Reportable Segments

12 Months Ended

Dec. 31, 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.

The Company 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)	2016			2015			2014
Net sales
U.S. Morning Foods	$	2,931		$	2,992		$	3,108
U.S. Snacks	3,198			3,234			3,329
U.S. Specialty	1,214			1,181			1,198
North America Other	1,598			1,687			1,864
Europe	2,377			2,497			2,869
Latin America	780			1,015			1,205
Asia Pacific	916			919			1,007
Consolidated	$	13,014		$	13,525		$	14,580
Operating profit
U.S. Morning Foods	$	593		$	474		$	479
U.S. Snacks	324			385			364
U.S. Specialty	279			260			266
North America Other	181			178			295
Europe	205			247			232
Latin America	84			9			169
Asia Pacific	70			54			53
Total Reportable Segments	1,736			1,607			1,858
Corporate	(341		)	(516		)	(834		)
Consolidated	$	1,395		$	1,091		$	1,024
Depreciation and amortization (a)
U.S. Morning Foods	$	122		$	123		$	136
U.S. Snacks	159			135			166
U.S. Specialty	11			11			10
North America Other	56			74			32
Europe	114			120			92
Latin America	22			28			32
Asia Pacific	30			29			31
Total Reportable Segments	514			520			499
Corporate	3			14			4
Consolidated	$	517		$	534		$	503

(a) Includes asset impairment charges as discussed in Note 14.

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)	2016			2015		2014
Interest expense
North America Other	$	5		$	5	$	6
Europe	8			5		5
Latin America	4			5		3
Asia Pacific	2			2		1
Corporate	387			210		194
Consolidated	$	406		$	227	$	209
Income taxes
Europe	$	(17	)	$	10	$	(3	)
Latin America	30			34		42
Asia Pacific	14			—		(1		)
Corporate & North America	206			115		148
Consolidated	$	233		$	159	$	186

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)	2016			2015			2014
Total assets
North America	$	10,533		$	10,363		$	10,488
Europe	3,824			3,742			2,893
Latin America	1,136			587			905
Asia Pacific	1,158			1,106			1,111
Corporate	1,248			1,184			1,783
Elimination entries	(2,788		)	(1,731		)	(2,041		)
Consolidated	$	15,111		$	15,251		$	15,139
Additions to long-lived assets
North America	$	318		$	342		$	295
Europe	125			110			129
Latin America	24			23			31
Asia Pacific	36			76			120
Corporate	4			2			7
Consolidated	$	507		$	553		$	582

The Company’s largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 20% of consolidated net sales during 2016, 21% in 2015, and 21% in 2014, 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)	2016		2015		2014
Net sales
United States	$	8,438	$	8,560	$	8,876
All other countries	4,576		4,965		5,704
Consolidated	$	13,014	$	13,525	$	14,580
Long-lived assets
United States	$	2,208	$	2,220	$	2,283
All other countries	1,361		1,401		1,486
Consolidated	$	3,569	$	3,621	$	3,769

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

(millions)	2016		2015		2014
Cereal	$	5,440	$	5,871	$	6,570
Snacks	6,660		6,698		7,002
Frozen	914		956		1,008
Consolidated	$	13,014	$	13,525	$	14,580