<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 1-4171
KELLOGG COMPANY
State of Incorporation--Delaware IRS Employer Identification No.38-0710690
One Kellogg Square, P.O. Box 3599, Battle Creek, MI 49016-3599
Registrant's telephone number: 616-961-2000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 _____
Common Stock outstanding October 31, 1996 - 210,736,060 shares
<PAGE> 2
KELLOGG COMPANY
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - Financial Information
Item 1:
Consolidated Balance Sheet - September 30, 1996 and December 31, 1995 2
Consolidated Earnings - three and nine months ended
September 30, 1996 and 1995 3
Consolidated Statement of Cash Flows - nine months ended September 30,
1996 and 1995 4
Notes to Consolidated Financial Statements 5-6
Item 2:
Management's Discussion and Analysis of Financial Condition
and Results of Operations 7-11
PART II - Other Information
Item 4:
Submission of Matters to a Vote of Security Holders 12
Item 6:
Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit Index 14
</TABLE>
1
<PAGE> 3
CONSOLIDATED BALANCE SHEET
=========================================================================
<TABLE>
<CAPTION>
KELLOGG COMPANY AND SUBSIDIARIES SEPTEMBER 30, DECEMBER 31,
(millions) 1996 1995
(unaudited) *
- -------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $300.4 $221.9
Accounts receivable, net 643.5 590.1
Inventories:
Raw materials and supplies 141.6 129.7
Finished goods and materials in process 240.7 247.0
Other current assets 281.1 240.1
- -------------------------------------------------------------------------
TOTAL CURRENT ASSETS 1,607.3 1,428.8
Property, net of accumulated depreciation
of $2,062.4 and $1,953.0 2,774.1 2,784.8
Other assets 251.2 201.0
- -------------------------------------------------------------------------
TOTAL ASSETS $4,632.6 $4,414.6
=========================================================================
CURRENT LIABILITIES
Current maturities of long-term debt $500.8 $1.9
Notes payable 570.7 188.0
Accounts payable 330.3 370.8
Income taxes 98.8 64.2
Accrued liabilities 644.3 640.5
- -------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 2,144.9 1,265.4
LONG-TERM DEBT 224.1 717.8
NONPENSION POSTRETIREMENT BENEFITS 567.6 546.1
DEFERRED INCOME TAXES AND OTHER LIABILITIES 336.5 294.4
SHAREHOLDERS' EQUITY
Common stock, $.25 par value 77.9 77.8
Capital in excess of par value 119.0 105.2
Retained earnings 4,151.1 3,963.0
Treasury stock, at cost (2,792.0) (2,361.2)
Currency translation adjustment (196.5) (193.9)
- -------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 1,359.5 1,590.9
- -------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,632.6 $4,414.6
=========================================================================
*Condensed from audited financial statements.
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 4
CONSOLIDATED EARNINGS (Results are unaudited)
================================================================================
<TABLE>
<CAPTION>
KELLOGG COMPANY AND SUBSIDIARIES Three months ended September 30, Nine months ended September 30,
(millions, except per share data) 1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $1,681.6 $1,844.7 $5,118.9 $5,340.8
- -----------------------------------------------------------------------------------------------------
Cost of goods sold 816.0 835.6 2,381.6 2,424.6
Selling and administrative expense 562.3 633.3 1,918.0 1,933.2
Non-recurring charges 24.8 0.0 60.4 52.8
- -----------------------------------------------------------------------------------------------------
OPERATING PROFIT 278.5 375.8 758.9 930.2
- -----------------------------------------------------------------------------------------------------
Interest expense 16.8 15.8 46.6 50.3
Other income (expense), net (2.6) 5.5 (1.9) 21.8
- -----------------------------------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES 259.1 365.5 710.4 901.7
Income taxes 99.6 135.5 266.7 339.8
- -----------------------------------------------------------------------------------------------------
NET EARNINGS $159.5 $230.0 $443.7 $561.9
=====================================================================================================
EARNINGS PER SHARE $.75 $1.05 $2.08 $2.56
DIVIDENDS PER SHARE $.42 $.39 $1.20 $1.11
AVERAGE SHARES OUTSTANDING 211.6 218.7 213.1 219.8
- -----------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
CONSOLIDATED STATEMENT OF CASH FLOWS (Results are unaudited)
================================================================================
<TABLE>
<CAPTION>
KELLOGG COMPANY AND SUBSIDIARIES Nine months ended September 30,
(millions) 1996 1995
- -----------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $443.7 $561.9
Items in net earnings not requiring (providing) cash:
Depreciation 185.5 205.4
Deferred income taxes 4.7 6.4
Non-recurring charges, net of cash paid 18.4 35.4
Other 35.2 31.9
Pension contributions (55.4) (61.7)
Changes in operating assets and liabilities (77.0) 82.0
- -----------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 555.1 861.3
- -----------------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to properties (199.0) (222.1)
Other 18.3 7.3
- -----------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (180.7) (214.8)
- -----------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net borrowings of notes payable 382.7 60.0
Reduction in long-term debt (4.9) 0.1
Common stock repurchases (427.5) (284.9)
Cash dividends (255.7) (243.8)
Other 10.6 23.2
- -----------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (294.8) (445.4)
- -----------------------------------------------------------------------------------
Effect of exchange rate changes on cash (1.1) (3.9)
- -----------------------------------------------------------------------------------
Increase in cash and cash equivalents 78.5 197.2
Cash and cash equivalents at beginning of period 221.9 266.3
- -----------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $300.4 $463.5
===================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 6
Notes To Consolidated Financial Statements
for the nine months ended September 30, 1996
(Unaudited)
1. Accounting policies
The unaudited interim financial information included herein reflects the
adjustments (consisting solely of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of the results of
operations, financial position, and cash flows for the periods presented. Such
interim information should be read in conjunction with the financial statements
and notes thereto contained on pages 15 to 28 of the Company's 1995 Annual
Report. The accounting policies used in preparing these financial statements
are the same as those summarized in the Company's 1995 Annual Report.
The results of operations for the three and nine months ended September 30,
1996, are not necessarily indicative of the results to be expected for other
interim periods or the full year.
2. Non-recurring charges
Operating profit includes non-recurring charges for the quarter of $24.8
million ($21.3 million after tax or $.10 per share) and for the year-to-date
period of $60.4 million ($44.3 million after tax or $.21 per share). Operating
profit for the comparable 1995 year-to-date period includes non-recurring
charges of $52.8 million ($33.0 million after tax or $.15 per share). The third
quarter 1996 charges include a provision of $15.0 million for the potential
settlement of certain international litigation matters. The balance of the
1996 charges and all of the 1995 charges primarily relate to ongoing
productivity and operational streamlining initiatives in the U.S., Europe, and
other international locations, and are comprised principally of expenditures
for employee severance, training, and relocation; associated management
consulting; and production redeployment.
During 1995, the Company recorded pre-tax non-recurring charges of $348.0
million related to operational streamlining initiatives in the U.S., Australia,
and Europe. The Company will eliminate approximately 2,000 employee positions
by the end of 1996, through a combination of voluntary early retirement
incentives, voluntary and involuntary severance programs, and attrition.
Associated with these initiatives, the Company will incur during 1996
approximately $25 million in costs related to workforce and production
redeployment which are being expensed as incurred.
In early 1996, the Company initiated a plan to consolidate and reorganize
certain aspects of its European operations, and is taking action to further
streamline operations in the U.S. and other international locations. As a
result, approximately 600 additional employee positions are expected to be
eliminated by the end of 1997. While some of these programs are not yet fully
implemented, management believes that the combination of these 1996 initiatives
with the aforementioned redeployment expenditures from 1995 initiatives could
generate total pre-tax
5
<PAGE> 7
non-recurring charges during 1996 of approximately $120 million. From all of
the streamlining initiatives currently underway, the Company anticipates
pre-tax cash outlays of approximately $130 million in 1996 and $40 million in
1997.
3. Earnings per share
Earnings per share are based on the weighted average shares outstanding as
presented. The potential dilution of earnings per share from the exercise of
stock options is not material.
6
<PAGE> 8
KELLOGG COMPANY
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of operations
Kellogg Company operates in a single industry - manufacturing and marketing
grain-based convenience food products including ready-to-eat cereal, toaster
pastries, frozen waffles, and cereal bars throughout the world. The Company
holds a 41 percent volume share of the global ready-to-eat cereal market. In
North America, the Company continues to hold the number one market share
position in the toaster pastry, cereal/granola bar, and frozen waffle
categories.
The Company's third quarter 1996 results were impacted by competitive
conditions in the U.S. ready-to-eat cereal market, in which significant price
reductions were initiated by the Company and competitors beginning in the
second quarter of this year. The Company followed with its integrated strategy
of lower product prices and reduced marketing expenditures during the quarter,
while major competitors continued heavy deep-discount promotional spending. As
a result, the Company reported declines in ready-to-eat cereal volume,
consolidated net sales, net earnings, and earnings per share versus last year.
Management continues to believe that its strategy of lower prices combined with
efficient marketing spending positions both the Company and the ready-to-eat
cereal category for profitable growth in future periods.
Since the beginning of 1996, the Company has taken several major price
decreases on its U.S. ready-to-eat cereal brands. In January 1996, the
Company announced a 9% reduction in the price of Kellogg's(R) Low Fat Granola
cereal and, on April 1, 1996, the price of Kellogg's(R) Raisin Bran cereal was
reduced by 16%. On June 10, 1996, the Company implemented price reductions
averaging 19% on brands comprising approximately two-thirds of its U.S.
cereal business. Cereal prices have also been reduced in some Latin American
markets. Additionally, during the second quarter of 1996, the Company lowered
the price of Kellogg's(R) Pop-Tarts(R) toaster pastries via a combination of
per-package count increases and direct price reductions.
These pricing actions are integral to a long-term strategy initiated by
management in early 1994 to improve the Company's pricing and cost structure.
This strategy includes pricing based on brand differentiation, elimination of
inefficient price promotion spending, and reduction of operating costs through
productivity and streamlining programs. Management believes that the Company's
implementation of certain of these pricing measures during 1996 improved the
long-term brand value proposition to the consumer, but has negatively impacted
profitability in the short term, extending through the first quarter of 1997.
However, management believes the Company will return to double-digit growth in
earnings per share, excluding non-recurring charges, for the full year of 1997.
Forecasted 1997 earnings per share results could be impacted by pricing and/or
marketing spending actions which may become necessary to protect the Company's
market share leadership position.
7
<PAGE> 9
Total volume was up 1% for both the quarter and year-to-date periods, with
strength in non-U.S. ready-to-eat cereal and other convenience foods volume more
than offsetting continued softness in the U.S. ready-to-eat cereal market. The
Company's Asia-Pacific and Latin American regions achieved record volumes
during the third quarter of 1996. The Company's volume in the Mexican market,
significantly impacted by unfavorable economic conditions since late 1994,
returned to growth during this quarter. These non-U.S. cereal volume gains more
than offset volume declines in Great Britain, where significant store brand
competition continued, and in northern Europe, where weak economic conditions
persisted. Significantly impacted by a U.S. ready-to-eat cereal volume decline
of 10% during the third quarter, global cereal volume was down 2.5% for the
quarter and 1% for the year-to-date period. Other convenience foods experienced
low double-digit volume growth for both the quarter and year-to-date periods.
Net sales were down 9% for the quarter and 4% for the year-to-date period. This
decline primarily reflects the ready-to-eat cereal volume loss, price
reductions, and unfavorable foreign currency movements which reduced net sales
by 2% for both the quarter and year-to-date periods.
The gross profit margin for the quarter was 51.5%, down 3.2 percentage points
from the comparable 1995 period. Year-to-date, the gross profit margin was
53.5%, down 1.1 percentage points, reflecting the decline in net sales,
partially offset by operational cost savings which resulted in a significant
improvement in the cost of goods sold per unit volume shipped versus the prior
year.
For the quarter, selling and administrative expense as a percentage of net
sales (SGA%) was 33.4%, down from 34.3% in the prior year. This decrease was
driven by a reduction in advertising and promotional spending in the U.S.
market, which more than offset the negative impact on this ratio of the reduced
net sales per unit volume shipped versus last year. On a year-to-date basis,
the SGA% was 37.5% versus 36.2% in 1995.
Operating profit included non-recurring charges for the quarter of $24.8
million ($21.3 million after tax or $.10 per share) and for the year-to-date
period of $60.4 million ($44.3 million after tax or $.21 per share). Operating
profit for the comparable 1995 year-to-date period included non-recurring
charges of $52.8 million ($33.0 million after tax or $.15 per share). The third
quarter 1996 charges included a provision of $15.0 million for the potential
settlement of certain international litigation matters. The balance of the 1996
charges and all of the 1995 charges primarily related to ongoing productivity
and operational streamlining initiatives in the U.S., Europe, and other
international locations, and were comprised principally of expenditures for
employee severance, training, and relocation; management consulting; and
production redeployment. (Refer to section below on non-recurring charges.)
Excluding non-recurring charges, third quarter operating profit declined 19% to
$303.3 million, principally attributable to the decrease in net sales, as
discussed above. Year-to-date operating profit,
8
<PAGE> 10
excluding non-recurring charges, was $819.3 million, down 17% from the prior
year. Excluding the effect of non-recurring charges, the third quarter
operating profit margin was 18.0%, down from 20.4% last year, and the
year-to-date margin was 16.0%, versus 18.4% in the comparable 1995 period.
For the quarter, gross interest expense, prior to amounts capitalized, was
$17.8 million, equal to the prior year amount, and on a year-to-date basis, was
$49.0 million versus $56.1 million in 1995. Year-to-date interest expense
decreased versus last year due to lower rates on short-term borrowings.
However, due to increases in short-term debt since year-end 1995, management
expects total year 1996 interest expense to approximate the 1995 level. Other
income, net, decreased $8.1 million for the quarter and $23.7 million for the
year-to-date period, primarily due to foreign currency losses in
hyperinflationary Latin American markets and lower interest income during 1996.
Excluding the effect of non-recurring charges, the Company's third quarter
income tax rate was 36.3%, down from 37.1% last year, and the year-to-date rate
was 36.7% versus 37.7% in 1995. The 1996 rate was decreased by favorable audit
settlements in certain foreign jurisdictions. Additionally, the 1995 tax rate
was increased by a retroactive statutory rate change in Australia recorded
during the second quarter of last year. The Company expects its effective
income tax rate for the full year of 1996 to be approximately 36%-37%.
Third quarter 1996 net earnings and earnings per share decreased 31% and 29%,
respectively, from the third quarter of 1995. Excluding non-recurring charges,
earnings per share were $.85 versus $1.05 a year ago, a 19% decrease derived
from $.22 in business decline and $.01 in unfavorable foreign currency
movements, mitigated by $.02 from share repurchase and $.01 from the lower
effective tax rate. Excluding non-recurring charges, third quarter net
earnings were $180.8 million, down 21% from $230.0 million in 1995.
Year-to-date, excluding non-recurring charges for both years, earnings per
share were $2.29, compared to $2.71 in 1995, and net earnings were $488.0
million versus $594.9 million last year.
The foregoing projections of market conditions, volume growth, profitability,
and earnings per share are forward-looking statements which involve risks and
uncertainties. Actual 1996 and 1997 results may differ materially due to the
impact of the Company's price reductions on volumes, the level of marketing
spending and/or incremental pricing actions required to maintain the Company's
market share leadership position, the level of trade and consumer participation
in promotional programs, and competitive response; as well as general economic
and market conditions; actual worldwide volumes and product mix; the levels of
worldwide spending on advertising, promotion, and other general and
administrative costs; and raw material price and labor cost fluctuations.
Liquidity and capital resources
The Company's financial condition remained solid during the third quarter of
1996, despite the decline in net earnings. A strong cash flow, combined with a
program of issuing commercial paper and maintaining worldwide credit
facilities, provides adequate liquidity to meet the Company's operational
needs. The Company continues to enjoy the highest available credit ratings on
both its long-term debt and commercial paper.
9
<PAGE> 11
Year-to-date net cash provided by operations was $555.1 million, compared to
$861.3 million for the 1995 period. Cash flow from operations was down from
prior year levels principally due to decreased earnings, combined with
increased employee severance payments and other cash expenditures related to
the Company's ongoing productivity initiatives (see section on non-recurring
charges below). The ratio of current assets to current liabilities was .7:1.0
as of September 30, 1996, down from 1.1:1.0 at December 31, 1995, primarily due
to a reclassification of $500 million in long-term debt to current maturity
status.
Net cash used in investing activities was $180.7 million year-to-date,
primarily due to capital spending of $199.0 million. Management anticipates
that total year 1996 capital expenditures will be approximately $275-$300
million.
For the year-to-date period, net cash used in financing activities was $294.8
million, principally related to common stock repurchases and dividends, net of
additional short-term borrowing. Under an existing plan authorized by the
Company's Board of Directors, management spent $427.5 million year-to-date to
repurchase 5.7 million common shares at an average price of $74.60 per share.
As of September 30, 1996, the remaining repurchase authorization was $123.2
million. Management intends to fully utilize this authorization by the end of
the year.
During the third quarter, the Company paid $89.0 million in dividends at a rate
of $.42 per common share, an 8% increase over the 1995 per share amount. On
October 25, 1996, the Company's Board of Directors declared a dividend of $.42
per common share, payable December 13, 1996, to shareholders of record at the
close of business on November 29, 1996. At September 30, 1996, common shares
outstanding totaled 211.2 million, compared to 217.7 million at September 30,
1995.
Long-term debt outstanding at quarter-end consisted principally of $200 million
of three-year notes issued in 1994, $200 million of five-year notes issued in
1993, and $300 million of five-year notes issued in 1992. The $200 million of
three-year notes and the $300 million of five-year notes will mature during the
third quarter of 1997 and are classified as current maturities as of September
30, 1996. Management currently intends to replace these borrowings with new
long-term debt issuances as of the maturity dates. Short-term debt outstanding
at quarter-end consisted principally of U.S. commercial paper. The Company's
net debt position (long-term debt plus notes payable less cash) at September
30, 1996 was $995.2 million, up $309.4 million from December 31, 1995,
principally due to an increase in short-term debt to fund common stock
repurchases. The ratio of debt to total capitalization was 49%, up from 36% at
December 31, 1995.
At September 30, 1996, the Company had available an unused "shelf registration"
of $200 million with the Securities and Exchange Commission to provide for the
issuance of debt in the United States. The proceeds of such an offering would
be added to the Company's working capital and be available for general
corporate purposes.
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,
10
<PAGE> 12
strong balance sheet, and solid earnings history provide a base for obtaining
additional financial resources at competitive rates and terms.
Non-recurring charges
During 1995, the Company recorded pre-tax non-recurring charges of $348.0
million related to operational streamlining initiatives in the U.S., Australia,
and Europe. The Company will eliminate approximately 2,000 employee positions
by the end of 1996, through a combination of voluntary early retirement
incentives, voluntary and involuntary severance programs, and attrition.
Associated with these initiatives, the Company will incur during 1996
approximately $25 million in costs related to workforce and production
redeployment which are being expensed as incurred.
In early 1996, the Company initiated a plan to consolidate and reorganize
certain aspects of its European operations, and is taking action to further
streamline operations in the U.S. and other international locations. As a
result, approximately 600 additional employee positions are expected to be
eliminated by the end of 1997. While some of these programs are not yet fully
implemented, management believes that the combination of these 1996 initiatives
with the aforementioned redeployment expenditures from 1995 initiatives could
generate total pre-tax non-recurring charges during 1996 of approximately $120
million.
From all of the streamlining initiatives currently underway, the Company
anticipates pre-tax cash outlays of approximately $130 million in 1996 and $40
million in 1997. From these programs, the Company expects to realize
approximately $70 million of annual pre-tax savings in 1996, reaching an
average annual pre-tax savings of $155 million by 1998. These savings are not
necessarily indicative of future incremental earnings due to management's
commitment to invest in competitive business strategies, new markets, and
growth opportunities.
In addition to the non-recurring charges reported throughout 1996 for
streamlining initiatives, during the third quarter, the Company recorded a
provision of $15.0 million for the potential settlement of certain
international litigation matters. Furthermore, during the fourth quarter of
1996, the Company anticipates recording an expense of $35.0 million for the
funding of the Kellogg s Corporate Citizenship Fund. This contribution is
expected to satisfy the charitable-giving plans of the Fund through the year
2000. In summary, the Company expects to incur total pre-tax non-recurring
charges from streamlining initiatives and other unusual expenses of
approximately $170 million during 1996.
The foregoing discussion of non-recurring charges contains forward-looking
statements regarding amounts of future charges, headcount reductions, cash
requirements, and realizable savings. Actual amounts may vary depending on the
final determination of important factors such as the magnitude of
centralization of operations, the number of employees affected and the type of
separation programs, product sourcing reviews, asset utilization analyses, and
other items which have yet to be determined. In addition, the recognition of
future charges will depend on the timing of management approvals of elements of
the streamlining plans, communication of employee severance programs, and
actual incurrence of certain costs.
11
<PAGE> 13
KELLOGG COMPANY
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
There were no submissions of matters to a vote of security holders during
the quarter for which this report is filed.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
4.01 - There is no instrument with respect to long-term debt of the
Company that involves indebtedness or securities authorized
thereunder exceeding ten percent of the total assets of the Company
and its subsidiaries on a consolidated basis. The Company agrees
to file a copy of any instrument or agreement defining the rights
of holders of long-term debt of the Company upon request of the
Securities and Exchange Commission.
27.01- Financial Data Schedule
(b) Reports on Form 8-K:
On September 4, 1996, the Company filed a report on Form 8-K which
included an exhibit containing a press release dated September 4,
1996.
12
<PAGE> 14
KELLOGG COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KELLOGG COMPANY
/s/ J. R. Hinton
-------------------------------
J.R. Hinton
Principal Financial Officer;
Senior Vice President - Administration
/s/ A. Taylor
-------------------------------
A. Taylor
Principal Accounting Officer;
Vice President and Corporate Controller
Date: November 8, 1996
13
<PAGE> 15
KELLOGG COMPANY
EXHIBIT INDEX
<TABLE>
<S> <C>
Number Description
- ------ -----------------------
27.01 Financial Data Schedule
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM KELLOGG
COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 300
<SECURITIES> 0
<RECEIVABLES> 651
<ALLOWANCES> (7)
<INVENTORY> 382
<CURRENT-ASSETS> 1,607
<PP&E> 4,837
<DEPRECIATION> (2,062)
<TOTAL-ASSETS> 4,633
<CURRENT-LIABILITIES> 2,145
<BONDS> 224
0
0
<COMMON> 78
<OTHER-SE> 1,281
<TOTAL-LIABILITY-AND-EQUITY> 4,633
<SALES> 5,119
<TOTAL-REVENUES> 5,119
<CGS> 2,382
<TOTAL-COSTS> 2,382
<OTHER-EXPENSES> 1,980
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47
<INCOME-PRETAX> 710
<INCOME-TAX> 267
<INCOME-CONTINUING> 444
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 444
<EPS-PRIMARY> 2.08
<EPS-DILUTED> 2.08
</TABLE>
