8-K

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

January 31, 2005
Date of Report (Date of Earliest Event Reported)

Commission file number 1-4171

KELLOGG COMPANY

(Exact Name of Registrant as Specified in its Charter)

State of Incorporation — Delaware IRS Employer Identification No. 38-0710690

ONE KELLOGG SQUARE
BATTLE CREEK, MICHIGAN 49016-3599
(Address of principal executive offices) (including zip code)

Registrant’s telephone number: 269-961-2000

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

Press Release dated January 31, 2005

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 January 31, 2005, Kellogg Company issued a press release announcing financial results for the period ended January 1, 2005, a copy of which is attached as Exhibit 99.1.

SIGNATURE

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
	(Registrant)
Dated: January 31, 2005	By       /s/ Jeffrey M. Boromisa
	Jeffrey M. Boromisa
	Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.
99.1	Press release dated January 31, 2005 issued by Kellogg Company.

EX-99.1

EXHIBIT 99.1

Kellogg Company News

For release:           January 31, 2005

Analyst /Media

Contact:                 Simon D. Burton, CFA (269) 961-6636

Kellogg Reports Strong Results In 2004

     BATTLE CREEK, Mich. – Kellogg Company (NYSE: K) today reported that its fourth quarter and full-year earnings exceeded its previously increased forecast range. The Company also reaffirmed its earnings forecast range for 2005 of $2.28-2.32 per share.

     Reported net earnings for the full year 2004 were $890.6 million, or a 13% increase from last year’s $787.1 million. Earnings were $2.14 per diluted share, an increase of 11% from $1.92 per share in 2003. Reported net earnings in the fourth quarter of 2004 were $186.4 million, or $0.45 per diluted share, compared to $188.0 million or $0.46 per share in the fourth quarter of 2003. This decline was anticipated and resulted primarily from a higher tax rate.

     “2004 was another excellent year for our Company,” said Jim Jenness, Kellogg’s chairman and chief executive officer-designate. “We remained focused on innovation and brand building, we added excitement to our categories, and we improved mix. Importantly, we did all this while making significant investment in our future growth.”

     Reported net sales in 2004 increased by 9% to $9.6 billion; fourth quarter sales increased by 12%, to $2.4 billion. Internal net sales growth, which excludes the effect of foreign-currency translation and a 53^rd week, was 5% for the full year and 4% in the fourth quarter.

     Kellogg North America reported net sales growth of 7% in 2004, and 12% in the fourth quarter. Internal sales growth was 5% in 2004, which built on growth of 3% in 2003; internal sales growth in the fourth quarter was also 5 percent. Retail cereal internal sales increased by 2% in 2004, even after posting a gain of 6% during 2003; 2004’s growth led to the fifth consecutive year of category share gains in the ready-to-eat cereal category. Retail cereal internal sales increased by 1% in the fourth quarter, which built on exceptional growth of 9% in the fourth quarter of 2003. Retail snacks posted internal sales growth of 8% in 2004 and 10% in the fourth quarter. This excellent full-year growth resulted from increased sales of toaster pastries, crackers and wholesome

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snacks. The Frozen and Specialty Channels businesses posted internal growth of 4% for the full year and 3% for the fourth quarter. These results were led by mid single-digit internal sales growth in the Food Away From Home business and double-digit growth in the Eggo business.

     Kellogg International reported net sales growth of 14% in 2004, and 12% in the fourth quarter. Internal sales growth was 5% for the full year and 2% in the fourth quarter. Internal sales growth in Latin America was 11% in 2004 and 2% in the fourth quarter. Full-year growth was driven by increased sales in both cereal and snacks in the Mexican market. Fourth quarter growth was limited by difficult comparisons in Mexico and the repurchase of a few weeks of inventory elsewhere in Latin America. Europe posted internal sales growth of 4% and 2% for the full year and fourth quarter, respectively. Sales increased in the United Kingdom despite increased competitive activity; the remainder of the European business also posted increased sales in 2004. The Asia Pacific business reported internal sales growth of 2% for the full year and 5% for the fourth quarter despite a relatively weak cereal category in Korea and continued competitive activity in Australia.

     Operating profit increased by 9% in 2004 to $1.7 billion; operating profit increased by 4% to $366 million during the fourth quarter. Investment in brand building increased at a double-digit rate in 2004 and at a high single-digit rate in the fourth quarter. In addition, the Company made significant investments in up-front costs related to cost-reduction initiatives during both periods.

     In addition, net earnings included the impact of a higher tax rate of 35.9% in the fourth quarter. This higher tax rate resulted primarily from the Company’s decision to repatriate foreign earnings as a result of passage of the American Jobs Creation Act.

     In 2004, cash flow, defined as cash from operating activities less capital expenditures, was $950 million, including $11 million more of total contributions to benefit plans than in 2003. The Company reduced debt by $286 million and repurchased $298 million of its stock in 2004.

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Kellogg Reaffirms 2005 Outlook

     Kellogg reiterated its expectation for full-year earnings per share to fall within a range of $2.28-2.32; this excludes the impact of an accounting change which requires the expensing of stock-based compensation. The Company expects higher benefit costs in 2005 and no net effect from changed commodity costs. The Company also anticipates that it will continue to invest in future growth through increased brand-building activity and the execution of additional cost-saving initiatives.

     Mr. Jenness concluded, “2004 was another strong year for our Company. We remained focused on our proven strategy and made the right decisions for the future. We executed well and increased our investment in the business. Each of our 25,000 employees around the world is committed to providing growth for our share owners and I have every confidence in their ability to deliver in 2005, and the years to come.

About Kellogg Company

     With 2004 sales of almost $10 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, frozen waffles, meat alternatives, pie crusts, and ice cream cones. The company’s brands include Kellogg’s, Keebler, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain, Rice Krispies, Murray, Austin, Morningstar Farms, Famous Amos, Carr’s, and Kashi. Kellogg products are manufactured in 17 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 forward-looking statements related to business performance, earnings, costs, brand building, and cost-saving 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

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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; business disruption or other losses from terrorist acts or political unrest; and other factors.

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Kellogg Company and Subsidiaries

CONSOLIDATED STATEMENT OF EARNINGS
(millions, except per share data)

	Quarter ended		Quarter ended			Year ended			Year ended
	Jan. 1,		Dec. 27,			Jan. 1,			Dec. 27,
(Quarterly results and 2004 annual results are unaudited)	2005		2003			2005			2003
Net sales	$	2,390.8	$	2,135.0		$	9,613.9		$	8,811.5
Cost of goods sold		1,317.0		1,188.1			5,298.7			4,898.9
Selling and administrative expense		708.1		595.1			2,634.1			2,368.5
Operating profit		365.7		351.8			1,681.1			1,544.1
Interest expense		78.1		102.9			308.6			371.4
Other income (expense), net		3.2		(5.4	)		(6.6	)		(3.2	)
Earnings before income taxes		290.8		243.5			1,365.9			1,169.5
Income taxes		104.4		55.5			475.3			382.4
Net earnings	$	186.4	$	188.0		$	890.6		$	787.1
Net earnings per share:
Basic	$	.45	$	.46		$	2.16		$	1.93
Diluted	$	.45	$	.46		$	2.14		$	1.92
Dividends per share	$	.2525	$	.2525		$	1.01		$	1.01
Average shares outstanding:
Basic		413.2		408.6			412.0			407.9
Diluted		417.7		412.0			416.4			410.5
Actual shares outstanding at period end							413.0			409.7

Other income (expense), net includes non-operating items such as interest income, foreign exchange gains and losses, charitable donations, and gains on asset sales.

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Kellogg Company and Subsidiaries

SELECTED OPERATING SEGMENT DATA
(millions)

	Quarter ended			Quarter ended			Year ended			Year ended
	Jan. 1,			Dec. 27,			Jan. 1,			Dec. 27,
(Quarterly results and 2004 annual results are unaudited)	2005			2003 (a)			2005			2003 (a)
Net sales
North America	$	1,593.2		$	1,420.9		$	6,369.3		$	5,954.3
Europe		489.6			425.7			2,007.3			1,734.2
Latin America		170.9			169.7			718.0			666.7
Asia Pacific (b)		137.1			118.7			519.3			456.3
Consolidated	$	2,390.8		$	2,135.0		$	9,613.9		$	8,811.5
Segment operating profit
North America	$	334.0		$	278.1		$	1,240.4		$	1,134.2
Europe		16.8			52.2			292.3			279.8
Latin America		34.9			37.6			185.4			168.9
Asia Pacific (b)		17.3			7.1			79.5			61.1
Corporate		(37.3	)		(23.2	)		(116.5	)		(99.9	)
Consolidated	$	365.7		$	351.8		$	1,681.1		$	1,544.1

(a)	2003 results were restated to conform to 2004 operating segment presentation as follows: 1) U.S. and Canadian results combined into North America, 2) certain U.S. export operations reclassified from U.S. to Latin America, and 3) certain SGA expenditures reallocated between Corporate and North America.
(b)	Includes Australia and Asia.

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Kellogg Company and Subsidiaries

CONSOLIDATED STATEMENT OF CASH FLOWS
(millions)

	Year ended			Year ended
	Jan. 1,			Dec. 27,
(2004 results are unaudited)	2005			2003
Operating activities
Net earnings	$	890.6		$	787.1
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization		410.0			372.8
Deferred income taxes		57.7			74.8
Other		96.0			76.1
Postretirement benefit plan contributions		(195.5	)		(184.2	)
Changes in operating assets and liabilities		(29.8	)		44.4
Net cash provided by operating activities		1,229.0			1,171.0
Investing activities
Additions to properties		(278.6	)		(247.2	)
Dispositions of businesses		—			14.0
Other		8.2			14.2
Net cash used in investing activities		(270.4	)		(219.0	)
Financing activities
Net issuances of notes payable		388.9			(100.1	)
Issuances of long-term debt		7.0			498.1
Reductions of long-term debt		(682.2	)		(956.0	)
Net issuances of common stock		291.8			121.6
Common stock repurchases		(297.5	)		(90.0	)
Cash dividends		(417.6	)		(412.4	)
Other		(6.7	)		(0.6	)
Net cash used in financing activities		(716.3	)		(939.4	)
Effect of exchange rate changes on cash		33.9			28.0
Increase in cash and cash equivalents		276.2			40.6
Cash and cash equivalents at beginning of period		141.2			100.6
Cash and cash equivalents at end of period	$	417.4		$	141.2
Supplemental Financial Data:
Cash Flow (operating cash flow less property additions)*	$	950.4		$	923.8

*   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

(2004 results are unaudited)	January 1,			December 27,
(millions, except per share data)	2005			2003 *
Current assets
Cash and cash equivalents	$	417.4		$	141.2
Accounts receivable, net		776.4			754.8
Inventories:
Raw materials and supplies		188.0			185.3
Finished goods and materials in process		493.0			464.5
Other current assets		247.0			242.1
Total current assets		2,121.8			1,787.9
Property, net of accumulated depreciation of $3,778.8 and $3,439.3		2,715.1			2,780.2
Goodwill		3,092.9			3,098.4
Other intangibles, net of accumulated amortization of $46.1 and $35.1		2,023.4			2,034.4
Other assets		837.2			441.8
Total assets	$	10,790.4		$	10,142.7
Current liabilities
Current maturities of long-term debt	$	278.6		$	578.1
Notes payable		709.7			320.8
Accounts payable		767.2			703.8
Accrued advertising and promotion		322.0			323.1
Other current liabilities		768.5			840.2
Total current liabilities		2,846.0			2,766.0
Long-term debt		3,892.6			4,265.4
Deferred income taxes		1,187.6			1,062.8
Pension benefits		181.1			165.3
Nonpension postretirement benefits		269.7			291.0
Other liabilities		156.2			149.0
Shareholders’ equity
Common stock, $.25 par value		103.8			103.8
Capital in excess of par value		—			24.5
Retained earnings		2,701.3			2,247.7
Treasury stock, at cost		(108.0	)		(203.6	)
Accumulated other comprehensive income (loss)		(439.9	)		(729.2	)
Total shareholders’ equity		2,257.2			1,443.2
Total liabilities and shareholders’ equity	$	10,790.4		$	10,142.7

* Condensed from audited financial statements.

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