Reportable Segments

12 Months Ended

Jan. 02, 2016

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

REPORTABLE SEGMENTS

Kellogg Company is the world’s leading producer of cereal, second largest producer of cookies and crackers and a leading producer of savory snacks and frozen foods. Additional product offerings include toaster pastries, cereal bars, fruit-flavored snacks and veggie foods. Kellogg products are manufactured and marketed globally. Principal markets for these products include the United States and United Kingdom.

Beginning in the first quarter of 2015, a new Kashi operating segment was established in order to optimize future growth potential of this business. This operating segment is included in the North America Other reportable segment. Previously, results of Kashi were included within the U.S. Morning Foods, U.S. Snacks, and the U.S. Frozen operating segments. Goodwill was reallocated between operating segments on a relative fair value basis. In conjunction with the reallocation of goodwill, an impairment analysis was performed. No impairment of the operating segments was noted. Reportable segment results of prior periods have been recast to conform to the current presentation. The Company currently has the following reportable segments: U.S. Morning Foods; U.S. Snacks; U.S. Specialty; North America Other; Europe; Latin America; and Asia Pacific.

The Company manages its operations through 9 operating segments that are based on product category or geographic location. These operating segments are evaluated for similarity with regards to economic characteristics, products, production processes, types or classes of customers, distribution methods and regulatory environments to determine if they can be aggregated into reportable segments. The reportable segments are discussed in greater detail below.

The U.S. Morning Foods operating segment includes cereal, toaster pastries, health and wellness bars, and beverages.

U.S. Snacks includes cookies, crackers, cereal bars, savory snacks and fruit-flavored snacks.

U.S. Specialty primarily represents food away from home channels, including food service, convenience, vending, Girl Scouts and food manufacturing. The food service business is mostly non-commercial, serving institutions such as schools and hospitals. The convenience business includes traditional convenience stores as well as alternate retailing outlets.

North America Other includes the U.S. Frozen, Kashi and Canada operating segments. As these operating segments are not considered economically similar enough to aggregate with other operating segments and are immaterial for separate disclosure, they have been grouped together as a single reportable segment.

The 3 remaining reportable segments are based on geographic location — Europe which consists principally of European countries; Latin America which consists of Central and South America and includes Mexico; and Asia Pacific which consists of Sub-Saharan Africa, Australia and other Asian and Pacific markets.

The measurement of reportable segment results is based on segment operating profit which is generally consistent with the presentation of operating profit in the Consolidated Statement of Income. Intercompany transactions between operating segments were insignificant in all periods presented.

(millions)	2015			2014			2013
Net sales
U.S. Morning Foods	$	2,992		$	3,108		$	3,195
U.S. Snacks	3,234			3,329			3,379
U.S. Specialty	1,181			1,198			1,202
North America Other	1,687			1,864			1,940
Europe	2,497			2,869			2,843
Latin America	1,015			1,205			1,195
Asia Pacific	919			1,007			1,038
Consolidated	$	13,525		$	14,580		$	14,792
Operating profit
U.S. Morning Foods	$	474		$	479		$	469
U.S. Snacks	385			364			424
U.S. Specialty	260			266			265
North America Other	178			295			314
Europe	247			232			249
Latin America	9			169			157
Asia Pacific	54			53			67
Total Reportable Segments	1,607			1,858			1,945
Corporate	(516		)	(834		)	892
Consolidated	$	1,091		$	1,024		$	2,837
Depreciation and amortization (a)
U.S. Morning Foods	$	123		$	136		$	181
U.S. Snacks	135			166			144
U.S. Specialty	11			10			8
North America Other	74			32			30
Europe	120			92			84
Latin America	28			32			29
Asia Pacific	29			31			40
Total Reportable Segments	520			499			516
Corporate	14			4			16
Consolidated	$	534		$	503		$	532

(a) Includes asset impairment charges as discussed in Note 13.

Certain items such as interest expense and income taxes, while not included in the measure of reportable segment operating results, are regularly reviewed by Management for the Company’s internationally-based reportable segments as shown below.

(millions)	2015		2014			2013
Interest expense
North America Other	$	5	$	6		$	6
Europe	5		5			6
Latin America	5		3			1
Asia Pacific	2		1			3
Corporate	210		194			219
Consolidated	$	227	$	209		$	235
Income taxes
Europe	$	10	$	(3	)	$	4
Latin America	34		42			35
Asia Pacific	—		(1		)	6
Corporate & North America	115		148			747
Consolidated	$	159	$	186		$	792

Management reviews balance sheet information, including total assets, based on geography. For all North American-based operating segments, balance sheet information is reviewed by Management in total and not on an individual operating segment basis.

(millions)	2015			2014			2013
Total assets
North America	$	10,363		$	10,489		$	10,643
Europe	3,742			2,893			3,007
Latin America	587			905			1,052
Asia Pacific	1,106			1,111			1,049
Corporate	1,198			1,796			2,583
Elimination entries	(1,731		)	(2,041		)	(2,860		)
Consolidated	$	15,265		$	15,153		$	15,474
Additions to long-lived assets
North America	$	342		$	295		$	296
Europe	110			129			182
Latin America	23			31			70
Asia Pacific	76			120			85
Corporate	2			7			4
Consolidated	$	553		$	582		$	637

The Company’s largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 21% of consolidated net sales during 2015, 2014, and 2013, comprised principally of sales within the United States.

Supplemental geographic information is provided below for net sales to external customers and long-lived assets:

(millions)	2015		2014		2013
Net sales
United States	$	8,560	$	8,876	$	9,060
All other countries	4,965		5,704		5,732
Consolidated	$	13,525	$	14,580	$	14,792
Long-lived assets
United States	$	2,220	$	2,283	$	2,343
All other countries	1,401		1,486		1,513
Consolidated	$	3,621	$	3,769	$	3,856

Supplemental product information is provided below for net sales to external customers:

(millions)	2015		2014		2013
Cereal	$	5,871	$	6,570	$	6,753
Snacks	6,698		7,002		7,011
Frozen	956		1,008		1,028
Consolidated	$	13,525	$	14,580	$	14,792