are renewable at the Company's
option, amounted to $46.8 million in 1993, $42.4 million in 1992, and $39.3
million in 1991. There are no significant future minimum rental commitments
under non-cancelable leases.
NOTE 3 -- RESEARCH AND DEVELOPMENT
Research and development costs charged to earnings approximated $39.8
million in 1993, $36.6 million in 1992, and $34.7 million in 1991.
F-7
<PAGE> 22
KELLOGG COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 4 -- DIVESTITURES AND OTHER NONRECURRING ITEMS
All gains from divestitures and nonrecurring charges are recorded in other
revenue (deductions). None of the divestitures are significant to the Company's
consolidated revenues and earnings.
During 1993, the Company recognized a pre-tax gain of $32.2 million ($.10
per share) from the sale of Cereal Packaging Ltd., a wholly owned subsidiary of
Kellogg Company of Great Britain, Limited., and a pre-tax gain of $33.7 million
($.10 per share) from the sale of the Argentine snack food business. During
1992, the Company sold Fearn International Inc., a foodservice subsidiary,
resulting in a pre-tax gain of $58.5 million ($.16 per share).
During 1993, the Company recognized pre-tax charges of $64.3 million ($.18
per share) from the write-down of certain assets in Europe and North America.
For 1992, other deductions includes a pre-tax charge of $22.4 million ($.05 per
share) from the disposition of convenience foods operations in Canada and other
North America assets.
NOTE 5 -- SHAREHOLDERS' EQUITY
On December 3, 1991, shareholders approved an increase in the authorized
shares of common stock from 165 million to 330 million and approved a
two-for-one stock split to shareholders of record on December 4, 1991. The
stated par value per share of common stock was not changed from $.25. All share
and per share amounts have been restated to retroactively reflect the stock
split.
In 1993, the Company purchased 9,487,508 shares of its common stock at an
average cost of $58; in 1992, purchased 3,497,000 shares at an average cost of
$63; and in 1991, purchased 1,515,600 shares at an average cost of $52. All
purchases are included in treasury stock. A summary of shareholders' equity is
shown on the following page.
F-8
<PAGE> 23
KELLOGG COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Most effects of exchange rate changes are reflected as a currency
translation adjustment in shareholders' equity. Exchange adjustments
attributable to operations in highly inflationary economies are reflected in
earnings along with those adjustments related to foreign currency transactions
that affect cash flows.
<TABLE>
<CAPTION>
(A)MINIMUM
CAPITAL IN PENSION CURRENCY
COMMON EXCESS OF RETAINED TREASURY LIABILITY TRANSLATION
STOCK PAR VALUE EARNINGS STOCK ADJUSTMENT ADJUSTMENT
------ ---------- -------- --------- ---------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1991........... $38.6 $ 81.2 $2,542.4 ($797.3) $ 36.9
Stock options exercised.......... 0.1 17.7
Two-for-one stock split.......... 38.7 (38.7)
Net earnings..................... 606.0
Dividends........................ (259.3)
Exchange adjustments............. (22.9)
Treasury stock purchased......... (83.6)
------ ---------- -------- --------- ---------- ----------
Balance, December 31, 1991......... 77.4 60.2 2,889.1 (880.9) 14.0
Stock options exercised.......... 0.1 9.0
Net earnings..................... 431.2
Dividends........................ (286.4)
Exchange adjustments............. (144.4)
Treasury stock purchased......... (224.1)
------ ---------- -------- --------- ---------- ----------
Balance, December 31, 1992......... 77.5 69.2 3,033.9 (1,105.0) (130.4)
Stock options exercised.......... 0.1 2.8
Net earnings..................... 680.7
Dividends........................ (305.2)
Exchange adjustments............. (36.8)
Minimum pension liability
adjustment.................... ($25.3)
Treasury stock purchased......... (548.1)
------ ---------- -------- --------- ---------- ----------
Balance, December 31, 1993......... $77.6 $ 72.0 $3,409.4 ($1,653.1) ($25.3) ($ 167.2)
------ ---------- -------- --------- ---------- ----------
------ ---------- -------- --------- ---------- ----------
</TABLE>
- -------------------------
(a) Refer to Note 8 for an explanation of the minimum pension liability
adjustment.
NOTE 6 -- DEBT
Notes payable consist of borrowings in the United States of $352.9 million
at 3.2% at December 31, 1993, and $148.3 million at 3.4% at December 31, 1992,
and bank loans of foreign subsidiaries at competitive market rates. The majority
of the borrowings within the United States are commercial paper which has the
highest debt rating available. The Company has credit agreements providing for
borrowing an aggregate of approximately $613 million on an unsecured basis, $569
million of which was unused at December 31, 1993.
As of January 1, 1992, the Company had on file a "shelf registration" of
$300 million of debt securities with the Securities and Exchange Commission.
Under this registration statement, the Company issued $300 million of 5.9% notes
in July 1992. In August 1993, the Company filed a $200 million "shelf
registration" with the Securities and Exchange Commission which remains unused
at December 31, 1993.
F-9
<PAGE> 24
KELLOGG COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
A summary of long-term debt follows.
<TABLE>
<CAPTION>
1993 1992
------ ------
(IN MILLIONS)
<S> <C> <C>
5.9% Five-Year Notes due 1997(a)............................................ $299.4 $299.1
6.25% Five-Year Canadian Eurodollar Note due 1998(a)........................ 200.0
Other....................................................................... 23.7 17.7
------ ------
523.1 316.8
Less current maturities..................................................... (1.5) (1.9)
------ ------
Balance, December 31,.................................................. $521.6 $314.9
------ ------
------ ------
</TABLE>
- -------------------------
(a) The 6.25% Canadian Eurodollar Notes were issued in October 1993. The first
two years of both five-year notes were swapped into variable rate debt,
indexed to the London Interbank Offered Rate.
Principal payments are due as follows (in millions): 1995 -- $2; 1996 --
$2; 1997 -- $302; 1998 -- $207.
Interest paid, net of amounts capitalized, approximated interest expense in
each of the three years ended December 31, 1993.
NOTE 7 -- STOCK OPTIONS
In 1991, shareholders approved the adoption of the Key Employee Long-Term
Incentive Plan. The plan provides for benefits to be awarded in the form of
stock options, performance shares, performance units, incentive stock options,
restricted stock awards, and other stock-based awards. Under this plan, options
are granted at the fair market value of the Company's common stock at the time
of grant. Such options are exercisable when granted and expire ten years from
date of grant. The plan also contains a reload option feature. When Company
stock is surrendered to pay for the exercise price of a stock option, the holder
of the option is granted a new option for the number of shares surrendered. For
all options reloaded, the expiration date is not changed, but the option price
becomes the fair market value of the Company's stock on the date the new reload
option is granted.
Options for 10,756,690 and 10,620,578 shares were available for grant at
January 1, 1993, and December 31, 1993, respectively. A summary of transactions
under the plan follows.
<TABLE>
<CAPTION>
SHARES AVERAGE PRICE
--------- -------------
<S> <C> <C>
Under option, January 1, 1992...................................... 1,526,972 $ 40.72
Granted.......................................................... 1,569,150 61.83
Exercised........................................................ 1,181,640 48.12
Cancelled........................................................ 5,100 25.99
--------- -------------
Under option, December 31, 1992.................................... 1,909,382 $ 52.92
Granted.......................................................... 848,885 62.40
Exercised........................................................ 293,494 45.46
Cancelled........................................................ 30,186 59.10
--------- -------------
Under option, December 31, 1993.................................... 2,434,587 $ 56.95
--------- -------------
--------- -------------
</TABLE>
NOTE 8 -- PENSION BENEFITS
The Company has a number of U.S. and worldwide pension plans to provide
retirement benefits for its employees. Benefits for salaried employees are
generally based on salary and years of service, while union employee benefits
are generally a negotiated amount for each year of service. Plan funding
strategies are
F-10
<PAGE> 25
KELLOGG COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
influenced by tax regulations. Plan assets consist primarily of equity
securities with smaller holdings of bonds, real estate, and other investments.
Pension expense includes the following components.
<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost........................................................ $ 24.9 $ 23.7 $ 23.6
Interest cost....................................................... 57.8 57.2 52.9
Actual (return) loss on plan assets................................. (76.3) (22.8) (88.0)
Net amortization and deferral....................................... 26.7 (27.3) 42.3
------ ------ ------
Pension expense -- Company plans.................................... 33.1 30.8 30.8
Pension expense -- multi-employer plans............................. 3.1 1.5 1.6
------ ------ ------
Total pension expense........................................ $ 36.2 $ 32.3 $ 32.4
------ ------ ------
------ ------ ------
</TABLE>
The reconciliation of the funded status of the plans at year-end follows.
<TABLE>
<CAPTION>
UNDERFUNDED OVERFUNDED
---------------- ----------------
1993 1992 1993 1992
------ ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Accumulated benefit obligation:
Nonvested................................................. $ 35.3 $ 23.8 $ 26.9 $ 18.1
Vested.................................................... 288.8 229.3 322.3 266.8
------ ------ ------ ------
Total....................................................... 324.1 253.1 349.2 284.9
Projected salary increases.................................. 13.8 12.3 86.3 85.0
------ ------ ------ ------
Projected benefit obligation................................ 337.9 265.4 435.5 369.9
Plan assets at fair value................................... 279.5 214.3 404.4 362.0
------ ------ ------ ------
Assets (less) greater than projected benefit obligation..... (58.4) (51.1) (31.1) (7.9)
Unrecognized net (gain) loss................................ 41.3 6.5 25.7 8.8
Unrecognized transition amount.............................. 19.3 22.0 (14.6) (18.1)
Unrecognized prior service cost............................. 46.3 30.7 21.3 21.7
Minimum liability adjustment................................ (96.0) (50.8)
------ ------ ------ ------
Prepaid (accrued) pension................................... ($47.5) ($42.7) $ 1.3 $ 4.5
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
The 1993 projected benefit obligation was impacted by plan improvements
that covered most U.S. employees.
All gains and losses are recognized over the average remaining service
period of active employees.
The unfunded liability in excess of the unamortized prior service cost and
the net transition obligation was recorded as a reduction in Shareholders'
Equity of $25.3 million, net of tax, as of December 31, 1993. Intangible assets
included $56.9 million as of December 31, 1993, and $50.8 million as of December
31, 1992, relating to the underfunded pension plans.
The weighted averages for all worldwide plans of the actuarially assumed
discount rate, long-term rate of compensation increase, and long-term rate of
return on plan assets were 7.9, 5.4, and 9.5 percent in 1993; 9.2, 6.7, and 9.6
percent in 1992; and 9.3, 6.8, and 9.7 percent in 1991, respectively.
The Company and certain of its subsidiaries sponsor 401K plans for some
active employees. These costs are not significant.
F-11
<PAGE> 26
KELLOGG COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 9 -- NONPENSION POSTRETIREMENT BENEFITS
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards (FAS) 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." This standard requires that the estimated cost of
postretirement benefits, principally health care, be accrued over the period
earned rather than expensed as incurred.
The transition effect of adopting FAS 106 on the immediate recognition
basis, as of January 1, 1992, resulted in a charge of $251.6 million ($1.05 per
share) to 1992 earnings, net of approximately $144.6 million of income tax
benefit. The Company adopted FAS 106 on a worldwide basis; however, costs
associated with subsidiaries outside of the United States are insignificant.
The Company's U.S. subsidiaries provide health care and certain other
benefits to substantially all retired employees, their covered dependents, and
beneficiaries. Generally, employees are eligible for these benefits when one of
the following service/age requirements are met: 30 years and any age; 20 years
and age 55; 5 years and age 62. Net periodic postretirement benefit cost
includes the following components.
<TABLE>
<CAPTION>
1993 1992
----- -----
(IN MILLIONS)
<S> <C> <C>
Service cost................................................... $12.1 $10.9
Interest cost.................................................. 38.6 34.9
Net amortization and deferral.................................. 1.0
----- -----
Net periodic postretirement benefit cost....................... $51.7 $45.8
----- -----
----- -----
</TABLE>
Actuarial assumptions used to determine the accumulated postretirement
benefit obligation include a discount rate of 7.75% for 1993 and 9.0% for 1992.
The assumed health care cost trend was 9.5% for 1993, decreasing gradually to
5.25% by the year 2003 and remaining at that level thereafter. These trend rates
reflect the Company's prior experience and management's expectation that future
rates will decline. Increasing the assumed health care cost trend rates by 1
percentage point in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1993 by $70.4 million and net periodic
postretirement benefit cost for 1993 by $8.5 million. All gains and losses are
recognized over the average remaining service period of active plan
participants. The Company's postretirement healthcare plans currently are not
funded.
The following table sets forth the plans' combined status with the amount
included in the consolidated balance sheet at year-end.
<TABLE>
<CAPTION>
1993 1992
------ ------
(IN MILLIONS)
<S> <C> <C>
Accumulated benefit obligation:
Retirees................................................... $251.7 $211.2
Active plan participants................................... 265.0 227.9
------ ------
516.7 439.1
Unrecognized experience loss................................. (47.2) (14.3)
Unrecognized prior service cost.............................. (0.5)
------ ------
Accrued postretirement benefit cost.......................... $469.0 $424.8
------ ------
------ ------
</TABLE>
NOTE 10 -- INCOME TAXES
Effective January 1, 1992, the Company adopted FAS 109, "Accounting for
Income Taxes." This standard requires the use of the asset and liability
approach for financial accounting and reporting of income taxes. The Company
previously accounted for income taxes in conformity with FAS 96. The effect of
the accounting change was not material except for allowing recognition of the
tax benefit associated with the
F-12
<PAGE> 27
KELLOGG COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
cumulative effect of adopting FAS 106 (refer to Note 9). The following table
summarizes the provision for U.S. federal, state, and foreign taxes on income.
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Earnings before income taxes and cumulative effect of
accounting change:
United States................................................ $ 703.3 $ 727.3 $ 626.0
Foreign...................................................... 330.8 343.1 358.2
-------- -------- --------
$1,034.1 $1,070.4 $ 984.2
-------- -------- --------
-------- -------- --------
Income taxes:
Currently payable:
Federal................................................... $ 233.0 $ 226.8 $ 191.0
State..................................................... 38.0 27.8 26.8
Foreign................................................... 104.7 132.9 136.1
-------- -------- --------
375.7 387.5 353.9
-------- -------- --------
Deferred:
Federal................................................... (19.4) (4.2) 7.9
State..................................................... (2.2) (1.0) 2.0
Foreign................................................... (0.7) 5.3 14.4
-------- -------- --------
(22.3) 0.1 24.3
-------- -------- --------
Total income taxes...................................... $ 353.4 $ 387.6 $ 378.2
-------- -------- --------
-------- -------- --------
</TABLE>
The difference between the U.S. federal statutory tax rate and the
Company's effective rate is as follows.
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
U.S. statutory rate....................................................... 35.0% 34.0% 34.0%
Foreign rates varying from 35%............................................ (1.5) 1.2 1.9
State income taxes, net of federal benefit................................ 2.2 1.7 1.9
Other..................................................................... (1.5) (0.7) 0.6
---- ---- ----
Effective income tax rate.......................................... 34.2% 36.2% 38.4%
---- ---- ----
---- ---- ----
</TABLE>
F-13
<PAGE> 28
KELLOGG COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The deferred tax assets and deferred tax liabilities recorded on the
balance sheet as of year-end are as follows.
<TABLE>
<CAPTION>
DEFERRED TAX DEFERRED TAX
ASSETS LIABILITIES
---------------- ----------------
1993 1992 1993 1992
------ ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Current:
Promotion and advertising................................. $ 53.4 $ 34.1
Wages and payroll taxes................................... 10.7 10.8
Pension................................................... $ 9.0 $ 10.7
Health and postretirement benefits........................ 13.0
State and property taxes.................................. 9.6 7.8 6.8 6.6
Other..................................................... 17.8 26.8 4.8 4.4
------ ------ ------ ------
104.5 79.5 20.6 21.7
------ ------ ------ ------
Noncurrent:
Depreciation and asset disposals.......................... 12.1 304.5 302.9
Postretirement benefits................................... 157.4 155.1 13.8
Capitalized interest...................................... 27.1 26.9
State taxes............................................... 8.0 5.3 15.7
Other..................................................... 6.2 7.6 13.1 7.1
------ ------ ------ ------
183.7 168.0 358.5 352.6
------ ------ ------ ------
Total deferred taxes................................... $288.2 $247.5 $379.1 $374.3
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
At December 31, 1993, $1,145 million of foreign subsidiary earnings was
considered permanently invested in those businesses. Accordingly, U.S. income
taxes have not been provided for such earnings. If all these earnings were
remitted, foreign withholding taxes would amount to $54 million.
Cash paid for income taxes was as follows (in millions): 1993 - $425; 1992
- -$361; 1991 - $334.
NOTE 11 -- FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATION
The Company enters into foreign exchange contracts to hedge against the
adverse impacts of fluctuations of foreign currency-denominated receivables,
payables, and other commitments. Foreign exchange contracts generally have
maturities of six months or less and are entered into with major international
financial institutions. The Company's risk in these transactions is the cost of
replacing, at current market rates, these contracts in the event of default by
the institutions. Management believes that the risk of such losses is remote. At
December 31, 1993 and 1992, the notional amounts of open forward exchange
contracts and other financial market instruments were $301 million and $168
million, respectively.
Financial instruments which potentially subject the Company to
concentrations of credit risk are primarily cash and temporary investments and
accounts receivable. The Company places its investments in highly rated
financial institutions and investment grade short-term debt instruments, and
limits the amount of credit exposure to any one entity. Concentrations of credit
risk with respect to accounts receivable are limited due to the large number of
customers, generally short payment terms, and their dispersion across geographic
areas.
F-14
<PAGE> 29
KELLOGG COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 12 -- QUARTERLY FINANCIAL DATA (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NET SALES GROSS PROFIT
-------------------- --------------------
1993 1992 1993 1992
-------- -------- -------- --------
<S> <C> <C> <C> <C>
First................................................. $1,518.4 $1,515.1 $ 793.4 $ 791.0
Second................................................ 1,541.6 1,584.0 785.7 838.9
Third................................................. 1,669.2 1,670.7 897.3 874.3
Fourth................................................ 1,566.2 1,420.8 830.0 698.7
-------- -------- -------- --------
$6,295.4 $6,190.6 $3,306.4 $3,202.9
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
EARNINGS BEFORE EARNINGS PER SHARE
CUMULATIVE EFFECT BEFORE CUMULATIVE
OF EFFECT OF
ACCOUNTING CHANGE ACCOUNTING CHANGE
----------------- ----------------------
1993 1992 1993 1992
------ ------ -------- ---------
<S> <C> <C> <C> <C>
First.................................................. $179.2 $191.6 $ .76 $ .80
Second................................................. 142.7 163.6 .62 .68
Third.................................................. 209.3 199.7 .90 .84
Fourth................................................. 149.5 127.9 .66 .54
------ ------ -------- ---------
$680.7 $682.8 $ 2.94 $2.86
------ ------ -------- ---------
------ ------ -------- ---------
</TABLE>
<TABLE>
<CAPTION>
EARNINGS
NET EARNINGS PER SHARE
----------------- ----------------------
1993 1992 1993 1992
------ ------ -------- ---------
<S> <C> <C> <C> <C>
First.................................................. $179.2 ($60.0) $ .76 ($.25)
Second................................................. 142.7 163.6 .62 .68
Third.................................................. 209.3 199.7 .90 .84
Fourth................................................. 149.5 127.9 .66 .54
------ ------ -------- ---------
$680.7 $431.2 $ 2.94 $1.81
------ ------ -------- ---------
------ ------ -------- ---------
</TABLE>
As discussed in Note 9, the Company adopted FAS 106 in the first quarter of
1992.
F-15
<PAGE> 30
KELLOGG COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Dividend payments for the year totaled $1.32 per share, up 10 percent from
1992, marking the 37th consecutive year of increase. The trend of increased
dividends is expected to continue in 1994. The principal market for trading
Kellogg shares is the New York Stock Exchange. The shares are also traded on the
Boston, Cincinnati, Midwest, Pacific, and Philadelphia Stock Exchanges. The
closing price (on the NYSE) on December 31, 1993 was $56 3/4. As of December 31,
1993, there were approximately 29,381 shareholders of record. Dividends paid and
the quarterly price ranges on the New York Stock Exchange during the last two
years are as follows.
<TABLE>
<CAPTION>
QUARTER DIVIDEND HIGH LOW
- ------------------------------------------------------------------- -------- ------ ------
<S> <C> <C> <C>
1993:
Fourth........................................................... $ .34 $61.88 $48.75
Third............................................................ .34 54.88 47.25
Second........................................................... .32 61.00 51.00
First............................................................ .32 67.88 59.38
--------
$ 1.32
--------
--------
1992:
Fourth........................................................... $ .32 $75.38 $65.88
Third............................................................ .32 73.38 62.75
Second........................................................... .28 66.88 54.63
First............................................................ .28 67.00 54.38
--------
$ 1.20
--------
--------
</TABLE>
F-16
<PAGE> 31
KELLOGG COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 13 -- OPERATING SEGMENTS
The Company operates in a single industry -- manufacturing and marketing
convenience food products throughout the world. Information presented below
describes operations by geographic area. Included are the schedules of net sales
and earnings before the cumulative effect of the accounting change for the years
1993, 1992, and 1991, and the related year-end identifiable assets, including
corporate assets that are comprised principally of cash and temporary
investments.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET SALES
(millions) 1993 % CHANGE 1992 % CHANGE 1991 % CHANGE
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
United States...................... $3,783.9 +6 $3,564.9 +5 $3,411.0 +12
% of total....................... 60% 57% 59%
Europe............................. 1,505.9 -8 1,643.6 +14 1,447.0 +9
% of total....................... 24% 27% 25%
Other areas........................ 1,005.6 +2 982.1 +6 928.6 +14
% of total....................... 16% 16% 16%
- -------------------------------------------------------------------------------------------------------------
Consolidated....................... $6,295.4 +2 $6,190.6 +7 $5,786.6 +12
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
EARNINGS BEFORE CUMULATIVE EFFECT
OF
ACCOUNTING CHANGE
(millions) 1993 % CHANGE 1992 % CHANGE 1991 % CHANGE
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
United States...................... $ 452.2 -1 $ 458.4 +18 $ 388.3 +19
% of total....................... 66% 67% 64%
Europe............................. 139.8 -1 141.7 +9 130.1 +20
% of total....................... 21% 21% 22%
Other areas........................ 88.7 +7 82.7 -6 87.6 +26
% of total....................... 13% 12% 14%
- -------------------------------------------------------------------------------------------------------------
Consolidated....................... $ 680.7 -- $ 682.8 +13 $ 606.0 +21
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
IDENTIFIABLE ASSETS
(millions) 1993 % CHANGE 1992 % CHANGE 1991 % CHANGE
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
United States...................... $2,340.4 +13 $2,064.4 +11 $1,859.6 +1
% of total....................... 55% 51% 47%
Europe............................. 1,022.6 -5 1,076.6 +3 1,110.8 +1
% of total....................... 24% 27% 28%
Other areas........................ 766.4 +4 738.4 -4 767.4 +8
% of total....................... 18% 18% 20%
Corporate assets................... 107.7 -21 135.6 -28 188.0 +72
% of total....................... 3% 4% 5%
- -------------------------------------------------------------------------------------------------------------
Consolidated....................... $4,237.1 +6 $4,015.0 +2 $3,925.8 +5
- -------------------------------------------------------------------------------------------------------------
</TABLE>
F-17
<PAGE> 32
FINANCIAL SCHEDULES
SCHEDULE II -- AMOUNTS RECEIVABLE FROM EMPLOYEES
(IN MILLIONS)
<TABLE>
<CAPTION>
Name of Balance, Addi- Collec- Balance, Addi- Collec- Balance, Addi- Collec- Balance,
Debtor 12/31/90 tions tions 12/31/91 tions tions 12/31/92 tions tions 12/31/93
- --------------------- -------- ----- ------- -------- ----- ------- -------- ----- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
D. Brett $0.2 $ 0.2
W. Camstra(1) 0.4 $0.4 $ 0.1 $0.3 $0.3
M. Cook 0.1 0.1
G. Costley(1) 0.5 0.1 0.4 0.1 0.3 0.3
C. Elliott(1) 0.2 0.2 0.2 0.2
G. Franklin 0.2 0.2 0.1 0.1 $ 0.1
C. French 0.1 0.1 0.1
A. Harris $0.1 0.1 0.1
J. Hinton(1) 0.2 0.2 0.2 0.2
P. Horekens $0.1 0.1 0.1
P. Kehoe 0.2 0.1 0.1 0.1
D. Kinnisten 0.1 0.1 0.1 0.1
T. Knowlton(1) 0.2 0.1 0.1 0.1 0.1
W. LaMothe 1.6 0.5 1.1 1.1
A. Langbo(1) 0.7 0.1 0.6 0.1 0.5 0.1 0.4
J. Maisner 0.1 0.1 0.1
T. Mobsby 0.2 0.2 0.2 0.2
B. Norton(2) 0.1 0.1 0.1 0.1
W. Rogers 0.1 0.1
D. Schaller 0.2 0.1 0.1 0.1 0.1
J. Stewart(1) 0.2 0.2 0.2 0.2
</TABLE>
(1) Amounts receivable include certain obligations payable on demand for W.
Camstra, J. Hinton, T. Knowlton, A. Langbo, and J. Stewart. Other amounts
are payable in 120 equal monthly installments. Payments are applied first in
reduction of interest, secondly in reduction of principal. Interest accrues
at 7.11%.
(2) Interest of $7,000 due annually, principal of $100,000 due in 1997; 7%
interest.
S-1
<PAGE> 33
SCHEDULE V - PROPERTY
(IN MILLIONS)
<TABLE>
<CAPTION>
Balance, Currency Balance,
beginning Additions Retire- translation end of
Classification of year at cost ments adjustments year
- --------------------------------------- --------- --------- ------- ----------- --------
<S> <C> <C> <C> <C> <C>
1993:
Land $ 40.5 $ 2.3 $ 1.1 $ (1.1) $ 40.6
Buildings 1,021.2 72.1 10.8 (16.8) 1,065.7
Machinery and equipment 2,629.4 366.8 94.9 (43.7) 2,857.6
Construction in progress 302.6 8.5 (2.5) 308.6
--------- --------- ------- ----------- --------
Totals $ 3,993.7 $ 449.7 $ 106.8 ($ 64.1) $4,272.5
--------- --------- ------- ----------- --------
--------- --------- ------- ----------- --------
1992:
Land $ 40.4 $ 3.0 $ 0.3 $ (2.6) $ 40.5
Buildings 1,045.5 63.7 15.6 (72.4) 1,021.2
Machinery and equipment 2,635.5 255.7 111.4 (150.4) 2,629.4
Construction in progress 168.3 151.2 (16.9) 302.6
--------- --------- ------- ----------- --------
Totals $ 3,889.7 $ 473.6 $ 127.3 ($242.3) $3,993.7
--------- --------- ------- ----------- --------
--------- --------- ------- ----------- --------
1991:
Land $ 41.0 $ 0.8 $ 0.2 $ 40.4
Buildings 1,026.9 $ 68.7 23.8 (26.3) 1,045.5
Machinery and equipment 2,462.8 481.1 46.7 (261.7) 2,635.5
Construction in progress 141.3 (216.4) 243.4 168.3
--------- --------- ------- ----------- --------
Totals $ 3,672.0 $ 333.4 $ 71.3 ($ 44.4) $3,889.7
--------- --------- ------- ----------- --------
--------- --------- ------- ----------- --------
</TABLE>
The net change in construction in progress is reflected in additions at cost.
Transfers of completed construction are included in additions of other
classifications.
Depreciation is computed at annual rates averaging approximately 4% for
buildings and 9% for machinery.
S-2
<PAGE> 34
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY
(IN MILLIONS)
<TABLE>
<CAPTION>
Balance, Currency Balance,
beginning Additions Retire- translation end of
Classification of year at cost ments adjustments year
- -------------------------------- --------- --------- ------- ----------- --------
<S> <C> <C> <C> <C> <C>
1993:
Buildings $ 267.7 $ 41.1 $ 2.8 ($4.2) $ 301.8
Machinery and equipment 1,063.3 224.1 66.3 (18.8) 1,202.3
--------- --------- ------- ----------- --------
Totals $ 1,331.0 $ 265.2 $69.1 ($23.0) $1,504.1
--------- --------- ------- ----------- --------
--------- --------- ------- ----------- --------
1992:
Buildings $ 248.9 $ 37.2 $ 4.9 ($13.5) $ 267.7
Machinery and equipment 994.3 194.3 62.9 (62.4) 1,063.3
--------- --------- ------- ----------- --------
Totals $ 1,243.2 $ 231.5 $67.8 ($ 75.9) $1,331.0
--------- --------- ------- ----------- --------
--------- --------- ------- ----------- --------
1991:
Buildings $ 217.1 $ 36.2 $ 4.0 ($0.4) $ 248.9
Machinery and equipment 859.5 186.6 37.5 (14.3) 994.3
--------- --------- ------- ----------- --------
Totals $ 1,076.6 $ 222.8 $41.5 ($14.7) $1,243.2
--------- --------- ------- ----------- --------
--------- --------- ------- ----------- --------
</TABLE>
SCHEDULE VIII - VALUATION RESERVE
(IN MILLIONS)
<TABLE>
<CAPTION>
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Balance at January 1 $ 6.2 $ 5.8 $ 4.8
Addition charged to costs and expenses 0.9 2.4 2.3
Doubtful accounts charged to reserves 0.7 1.0 1.3
Currency translation adjustments (0.4) (1.0) 0.0
----- ----- -----
Balance at December 31 $ 6.0 $ 6.2 $ 5.8
----- ----- -----
----- ----- -----
</TABLE>
S-3
<PAGE> 35
SCHEDULE IX - SHORT-TERM BORROWINGS
(IN MILLIONS)
<TABLE>
<CAPTION>
Weighted
Maximum Average average
Weighted amount amount interest
Balance average outstanding outstanding rate
Category of aggregate at end interest during the during the during the
short-term borrowings (1) of year rate year year (2) year (3)
- ----------------------------------- ------- -------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1993:
Notes payable to banks $ 82.4 6% $ 129.5 $ 112.4 7%
Commercial paper $ 304.3 3% $ 511.1 $ 307.7 3%
1992:
Notes payable to banks $ 110.2 8% $ 211.9 $ 132.3 7%
Commercial paper $ 99.7 3% $ 324.6 $ 130.6 4%
1991:
Notes payable to banks $ 98.6 7% $ 208.7 $ 187.5 8%
Commercial paper $ 89.8 5% $ 254.5 $ 132.8 6%
</TABLE>
(1) Commercial paper is generally issued for a maximum of 90 days with interest
at prevailing market rates. Notes payable at banks represent short-term
borrowings and foreign overdraft facilities which have varying interest
rates.
(2) Calculated on month-end outstanding balances during the year.
(3) Average amount outstanding during the year divided into actual interest
expense incurred.
SCHEDULE X - SUPPLEMENTARY EARNINGS STATEMENT INFORMATION
(IN MILLIONS)
<TABLE>
<CAPTION>
Charged to costs and expenses in 1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Maintenance and repairs $252.6 $244.9 $248.2
Depreciation of property $265.2 $231.5 $222.8
Advertising costs $772.4 $782.3 $708.3
</TABLE>
S-4
<PAGE> 36
EXHIBIT INDEX
<TABLE>
<CAPTION>
ELECTRONIC(E)
PAPER(P)
INCORP.BY
EXHIBIT NO. DESCRIPTION REF.(IBRF)
<C> <S> <C>
3.01 Restated Certificate of Incorporation of Kellogg Company, as IBRF
amended, incorporated by reference to Exhibit 3.01 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991, Commission file number 1-4171.
3.02 Bylaws of Kellogg Company, as amended. E
4.01 Indenture, dated as of March 1, 1988, between the Company and IBRF
Bankers Trust Company, incorporated by reference to Exhibit 4(a)
to the Company's Registration Statement on Form S-3, Commission
file number 33-20731.
4.02 Form of Debt Security, incorporated by reference to Exhibit 4(d) IBRF
to the Company's Registration Statement on Form S-3, Commission
file number 33-20731.
4.03 Supplemental Indenture, dated January 30, 1989, between the IBRF
Company and Bankers Trust Company, incorporated by reference to
Exhibit B to the Company's Current Report on Form 8-K, Commission
file number 1-4171, dated January 31, 1989.
4.04 Instrument of Resignation, Acceptance and Appointment, dated as IBRF
of January 31, 1989, between the Company, Bankers Trust Company
and NBD Bank, N.A. (formerly known as National Bank of Detroit),
incorporated by reference to Exhibit A to the Company's Current
Report on Form 8-K, Commission file number 1-4171, dated January
31, 1989.
4.05 Agency Agreement, dated as of January 31, 1989, between NBD Bank, IBRF
N.A. (formerly known as National Bank of Detroit) and Bankers
Trust Company, incorporated by reference to Exhibit C to the
Company's Current Report on Form 8-K, Commission file number
1-4171, dated January 31, 1989.
10.01 Employment Agreements between the Company and C. W. Elliott, made IBRF
and entered into as of January 30, 1987, incorporated by
reference to Exhibit 10.02 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1987, Commission file
number 1-4171.*
10.02 Kellogg Company Excess Benefit Retirement Plan, incorporated by IBRF
reference to Exhibit 10.01 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1983, Commission file
number 1-4171.*
10.03 Kellogg Company Supplemental Retirement Plan, incorporated by IBRF
reference to Exhibit 10.05 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1990, Commission file
number 1-4171.*
10.04 Kellogg Company Book Value Unit/Share Incentive Plan, IBRF
incorporated by reference to Exhibit 10.02 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1983, Commission file number 1-4171.*
10.05 Kellogg Company 1982 Stock Option Plan, as amended on December 7, IBRF
1990, incorporated by reference to Exhibit 10.07 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1990, Commission file number 1-4171.*
</TABLE>
<PAGE> 37
<TABLE>
<CAPTION>
ELECTRONIC(E)
PAPER(P)
INCORP.BY
EXHIBIT NO. DESCRIPTION REF.(IBRF)
<C> <S> <C>
10.06 Kellogg Company International Retirement Plan, incorporated by IBRF
reference to Exhibit 10.05 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1984, Commission file
number 1-4171.*
10.07 Kellogg Company Executive Survivor Income Plan, incorporated by IBRF
reference to Exhibit 10.06 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1985, Commission file
number 1-4171.*
10.08 Kellogg Company Key Executive Benefits Plan, incorporated by IBRF
reference to Exhibit 10.09 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1991, Commission file
number 1-4171.*
10.09 Kellogg Company Key Employee Long Term Incentive Plan, IBRF
incorporated by reference to Exhibit 10.10 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1991, Commission file number 1-4171.*
10.10 Deferred Compensation Plan for Non-Employee Directors.* E
21.01 Domestic and Foreign Subsidiaries of the Company, incorporated by IBRF
reference to Exhibit 22.01 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1991, Commission file
number 1-4171.
23.01 Consent of Price Waterhouse. E
24.01 Powers of Attorney authorizing Richard M. Clark to execute the E
Company's Form 10-K Annual Report for the fiscal year ended
December 31, 1993 on behalf of the Board of Directors, and each
of them.
99.01 Kellogg Company American Federation of Grain Millers Savings and P**
Investment Plan Form 11-K Annual Report for the fiscal year ended
October 31, 1993.
99.02 Kellogg Company Salaried Savings and Investment Plan Form 11-K P**
Annual Report for the fiscal year ended October 31, 1993.
</TABLE>
*A management contract or compensatory plan required to be filed by Item 14(c)
of this report.
**Required plan financial statements are filed under cover of Form SE pursuant
to Regulation S-T Item 311(c).
<PAGE> 1
EXHIBIT 3.02
Kellogg Company Bylaws
As Amended
<PAGE> 2
KELLOGG COMPANY
BYLAWS
(AS AMENDED UP TO AND INCLUDING MARCH 16, 1990)
ARTICLE I
OFFICES
SECTION 1. OFFICES. The principal office shall
be in the City of Wilmington, County of New Castle, State of Delaware, and the
name of the resident agent in charge thereof is The Corporation Trust Company.
The Corporation may also have an office in the City of Battle
Creek, State of Michigan, and also offices at such other places as the Board of
Directors may, from time-to-time, appoint, or the business of this Corporation
may require.
ARTICLE II
STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. The Annual Meeting of
Stockholders of this Corporation may be held either within or without the State
of Delaware at a time and place to be designated by the Board of Directors.
Notice of such Annual Meeting shall be given by the Secretary, by mailing a
written or printed notice stating the place, day and hour of the meeting to
each stockholder of record entitled to vote at such meeting, at least ten (10)
days prior to the date of such meeting, at such stockholder's last known post
office address as the same appears upon the books of this Corporation. The
Chairman of the Board, or in such officer's absence or incapacity, a Vice
Chairman, or in such officer's absence or incapacity, the President and
Secretary of this Corporation, shall act as president and secretary,
respectively, of each stockholders' meeting unless it shall be otherwise
determined at the meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of the
stockholders may be held either within or without the State of Delaware and may
be called (i) by such number of Directors constituting not less than two-thirds
of the total number of directorships fixed by a resolution adopted by the Board
of Directors pursuant to Article III, Section 1 of these Bylaws, whether or not
such directorships are filled at the time (such total number of directorships
hereinafter referred to as the "Full Board"), or by the Chairman of the Board,
or in such officer's absence or incapacity, by a Vice Chairman, or in such
officer's absence or incapacity, by the President, by mailing a written or
printed notice at least ten (10) days prior to the date of such meeting to each
stockholder of record entitled to vote at such meeting (at such
<PAGE> 3
2
stockholder's last known post office address as the same appears on the books
of this Corporation), or (ii) by any stockholder or stockholders holding not
less than one-third of the voting power of all of the outstanding shares of
capital stock of this Corporation entitled to vote at such meeting, voting
together as a single class, by mailing a written or printed notice at least
thirty (30) days prior to the date of such meeting to each stockholder of
record entitled to vote at such meeting. The notice required by clause (i) or
(ii) of the immediately preceding sentence shall state the place, date and hour
of such meeting and any and all purposes for which the meeting is called.
SECTION 3. VOTES. Each stockholder shall be entitled
to one (1) vote for each share of capital stock held on all matters to be voted
upon. Each stockholder entitled to vote shall be entitled to vote in person or
by proxy, but no proxy shall be voted on after three (3) years from its date
unless said proxy provides for a longer period. Except where the transfer
books of this Corporation shall have been closed, or a date shall have been
fixed as a record date for the determination of stockholders entitled to vote,
no share of stock shall be voted on at any election for Directors which shall
have been transferred on the books of this Corporation within twenty (20) days
next preceding such election of Directors.
SECTION 4. QUORUM. At any meeting at which the
holders of capital stock shall be entitled to vote for the election of
Directors or for other purposes, the holders of a majority of the outstanding
shares of capital stock entitled to vote at such meeting, and present in person
or by proxy, shall constitute a quorum for the purpose of electing Directors or
for such other purposes.
In the absence of a quorum of holders of capital stock at any
meeting of stockholders at which they are entitled to vote, the holders of
capital stock present at such meeting may adjourn the meeting to a future day
for such vote as the holders of capital stock are entitled and wish to take
without any notice other than an announcement at the meeting. At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted by stockholders which they might have transacted at the meeting as
originally notified.
SECTION 5. STOCKHOLDERS LISTS. A complete list of
the stockholders entitled to vote at the ensuing election, arranged in
alphabetical order, with the residence of each and the number of voting shares
held by each, shall be prepared by the Secretary and filed in the office where
the election is to be held at least ten (10) days before every election, and
shall, at all times, during the usual hours for business, and during the whole
time of said election, and at the place thereof, be open to the examination of
any stockholder entitled to vote thereat.
SECTION 6. CONSENTS TO CORPORATE ACTION. The record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting shall be fixed by the Board of Directors.
Any stockholder seeking to have the stockholders authorize or take corporate
action by written consent without a meeting shall, by written notice, request
the Board of Directors to fix a record date. The Board of Directors shall,
upon receipt of such a request, fix a record date, which shall be not later
than the 15th day following receipt of the request, or such later date as may
be specified by such stockholder. If
<PAGE> 4
3
the record date falls on a Saturday, Sunday or legal holiday, the record date
shall be the day next following which is not a Saturday, Sunday or legal
holiday.
Subject to the immediately following paragraph, the date for
determining if an action has been consented to by the holder or holders of
shares of outstanding stock of this Corporation having the requisite voting
power to authorize or take the action specified therein (the "Consent Date")
shall be the 31st day after the date on which materials soliciting consents are
mailed to stockholders of this Corporation or, if no such materials are
required to be mailed under applicable law, the 31st day following the record
date fixed by the Board pursuant to the immediately preceding paragraph. If
the Consent Date falls on a Saturday, Sunday or legal holiday, the Consent Date
shall be the day next following which is not a Saturday, Sunday or legal
holiday.
In the event of the delivery to this Corporation of a written
consent or consents purporting to authorize or take corporate action and/or
related revocations (each such written consent and related revocation
hereinafter referred to in this Section 6 as a "Consent"), the Secretary of
this Corporation shall provide for the safekeeping of such Consent and shall
conduct such reasonable investigation as the Secretary deems necessary or
appropriate for the purpose of ascertaining the validity of such Consent and
all matters incident thereto, including, without limitation, whether the
holders of shares having the requisite voting power to authorize or take the
action specified in the Consent have given consent; provided, that if the
corporate action to which the Consent relates is the removal or replacement of
one or more members of the Board of Directors, the Secretary of this
Corporation shall designate two persons, who shall not be members of the Board,
to serve as inspectors with respect to such Consent, and such inspectors shall
discharge the functions of the Secretary of this Corporation under this
paragraph. If, after such investigation, the Secretary, or such inspectors, as
the case may be, shall determine that the Consent is valid, that fact shall be
certified on the records of this Corporation kept for the purpose of recording
the proceedings of meetings of the stockholders, and the Consent shall be filed
with such records, at which time the Consent shall become effective as
stockholder action; provided, that neither the Secretary, nor such inspectors,
as the case may be, shall make such certification or filing, and the Consent
shall not become effective as stockholder action, until the final termination,
without the availability of any further appeal, of any proceedings which may
have been commenced in the Court of Chancery of the State of Delaware, or any
other court of competent jurisdiction, for an adjudication of any legal issues
incident to determining the validity of the Consent, unless and until such
Court has determined that such proceedings are not being pursued expeditiously
and in good faith. In conducting the investigation required by this paragraph,
the Secretary, or such inspectors, as the case may be, may, at the expense of
this Corporation, retain special legal counsel and any other necessary or
appropriate professional advisors and such other personnel, as they may deem
necessary or appropriate, to assist them.
To the extent that this Section 6 is inconsistent with this
Corporation's Restated Certificate of Incorporation, as amended, the provisions
of this Corporation's Restated Certificate of Incorporation, as amended, will
prevail.
<PAGE> 5
4
ARTICLE III
DIRECTORS
SECTION 1. MEMBERSHIP. The number of Directors of
this Corporation shall be not less than twelve (12) nor more than eighteen
(18), the exact number of Directors to be fixed from time-to-time by a
Resolution adopted by not less than two-thirds of the full Board (as defined in
Article NINTH of the Restated Certificate of Incorporation). Directors shall
be divided into three classes, as nearly equal in number as possible, with a
term of office of three years, one class to expire each year. At each Annual
Meeting of Stockholders, the class of Directors whose terms of office shall
expire at such time shall be elected by a plurality vote by ballot to hold
office for terms expiring at the third Annual Meeting of Stockholders following
their election and until a successor shall be elected and shall qualify.
Nominations for the election of Directors may be made by the
Board of Directors or a committee appointed by the Board of Directors or by any
stockholder entitled to vote in the election of Directors at the particular
meeting at which the nomination is to occur. However, any stockholder entitled
to vote at such meeting may nominate one or more persons for election as
Directors only in person or by proxy at such meeting and only if written notice
of such stockholder's intent to make such nomination or nominations has been
delivered personally to, or otherwise received by, the Secretary of this
Corporation at least thirty (30) days, but no more than ninety (90) days prior
to the anniversary date of the record date for determination of stockholders
entitled to vote in the immediately preceding Annual Meeting of Stockholders.
Each such notice shall contain a representation that: (i) the stockholder is,
and will be, on the record date, a beneficial owner or a holder of record of
stock of this Corporation entitled to vote at such meeting; (ii) the
stockholder has, and will have, on the record date, full voting power with
respect to such shares; and (iii) the stockholder intends to appear in person
or by proxy at the meeting to nominate the person or persons specified in the
notice. Additionally, each such notice shall set forth: (a) the name and
address of the stockholder who intends to make the nomination and of the person
or persons to be nominated; (b) a description of all arrangements or
understandings between the stockholder and each proposed nominee, and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (c) the number and
kinds of securities of this Corporation held beneficially or of record by each
proposed nominee; (d) such other information regarding each proposed nominee as
would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission for the initial election
of such proposed nominee for Director; and (e) the consent of each proposed
nominee to serve as a Director if so elected. The presiding officer of the
meeting may refuse to acknowledge the nomination of any person if any of the
information supplied is false or misleading or if any of the foregoing
requirements are not satisfied.
SECTION 2. VACANCIES. Subject to the rights of the
holders of any particular class or series of equity securities of this
Corporation, (i) newly created directorships resulting from any increase in the
total number of authorized Directors may be filled by the affirmative vote of
not less than two-thirds of the Directors then in office, although less than a
quorum, or by a sole remaining Director, at any regular or special meeting
<PAGE> 6
5
of the Board of Directors, or by a plurality vote of the stockholders at any
regular Annual Meeting or Special Meeting of Stockholders, and (ii) any
vacancies on the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
only by the affirmative vote of not less than two-thirds of the Directors then
in office, although less than a quorum, or by a sole remaining Director, at any
regular or special meeting of the Board of Directors.
SECTION 3. PLACE OF MEETINGS. The Directors may hold
their meetings and have one or more offices and keep the books of this
Corporation outside of Delaware at the office of this Corporation, in the City
of Battle Creek, Michigan, or at such other place or places as they may, from
time-to-time, determine.
SECTION 4. REGULAR MEETINGS. In months other than the
month in which the Annual Meeting of Stockholders shall be held, regular
meetings of the Board of Directors shall be held without other notice than this
bylaw, on the fourth Friday of each month, if not a legal holiday, and if a
legal holiday, then on the preceding business day, at such time and place as
the Board of Directors may designate, or, if no such designation shall have
been made, at the executive offices of this Corporation, in the City of Battle
Creek, Michigan, at the hour of 1:30 p.m., local time. A regular meeting of
the Board of Directors shall also be held without other notice than this bylaw,
immediately after, and at the same place as the Annual Meeting of Stockholders.
The Board of Directors may provide, by resolution, the time and place for the
holding of different or additional regular meetings or the cancellation of a
regular meeting(s) without other notice than such resolution.
SECTION 5. SPECIAL MEETINGS. Special meetings of the
Board of Directors, to be held within or without the State of Delaware, may be
called by the Chairman of the Board, or in such officer's absence or
incapacity, by a Vice Chairman, or in such officer's absence or incapacity, by
the President, or in such officer's absence or incapacity, by an Executive Vice
President, or in such officer's absence or incapacity, by not less than six (6)
Directors (provided, that if this Corporation's Restated Certificate of
Incorporation, as amended, provides for the division of the Board of Directors
into three classes, no more than two of such members of the Board of Directors
shall be from the same class), by giving one day's notice thereof in the case
of special meetings called by the Chairman of the Board, a Vice Chairman, the
President or an Executive Vice President, as the case may be, or ten day's
notice thereof in the case of all other special meetings, which notice shall,
in the case of any special meeting, set forth the time and place of the meeting
and be made orally, or in writing, or by telegraph or by telephone, and shall,
in the case of special meetings not called by the Chairman of the Board, a Vice
Chairman, the President or an Executive Vice President, also set forth in
reasonable detail any and all purposes for which the special meeting is called.
SECTION 6. VOTES. Any member of the Board may
require the ayes and noes to be taken on any questions and recorded on the
Minutes.
SECTION 7. QUORUM. Except as herein otherwise
specifically provided, a majority of the number of Directors constituting the
Full Board (as defined in Article II, Section 2) shall constitute a quorum for
the transaction of business.
<PAGE> 7
6
SECTION 8. COMPENSATION OF DIRECTORS. Compensation of
Directors shall be as determined by the Board. Nothing contained herein shall
be construed to preclude any Director from serving this Corporation in any
other capacity and receiving compensation therefor.
SECTION 9. NOTICES. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the call or notice, or waiver of notice of
such meeting, unless specifically required by law, this Corporation's Restated
Certificate of Incorporation, as amended, or these Bylaws.
ARTICLE IV
COMMITTEES
SECTION 1. EXECUTIVE COMMITTEE. There may be an
Executive Committee of two or more Directors, including the Chairman of the
Board, designated by resolution of the Board of Directors. Said Committee may
meet at stated times or on notice to all by any of their own number. During
the intervals between meetings of the Board, the members of such Committee, who
shall be requested to do so, shall advise and aid the officers in all matters
concerning its interests and the management of its business, and generally
perform such duties and exercise such powers as may be directed or delegated by
the Board of Directors from time-to-time. The Board may delegate to such
Committee authority to exercise all powers of the Board, except those powers
specifically excluded from committees by Section 141(c) of the Delaware General
Corporation Law and except the power to authorize the issuance of stock of this
Corporation while the Board is not in session. Vacancies in the membership of
the Committee shall be filled by the Board of Directors at a regular meeting or
at a special meeting called for that purpose.
The Executive Committee may, in its discretion, keep regular
minutes of its proceedings and shall report the same to the Board when
required.
In the absence or disqualification of a member of the
Executive Committee, the member or members of the Executive Committee present
at a meeting and not disqualified from voting, whether or not he, she or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors of the Company to act at the meeting in place of each such absent or
disqualified member.
SECTION 2. AUDIT COMMITTEE. There may be an Audit
Committee of two or more Directors designated by resolution of the Board of
Directors. Said Committee may meet at stated times or on notice to all by any
of its own number. The Committee and its membership shall generally perform
such duties and exercise such powers as may be directed or delegated by the
Board of Directors from time-to-time. Vacancies in the membership of the
Committee shall be filled by the Board of Directors at a regular meeting or at
a special meeting called for that
<PAGE> 8
7
purpose. The Committee may, in its discretion, keep regular minutes of its
proceedings and shall report the same to the Board when required.
SECTION 3. COMPENSATION COMMITTEE. There may be a
Compensation Committee of two or more Directors designated by resolution of the
Board of Directors. Said Committee may meet at stated times or on notice to
all by any of its own number. The Committee and its membership shall generally
perform such duties and exercise such power as may be directed or delegated by
the Board of Directors from time-to-time. Vacancies in the membership of the
Committee shall be filled by the Board of Directors at a regular meeting or at
a special meeting called for that purpose. The Committee may, in its
discretion, keep regular minutes of its proceedings and shall report the same
to the Board when required.
SECTION 4. EMPLOYEE BENEFITS ADVISORY COMMITTEE.
There may be an Employee Benefits Advisory Committee of two or more Directors
designated by resolution of the Board of Directors. Said Committee may meet at
stated times or on notice to all by any of its own number. The Committee and
its membership shall generally perform such duties and exercise such powers as
may be directed or delegated by the Board of Directors from time-to-time.
Vacancies in the membership of the Committee shall be filled by the Board of
Directors at a regular meeting or at a special meeting called for that purpose.
The Committee may, in its discretion, keep regular minutes of its proceedings
and shall report the same to the Board when required.
SECTION 5. FINANCE COMMITTEE. There may be a Finance
Committee of two or more Directors designated by resolution of the Board of
Directors. Said Committee may meet at stated times or on notice to all by any
of its own number. The Committee and its membership shall generally perform
such duties and exercise such powers as may be directed or delegated by the
Board of Directors from time-to-time. Vacancies in the membership of the
Committee shall be filled by the Board of Directors at a regular meeting or at
a special meeting called for that purpose. The Committee may, in its
discretion, keep regular minutes of its proceedings and shall report the same
to the Board when required.
SECTION 6. NOMINATING COMMITTEE. There may be a
Nominating Committee of two or more Directors designated by resolution of the
Board of Directors. Said Committee may meet at stated times or on notice to
all by any of its own number. The Committee and its membership shall generally
perform such duties and exercise such powers as may be directed or delegated by
the Board of Directors from time-to-time. Vacancies in the membership of the
Committee shall be filled by the Board of Directors at a regular meeting or at
a special meeting called for that purpose. The Committee may, in its
discretion, keep regular minutes of its proceedings and shall report the same
to the Board when required.
SECTION 7. COMMITTEE ON SOCIAL RESPONSIBILITY. There
may be a Committee on Social Responsibility of two or more Directors designated
by resolution of the Board of Directors. Said Committee may meet at stated
times or on notice to all by any of its own number. The Committee and its
membership shall generally perform such duties and exercise such powers as may
be directed or delegated by the Board of Directors from time-to-time.
Vacancies in the membership of the Committee shall be filled by the Board of
Directors at a regular meeting or at a special meeting called for that purpose.
The Committee may, in its
<PAGE> 9
8
discretion, keep regular minutes of its proceedings and shall report the same
to the Board when required.
SECTION 8. OTHER COMMITTEES. The Board of Directors,
by resolution, may dissolve existing committees and may designate additional
committees, each of which shall consist of not less than two Directors. Each
such additional committee may meet at stated times or on notice to all by any
of its own number. Each such additional committee and its membership shall
generally perform such duties and exercise such powers as may be directed or
delegated by the Board of Directors from time-to-time. Vacancies in the
membership of any such additional committee shall be filled by the Board of
Directors at a regular meeting or at a special meeting called for that purpose.
Any such additional committee may, in its discretion, keep regular minutes of
its proceedings and shall report the same to the Board of Directors when
required.
ARTICLE V
OFFICERS
SECTION 1. OFFICERS. The officers of this
Corporation shall be elected by the Board of Directors and shall consist of the
Chairman of the Board (if designated as the Chief Executive Officer by the
Board), the President, one or more Vice Presidents, a Secretary, a Controller,
one or more Assistant Secretaries, a Treasurer, one or more Assistant
Treasurers, and such other officers as shall, from time-to-time, be provided
by the Board of Directors, who shall perform the usual duties pertaining to
their respective offices, except as otherwise specifically provided herein or
by resolution of the Board of Directors. One person may hold more than one
office except that no person shall be both the President and a Vice President.
The Board of Directors may also elect one or more Vice Chairmen of the Board.
SECTION 2. QUALIFICATIONS. No person shall be
eligible for the Office of Chairman of the Board who is not a Director.
Persons who are not Directors or who are not stockholders shall be eligible for
all other offices of this Corporation.
SECTION 3. TERM OF OFFICE. The officers shall be
elected at the first regular meeting of the Board of Directors after the Annual
Meeting of Stockholders and shall hold office for one year and until their
respective successors have been duly elected and qualified; provided, however,
that all officers of this Corporation shall be subject to removal at any time
by an affirmative vote of Directors constituting not less than a majority of
the Full Board (as defined in Article II, Section 2).
SECTION 4. BONDS. The Directors may, by resolution,
require any or all of the officers or employees to give bond to this
Corporation with good and sufficient surety conditioned upon the faithful
performance of their respective duties and offices.
<PAGE> 10
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SECTION 5. CHAIRMAN OF THE BOARD AND VICE CHAIRMEN.
The Chairman of the Board, if one is elected, shall, in addition to his duties
as a Director of this Corporation, preside as Chairman at all meetings of the
stockholders, of the Board of Directors, and of the Executive Committee. A
Vice Chairman (if one or more is elected, in the order designated by the Board
of Directors or the Chief Executive Officer) shall, in the absence of the
Chairman of the Board, perform the duties of the Chairman of the Board provided
for in this Section.
SECTION 6. CHIEF EXECUTIVE OFFICER; PRESIDENT. The
Chairman of the Board, if so designated by the Board of Directors, shall be the
Chief Executive Officer of this Corporation and shall have general supervision
of the affairs of this Corporation, being responsible to the Board of
Directors. The President shall have general supervision of the operations of
this Corporation subject to the supervision of the Chairman of the Board,
except that, if the Chairman of the Board shall not also have been designated
Chief Executive Officer, or in the absence or incapacity of the Chairman of the
Board who has been so designated, the President shall be the Chief Executive
Officer of this Corporation and have general supervision of the affairs of this
Corporation, being responsible to the Board of Directors. The President shall,
in the absence or incapacity of the Chairman and Vice Chairman of the Board,
perform the functions of the Chairman of the Board set forth in Section 5 of
this Article V.
SECTION 7. VICE PRESIDENTS. One or more of the Vice
Presidents elected may be designated as Executive Vice Presidents. One or more
of the Vice Presidents elected may be designated as Senior Vice Presidents.
Each of the Vice Presidents, including the Executive Vice Presidents and the
Senior Vice Presidents, shall perform such duties as may be prescribed by the
Board of Directors or the Chief Executive Officer from time-to-time. In the
absence or disability to act of the President, any of the Executive Vice
Presidents designated by the Chief Executive Officer or the Board of Directors
shall possess all the powers and may perform any of the duties of the Office of
the President. In the absence or disability to act of the President and all of
the Executive Vice Presidents, such of the Vice Presidents designated by the
Chief Executive Officer or the Board of Directors, or in the absence or
incapacity of those designated Vice Presidents, any other person(s) designated
by the Chief Executive Officer shall possess all of the powers and may perform
all of the duties of the President.
SECTION 8. SECRETARY. The Secretary, or in his or her
absence, the Assistant Secretary, shall issue notices for meetings, shall keep
their minutes, shall have charge of the corporate seal and corporate Minute
Books, and shall make such reports and perform such other duties as are
incident to his or her office or as are properly required of him or her by the
Chief Executive Officer or the Board of Directors.
SECTION 9. TREASURER. The Treasurer shall have
custody of all monies and securities of this Corporation. He or she shall sign
or countersign such instruments as require his or her signature and shall
perform all duties incident to his or her office or that are properly required
of him or her by the Board of Directors or the Chief Executive Officer. He or
she shall give bond for the faithful performance of his or her duties in such
sum and with such sureties as may be required of him or her by the Board of
Directors or the Chief Executive Officer.
<PAGE> 11
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SECTION 10. CONTROLLER. The Controller shall have
custody of all the accounting records of this Corporation and shall keep
regular books of account. He or she shall sign or countersign such instruments
as require his or her signature and shall perform all duties incident to this
office or that are properly required of him or her by the Board of Directors,
the Chief Executive Officer or the President.
SECTION 11. DELEGATION. In case of the absence of any
officer of this Corporation or for any other reason which may seem sufficient
to the Board of Directors, the Board of Directors or the Chief Executive
Officer may delegate the powers and duties of any such officer to any Director
for the time being.
ARTICLE VI
EXECUTION OF CHECKS AND OTHER INSTRUMENTS
SECTION 1. The funds of this Corporation shall be
deposited in such bank or banks of deposit as shall be designated or authorized
by the Board of Directors and in the name of Kellogg Company or such other name
as the Board of Directors may designate. All checks, drafts or orders drawn
against funds on deposit in any such bank shall be signed by such person or
persons as may be authorized by the Board of Directors by a proper resolution
spread of record.
SECTION 2. All other instruments in writing involving
the payment of money or of credit or liability of this Corporation, such as
deeds, bonds, contracts, etc., shall be signed in the name of this Corporation
by the Chairman of the Board, a Vice Chairman, the President, a Vice President
or by such other person or persons as may be authorized by the Board and may be
attested, and the corporate seal affixed thereto by either the Secretary or an
Assistant Secretary. In the absence of the Secretary and Assistant Secretary,
or their inability to act, the Treasurer or Assistant Treasurer may affix the
seal.
The Board of Directors, the Executive Committee or the Chief
Executive Officer may authorize the execution of contracts and other
instruments by such other officers, agents and employees as may be selected by
them from time-to-time and with such limitations and restrictions as the
authorization may require.
ARTICLE VII
CERTIFICATES OF STOCK
SECTION 1. CERTIFICATES OF STOCK. Certificates of
stock shall be signed by the Chairman of the Board, the President or a Vice
President, and by the Secretary or an Assistant Secretary of this Corporation,
both of whose signatures may be a facsimile, and
<PAGE> 12
11
shall be numbered and entered in books of this Corporation as they are issued.
They shall, in all respects, conform to the requirements of the law of the
State of Delaware, and shall be otherwise in such form as may be prescribed by
the Board of Directors.
SECTION 2. LOST CERTIFICATES. If any person claims a
certificate is lost or destroyed, a new certificate may be issued of the same
tenor and for the same number of shares as the one alleged to be lost or
destroyed, upon compliance with any terms and conditions which this Corporation
may prescribe.
ARTICLE VIII
TRANSFER OF SHARES
SECTION 1. TRANSFER OF SHARES. Shares of the capital
stock of this Corporation shall be transferred on the books of this Corporation
by the owner thereof in person or by his or her attorney upon the surrender and
cancellation of certificates for a like number of shares. Upon presentation
and surrender of a certificate properly endorsed and payment of all taxes
thereon, the transferee shall be entitled to a new certificate or certificates
in place thereof.
SECTION 2. REGISTRATION. One or more Transfer Agents
and Registrars of the Company's stock may be appointed by resolution of the
Board of Directors for the transfer and registration of any class or classes of
stock of this Corporation, and upon such appointment, no certificate for any
such class of stock shall be issued or be valid for any purpose until
countersigned by one such Transfer Agent and registered and countersigned by
one such Registrar; provided, however, that the countersignature of such
Transfer Agent may be a facsimile if such certificate is countersigned manually
by a Registrar who shall be other than this Corporation or its employee.
SECTION 3. CLOSING OF TRANSFER BOOKS. The Board of
Directors shall have the power to close the stock transfer books of this
Corporation for a period not exceeding sixty (60) days preceding the date of
any meeting of stockholders, or the date of payment of any dividend or other
distribution or allotment of any rights, or the effective date of any change,
conversion or exchange of stock, or of any other lawful action; provided,
however, that in lieu of closing the stock transfer books as aforesaid and in
order that this Corporation may determine the stockholders entitled to notice
or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty (60) days before the date of such meeting, nor more than sixty
(60) days prior to any other action, and in such case, such stockholders, and
only such stockholders as shall be stockholders of record on the date so fixed,
shall be entitled to such notice of, and to vote at, such meeting and any
adjournment or adjournments thereof, or to receive payment of such dividend, or
to receive such allotment of rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any stock
<PAGE> 13
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on the books of this Corporation after any such record date fixed as aforesaid.
A determination of stockholders of record entitled to notice of, or to vote at,
a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
SECTION 4. REGISTERED STOCKHOLDERS. The Corporation
shall be entitled to treat the holder of record of any share or shares of stock
as the holder in fact thereof, and accordingly, shall not be bound to recognize
any equitable or other claim to, or interest in, such share on the part of any
other person, whether or not it shall have express or other notice thereof,
save as expressly provided by the laws of Delaware.
ARTICLE IX
CORPORATE SEAL
SECTION 1. CORPORATE SEAL. The corporate seal shall
have inscribed thereon in the center the words "Corporate Seal" and the number
"1922," and in a circle around the margin the words
"Kellogg Company"
"Delaware".
ARTICLE X
DIVIDENDS
SECTION 1. DIVIDENDS. Dividends upon the stock of
this Corporation shall be payable from funds lawfully available therefor at
such times and in such amounts as the Board of Directors, or a Committee
thereof expressly authorized by resolution of the Board of Directors may, from
time-to-time, direct.
ARTICLE XI
FISCAL YEAR
SECTION 1. FISCAL YEAR. The fiscal year of this
Corporation shall begin on the 1st day of January and end on the 31st day of
December of each year.
<PAGE> 14
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ARTICLE XII
INSPECTION OF BOOKS
SECTION 1. INSPECTION OF BOOKS. The Directors shall
determine, from time-to,-time whether, and if allowed, when, and under what
conditions and regulations, the accounts and books of this Corporation (except
such as may, by statute, be specifically open to inspection), or any of them,
shall be open to the inspection of the stockholders, and the stockholders'
rights in this respect are and shall be restricted and limited accordingly.
ARTICLE XIII
ORDER OF BUSINESS
SECTION 1. ORDER OF BUSINESS. At all stockholders'
and Directors' meetings, the order of business shall be as determined by the
presiding officer of the meeting.
ARTICLE XIV
AMENDMENT
SECTION 1. AMENDMENT. Except to the extent otherwise
provided in this Corporation's Restated Certificate of Incorporation, as
amended, these Bylaws shall be subject to alteration, amendment or repeal, and
new bylaws may be adopted (i) by the affirmative vote of the holders of not
less than a majority of the voting power of all of the outstanding shares of
capital stock of this Corporation then entitled to vote generally in the
election of Directors, voting together as a single class, at any regular or
special meeting of the stockholders (but only if notice of the proposed change
be contained in the notice to the stockholders of the proposed action), or (ii)
by the affirmative vote of not less than a majority of the members of the Board
of Directors at any meeting of the Board of Directors at which there is a
quorum present and voting; provided, that in the case of clause (ii), any
alteration, amendment or repeal made with respect to, or the adoption of, a new
bylaw inconsistent with Article II, Section 2 or Section 6, or Article III,
Section 1, Section 2, or Section 5 of this Article XIV, Section 1 of these
Bylaws, shall require the affirmative vote of Directors constituting not less
than two-thirds of the Full Board (as defined in Article II, Section 2).
<PAGE> 15
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ARTICLE XV
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS; INSURANCE
SECTION 1. The Corporation shall indemnify any person
who was or is a party, or is threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
this Corporation), by reason of the fact that he is or was a Director or
officer of this Corporation, is or was serving at the request of this
Corporation as a Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of this Corporation, and, with
respect to any criminal action or proceeding, has no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in, or not opposed to, the best interests of this Corporation,
and, with respect to any criminal action or proceeding, has reasonable cause to
believe that his conduct was unlawful.
SECTION 2. The Corporation shall indemnify any person
who was or is a party, or is threatened to be made a party, to any threatened
pending or completed action or suit by, or in the right of, this Corporation to
procure a judgment in its favor by reason of the fact that he is or was a
Director or officer of this Corporation, or, while a Director or officer of
this Corporation, is or was serving at the request of this Corporation as a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of this
Corporation, and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to this Corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine, upon application, that despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
SECTION 3. The Board of Directors of this Corporation
shall have the power, in its discretion, to cause this Corporation to indemnify
any person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or proceeding referred to in
Sections 1 or 2 of this Article by reason of the fact that (although not a
Director or officer of this Corporation) he is or was an employee or agent of
this Corporation, or is or was serving at the request of this Corporation as a
Director, officer, employee or agent of
<PAGE> 16
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another corporation, partnership, joint venture, trust or other enterprise to
the extent that any such person would have been entitled to be indemnified
under Sections 1 and 2 had he, at all times, been a Director or officer of this
Corporation.
SECTION 4. Any indemnification under Sections 1, 2 or
3 of this Article (unless ordered by a court) shall be made by this Corporation
only as authorized in the specific case upon a determination that
indemnification of the Director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth
in Sections 1 or 2. Such determination shall be made (1) by the Board of
Directors by a majority vote of a quorum consisting of Directors who were not
parties to such action, suit or proceeding, or, (2) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested Directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
SECTION 5. To the extent that a Director, officer,
employee or agent has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections 1, 2 or 3, or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
SECTION 6. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by this Corporation in advance
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by, or on behalf of, the Director, officer, employee or agent to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by this Corporation as authorized in this Article.
SECTION 7. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article, shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may, at any time, be entitled under any bylaw,
agreement, vote of stockholders or disinterested Directors, or otherwise, both
as to action by a person in his official capacity and as to action in another
capacity while holding such office.
SECTION 8. The Board of Directors shall have power to
authorize and direct the purchase and maintenance of insurance on behalf of
itself or any person who is or was a Director, officer, employee or agent of
this Corporation, or is or was serving at the request of this Corporation as a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not this Corporation would have the power to indemnify him against
such liability under the provisions of this Article.
SECTION 9. For purposes of this Article XV, reference
to "this Corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its Directors,
officers and employees or agents, so that any person who is or was a Director,
officer, employee or agent
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of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article XV with respect to
the resulting or surviving corporation as he or she would have with respect to
such constituent corporation if its separate existence had continued.
SECTION 10. For purposes of this Article XV, references
to "enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of this Corporation"
shall include any service as a Director, officer, employee or agent of this
Corporation which imposes duties on, or involves services by, such Director,
officer, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of this Corporation" as referred to
in this Article XV.
SECTION 11. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article, shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a Director, officer, employee or agent, and shall inure to the
benefit of the executors, administrators and other legal representatives and
heirs of such a person.
ARTICLE XVI
MISCELLANY
SECTION 1. The Chief Executive Officer or the Board of
Directors may designate any order of assignment to apply within any specified
group of officers where, as provided in these Bylaws, any such designation is
to be made as to one or more of such officers. In the event that no such
designation is made, the order of assignment within any specified group of
officers will be according to the length of service of each particular officer
in the specified office, with the officer serving the longest term within that
particular office to be assigned first, and in his or her absence or
incapacity, the officer serving the next longest term in that particular office
to be assigned second, and so on.
<PAGE> 1
EXHIBIT 10.10
Kellogg Company
Deferred Compensation Plan for Non-Employee Directors
<PAGE> 2
KELLOGG COMPANY
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
(AS AMENDED AND RESTATED AS OF MAY 21, 1993)
The Chairman of the Board of KELLOGG COMPANY (hereinafter referred to
as the "Company") a corporation with principal office located at One
Kellogg Square, Battle Creek, Michigan 49016-3599, does hereby adopt the
following amendment and restatement to the Deferred Compensation Plan for
Non-Employee Directors:
WHEREAS, the Employer maintains a Deferred Compensation Plan for
Non-Employee Directors (hereinafter sometimes referred to as the "Plan")
for the benefit of its Non-Employee Directors, which Plan was last amended
and restated effective February 26, 1993; and
WHEREAS, under the provisions of Article XIII of the amended and
restated Plan, the Employer retained the right to amend the Plan in any and
all respects at any time and from time to time; and
WHEREAS, the Board of Directors of the Employer, at a meeting duly held
on May 21, 1993, authorized its officers to amend the Plan to provide for a
change in the method of distribution of deferred compensation;
NOW, THEREFORE, the premises considered, the Company's Deferred
Compensation Plan for Non-Employee Directors is hereby amended, effective
May 21, 1993:
I. NAME AND PURPOSE.
The name of this Plan is the Kellogg Company Deferred Compensation Plan
for Non-Employee Directors. Its purpose is to provide non-employee
Directors of the Company with an opportunity to defer compensation
earned as a Director.
II. EFFECTIVE DATE.
The Plan was originally effective on August 1, 1986. This amendment and
restatement shall be effective May 21, 1993.
III. PARTICIPANTS.
Any Director of the Company who is not an employee of the Company or
of a subsidiary of the Company shall be eligible to participate in
the Plan. Any such person who elects to participate in the Plan is
hereinafter called a "Participant". The Plan shall establish for each
Participant an unfunded deferred compensation account.
<PAGE> 3
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IV. ELECTION OF DEFERRAL.
(A) On or before December 31 of any year during which the Plan is in
effect, each Director shall be entitled to make an irrevocable
election (in the form of Exhibit A) to defer receipt of all or a
specified portion of each component of the Participant's compensation
(annual retainer, Committee Chair fees and attendance fees exclusive
of expense reimbursement) otherwise payable during the following
February 1 to January 31 period for service on the Board of Directors
of the Company and its Committees, and for attending meetings of the
Board of Directors and Committees of the Board of Directors. Such
compensation shall be credited to the Participant's deferred compensation
account on the date the compensation is otherwise payable.
(B) A newly-elected director may elect to participate in the Plan for the
remainder of the calendar year and the month of January of the
succeeding year in which such Director joins the Board. Any such
election shall be made within one month following the date on which such
Director is elected to the Board and shall be effective with respect to
compensation allocable to the quarterly period following the date on
which such election is made. It shall be made in the same manner as in
Section IV(A) above.
(C) Each annual election shall include an irrevocable election as to the
method by which the amounts deferred are to be distributed in accordance
with Section VI, below.
(D) Such notice shall be delivered to the Company on or before December 31
of the year preceding the first year to which such election relates,
except that notice from newly-elected Directors may be delivered at any
time within one month following the date of their election to the Board.
The elections set forth in such notice shall be given continuing effect
for subsequent years until a new notice specifying a different election
shall be delivered to the Company. Any such new notice shall apply only
to compensation for years (February 1 through January 31) subsequent to
the calendar year in which such new notice is delivered.
V. DEFERRED COMPENSATION ACCOUNTS.
(A) An account shall be established and maintained for each Participant in
the Plan. Units, including fractional Units, shall be credited to each
Participant's account to the extent of compensation deferred pursuant to
the Plan in accordance with the following procedures: (1) compensation
otherwise payable to the Participant, but deferred pursuant to the Plan,
arising from payment of quarterly in-advance installments of the annual
standard retainer payable to all non-employee members of the Board of
Directors, shall be credited to the Participant's account as Units,
including fractional Units, with the actual payment date of such
installments being February 1, May 1, August 1 and December 1 of each
year (or, if any such day is a Saturday, Sunday or legal holiday, the
next business day); (2) compensation otherwise payable to the
Participant, but deferred pursuant to the Plan, arising from payment of
fees
<PAGE> 4
3
attributable to service as the Chairman of any Committee(s) of the Board
of Directors, shall be credited to the Participant's account as Units,
including fractional Units, on May 1 of each year (or, if any such day is
a Saturday, Sunday or legal holiday, the next business day); (3)
compensation otherwise payable to the Participant, but deferred pursuant
to the Plan, arising from payment of fees attributable to attendance at
meetings of the Board of Directors or any Committee(s) of the Board of
Directors, shall be credited to the Participant's account as Units,
including fractional Units, on the date of each and any such meetings and
(4) dividend equivalents earned on the basis of whole Units previously
credited to the Participant's account shall be credited to the
Participant's account as Units, including fractional Units, on the date
any such dividend has been declared to be payable on shares of common
stock of the Company by the Board of Directors of the Company. Units,
excluding fractional Units, shall earn dividend equivalents from the date
of crediting until the date of final valuation of the Units on the last
day of the Participant's service as a Director. Dividend equivalents
shall be computed by multiplying the dividend paid per share of common
stock of the Company during the period Units are credited to a
Participant's account times the number of whole Units so credited, but
Units, excluding fractional Units, shall earn such dividend equivalents
only as, if and when dividends are declared and paid on the common stock
of the Company.
(B) Each Unit shall have an initial value and be credited in respect of
deferred compensation, equal to one hundred percent (100%) of the fair
market value of one share of the common stock of the Company on the
date, as hereinabove provided, of crediting to the Participant's
account. The fair market value per Unit shall be the average between
the highest and lowest quoted selling price per share of common stock on
the New York Stock Exchange Corporate Transactions Tape. If there
should be no sale of the shares of common stock of the Company on such
date, then the price per share shall be the average between the highest
and lowest quoted selling price on the Corporate Tape on the next
preceding day on which there shall have been a sale.
VI. METHOD OF DISTRIBUTION OF DEFERRED COMPENSATION -
UNFORESEEABLE EMERGENCY.
(A) No distribution of deferred compensation may be made except as provided
in this Section VI.
(B) The final value of said Units, including fractional Units, shall be
computed in accordance with the provisions of the second and third
sentences of Section V(B) and determined on and as of the last day of a
Participant's service as a Director. The value of Units, including
fractional Units, credited to a Participant's deferred compensation
account for each year shall be payable only in cash, either in a lump
sum or in up to ten annual installments. Payment of the lump sum or the
first annual installment shall be made or shall commence, as the case
may be, as soon as practicable, but not later than fifteen (15) days
following the date on which the Participant's service as a Director
terminates. If annual installments
<PAGE> 5
4
are elected for any year, the amount of the first payment shall be a
fraction of the amount of the Participant's deferred compensation
account for such year as of the last day of a Participant's Service as a
Director, the numerator of which is one and the denominator of which is
the total number of installments elected. The amount of each subsequent
payment shall be a fraction of the amount as of December 31 of the year
preceding each subsequent payment, the numerator of which is one and the
denominator of which is the total number of installments elected minus
the number of installments previously paid.
(C) Each distribution of deferred compensation, subsequent to the first
distribution, in annual installments, shall be made on January 10 (or,
if that date is a Saturday, Sunday or holiday, the next business day) of
the year, or years, as the case may be, of distribution.
(D) At the written request of a Participant, the Plan's Administrative
Committee, in its sole discretion, may authorize the cessation of
deferrals by such Participant under the Plan or accelerate payment of
any installments at any time after the sixth month following such
Participant's termination of service as a Director, upon a showing of
unforeseeable emergency by such Participant. If the Administrative
Committee authorizes any such distribution, valuation of the Units to be
distributed shall be determined on the date of such authorization in
accordance with the second and third sentences of paragraph VI(B). For
purposes of this paragraph, "unforeseeable emergency" is defined as
severe financial hardship resulting from extraordinary and unanticipated
circumstances arising as a result of one or more recent events beyond
the control of the Participant. In any event, payment may not be made
to the extent such emergency is or may be relieved: (1) through
reimbursement or compensation by insurance or otherwise; (2) by
liquidation of the Participant's assets, to the extent the liquidation
of such assets would not, itself, cause severe financial hardship; and
(3) by cessation of deferrals under the Plan. Examples of what are not
considered to be unforeseeable emergencies include the need to send a
Participant's child to college or the desire to purchase a home.
(E) The account will be credited with dividend equivalents in accordance
with the Plan up to the date of hardship distribution on account of an
unforeseeable emergency, or the last date of the Participant's service
as a Director, whichever first occurs.
(F) Interest shall accrue and be payable each succeeding January 10 (or, if
that date is a Saturday, Sunday or holiday, the next business day), on
and with respect to the total amount credited to a Participant's account
on and as of the final valuation of said account on each Participant's
last day of service as a Director through the date of initial
distribution and until the subsequent January 10 (or, if that date is a
Saturday, Sunday or holiday, the next business day) on the total amount
less the initial distribution. Such interest shall accrue at the prime
corporate rate in effect (at Morgan Guaranty, New York City) on the last
day of service. Regardless, if the Participant receives a lump sum
distribution, such lump sum distribution shall, include the interest
accrued through such date. Thereafter,
<PAGE> 6
5
interest will accrue on remaining principal amounts at the prime
corporate rate in effect (at Morgan Guaranty, New York City) on January
10 of each succeeding year, and be payable in full on each immediately
following January 10 (or, in each case, if such date is a Saturday,
Sunday or holiday, the next business day) until all principal amounts in
the Participant's account have been paid in accordance with his or her
election regarding lump sum or installment payments of deferred amounts.
VII. DISTRIBUTION UPON DEATH.
If any Participant dies while a Director, or thereafter, before receiving all
amounts credited to his or her account, the unpaid amount in the
Participant's account shall be paid in one lump sum on the last business day
of the month following the month of death to any beneficiary or beneficiaries
designated by the Participant by written notice to the Company or, in the
absence of such designation, to such Participant's estate.
VIII. PARTICIPANT'S RIGHTS IN ACCOUNT - UNFUNDED STATUS OF THE PLAN.
A Participant shall not have any interest in any amounts credited to his or
her account until it is distributed in accordance with the Plan. Any and all
cash payments made to a Participant pursuant to the Plan shall be made only
from the general assets of the Company. All amounts deferred under the Plan
shall remain the sole property of the Company, subject to the claims of its
general creditors and available for its use for whatever purposes are
desired. With respect to amounts deferred, a Participant is merely a general
creditor of the Company; and the obligation of the Company hereunder is
purely contractual and shall not be funded or secured in any way.
IX. NON-ALIENABILITY AND NON-TRANSFERABILITY.
The rights of a Participant to the payment of deferred compensation as
provided in the Plan shall not be assigned, transferred, pledged or
encumbered or be subject in any manner to alienation or anticipation. No
Participant may borrow against Units or fractional Units. No Units or
fractional Units shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, change, garnishment,
execution or levy of any kind, whether voluntary or involuntary prior to
distribution of deferred compensation in accordance with Section VI.
X. STATEMENT OF ACCOUNT.
Statements will be sent to Participants during February of each year as to
the balance in their deferred compensation accounts as of the end of the
previous calendar year.
XI. ADMINISTRATION.
The Administrator of this Plan shall be the Administrative Committee. The
Plan's Administrative Committee, shall consist of up to (but may be less
than) three (3) persons who are not and cannot be Participants in the Plan
and who shall be Directors of the Company. The Administrative Committee
shall be appointed annually by, and may
<PAGE> 7
6
include the Chief Executive Officer of the Company. The Administrative
Committee shall have authority to adopt rules and regulations for carrying out
the Plan and to interpret, construe and implement the provisions thereof.
XII. AMENDMENT AND TERMINATION.
The Plan may, at any time, be amended, modified or terminated by the Board of
Directors or the Executive Committee of the Company. No amendment,
modification or termination shall, without the consent of a Participant,
adversely affect such Participant's rights with respect to amounts accrued in
his or her deferred compensation account.
XIII. NOTICES.
All notices to the Company hereunder shall be delivered to the attention of the
Secretary of the Company.
XIV. ADJUSTMENTS.
If any change is made in the stock from which Units, including fractional
Units, in the Plan are derived, whether through merger, consolidation,
reorganization, recapitalization, stock dividend, split-up, combination of
shares, change in corporate structure or otherwise, the Administrative
Committee, in its sole discretion, may make appropriate adjustments in the
number and value of outstanding Units, or fractional Units. The decision of
the Administrative Committee as to whether to make any such adjustments, and
their amount and timing, if made, shall be conclusive.
<PAGE> 1
EXHIBIT 23.01
Consent of Price Waterhouse
<PAGE> 2
Exhibit 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (nos. 33-20731,
33-38846 and 33-49875) and the Registration Statements on Form S-8 (nos.
2-77316, 33-27293, 33-27294 and 33-40651) of Kellogg Company of our report
dated February 4, 1994 which appears on page F-3 of this Form 10-K. We also
consent to the incorporation by reference in the Registration Statement on Form
S-8 (no. 33-27294) of our report dated March 18, 1994 which appears on page 1
of Exhibit 99.01 of this Form 10-K and to the incorporation by reference in the
Registration Statement on Form S-8 (no. 33-27293) of our report dated March 18,
1994 which appears on page 1 of Exhibit 99.02 of this Form 10-K.
PRICE WATERHOUSE
Battle Creek, Michigan
March 25, 1994
<PAGE> 1
EXHIBIT 24.01
Powers of Attorney
authorizing Richard M. Clark
to execute the Company's Form 10-K Annual Report for 1993
on behalf of the Board of Directors, and each of them
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg
Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice
President, General Counsel and Secretary of Kellogg Company, as my lawful
attorney-in-fact and agent, to act on my behalf, with full power of
substitution, in preparing, executing and filing the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1993, and any exhibits, amendments
and other documents related thereto, with the Securities and Exchange
Commission. Said filing shall be for the purpose of fulfilling applicable
legal requirements.
Whereupon, I grant unto said Richard M. Clark full power and authority to
perform all necessary and appropriate acts in connection therewith, and hereby
ratify and confirm all that said attorney-in-fact and agent, or his substitute,
may lawfully do, or cause to be done, by virtue hereof.
/s/ Norman A. Brown
Norman A. Brown
Director
Dated: Jan 28 1994
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg
Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice
President, General Counsel and Secretary of Kellogg Company, as my lawful
attorney-in-fact and agent, to act on my behalf, with full power of
substitution, in preparing, executing and filing the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1993, and any exhibits, amendments
and other documents related thereto, with the Securities and Exchange
Commission. Said filing shall be for the purpose of fulfilling applicable
legal requirements.
Whereupon, I grant unto said Richard M. Clark full power and authority to
perform all necessary and appropriate acts in connection therewith, and hereby
ratify and confirm all that said attorney-in-fact and agent, or his substitute,
may lawfully do, or cause to be done, by virtue hereof.
/s/ Charles W. Elliott
Charles W. Elliott
Director
Dated: Jan 31 1994
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg
Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice
President, General Counsel and Secretary of Kellogg Company, as my lawful
attorney-in-fact and agent, to act on my behalf, with full power of
substitution, in preparing, executing and filing the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1993, and any exhibits, amendments
and other documents related thereto, with the Securities and Exchange
Commission. Said filing shall be for the purpose of fulfilling applicable
legal requirements.
Whereupon, I grant unto said Richard M. Clark full power and authority to
perform all necessary and appropriate acts in connection therewith, and hereby
ratify and confirm all that said attorney-in-fact and agent, or his substitute,
may lawfully do, or cause to be done, by virtue hereof.
/s/ Claudio X. Gonzalez
Claudio X. Gonzalez
Director
Dated: Jan 31 1994
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg
Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice
President, General Counsel and Secretary of Kellogg Company, as my lawful
attorney-in-fact and agent, to act on my behalf, with full power of
substitution, in preparing, executing and filing the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1993, and any exhibits, amendments
and other documents related thereto, with the Securities and Exchange
Commission. Said filing shall be for the purpose of fulfilling applicable
legal requirements.
Whereupon, I grant unto said Richard M. Clark full power and authority to
perform all necessary and appropriate acts in connection therewith, and hereby
ratify and confirm all that said attorney-in-fact and agent, or his substitute,
may lawfully do, or cause to be done, by virtue hereof.
/s/ Gordon Gund
Gordon Gund
Director
Dated: Jan 26 1994
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg
Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice
President, General Counsel and Secretary of Kellogg Company, as my lawful
attorney-in-fact and agent, to act on my behalf, with full power of
substitution, in preparing, executing and filing the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1993, and any exhibits, amendments
and other documents related thereto, with the Securities and Exchange
Commission. Said filing shall be for the purpose of fulfilling applicable
legal requirements.
Whereupon, I grant unto said Richard M. Clark full power and authority to
perform all necessary and appropriate acts in connection therewith, and hereby
ratify and confirm all that said attorney-in-fact and agent, or his substitute,
may lawfully do, or cause to be done, by virtue hereof.
/s/ W. E. LaMothe
W. E. LaMothe
Director
Dated: Jan 28 1994
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg
Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice
President, General Counsel and Secretary of Kellogg Company, as my lawful
attorney-in-fact and agent, to act on my behalf, with full power of
substitution, in preparing, executing and filing the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1993, and any exhibits, amendments
and other documents related thereto, with the Securities and Exchange
Commission. Said filing shall be for the purpose of fulfilling applicable
legal requirements.
Whereupon, I grant unto said Richard M. Clark full power and authority to
perform all necessary and appropriate acts in connection therewith, and hereby
ratify and confirm all that said attorney-in-fact and agent, or his substitute,
may lawfully do, or cause to be done, by virtue hereof.
/s/ A. G. Langbo
A. G. Langbo
Director
Dated: Jan 26 1994
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg
Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice
President, General Counsel and Secretary of Kellogg Company, as my lawful
attorney-in-fact and agent, to act on my behalf, with full power of
substitution, in preparing, executing and filing the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1993, and any exhibits, amendments
and other documents related thereto, with the Securities and Exchange
Commission. Said filing shall be for the purpose of fulfilling applicable
legal requirements.
Whereupon, I grant unto said Richard M. Clark full power and authority to
perform all necessary and appropriate acts in connection therewith, and hereby
ratify and confirm all that said attorney-in-fact and agent, or his substitute,
may lawfully do, or cause to be done, by virtue hereof.
/s/ Russell G. Mawby
Russell G. Mawby
Director
Dated: Jan 26 1994
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg
Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice
President, General Counsel and Secretary of Kellogg Company, as my lawful
attorney-in-fact and agent, to act on my behalf, with full power of
substitution, in preparing, executing and filing the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1993, and any exhibits, amendments
and other documents related thereto, with the Securities and Exchange
Commission. Said filing shall be for the purpose of fulfilling applicable
legal requirements.
Whereupon, I grant unto said Richard M. Clark full power and authority to
perform all necessary and appropriate acts in connection therewith, and hereby
ratify and confirm all that said attorney-in-fact and agent, or his substitute,
may lawfully do, or cause to be done, by virtue hereof.
/s/ Ann McLaughlin
Ann McLaughlin
Director
Dated: Jan 27 1994
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg
Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice
President, General Counsel and Secretary of Kellogg Company, as my lawful
attorney-in-fact and agent, to act on my behalf, with full power of
substitution, in preparing, executing and filing the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1993, and any exhibits, amendments
and other documents related thereto, with the Securities and Exchange
Commission. Said filing shall be for the purpose of fulfilling applicable
legal requirements.
Whereupon, I grant unto said Richard M. Clark full power and authority to
perform all necessary and appropriate acts in connection therewith, and hereby
ratify and confirm all that said attorney-in-fact and agent, or his substitute,
may lawfully do, or cause to be done, by virtue hereof.
/s/ J. Richard Munro
J. Richard Munro
Director
Dated: Jan 27 1994
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg
Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice
President, General Counsel and Secretary of Kellogg Company, as my lawful
attorney-in-fact and agent, to act on my behalf, with full power of
substitution, in preparing, executing and filing the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1993, and any exhibits, amendments
and other documents related thereto, with the Securities and Exchange
Commission. Said filing shall be for the purpose of fulfilling applicable
legal requirements.
Whereupon, I grant unto said Richard M. Clark full power and authority to
perform all necessary and appropriate acts in connection therewith, and hereby
ratify and confirm all that said attorney-in-fact and agent, or his substitute,
may lawfully do, or cause to be done, by virtue hereof.
/s/ Harold A. Poling
Harold A. Poling
Director
Dated: Jan 26 1994
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg
Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice
President, General Counsel and Secretary of Kellogg Company, as my lawful
attorney-in-fact and agent, to act on my behalf, with full power of
substitution, in preparing, executing and filing the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1993, and any exhibits, amendments
and other documents related thereto, with the Securities and Exchange
Commission. Said filing shall be for the purpose of fulfilling applicable
legal requirements.
Whereupon, I grant unto said Richard M. Clark full power and authority to
perform all necessary and appropriate acts in connection therewith, and hereby
ratify and confirm all that said attorney-in-fact and agent, or his substitute,
may lawfully do, or cause to be done, by virtue hereof.
/s/ Donald Rumsfeld
Donald Rumsfeld
Director
Dated: Jan 26 1994
<PAGE> 13
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg
Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice
President, General Counsel and Secretary of Kellogg Company, as my lawful
attorney-in-fact and agent, to act on my behalf, with full power of
substitution, in preparing, executing and filing the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1993, and any exhibits, amendments
and other documents related thereto, with the Securities and Exchange
Commission. Said filing shall be for the purpose of fulfilling applicable
legal requirements.
Whereupon, I grant unto said Richard M. Clark full power and authority to
perform all necessary and appropriate acts in connection therewith, and hereby
ratify and confirm all that said attorney-in-fact and agent, or his substitute,
may lawfully do, or cause to be done, by virtue hereof.
/s/ Timothy P. Smucker
Timothy P. Smucker
Director
Dated: Jan 26 1994
<PAGE> 14
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned Director of Kellogg
Company, a Delaware corporation, hereby appoint Richard M. Clark, Senior Vice
President, General Counsel and Secretary of Kellogg Company, as my lawful
attorney-in-fact and agent, to act on my behalf, with full power of
substitution, in preparing, executing and filing the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1993, and any exhibits, amendments
and other documents related thereto, with the Securities and Exchange
Commission. Said filing shall be for the purpose of fulfilling applicable
legal requirements.
Whereupon, I grant unto said Richard M. Clark full power and authority to
perform all necessary and appropriate acts in connection therewith, and hereby
ratify and confirm all that said attorney-in-fact and agent, or his substitute,
may lawfully do, or cause to be done, by virtue hereof.
/s/ Dolores D. Wharton
Dolores D. Wharton
Director
Dated: Feb 1 1994
<PAGE> 1
EXHIBIT 99.01
Kellogg Company
American Federation of Grain Millers Savings and Investment Plan
Form 11-K Annual Report
for the fiscal year ended October 31, 1993
<PAGE> 2
KELLOGG COMPANY AMERICAN
FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
AND SCHEDULES
OCTOBER 31, 1993
FILED UNDER FORM SE
<PAGE> 1
EXHIBIT 99.02
Kellogg Company
Salaried Savings and Investment Plan
Form 11-K Annual Report
for the fiscal year ended October 31, 1993
<PAGE> 2
KELLOGG COMPANY SALARIED
SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
AND SCHEDULES
OCTOBER 31, 1993
FILED UNDER FORM SE
