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 26, 2007

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))

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 26, 2007, Kellogg Company issued a press release announcing financial results for the period ended June 30, 2007, a copy of which is attached as Exhibit 99.01.

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 26, 2007	/s/ John A. Bryant
	Name:	John A. Bryant
	Title:	Executive Vice President, Chief Financial Officer, Kellogg Company and President, Kellogg North America

EXHIBIT INDEX

99.01 Financial results for the period ended June 30, 2007

EX-99.1

	Kellogg Company News
	For release:	July 26, 2007
	Analyst/Media
	Contact:	Simon D. Burton, CFA (269) 961-6636

Kellogg Announces Strong First Half and Increased Investment

     BATTLE CREEK, Mich. — Kellogg Company (NYSE: K) today reported excellent second quarter sales, operating profit, earnings, and cash flow growth. The Company posted better-than-expected results despite continued inflation and a difficult competitive environment. Effective innovation and brand building both contributed to the quarter’s growth and provide additional confidence for the remainder of the year.

     Reported net earnings for the quarter were $301 million, a 13% increase from last year’s $267 million. Earnings were $0.75 per diluted share, an increase of 12% from last year’s $0.67 per share. This year’s second quarter results included up-front costs related to cost-reduction initiatives that equated to approximately $0.08 of earnings per share.

     “We have remained committed to our business model, operating principles, and strategy,” said David Mackay, Kellogg’s chief executive officer. “This focus continued to provide strong returns in the second quarter and we now enter the second half of the year with additional confidence and the flexibility to increase our investment in future growth.”

     Reported net sales in the quarter increased by 9% to $3.0 billion. Internal net sales growth, which excludes the effect of foreign-currency translation, was 6% and built on growth of 7% in the second quarter of last year.

     Kellogg North America posted reported net sales growth of 7%; internal net sales growth was 6%, driven by growth in each of the businesses. The Retail Cereal business posted internal sales growth of 3%, as the result of innovation introduced during the past year and strong brand-building programs. The Retail Snacks business posted 9% internal sales growth; each of the cookie, cracker, and wholesome snack businesses posted good growth. In combination, the North America Frozen and Specialty Channels businesses posted 8% internal net sales growth. The frozen food, foodservice and vending, and convenience and drug businesses all posted growth.

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     Kellogg International reported second quarter net sales growth of 13%, and 6% internal sales growth. This internal growth built on a strong comparison of 5% growth posted in the second quarter of last year. The Latin American region posted internal sales growth of 8%, which built on double-digit growth in the comparable quarter of last year. Both the cereal and snacks businesses contributed to these results. Internal net sales in the European business increased by 7%, as the result of mid single-digit growth in the cereal business and double-digit growth in the snacks business. The Asia Pacific region posted an internal net sales decline of 1 percent.

     Reported gross margin in the second quarter expanded by approximately 120 basis points as the result of operating leverage, cost-savings, and a favorable impact from pricing actions. In addition, quarterly gross margin benefited from lower spending for consumer promotion as a result of last year’s efficiency initiative and a difference in the amount of up-front costs related to cost-reduction initiatives recognized in cost of goods sold. This performance led to gross profit growth of 11 percent.

     Reported operating profit was $518 million in the second quarter, an increase of 12% from the second quarter of last year. Internal operating profit growth, which excludes the impact of foreign exchange, was 9% in the second quarter. The Company achieved these results despite a significant increase in cost inflation and a double-digit increase in its advertising investment which supported both new and existing brands. The Company now expects that up-front costs for the full year will equate to approximately $0.17 of earnings per share. Up-front costs in the second quarter totaled approximately $0.08 of earnings per share, significantly higher than the investment in the second quarter of 2006; this increased investment lowered internal operating profit growth by almost 5 percent.

     Cash flow, defined as cash from operating activities less capital expenditures, was $569 million in the first half of the year, $229 million more than was generated in the first half of 2006. Strong net earnings growth, excellent performance in trade payables, and the timing of brand-building investment all contributed to this improvement.

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Kellogg Expresses Increased Confidence for the Full Year

     Kellogg Company continues to expect that full-year earnings will be approximately $2.71 to $2.74 per share. The Company expects to achieve this growth despite significantly increased investment in brand building and its increased estimate for full-year cost inflation of $0.26 — $0.30 per share, or an increase of $0.08 from prior expectations. The Company continues to expect that full-year cash flow will be approximately $950 million to $1.025 billion. The Company also continues to expect that internal sales and operating profit will increase at a mid single-digit rate for the full year.

     Mr. Mackay concluded, “Our momentum continued in the second quarter and the good results through the first half of the year have provided us with increased levels of confidence that 2007 will be another year of dependable, sustainable growth. Most important, though, is the fact that we will post this growth while continuing to make significant and increased investment in future growth.”

About Kellogg Company

     With 2006 sales of nearly $11 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 snacks, frozen waffles, and veggie foods. The Company’s brands include Kellogg’s, Keebler, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain, Rice Krispies, Murray, Morningstar Farms, Austin, Famous Amos, 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.

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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 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. 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 EARNINGS
(millions, except per share data)

	Quarter ended				Year-to-date period ended
	June 30,		July 1,		June 30,		July 1,
(Results are unaudited)	2007		2006		2007		2006
Net sales	$	3,015	$	2,773	$	5,978	$	5,500
Cost of goods sold		1,638		1,538		3,337		3,068
Selling, general, and administrative expense		859		774		1,624		1,498
Operating profit		518		461		1,017		934
Interest expense		76		77		154		152
Other income (expense), net		—		4		2		9
Earnings before income taxes		442		388		865		791
Income taxes		141		121		243		250
Net earnings	$	301	$	267	$	622	$	541
Net earnings per share:
Basic	$	.76	$	.68	$	1.56	$	1.36
Diluted	$	.75	$	.67	$	1.55	$	1.35
Dividends per share	$	.2910	$	.2775	$	.5820	$	.5550
Average shares outstanding:
Basic		397		394		397		396
Diluted		401		397		401		399
Actual shares outstanding at period end						396		396

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Kellogg Company and Subsidiaries

SELECTED OPERATING SEGMENT DATA
(millions)

	Quarter ended						Year-to-date period ended
	June 30,			July 1,			June 30,			July 1,
(Results are unaudited)	2007			2006			2007			2006
Net sales
North America	$	1,980		$	1,859		$	3,982		$	3,724
Europe		623			538			1,197			1,028
Latin America		253			225			482			440
Asia Pacific(a)		159			151			317			308
Consolidated	$	3,015		$	2,773		$	5,978		$	5,500
Operating profit
North America	$	365		$	327		$	726		$	679
Europe		127			97			235			181
Latin America		55			58			102			113
Asia Pacific(a)		20			24			47			49
Corporate		(49	)		(45	)		(93	)		(88	)
Consolidated	$	518		$	461		$	1,017		$	934

(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
	June 30,			July 1,
(unaudited)	2007			2006
Operating activities
Net earnings	$	622		$	541
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization		185			173
Deferred income taxes		(92	)		(2	)
Other(a)		79			74
Postretirement benefit plan contributions		(34	)		(30	)
Changes in operating assets and liabilities		(10	)		(254	)
Net cash provided by operating activities		750			502
Investing activities
Additions to properties		(181	)		(162	)
Investments in joint ventures and other		(4	)		(1	)
Net cash used in investing activities		(185	)		(163	)
Financing activities
Net issuances of notes payable		699			433
Reductions of long-term debt		(729	)		—
Issuances of common stock		100			116
Common stock repurchases		(264	)		(580	)
Cash dividends		(232	)		(218	)
Other		10			7
Net cash used in financing activities		(416	)		(242	)
Effect of exchange rate changes on cash		14			(1	)
Increase (decrease) in cash and cash equivalents		163			96
Cash and cash equivalents at beginning of period		411			219
Cash and cash equivalents at end of period	$	574		$	315
Supplemental Financial Data:
Cash Flow (operating cash flow less property additions)(b)	$	569		$	340

(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.

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Kellogg Company and Subsidiaries

CONSOLIDATED BALANCE SHEET

(millions, except per share data)	June 30,			December 30,
	2007			2006
	(unaudited)			*
Current assets
Cash and cash equivalents	$	574		$	411
Accounts receivable, net		1,118			945
Inventories:
Raw materials and supplies		219			201
Finished goods and materials in process		596			623
Deferred income taxes		149			116
Other prepaid assets		125			131
Total current assets		2,781			2,427
Property, net of accumulated depreciation of $4,310 and $4,102		2,845			2,816
Goodwill		3,448			3,448
Other intangibles, net of accumulated amortization of $41 and $49		1,412			1,420
Pension		383			353
Other assets		254			250
Total assets	$	11,123		$	10,714
Current liabilities
Current maturities of long-term debt	$	466		$	723
Notes payable		1,969			1,268
Accounts payable		971			910
Accrued advertising and promotion		398			338
Accrued income taxes		92			152
Accrued salaries and wages		225			311
Other current liabilities		341			318
Total current liabilities		4,462			4,020
Long-term debt		2,588			3,053
Deferred income taxes		572			619
Other liabilities		1,100			953
Shareholders’ equity
Common stock, $.25 par value		105			105
Capital in excess of par value		329			292
Retained earnings		4,011			3,630
Treasury stock, at cost		(1,044	)		(912	)
Accumulated other comprehensive income (loss)		(1,000	)		(1,046	)
Total shareholders’ equity		2,401			2,069
Total liabilities and shareholders’ equity	$	11,123		$	10,714

* Condensed from audited financial statements.

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