8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 30, 2009

Kellogg Company

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation) 1-4171
(Commission File Number) 38-0710690
(IRS Employer Identification No.)

One Kellogg Square
Battle Creek, Michigan 49016-3599
(Address of principal executive offices, including zip code)

(269) 961-2000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-99.1

Item 2.02. Results of Operations and Financial Condition.

The information in this Current Report, including the attached Exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

On July 30, 2009, Kellogg Company issued a press release announcing financial results for the period ended July 4, 2009, a copy of which is attached as Exhibit 99.1.

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 hereunto duly authorized.

	KELLOGG COMPANY
Date: July 30, 2009	/s/ John A. Bryant
	Name:	John A. Bryant
	Title:	Executive Vice President, Chief Operating Officer and Chief Financial Officer

EXHIBIT INDEX

99.1 Financial results for the period ended July 4, 2009

EX-99.1

Exhibit 99.1

	Kellogg Company News
	For release:	July 30, 2009
	Analyst Contacts:	Joel Wittenberg	(269) 961-9089
		Kim Stumm	(269) 961-3565
	Media Contact:	Kris Charles	(269) 961-3799

Kellogg Delivers Strong Q2 2009; Raises Full-Year Guidance

     BATTLE CREEK, Mich. — Kellogg Company (NYSE: K) today reported second quarter 2009 financial results that include double-digit growth in net earnings and internal operating profit. The Company posted these better-than-expected results despite ongoing cost pressures and the challenging economic environment. Second quarter net earnings were $354 million, a 13% increase from last year’s second quarter net earnings of $312 million. Earnings per diluted share were $0.92 for the quarter, a year-over-year increase of 12% on a reported basis and 23% higher on a currency-neutral basis despite higher up-front costs.

     “We remain committed to delivering sustainable and dependable performance as we work through the current tough economic environment,” said David Mackay, Kellogg’s chief executive officer. “This focus continued to provide strong returns in the second quarter which were ahead of expectations. We now enter the second half of the year with increased confidence in our ability to deliver on our long-term targets, as well as the visibility and flexibility to increase our investments for future growth.”

     Kellogg Company is on track to deliver $1 billion in annualized savings from efficiency initiatives by year-end 2011. In addition, the Company announced that it plans to increase up-front cost investments for savings initiatives to approximately $0.26 per share for 2009 while increasing current 2009 earnings per share guidance.

     Second quarter reported net sales were $3.2 billion, representing a 3% decrease versus the second quarter of 2008. However, internal net sales growth, which excludes the effects of foreign currency translation and acquisitions, rose 3%, in line with the Company’s long-term annual growth targets. Kellogg North America posted second quarter net sales growth of 2% on a reported basis and 3% on an internal basis. Internal net sales growth for Kellogg North America was comprised of internal net sales growth delivery from North America Retail Cereal of 4%, North America Frozen and Specialty Channels of 5%, and North America Snacks of 3%. While second quarter top-line growth for North America Snacks was negatively impacted by the peanut-related recall, most of the previously affected products returned to the marketplace by quarter-end.

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     Kellogg International posted a second quarter net sales decline of 13% on a reported basis, however net sales grew 2% on an internal basis, which excludes the effects of currency translation and acquisitions. Internal net sales for Kellogg International was comprised of Latin America’s internal net sales growth of 8%, Asia Pacific’s growth of 3%, and Europe’s decline of 1% versus the second quarter of last year. Challenging negotiations with some European retailers in the first quarter, though now resolved, negatively impacted sales in that region for the second quarter.

     Operating profit for the second quarter of $553 million was a solid 4% increase on a reported basis, and a strong 14% increase on an internal basis. Total up-front costs for cost-reduction initiatives totaled approximately $0.07 per share, out-pacing 2008’s second quarter up-front costs of $0.04 per share. Second quarter 2009 gross margin of 43.5% represents a 30 basis points increase over last year’s second quarter on a reported basis.

     Second quarter earnings per share benefitted from favorability in below the line items such as other income and expense, interest expense and a lower effective tax rate.

     Kellogg Company continued to deliver strong cash flow, generating $535 million during the first half of 2009, including an unfavorable impact from foreign exchange. This cash flow, defined as cash from operating activities less capital expenditures, surpasses the 2008 first half cash flow of $510 million. For the full-year 2009, Kellogg continues to anticipate cash flow, as defined, of between $1.05 — $1.15 billion. “Our continuing strong performance in the weak economy demonstrates the resilience and effectiveness of our Sustainable Growth model, as well as the benefits of our financial discipline,” said Mackay.

Kellogg Raises Full-Year 2009 Guidance

     Supported by the strong first half performance, continuing momentum, and the acceleration of savings realization, Kellogg Company raised its full-year 2009 earnings per share guidance to the range of 8 — 10% on a currency-neutral basis, which excludes the effects of foreign currency translation. Based on current rates, the Company now expects a negative impact from foreign currency exchange of approximately 6% to reported earnings per share for the full year. Importantly, Kellogg’s guidance for the year includes a substantial increase in up-front charges for cost reduction initiatives to approximately $0.26 per share from the initial expectation of $0.14 per share.

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     Kellogg also raised full-year guidance for internal operating profit growth to the high end of its previously guided mid single-digit range. Management affirmed its internal net sales growth guidance of 3 — 4% for the year as well.

     CEO Mackay concluded, “With strong brands, solid business fundamentals and our focus on managing the business for the long term, Kellogg Company is well positioned in the marketplace to continue delivering sustainable and dependable performance.”

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^®, Keebler^®, Pop-Tarts^®, Eggo^®, Cheez-It^®, Nutri-Grain^®, Rice Krispies^®, BearNaked^®, Morningstar Farms^®, Famous Amos^®, Special K^®, All-Bran^®, Frosted Mini-Wheats^®, Club^® and Kashi^®. 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.

Forward-Looking Statements Disclosure

     This news release contains, or incorporates by reference, “forward-looking statements” with projections concerning, among other things, the Company’s strategy, and the Company’s sales, earnings, margin, operating profit, costs and expenditures, interest expense, tax rate, capital expenditure, dividends, cash flow, debt reduction, share repurchases, costs, brand building, ROIC, working capital, growth, new products, innovation, cost reduction projects, and competitive pressures. Forward-looking statements include predictions of future results or activities and may contain the words “expects,” “believes,” “should,” “will,” “will deliver,” “anticipates,” “projects,” “estimates,” or words or phrases of similar meaning.

     The Company’s actual results or activities may differ materially from these predictions. The Company’s future results could also be affected by a variety of factors, including the impact of competitive conditions; the effectiveness of pricing, advertising, and promotional programs; the success of innovation, renovation and new product introductions; the recoverability of the carrying value of goodwill and other intangibles; the success of productivity improvements and business

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transitions; commodity and energy prices; labor costs; the availability of and interest rates on short-term and long-term financing; actual market performance of benefit plan trust investments; the levels of spending on systems initiatives, properties, business opportunities, integration of acquired businesses, and other general and administrative costs; changes in consumer behavior and preferences; the effect of U.S. and foreign economic conditions on items such as interest rates, statutory tax rates, currency conversion and availability; legal and regulatory factors; the ultimate impact of product recalls; business disruption or other losses from war, terrorist acts or political unrest; and other items.

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

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Kellogg Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(millions, except per share data)

	Quarter ended						Year-to-date period ended
	July 4,			June 28,			July 4,			June 28,
(Results are unaudited)	2009			2008			2009			2008
Net sales	$	3,229		$	3,343		$	6,398		$	6,601
Cost of goods sold		1,825			1,899			3,692			3,793
Selling, general and administrative expense		851			914			1,624			1,733
Operating profit		553			530			1,082			1,075
Interest expense		67			77			134			159
Other income (expense), net		9			(8	)		9			(19	)
Income before income taxes		495			445			957			897
Income taxes		141			133			284			270
Earnings (loss) from joint ventures		(1	)		—			(1	)		—
Net income	$	353		$	312		$	672		$	627
Net income (loss) attributable to noncontrolling interests (a)		(1	)		—			(3	)		—
Net income attributable to Kellogg Company (a)	$	354		$	312		$	675		$	627
Per share amounts:
Basic	$	.93		$	.82		$	1.77		$	1.64
Diluted	$	.92		$	.82		$	1.76		$	1.63
Dividends per share	$	.3400		$	.3100		$	.6800		$	.6200
Average shares outstanding:
Basic		383			379			382			382
Diluted		383			382			383			386
Actual shares outstanding at period end								383			379

(a) SFAS No. 160, “Noncontrolling interests in Consolidated Financial Statements” requires retrospective presentation of amounts related to partially-owned subsidiaries.

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Kellogg Company and Subsidiaries
SELECTED OPERATING SEGMENT DATA

	Quarter ended						Year-to-date period ended
(millions)	July 4,			June 28,			July 4,			June 28,
(Results are unaudited)	2009			2008			2009			2008
Net sales
North America	$	2,176		$	2,127		$	4,387		$	4,275
Europe		617			746			1,174			1,423
Latin America		258			283			488			536
Asia Pacific (a)		178			187			349			367
Consolidated	$	3,229		$	3,343		$	6,398		$	6,601
Segment operating profit
North America	$	426		$	380		$	829		$	783
Europe		104			122			199			234
Latin America		57			60			106			105
Asia Pacific (a)		21			22			46			53
Corporate		(55	)		(54	)		(98	)		(100	)
Consolidated	$	553		$	530		$	1,082		$	1,075

(a) Includes Australia, Asia and South Africa.

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Kellogg Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(millions)

	Year-to-date period ended
	July 4,			June 28,
(unaudited)	2009			2008
Operating activities
Net income	$	672		$	627
Adjustments to reconcile net income to operating cash flows:
Depreciation and amortization		189			182
Deferred income taxes		30			(3	)
Other		(8	)		71
Postretirement benefit plan contributions		(84	)		(48	)
Changes in operating assets and liabilities		(103	)		(140	)
Net cash provided by operating activities		696			689
Investing activities
Additions to properties		(161	)		(179	)
Acquisitions of businesses, net of cash acquired		—			(133	)
Property disposals		1			10
Net cash used in investing activities		(160	)		(302	)
Financing activities
Net issuances (reductions) of notes payable		(882	)		152
Issuances of long-term debt		745			756
Reductions of long-term debt		—			(465	)
Issuances of common stock		18			61
Common stock repurchases		—			(650	)
Cash dividends		(260	)		(236	)
Other		2			9
Net cash used in financing activities		(377	)		(373	)
Effect of exchange rate changes on cash		10			18
Increase in cash and cash equivalents		169			32
Cash and cash equivalents at beginning of period		255			524
Cash and cash equivalents at end of period	$	424		$	556
Supplemental Financial Data:
Cash Flow (operating cash flow less property additions) (a)	$	535		$	510

(a) We use this non-GAAP measure of cash flow to focus management and investors on the amount of cash available for debt reduction, dividend distributions, acquisition opportunities, and share repurchase.

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Kellogg Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(millions, except per share data)

	July 4,			January 3,
	2009			2009
	(unaudited)			*
Current assets
Cash and cash equivalents	$	424		$	255
Accounts receivable, net		1,191			1,100
Inventories:
Raw materials and supplies		223			203
Finished goods and materials in process		610			694
Deferred income taxes		105			112
Other prepaid assets		162			157
Total current assets		2,715			2,521
Property, net of accumulated depreciation of $4,405 and $4,171		2,977			2,933
Goodwill		3,639			3,637
Other intangibles, net of accumulated amortization of $43 and $42		1,460			1,461
Pension		169			96
Other assets		302			298
Total assets	$	11,262		$	10,946
Current liabilities
Current maturities of long-term debt	$	1		$	1
Notes payable		508			1,387
Accounts payable		1,052			1,135
Accrued advertising and promotion		410			357
Accrued income taxes		—			51
Accrued salaries and wages		231			280
Other current liabilities		374			341
Total current liabilities		2,576			3,552
Long-term debt		4,808			4,068
Deferred income taxes		330			300
Pension liability		621			631
Other liabilities		955			940
Commitments and contingencies
Equity
Common stock, $.25 par value		105			105
Capital in excess of par value		441			438
Retained earnings		5,246			4,836
Treasury stock, at cost		(1,755	)		(1,790	)
Accumulated other comprehensive income (loss)		(2,069	)		(2,141	)
Total Kellogg Company equity		1,968			1,448
Noncontrolling interests (a)		4			7
Total equity		1,972			1,455
Total liabilities and equity	$	11,262		$	10,946

*	Condensed from audited financial statements.
(a)	SFAS No. 160, “Noncontrolling interests in Consolidated Financial Statements” requires retrospective presentation of amounts related to partially-owned subsidiaries.

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Kellogg Company and Subsidiaries
     Analysis of net sales and operating profit performance

     Second quarter of 2009 versus 2008

	North						Latin			Asia Pacific						Consoli-
(dollars in millions)	America			Europe			America			(a)			Corporate			dated
2009 net sales	$	2,176		$	617		$	258		$	178		$	—		$	3,229
2008 net sales	$	2,127		$	746		$	283		$	187		$	—		$	3,343
% change — 2009 vs. 2008:
Volume (tonnage) (b)		.4	%		-5.5	%		3.7	%		-.7	%		—			-.5	%
Pricing/mix		2.9	%		4.1	%		4.5	%		3.6	%		—			3.1	%
Subtotal — internal business		3.3	%		-1.4	%		8.2	%		2.9	%		—			2.6	%
Acquisitions (c)		.1	%		—			—			5.6	%		—			.4	%
Foreign currency impact		-1.1	%		-16.0	%		-16.9	%		-12.9	%		—			-6.4	%
Total change		2.3	%		-17.4	%		-8.7	%		-4.4	%		—			-3.4	%
	North						Latin			Asia Pacific						Consoli-
(dollars in millions)	America			Europe			America			(a)			Corporate			dated
2009 operating profit	$	426		$	104		$	57		$	21		$	(55	)	$	553
2008 operating profit	$	380		$	122		$	60		$	22		$	(54	)	$	530
% change — 2009 vs. 2008:
Internal business		13.9	%		3.5	%		12.3	%		35.9	%		-1.0	%		13.5	%
Acquisitions (c)		-.1	%		—			—			-19.6	%		—			-.9	%
Foreign currency impact		-1.5	%		-18.7	%		-17.8	%		-20.2	%		—			-8.2	%
Total change		12.3	%		-15.2	%		-5.5	%		-3.9	%		-1.0	%		4.4	%

(a)	Includes Australia, Asia, and South Africa.
(b)	We measure the volume impact (tonnage) on revenues based on the stated weight of our product shipments.
(c)	Impact of results for the quarterly period ended July 4, 2009 from the acquisitions of Navigable Foods, Specialty Cereal and certain assets and liabilities of IndyBake.

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Kellogg Company and Subsidiaries
     Analysis of net sales and operating profit performance

     Year-to-date 2009 versus 2008

	North						Latin			Asia Pacific						Consoli-
(dollars in millions)	America			Europe			America			(a)			Corporate			dated
2009 net sales	$	4,387		$	1,174		$	488		$	349		$	—		$	6,398
2008 net sales	$	4,275		$	1,423		$	536		$	367		$	—		$	6,601
% change — 2009 vs. 2008:
Volume (tonnage) (b)		-.8	%		-4.7	%		1.9	%		4.2	%		—			-1.1	%
Pricing/mix		4.5	%		4.6	%		6.4	%		2.5	%		—			4.5	%
Subtotal — internal business		3.7	%		-.1	%		8.3	%		6.7	%		—			3.4	%
Acquisitions (c)		.1	%		.5	%		—			6.4	%		—			.5	%
Foreign currency impact		-1.2	%		-17.9	%		-17.2	%		-18.0	%		—			-7.0	%
Total change		2.6	%		-17.5	%		-8.9	%		-4.9	%		—			-3.1	%
	North						Latin			Asia Pacific						Consoli-
(dollars in millions)	America			Europe			America			(a)			Corporate			dated
2009 operating profit	$	829		$	199		$	106		$	46		$	(98	)	$	1,082
2008 operating profit	$	783		$	234		$	105		$	53		$	(100	)	$	1,075
% change — 2009 vs. 2008:
Internal business		7.6	%		6.0	%		19.0	%		24.3	%		1.4	%		10.0	%
Acquisitions (c)		-.1	%		—			—			-12.9	%		—			-.7	%
Foreign currency impact		-1.6	%		-20.9	%		-18.0	%		-23.9	%		—			-8.6	%
Total change		5.9	%		-14.9	%		1.0	%		-12.5	%		1.4	%		.7	%

(a)	Includes Australia, Asia, and South Africa.
(b)	We measure the volume impact (tonnage) on revenues based on the stated weight of our product shipments.
(c)	Impact of results for the year-to-date period ended July 4, 2009 from the acquisitions of United Bakers, Navigable Foods, Specialty Cereal and certain assets and liabilities of IndyBake.

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Kellogg Company and Subsidiaries
Up-front Costs ^(a)
$ millions

	Quarter ended July 4, 2009						Year-to-date period ended July 4, 2009
			Selling, general and						Selling, general and
	Cost of goods		administrative				Cost of goods		administrative
	sold		expense		Total		sold		expense		Total
2009
North America	$	18	$	11	$	29	$	34	$	11	$	45
Europe		9		—		9		10		—		10
Latin America		1		—		1		2		—		2
Asia Pacific		1		—		1		1		—		1
Corporate		—		—		—		—		—		—
Total	$	29	$	11	$	40	$	47	$	11	$	58

	Quarter ended June 28, 2008						Year-to-date period ended June 28, 2008
			Selling, general and						Selling, general and
	Cost of goods		administrative				Cost of goods		administrative
	sold		expense		Total		sold		expense		Total
2008
North America	$	—	$	1	$	1	$	—	$	2	$	2
Europe		4		—		4		13		—		13
Latin America		—		—		—		11		—		11
Asia Pacific		—		—		—		—		—		—
Corporate		—		17		17		—		17		17
Total	$	4	$	18	$	22	$	24	$	19	$	43

	Quarter ended June 28, 2008									Year-to-date period ended June 28, 2008
				Selling, general and									Selling, general and
	Cost of goods			administrative						Cost of goods			administrative
	sold			expense			Total			sold			expense			Total
2009 Variance – better(worse) than 2008
North America	$	(18	)	$	(10	)	$	(28	)	$	(34	)	$	(9	)	$	(43	)
Europe		(5	)		—			(5	)		3			—			3
Latin America		(1	)		—			(1	)		9			—			9
Asia Pacific		(1	)		—			(1	)		(1	)		—			(1	)
Corporate		—			17			17			—			17			17
Total	$	(25	)	$	7		$	(18	)	$	(23	)	$	8		$	(15	)

^(a) Up-front costs are charges incurred by the Company which will result in future cash savings and/or reduced depreciation.

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