BATTLE CREEK, Mich., Feb. 5, 2009 (GLOBE NEWSWIRE) -- Kellogg Company (NYSE:K) today reported strong 2008 sales and earnings growth. Fourth quarter earnings per diluted share grew 7% to $0.47, bringing the 2008 full-year earnings per share to $2.99. The fourth quarter results include a 6 cent per share adverse effect due to the estimated impact of the recent peanut-related recall.
Reported net earnings for the full year were $1,148 million, a 4% increase over last year's $1,103 million. Full-year earnings per diluted share rose 8% to $2.99 versus the most recent estimate of $2.95 to $3.00. Reported earnings in the fourth quarter of 2008 were $179 million, or $0.47 per diluted share, compared to $176 million, or $0.44 per diluted share in the fourth quarter of 2007.
"Kellogg delivered another year of sustainable and dependable results, despite significant cost pressures and the stress the economy is placing on consumers," said David Mackay, Kellogg's chief executive officer. "We also continued to focus on cost savings initiatives and added to our platform for future growth with acquisitions in Russia, China, the U.S. and Australia."
Reported 2008 net sales increased 9% to $12.8 billion. Internal net sales growth, which excludes the effects of foreign currency translation, acquisitions and a 53rd week, was 5%. Fourth quarter internal sales growth was 3%.
Kellogg North America posted broad-based 2008 reported net sales growth of 9%; internal net sales growth was 6%. Sales strength was driven by solid innovation and price realization. Internal sales growth in the fourth quarter was 3%. North America Retail Cereal posted internal net sales growth of 3% for the full year and the Retail Snacks business posted internal net sales growth of 6%. North America Frozen and Specialty Channels businesses delivered full-year internal net sales growth of 9%.
Kellogg International also reported broad-based, 2008 full-year net sales growth of 9%, or 5% on an internal basis, which excludes the favorable effects of currency translation, acquisitions and a 53rd week. Internal sales growth in the fourth quarter was 4%. Full-year internal net sales in Europe and Latin America each increased 4%, while Asia Pacific internal sales rose 8%.
Operating profit in 2008 was $1,953 million, an increase of 5% on a reported basis and 4% on an internal basis. As anticipated, total up-front costs for cost-reduction initiatives were approximately $0.14 per share.
Cash flow, defined as cash from operating activities less capital expenditures, was $806 million for the year including a discretionary $300 million year-end retirement plan contribution ($400 million before tax). The Company also announced a $650 million share repurchase authorization for 2009. The previous $500 million authorization has been canceled.
Kellogg Updates 2009 Guidance
Kellogg is well positioned to drive sustainable and dependable performance. The Company provided updated 2009 guidance of 3-4% internal sales growth versus the prior estimate of mid single-digit growth. In addition, internal operating profit is projected to grow at a mid single-digit rate. Currently, the Company expects a six cent adverse earnings per share impact in 2009 from the peanut-related recall, which is included in the full-year guidance. The Company remains confident that it can achieve high single-digit EPS growth on a currency neutral basis, which excludes the effects of foreign currency translation.
CEO Mackay concluded, "We remain confident in our ability to deliver another year of sustainable and dependable performance. For 2009, we will focus on driving solid top-line growth as well as further cost-savings initiatives."
About Kellogg Company
With 2008 sales of nearly $13 billion, Kellogg Company is the world's leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles, and veggie foods. The Company's brands include Kellogg's(r), Keebler(r), Pop-Tarts(r), Eggo(r), Cheez-It(r), Nutri-Grain(r), Rice Krispies(r), Morningstar Farms(r), Famous Amos(r), Special K(r), Stretch Island(r), All-Bran(r), Frosted Mini-Wheats(r), Club(r) and Kashi(r). Kellogg products are manufactured in 19 countries and marketed in more than 180 countries around the world. For more information, visit Kellogg's web site at http://www.kelloggcompany.com.
The Kellogg Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3194
Forward-Looking Statements Disclosure
This news release contains forward-looking statements related to business performance, earnings, costs, cash flow, brand building, and cost-reduction initiatives. Actual performance may differ materially from these statements due to factors related to competitive conditions and their impact; the effectiveness of advertising, pricing and promotional spending; the success of productivity improvements and business transitions; the success of innovation and new product introductions; the recoverability of the carrying value of goodwill and other intangibles; the availability of and interest rates on short-term financing; commodity and energy prices and labor costs; actual market performance of benefit plan trust investments; the levels of spending on systems initiatives, properties, business opportunities, integration of acquired businesses; changes in consumer behavior and preferences; U.S. and foreign economic factors such as interest rates, statutory tax rates, and foreign currency conversions or unavailability; legal and regulatory factors; the ultimate impact of product recalls; business disruption or other losses from terrorist acts or political unrest; and other factors. Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to publicly update them.
Kellogg Company and Subsidiaries
CONSOLIDATED STATEMENT OF EARNINGS
(millions, except per share data)
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Quarter ended Year ended
Jan. 3, Dec. 29, Jan. 3, Dec. 29,
(Results are unaudited) 2009 2007 2009 2007
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Net sales $2,933 $2,794 $12,822 $11,776
Cost of goods sold 1,777 1,598 7,455 6,597
Selling, general and
administrative expense 811 837 3,414 3,311
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Operating profit 345 359 1,953 1,868
Interest expense 78 86 308 319
Other income (expense), net (6) (7) (12) (2)
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Earnings before income taxes 261 266 1,633 1,547
Income taxes 82 90 485 444
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Net earnings $179 $176 $1,148 $1,103
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Net earnings per share:
Basic $.47 $.45 $3.01 $2.79
Diluted $.47 $.44 $2.99 $2.76
Dividends per share $.340 $.310 $1.300 $1.202
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Average shares outstanding:
Basic 382 392 382 396
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Diluted 384 396 385 400
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Actual shares outstanding at
period end 382 390
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Kellogg Company and Subsidiaries
SELECTED OPERATING SEGMENT DATA
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Quarter ended Year ended
(millions) Jan. 3, Dec. 29, Jan. 3, Dec. 29,
(Results are unaudited) 2009 2007 2009 2007
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Net sales
North America $2,026 $1,844 $8,457 $7,786
Europe 530 556 2,619 2,357
Latin America 217 232 1,030 984
Asia Pacific(a) 160 162 716 649
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Consolidated $2,933 $2,794 $12,822 $11,776
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Segment operating profit
North America $284 $286 $1,447 $1,345
Europe 43 52 390 397
Latin America 43 45 209 213
Asia Pacific(a) 13 23 92 88
Corporate (38) (47) (185) (175)
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Consolidated $345 $359 $1,953 $1,868
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(a) Includes Australia, Asia and South Africa.
Kellogg Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(millions)
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Year-to-date period ended
January 3, December 29,
(unaudited) 2009 2007
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Operating activities
Net earnings $1,148 $1,103
Adjustments to reconcile net earnings to
operating cash flows:
Depreciation and amortization 375 372
Deferred income taxes 159 (69)
Other(a) 117 183
Postretirement benefit plan contributions (451) (96)
Changes in operating assets and liabilities (81) 10
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Net cash provided by operating activities 1,267 1,503
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Investing activities
Additions to properties (461) (472)
Acquisitions of businesses, net of cash acquired (213) (128)
Property disposals 13 3
Investments in joint ventures and other (20) (4)
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Net cash used in investing activities (681) (601)
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Financing activities
Net issuances (reductions) of notes payable (103) 220
Issuances of long-term debt 756 750
Reductions of long-term debt (468) (802)
Issuances of common stock 175 163
Common stock repurchases (650) (650)
Cash dividends (495) (475)
Other 5 6
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Net cash used in financing activities (780) (788)
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Effect of exchange rate changes on cash (75) (1)
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Increase (decrease) in cash and cash equivalents (269) 113
Cash and cash equivalents at beginning of period 524 411
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Cash and cash equivalents at end of period $255 $524
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Supplemental Financial Data:
Cash Flow (operating cash flow less property
additions)(b) $806 $1,031
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(a) Consists principally of non-cash expense accruals for employee
compensation and benefit obligations.
(b) We use this non-GAAP measure of cash flow to focus management and
investors on the amount of cash available for debt reduction,
dividend distributions, acquisition opportunities, and share
repurchase.
Kellogg Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(millions, except per share data)
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January 3, December 29,
2009 2007
(unaudited) *
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Current assets
Cash and cash equivalents $255 $524
Accounts receivable, net 1,143 1,011
Inventories:
Raw materials and supplies 203 234
Finished goods and materials in process 694 690
Deferred income taxes 112 103
Other prepaid assets 114 140
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Total current assets 2,521 2,702
Property, net of accumulated depreciation of
$4,171 and $4,313 2,933 2,990
Goodwill 3,637 3,515
Other intangibles, net of accumulated
amortization of $42 and $41 1,461 1,450
Pension 96 481
Other assets 298 259
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Total assets $10,946 $11,397
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Current liabilities
Current maturities of long-term debt $1 $466
Notes payable 1,387 1,489
Accounts payable 1,135 1,081
Accrued advertising and promotion 357 378
Accrued income taxes 51 --
Accrued salaries and wages 280 316
Other current liabilities 341 314
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Total current liabilities 3,552 4,044
Long-term debt 4,068 3,270
Deferred income taxes 300 647
Pension liability 631 190
Other liabilities 947 720
Shareholders' equity
Common stock, $.25 par value 105 105
Capital in excess of par value 438 388
Retained earnings 4,836 4,217
Treasury stock, at cost (1,790) (1,357)
Accumulated other comprehensive income
(loss)(a) (2,141) (827)
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Total shareholders' equity 1,448 2,526
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Total liabilities and shareholders' equity $10,946 $11,397
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* Condensed from audited financial statements.
(a) Current year change due primarily to currency translation
adjustments of ($431) and net experience losses in postretirement
and postemployment benefit plans of ($865).