Notes to Consolidated Financial Statements

for the quarter ended ~~September 28, 2019~~June 27, 2020 (unaudited)

Note 1 Accounting policies

Basis of presentation

The unaudited interim financial information of Kellogg Company (the Company) included in this report reflects all adjustments, all of which are of a normal and recurring nature, that management believes are necessary for a fair statement of the results of operations, comprehensive income, financial position, equity and cash flows for the periods presented. This interim information should be read in conjunction with the financial statements and accompanying footnotes within the Company’s ~~2018~~2019 Annual Report on Form 10-K.

The condensed balance sheet information at December ~~29, 2018~~28, 2019 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. The results of operations for the ~~quarterly period~~quarter ended ~~September 28, 2019~~June 27, 2020 are not necessarily indicative of the results to be expected for other interim periods or the full year.

Accounts payable

The Company has agreements with certain third parties to provide accounts payable tracking systems which facilitates participating suppliers’ ability to monitor and, if elected, sell payment obligations from the Company to designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to sell one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s goal in entering into these agreements is to capture overall supplier savings, in the form of payment terms or vendor funding, created by facilitating suppliers’ ability to sell payment obligations, while providing them with greater working capital flexibility. We have no economic interest in the sale of these suppliers’ receivables and no direct financial relationship with the financial institutions concerning these services. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to sell amounts under these arrangements. However, the Company’s right to offset balances due from suppliers against payment obligations is restricted by this agreement for those payment obligations that have been sold by suppliers. The payment of these obligations by the Company is included in cash used in operating activities in the Consolidated Statement of Cash Flows. As of ~~September 28, 2019, $809~~June 27, 2020, $899 million of the Company’s outstanding payment obligations had been placed in the accounts payable tracking system, and participating suppliers had sold ~~$572~~$667 million of those payment obligations to participating financial institutions. As of December ~~29, 2018, $893~~28, 2019, $812 million of the Company’s outstanding payment obligations had been placed in the accounts payable tracking system, and participating suppliers had sold ~~$701~~$605 million of those payment obligations to participating financial institutions.

~~New~~Adoption of new accounting standards ~~adopted in the period~~

~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.~~
In February 2018, the Financial Accounting Standards Board (FASB) issued an Accounting Standard Update (ASU) permitting a company to reclassify the disproportionate income tax effects of the Tax Cuts and Jobs Act of 2017 on items within accumulated other comprehensive income (AOCI) to retained earnings. We elected to adopt the ASU effective in the first quarter of 2019 and reclassified the disproportionate income tax effect recorded within AOCI to retained earnings. This resulted in a decrease to AOCI and an increase to retained earnings of $22 million. The adjustment primarily related to deferred taxes previously recorded for pension and other postretirement benefits, as well as hedging positions for debt and net investment hedges.

~~Leases.~~ In February 2016, the FASB issued an ASU requiring the recognition of lease assets and lease liabilities by lessees for all leases with terms greater than 12 months. The distinction between finance leases and operating leases remains, with similar classification criteria as current GAAP to distinguish between capital and operating leases. The principal difference from prior guidance is that the lease assets and lease liabilities arising from operating leases will be recognized on the Consolidated Balance Sheet. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018.

The Company adopted the ASU in the first quarter of 2019, using the optional transition method that allows for a cumulative-effect adjustment in the period of adoption with no restatement of prior periods. The Company elected the package of practical expedients permitted under the transition guidance that allows for the carry forward of historical lease classifications and consistent treatment of initial direct costs for existing leases. The Company also elected to apply the practical expedient that allows the continued historical treatment of land easements. The

~~Company did not elect the practical expedient for the use of hindsight in evaluating the expected lease term of existing leases.~~

The adoption of the ASU resulted in the recording of operating lease assets and operating lease liabilities of approximately $453 million and $461 million, respectively, as of December 30, 2018. The difference between the additional lease assets and lease liabilities, represents existing deferred rent and prepaid lease balances that were reclassified on the balance sheet. The adoption of the ASU did not have a material impact to the Company’s Consolidated Statements of Income or Cash Flows.

~~Accounting standards to be adopted in future periods~~

Cloud Computing Arrangements. In August 2018, the FASB issued ASU 2018-15: Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. The ASU allows companies to capitalize implementation costs incurred in a hosting arrangement that is a service contract over the term of the hosting arrangement, including periods covered by renewal options that are reasonably certain to be exercised. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019 and can be applied retrospectively or prospectively. Early adoption is permitted. The Company ~~plans to adopt~~adopted the ASU in the first quarter of 2020 and elected to apply it prospectively. The adoption isdid not ~~expected to~~ have a material impact to the Company's Consolidated Financial Statements.

Accounting standards to be adopted in future periods

Compensation Retirement Benefits. In August 2018, the FASB issued ASU 2018-14: Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. The ASU removed disclosures that no longer are considered cost beneficial, clarified the specific requirements of disclosures, and added disclosure requirements identified as relevant. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020 and can be applied retrospectively or prospectively. Early adoption is permitted. The Company is currently assessing when to adopt the ASU and the impact of adoption.

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Note 2 Sale of accounts receivable

The Company has a program in which a discrete group of customers are allowed to extend their payment terms in exchange for the elimination of early payment discounts (Extended Terms Program).

The Company has two Receivable Sales Agreements (Monetization Programs) described below, which are intended to directly offset the impact the Extended Terms Program would have on the days-sales-outstanding (DSO) metric that is critical to the effective management of the Company's accounts receivable balance and overall working capital. The Monetization Programs are designed to effectively offset the impact on working capital of the Extended Terms Program. The Monetization Programs sell, on a revolving basis, certain trade accounts receivable invoices to third party financial institutions. Transfers under these agreements are accounted for as sales of receivables resulting in the receivables being de-recognized from the Consolidated Balance Sheet. The Monetization Programs provide for the continuing sale of certain receivables on a revolving basis until terminated by either party; however the maximum receivables that may be sold at any time is $1,033 million.

The Company has no retained interest in the receivables sold, however the Company does have collection and administrative responsibilities for the sold receivables. The Company has not recorded any servicing assets or liabilities as of ~~September~~June 27, 2020 and December 28, 2019 ~~and December 29, 2018~~ for these agreements as the fair value of these servicing arrangements as well as the fees earned were not material to the financial statements.

Accounts receivable sold of ~~$918~~$964 million and ~~$900~~$774 million remained outstanding under these arrangements as of ~~September~~June 27, 2020 and December 28, 2019, ~~and December 29, 2018,~~ respectively. The proceeds from these sales of receivables are included in cash from operating activities in the Consolidated Statement of Cash Flows in the period of sale. The recorded net loss on sale of receivables was $6$3 million and ~~$21~~$8 million for the quarter and year-to-date periods ended ~~September 28, 2019,~~June 27, 2020, respectively and was $7 million and ~~$20~~$15 million for the quarter and year-to-date periods ended ~~September~~June 29, ~~2018,~~2019, respectively. The recorded loss is included in Other income and ~~expense.~~expense (OIE).

Other programs

Additionally, from time to time certain of the Company's foreign subsidiaries will transfer, without recourse, accounts receivable invoices of certain customers to financial institutions. These transactions are accounted for as sales of the receivables resulting in the receivables being de-recognized from the Consolidated Balance Sheet. Accounts receivable sold of ~~$23~~$30 million and ~~$93~~$89 million remained outstanding under these programs as of ~~September~~June 27, 2020 and December 28, 2019, ~~and December 29, 2018,~~ respectively. The proceeds from these sales of receivables are included in cash from operating activities in the Consolidated Statement of Cash Flows in the period of sale. The recorded net loss on the sale of these receivables is included in ~~Other income and expense (OIE)~~OIE and is not material.

Note 3 Divestiture

On July 28, 2019, the Company completed its sale of selected cookies, fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses to Ferrero International S.A. (“Ferrero”) for approximately $1.3 billion in cash, subject to a working capital adjustment mechanism. Both the total assets and net assets of the businesses were approximately $1.3 billion, resulting in a net pre-tax gain of $38 million during the third quarter ~~ended September 28,~~of 2019, recorded in Other income and (expense), after including related costs to sell of $14 million. Additionally, the Company recognized curtailment gains related to the divestiture totaling $17 million in our U.S. pension and nonpension postretirement plans. The operating results for these businesses were primarily included in the North America reporting segment prior to the sale.

Proceeds from the divestiture were used primarily to redeem $1.0 billion of debt during the third ~~quarter. The Company expects to pay approximately $260 million of cash taxes on the divestiture in the fourth~~ quarter of 2019.

In connection with the sale, the Company entered into a transition services agreement (TSA) with Ferrero, under which the Company will provide certain services to Ferrero to help facilitate an orderly transition of the businesses following the sale. In return for these services, Ferrero is required to pay certain agreed upon fees that are designed to reimburse the Company for certain costs incurred by the Company in providing such services, plus specified nominal ~~margins which are immaterial.~~margins. The TSA provides for a term of services starting at the sale completion date and continuing for a period of up to 18 months.

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Note 4 ~~Acquisitions, West Africa investments, goodwill~~Goodwill and ~~other~~Other intangible assets

~~Multipro acquisition~~

On May 2, 2018, the Company (i) acquired an incremental 1% ownership interest in Multipro, a leading distributor of a variety of food products in Nigeria and Ghana, and (ii) exercised its call option (Purchase Option) to acquire a 50% interest in Tolaram Africa Foods, PTE LTD (TAF), a holding company with a 49% equity interest in an affiliated food manufacturer, resulting in the Company having a 24.5% interest in the affiliated food manufacturer. The aggregate cash consideration paid was approximately $419 million and was funded through cash on hand and short-term borrowings, which was refinanced with long-term borrowings in May 2018. As part of the consideration for the acquisition, an escrow established in connection with the original Multipro investment in 2015, which represented a significant portion of the amount paid for the Company’s initial investment, was released by the Company.

As a result of the Company’s incremental ownership interest in Multipro and concurrent changes to the shareholders' agreement, the Company has a 51% controlling interest in and is consolidating Multipro. The acquisition was accounted for as a business combination and the assets and liabilities of Multipro were included in the September 28, 2019 and December 29, 2018 Consolidated Balance Sheet and the results of its operations have been included in the Consolidated Statement of Income subsequent to the acquisition date within the AMEA reporting segment. The Multipro investment was previously accounted for under the equity method of accounting and the Company recorded our share of equity income or loss from Multipro within Earnings (loss) from unconsolidated entities. In connection with the business combination, the Company recognized a one-time, non-cash gain in the second quarter of 2018 on the disposition of our previously held equity interest in Multipro of $245 million, which is included within Earnings (loss) from unconsolidated entities.

The Company's September 29, 2018 quarter and year-to-date consolidated unaudited pro forma historical net sales and net income, as if Multipro had been acquired at the beginning of 2018, exclusive of the non-cash $245 million gain on the disposition of the equity interest recognized in the second quarter of 2018, are estimated as follows:

Quarter ended Year-to-date period ended
(millions) September 29, 2018 September 29, 2018
Net sales $ 3,469

$ 10,512
Net Income attributable to Kellogg Company $ 380

$ 1,420

~~Investment in TAF~~

The investment in TAF, our interest in an affiliated food manufacturer, is accounted for under the equity method of accounting with the Company’s share of equity income or loss being recognized within Earnings (loss) from unconsolidated entities. The $458 million aggregate of the consideration paid upon exercise and the historical cost value of the Purchase Option was compared to the estimated fair value of the Company’s ownership percentage of TAF and the Company recognized a one-time, non-cash loss in the second quarter of 2018 of $45 million within Earnings (loss) from unconsolidated entities, which represents an other than temporary excess of cost over fair value of the investment. The difference between the carrying amount of TAF and the underlying equity in net assets is primarily attributable to brand and customer list intangible assets, a portion of which is being amortized over future periods, and goodwill.

Goodwill and Intangible Assets

Changes in the carrying amount of goodwill, intangible assets subject to amortization, consisting primarily of customer relationships, ~~distribution agreements,~~ and indefinite-lived intangible assets, consisting of brands and distribution agreements, are presented in the following tables:

Carrying amount of goodwill

(millions)
North
America
Europe
Latin
America
AMEA
Consoli-
dated
December 29, 2018 $ 4,611
$ 346
$ 218
$ 875
$ 6,050
Divestiture (191 ) —
—
—
(191 )
Currency translation adjustment —
(10 ) (10 ) 3
(17 )
September 28, 2019 $ 4,420
$ 336
$ 208
$ 878
$ 5,842


(millions)	North America		Europe		Latin America		AMEA		Consoli- dated
December 28, 2019	$	4,422	$	347	$	213	$	879	$	5,861




Currency translation adjustment	(2)		(8)		(43)		(40)		(93)
June 27, 2020	$	4,420	$	339	$	170	$	839	$	5,768

Intangible assets subject to amortization

Gross carrying amount
(millions)
North
America
Europe
Latin
America
AMEA
Consoli-
dated
December 29, 2018 $ 74
$ 39
$ 63
$ 432
$ 608
Additions 2
—
—
—
2
Divestiture (12 ) —
—
—
(12 )
Currency translation adjustment —
(3 ) (4 ) 1
(6 )
September 28, 2019 $ 64
$ 36
$ 59
$ 433
$ 592

Accumulated Amortization
December 29, 2018 $ 39
$ 18
$ 12
$ 18
$ 87
Amortization 2
2
3
13
20
Divestiture (12 ) —
—
—
(12 )
Currency translation adjustment —
(1 ) (1 ) (1 ) (3 )
September 28, 2019 $ 29
$ 19
$ 14
$ 30
$ 92

Intangible assets subject to amortization, net
December 29, 2018 $ 35
$ 21
$ 51
$ 414
$ 521
Amortization (2 ) (2 ) (3 ) (13 ) (20 )
Currency translation adjustment —
(2 ) (3 ) 2
(3 )
September 28, 2019 $ 33
$ 17
$ 45
$ 403
$ 498


Gross carrying amount
(millions)	North America		Europe		Latin America		AMEA		Consoli- dated
December 28, 2019	$	64	$	41	$	60	$	429	$	594



Currency translation adjustment	—		—		(15)		(26)		(41)
June 27, 2020	$	64	$	41	$	45	$	403	$	553

Accumulated Amortization
December 28, 2019	$	31	$	21	$	15	$	34	$	101
Amortization	2		3		1		8		14

Currency translation adjustment	—		—		(3)		(2)		(5)
June 27, 2020	$	33	$	24	$	13	$	40	$	110

Intangible assets subject to amortization, net
December 28, 2019	$	33	$	20	$	45	$	395	$	493


Amortization	(2)		(3)		(1)		(8)		(14)

Currency translation adjustment	—		—		(12)		(24)		(36)
June 27, 2020	$	31	$	17	$	32	$	363	$	443

For intangible assets in the preceding table, amortization was ~~$20~~$14 million ~~and $16 million~~ for each of the year-to-date periods ended ~~September 28, 2019~~June 27, 2020 and ~~September~~June 29, ~~2018, respectively.~~2019. The currently estimated aggregate annual amortization expense for full-year ~~2019~~2020 is approximately ~~$27~~$28 million.

Intangible assets not subject to amortization

(millions)
North
America
Europe
Latin
America
AMEA
Consoli-
dated
December 29, 2018 $ 1,985
$ 401
$ 73
$ 381
$ 2,840
Additions 18
—
—
—
18
Divestiture (765 ) —
—
—
(765 )
Currency translation adjustment —
(16 ) (5 ) 2
(19 )
September 28, 2019 $ 1,238
$ 385
$ 68
$ 383
$ 2,074


(millions)	North America		Europe		Latin America		AMEA		Consoli- dated
December 28, 2019	$	1,238	$	392	$	70	$	383	$	2,083



Currency translation adjustment	—		2		(19)		(23)		(40)
June 27, 2020	$	1,238	$	394	$	51	$	360	$	2,043

~~Impairment Testing~~

Goodwill is tested for impairment at least annually or whenever events or changes in circumstances indicate the carrying value of the asset may be impaired, including a change in reporting units or composition of reporting units as a result of a re-organization in internal reporting structures.

For the goodwill impairment test, the fair value of the reporting units are estimated based on market multiples. This approach employs market multiples based on either sales or earnings before interest, taxes, depreciation and amortization for companies that are comparable to the Company’s reporting units. In the event the fair value determined using the market multiple approach is close to carrying value, the Company may supplement the fair value determination using discounted cash flows. The assumptions used for the impairment test are consistent with those utilized by a market participant performing similar valuations for the Company’s reporting units.

~~These estimates are made using various inputs including historical data, current and anticipated market conditions, management plans, and market comparables.~~

On December 30, 2018 the Company reorganized our North American business. The reorganization eliminated the legacy business unit structure and internal reporting. In addition, the Company changed the internal reporting provided to the chief operating decision maker (CODM) and segment manager. As a result, the Company reevaluated its operating segments and reporting units.

~~In addition, we transferred the management of our Middle East, North Africa, and Turkey businesses from Kellogg Europe to Kellogg AMEA, effective December 30, 2018.~~

Refer to Note 13, Reportable Segments for further details on these changes. As a result of these changes in operating segments and related reporting units, the Company re-allocated goodwill between reporting units where necessary and compared the carrying value to the fair value of each impacted reporting unit on a before and after basis. This evaluation was only required to be performed on reporting units impacted by the changes noted above.

Effective December 30, 2018 in North America, the previous U.S. Snacks, U.S. Morning Foods, U.S. Specialty Channels, U.S. Frozen Foods, Kashi, Canada and RX operating segments are now a single operating segment (Kellogg North America). At the beginning of 2019, the Company evaluated the related impacted reporting units for impairment on a before and after basis and concluded that the fair values of each reporting unit exceeded their carrying values. On a before basis, the previous Kashi reporting unit's percentage of excess of fair value over carrying value was approximately 18% using the same methodology as the 2018 annual impairment analysis, which was performed as of the beginning of the fourth quarter of 2018. The fair value of the previous Kashi reporting unit was estimated primarily based on a multiple of net sales and discounted cash flows.

Approximately $46 million of goodwill was re-allocated between the impacted reporting units within Kellogg Europe and Kellogg AMEA related to the transfer of businesses between these operating segments. The Company performed a goodwill evaluation of the impacted reporting units on a before and after basis and concluded that the fair value of the impacted reporting units exceeded their carrying values.

Additionally, during the first quarter of 2019, the Company determined that it was more likely than not that the Company would be selling selected cookies, fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses within the North America reporting unit. As a result, the Company performed a goodwill impairment evaluation on the North America reporting unit in the first quarter of 2019 and concluded that the fair value

exceeded the carrying value of the reporting unit. During the second quarter of 2019, the Company entered into a definitive agreement to sell the businesses to Ferrero. The sale was completed during the third quarter of 2019 and resulted in the divestiture of the net assets and liabilities of these businesses, included in the North America reporting unit, including $191 million of Goodwill and $765 million of Net Intangibles. In addition to the cash consideration received, the Company entered into a perpetual royalty-free licensing agreement with Ferrero, allowing Kellogg the use of certain brand names for cracker products. The license agreement was fair valued at $18 million and recorded as an indefinite-lived intangible asset.

Note 5 Restructuring Programs

The Company views its restructuring programs as part of its operating principles to provide greater visibility in achieving its long-term profit growth targets. Initiatives undertaken are currently expected to recover cash implementation costs within a 3 to 5-year period of completion. Upon completion (or as each major stage is completed in the case of multi-year programs), the project begins to deliver cash savings and/or reduced depreciation.

~~Project K~~

Since inception, Project K has reduced the Company’s cost structure, and is expected to provide enduring benefits, including an optimized supply chain infrastructure, an efficient global business services model, a global focus on categories, increased agility from a more efficient organization design, and improved effectiveness in go-to-market models. These benefits are intended to strengthen existing businesses in core markets, increase growth in developing and emerging markets, and drive an increased level

Table of ~~value-added innovation.~~Contents

The Company approved all remaining Project K initiatives as of the end of 2018 and implementation of these remaining initiatives will be completed in 2019. Project charges, after-tax costs and annual savings remain in line with previous estimates.

The Company currently anticipates that the program will result in total pre-tax charges, once all phases are implemented, of $1.6 billion, with after-tax cash costs, including incremental capital investments, estimated to be approximately $1.2 billion. Based on current estimates and actual charges to date, the Company expects the total project charges will consist of asset-related costs of approximately $500 million which will consist primarily of asset impairments, accelerated depreciation and other exit-related costs; employee-related costs of approximately $400 million which includes severance, pension and other termination benefits; and other costs of approximately

~~$700 million which consists primarily of charges related to the design and implementation of global business capabilities and a more efficient go-to-market model.~~

The Company currently expects that total pre-tax charges related to Project K will impact reportable segments as follows: North America (approximately 65%), Europe (approximately 22%), Latin America (approximately 3%), AMEA (approximately 6%), and Corporate (approximately 4%).

During the quarter and year-to-date period ended September 28, 2019, the Company recorded total net charges of $15 million and $38 million, respectively related to Project K. During the quarter and year-to-date period ended September 29, 2018, the Company recorded total net charges of $34 million and $59 million, respectively related to Project K.

Since the inception of Project K, the Company has recognized charges of $1,558 million that have been attributed to the program. The charges consist of $6 million recorded as a reduction of revenue, $923 million recorded in cost of goods sold (COGS), $796 million recorded in selling, general and administrative (SG&A) expense, and $(167) million recorded in OIE.

~~Other Programs~~

During the second quarter of 2019, the Company announced a reorganization plan for the European reportable segment designed to simplify the organization, increase organizational efficiency, and enhance key processes. The overall project is expected to be substantially completed by ~~December 31,~~the end of fiscal year 2020.

The project is expected to result in cumulative pretax net charges of approximately $40 million, including certain non-cash credits. Cash costs are expected to be approximately $50 million. The total expected charges will include severance and other termination benefits and charges related to relocation, third party legal and consulting fees, and contract termination costs.

During the quarter and year-to-date periods ended ~~September 28, 2019,~~June 27, 2020, the Company recorded total charges of ~~$32~~$2 million and $3 million, respectively, related to this initiative. These charges were recorded in SG&A expense. Since inception, the Company has recognized total charges, including non-cash credits, of $41 million attributed to this initiative.

Additionally during the second quarter of 2019, the Company announced a reorganization plan which primarily ~~impacts~~impacted the North America reportable segment. The reorganization plan iswas designed to simplify the organization that supports the remaining North America reportable segment after the divestiture and related transition. The overall project is expected to be substantially completed by ~~December 31,~~the end of fiscal year 2020.

The overall project is expected to result in cumulative pretax charges of approximately ~~$30~~$25 million. Cash costs are expected to approximate the pretax charges. Total expected charges will include severance and other termination benefits and charges related to third party consulting fees.

The charges related to this initiative were not material during the quarter ended and year-to-date period ended June 27, 2020. These charges were recorded in SG&A expense. Since inception, the Company has recognized total charges of $21 million attributed to this initiative.

In addition to the projects discussed above, during the quarter-end June 27, 2020 the Company also incurred restructuring costs of $4 million in the Latin America reportable segment and $8 million in the AMEA reportable segment related to reorganization and simplification of those businesses. These costs primarily relate to severance and other termination benefits.

Project K

As of the end of 2019, the Company completed implementation of all Project K initiatives. Total project charges, after-tax cash costs and annual savings delivered by Project K were in line with expectations.

During the quarter and year-to-date ~~periods~~period ended ~~September 28,~~June 29, 2019, the Company recorded total charges of $3$15 million and ~~$21~~$23 million, respectively, related to ~~this initiative. These~~Project K.

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Total Projects

The tables below provide the details for charges ~~were recorded in SG&A expense.~~incurred during the quarters and year-to-date periods ended June 27, 2020 and June 29, 2019 and program costs to date for all programs currently active as of June 27, 2020.

~~All Programs~~


	Quarter ended						Year-to-date period ended				Program costs to date
(millions)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019		June 27, 2020
Employee related costs	$	13	$	45	$	13	$	42	$	63
Pension curtailment (gain) loss, net	—		—		—		—		(5)
Asset related costs	—		7		—		10		—

Other costs	1		13		2		21		16
Total	$	14	$	65	$	15	$	73	$	74

	Quarter ended						Year-to-date period ended				Program costs to date
(millions)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019		June 27, 2020
North America	$	(1)	$	28	$	(2)	$	32	$	19
Europe	2		33		3		34		41
Latin America	4		2		4		4		4
AMEA	8		2		8		3		8
Corporate	1		—		2		—		2
Total	$	14	$	65	$	15	$	73	$	74

During the quarter ended ~~September 28, 2019,~~June 27, 2020, the Company recorded total net charges of ~~$18~~$14 million across all restructuring programs. These charges were comprised of $6 million recorded in COGS and $8 million recorded in SG&A expense. During the year-to-date period ended June 27, 2020, the Company recorded total charges of $15 million across all restructuring programs. The charges were comprised of ~~$13~~$6 million recorded in COGS and $9 million recorded in SG&A expense.

During the quarter ended June 29, 2019, the Company recorded total net charges of $65 million across all restructuring programs. The charges were comprised of $11 million of expense recorded in COGS $5and $54 million of expense recorded in SG&A expense. During the year-to-date period ended ~~September 28,~~June 29, 2019, the Company recorded total charges of ~~$91~~$73 million across all restructuring programs. The charges were comprised of ~~$30~~$17 million recorded in COGS and ~~$61~~$56 million recorded in SG&A expense.

During the quarter ended September 29, 2018, the Company recorded total net charges of $34 million across all restructuring programs. The charges were comprised of $49 million recorded in COGS, $15 million recorded in SG&A expense and a $(30) million net curtailment gain recorded in OIE. During the year-to-date period ended September 29, 2018, the Company recorded total charges of $59 million across all restructuring programs. The charges were comprised of $58 million recorded in COGS, $31 million recorded in SG&A expense and a net gain of $(30) million recorded in OIE.

The tables below provide the details for charges incurred during the quarters ended September 28, 2019 and September 29, 2018 and program costs to date for all programs currently active as of September 28, 2019.

Quarter ended Year-to-date period ended Program costs to date
(millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 September 28, 2019
Employee related costs $ (1 ) $ 17
$ 41
$ 22
$ 638
Pension curtailment (gain) loss, net —
(30 ) —
(30 ) (167 )
Asset related costs 5
10
15
—
300
Asset impairment —
14
—
14
169
Other costs 14
23
35
53
671
Total $ 18
$ 34
$ 91
$ 59
$ 1,611

Quarter ended Year-to-date period ended Program costs to date
(millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 September 28, 2019
North America $ 13
$ 44
$ 45
$ 66
$ 1,067
Europe 1
(16 ) 35
(22 ) 368
Latin America 4
3
8
7
50
AMEA —
2
3
5
101
Corporate —
1
—
3
25
Total $ 18
$ 34
$ 91
$ 59
$ 1,611

Employee related costs consist primarily of severance and related benefits. Pension curtailment (gain) loss consists of curtailment gains or losses that resulted from project initiatives. Asset related costs consist primarily of accelerated ~~depreciation. Asset impairments were recorded for fixed assets that were determined to be impaired~~depreciation and ~~were written down to their estimated fair value.~~asset write-offs. Other costs consist of third-party incremental costs related to the development and implementation of enhanced global structures and capabilities.

At ~~September 28, 2019~~June 27, 2020 total project reserves were ~~$84~~$29 million, related to severance payments and other costs of which a substantial portion will be paid in ~~2019.~~2020. The following table provides details for exit cost ~~reserves.~~reserves related to the reorganizations described above.


	Employee Related Costs		Pension curtailment (gain) loss, net		Other Costs		Total
Liability as of December 28, 2019	$	37	$	—	$	1	$	38
2020 restructuring charges	13		—		2		15
Cash payments	(21)		—		(3)		(24)
Non-cash charges and other	—		—		—		—
Liability as of June 27, 2020	$	29	$	—	$	—	$	29

Employee
Related
Costs
Pension curtailment (gain) loss, net
Asset
Impairment
Asset
Related
Costs
Other
Costs
Total
Liability as of December 29, 2018 $ 93
$ —
$ —
$ 1
$ 10
$ 104
2019 restructuring charges 41
—
—
15
35
91
Cash payments (58 ) —
—
(7 ) (38 ) (103 )
Non-cash charges and other —
—
—
(8 ) —
(8 )
Liability as of September 28, 2019 $ 76
$ —
$ —
$ 1
$ 7
$ 84

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Note 6 Equity

Earnings per share

Basic earnings per share is determined by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is similarly determined, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. Dilutive potential common shares consist principally of employee stock options issued by the Company, restricted stock units, and to a lesser extent, certain contingently issuable performance shares. There were 108 million and 7 million anti-dilutive potential common shares excluded from the reconciliation for the quarter and year-to-date periods ended June 27, 2020. There were 15 million and 14 million anti-dilutive potential common shares excluded from the reconciliation for the quarter and year-to-date periods ended ~~September 28,~~June 29, 2019. ~~There were~~ ~~7 million~~ ~~and 6 million anti-dilutive potential common shares excluded from the reconciliation for the quarter and year-to-date periods ended September 29, 2018.~~ Please refer to the Consolidated Statement of Income for basic and diluted earnings per share for the ~~quarters~~quarter and year-to-date periods ended ~~September 28, 2019~~June 27, 2020 and ~~September~~June 29, ~~2018.~~2019.

Share repurchases

In ~~December 2017,~~February 2020, the board of directors approved a new authorization to repurchase up to $1.5 billion of our common stock ~~beginning in January 2018~~ through December ~~2019. As~~2022. During the year-to-date period ended June 27, 2020, the company did not repurchase any shares of ~~September 28, 2019, $960 million~~common stock and $1.5 billion remains available under the authorization.

During the year-to-date period ended ~~September 28,~~June 29, 2019, the Company repurchased approximately 4 million shares of common stock for a total of $220 million. ~~During the year-to-date period ended September 29, 2018, the Company repurchased approximately 2 million shares of common stock for a total of $120 million.~~

Comprehensive income

Comprehensive income includes net income and all other changes in equity during a period except those resulting from investments by or distributions to shareholders. Other comprehensive income consists of foreign currency translation adjustments, fair value adjustments associated with cash flow hedges, ~~and~~ adjustments for net experience losses and prior service cost related to employee benefit plans, and adjustments for unrealized gains and losses on available-for-sale securities, net of related tax effects.

Reclassifications out of AOCI for the quarter and year-to-date periods ended ~~September 28,~~June 27, 2020 and June 29, 2019, ~~and September 29, 2018,~~ consisted of the following:


(millions)
Details about AOCI components	Amount reclassified from AOCI					Line item impacted within Income Statement
	Quarter ended June 27, 2020		Year-to-date period ended June 27, 2020
(Gains) losses on cash flow hedges:


Interest rate contracts	$	5	$	7	Interest expense

	$	5	$	7	Total before tax
	(2)		(2)		Tax expense (benefit)
	$	3	$	5	Net of tax
Amortization of postretirement and postemployment benefits:
Net experience (gain) loss	$	(1)	$	(2)	OIE
Prior service cost	(1)		(1)		See Note 9 for further details
	$	(2)	$	(3)	Total before tax
	1		1		Tax expense (benefit)
	$	(1)	$	(2)	Net of tax





Total reclassifications	$	2	$	3	Net of tax

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(millions)								(millions)
Details about AOCI components	Amount reclassified from AOCI						Line item impacted within Income Statement	Details about AOCI components	Amount reclassified from AOCI					Line item impacted within Income Statement
	Quarter ended September 28, 2019			Year-to-date period ended September 28, 2019					Quarter ended June 29, 2019		Year-to-date period ended June 29, 2019
(Gains) losses on cash flow hedges:								(Gains) losses on cash flow hedges:

Interest rate contracts	$	(1	)	$	2		Interest expense	Interest rate contracts	$	2	$	3	Interest expense
	$	(1	)	$	2		Total before tax
	—			(1		)	Tax expense (benefit)		$	2	$	3	Total before tax
	$	(1	)	$	1		Net of tax		(1)		(1)		Tax expense (benefit)
									$	1	$	2	Net of tax
Amortization of postretirement and postemployment benefits:								Amortization of postretirement and postemployment benefits:
Net experience (gain) loss	$	(1	)	$	(3	)	OIE
Net experience loss								Net experience loss	$	(1)	$	(2)	See Note 9 for further details
	$	(1	)	$	(3	)	Total before tax
	—			1			Tax expense (benefit)
	$	(1	)	$	(2	)	Net of tax
(Gains) losses on available-for-sale securities:
Corporate bonds	$	(4	)	$	(4	)	OIE
	$	(4	)	$	(4	)	Total before tax		$	(1)	$	(2)	Total before tax
	—			—			Tax expense (benefit)		1		1		Tax expense (benefit)
	$	(4	)	$	(4	)	Net of tax		$	—	$	(1)	Net of tax
Total reclassifications	$	(6	)	$	(5	)	Net of tax	Total reclassifications	$	1	$	1	Net of tax

(millions)
Details about AOCI
components
Amount reclassified
from AOCI
Line item impacted
within Income Statement

Quarter ended
September 29, 2018
Year-to-date period ended
September 29, 2018

(Gains) losses on cash flow hedges:
Interest rate contracts $ 2
$ 6
Interest expense
$ 2
$ 6
Total before tax
(1 ) (2 ) Tax expense (benefit)
$ 1
$ 4
Net of tax
Amortization of postretirement and postemployment benefits:
Net experience loss $ (1 ) $ (3 ) See Note 10 for further details
$ (1 ) $ (3 ) Total before tax
—
—
Tax expense (benefit)
$ (1 ) $ (3 ) Net of tax
Total reclassifications $ —
$ 1
Net of tax

Accumulated other comprehensive income (loss), net of tax, as of ~~September~~June 27, 2020 and December 28, 2019 ~~and December 29, 2018~~ consisted of the following:

(millions) September 28,
2019 December 29,
2018
Foreign currency translation adjustments $ (1,432 ) $ (1,467 )
Cash flow hedges — unrealized net gain (loss) (74 ) (53 )
Postretirement and postemployment benefits:
Net experience gain (loss) 20
23
Prior service credit (cost) 3
(3 )
Total accumulated other comprehensive income (loss) $ (1,483 ) $ (1,500 )


(millions)	June 27, 2020		December 28, 2019
Foreign currency translation adjustments	$	(1,634)	$	(1,399)
Cash flow hedges — unrealized net gain (loss)	(94)		(60)
Postretirement and postemployment benefits:
Net experience gain (loss)	6		7
Prior service credit (cost)	3		4
Available-for-sale securities unrealized net gain (loss)	2		—
Total accumulated other comprehensive income (loss)	$	(1,717)	$	(1,448)

Note 7 ~~Leases~~

The Company leases certain warehouses, equipment, vehicles, and office space primarily through operating lease agreements. Finance lease obligations and activity are not material to the Consolidated Financial Statements. Lease obligations are primarily for real estate assets, with the remainder related to manufacturing and distribution related equipment, vehicles, information technology equipment, and rail cars. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

A portion of the Company's real estate leases include future variable rental payments that include inflationary adjustment factors. The future variability of these adjustments is unknown and therefore not included in the minimum lease payments. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The leases have remaining terms which range from less than 1 year to 10 years and the majority of leases provide the Company with the option to exercise one or more renewal terms. The length of the lease term used in recording lease assets and lease liabilities is based on the contractually required lease term adjusted for any options to renew or early terminate the lease that are reasonably certain of being executed.

The Company combines lease and non-lease components together in determining the minimum lease payments for the majority of leases. The Company has elected to not combine lease and non-lease components for certain asset types in service-related agreements that include significant production related costs. The Company has closely

~~analyzed these agreements to ensure any embedded costs related to the securing of the leased asset is properly segregated and accounted for in measuring the lease assets and liabilities.~~

The majority of the leases do not include a stated interest rate, and therefore the Company's periodic incremental borrowing rate is used to determine the present value of lease payments. This rate is calculated based on a collateralized rate for the specific currencies used in leasing activities and the borrowing ability of the applicable Company legal entity. For the initial implementation of the lease standard, the incremental borrowing rate at December 29, 2018 was used to present value operating lease assets and liabilities.

The Company recorded operating lease costs of $36 million and $100 million for the quarter and year-to-date periods ended September 28, 2019. Lease related costs associated with variable rent, short-term leases, and sale-leaseback arrangements, as well as sublease income, are each immaterial.

(millions) Quarter ended September 28, 2019 Year-to-date period ended September 28, 2019
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 39
$ 102
Right-of-use assets obtained in exchange for new operating lease liabilities $ 67
$ 87

Weighted-average remaining lease term - operating leases 7 years
Weighted-average discount rate - operating leases 3.0%

~~At September 28, 2019, future maturities of operating leases were as follows:~~

(millions)
Operating
leases
2019 (three months remaining) 36
2020 111
2021 86
2022 69
2023 57
2024 and beyond 166
Total minimum payments $ 525
Less interest $ (54 )
Present value of lease liabilities $ 471

Operating lease payments presented in the table above exclude $82 million of minimum lease payments for real-estate leases signed but not yet commenced. The leases are expected to commence in 2019 and 2020.

As previously disclosed in our 2018 Annual Report on Form 10-K and under previous lease standard (Topic 840), at December 29, 2018, future minimum annual lease commitments under non-cancelable operating leases were as follows:

(millions)
Operating
leases
2019 121
2020 97
2021 73
2022 57
2023 48
2024 and beyond 129
Total minimum payments $ 525

~~Rent expense on operating leases for the year ended December 29, 2018 was $133 million.~~

~~Note 8~~ Debt

The following table presents the components of notes payable at ~~September 28, 2019~~June 27, 2020 and December ~~29, 2018:~~28, 2019:


	June 27, 2020						December 28, 2019
(millions)	Principal amount		Effective interest rate		Principal amount		Effective interest rate
U.S. commercial paper	$	—	—	%	$	3	1.78	%
Bank borrowings	121				104
Total	$	121			$	107

September 28, 2019 December 29, 2018
(millions)
Principal
amount
Effective
interest rate

Principal
amount
Effective
interest rate
U.S. commercial paper $ 25
2.13 % $ 15
2.75 %
Bank borrowings 160
161

Total $ 185
$ 176

In ~~August 2019,~~May of 2020, the Company ~~redeemed $191~~issued $500 million of ~~its 4.15% U.S. Dollar~~ten-year 2.10% Notes due ~~November 2019, $248~~2030, resulting in net proceeds after debt discount of $496 million. The proceeds from these notes were used for general corporate purposes, including the payment of offering related fees and expenses, repayment of a portion of the $600 million ~~of its~~ 4.00% ~~U.S. Dollar~~ Notes due 2020 ~~$202 million~~when they mature on December 15, 2020, and repayment of a portion of commercial paper borrowings. The Notes contain customary covenants that limit the ability of the Company and its ~~3.25% U.S. Dollar Notes due 2021,~~restricted subsidiaries (as defined) to incur certain liens or enter into certain sale and ~~$50 million~~lease-back transactions, as well as a change of ~~its 2.65% U.S. Dollar Notes due 2023.~~ control provision.

In connection with the May 2020 debt ~~redemption,~~issuance, the Company ~~incurred $15~~terminated forward starting interest rate swaps with notional amounts totaling $500 million, ofresulting in a $51 million loss that will be amortized to interest expense ~~consisting primarily~~over

Table of ~~a premium~~Contents

the term of the Notes. The effective interest rate on the ~~tender offer and also including accelerated losses on pre-issuance interest rate hedges, acceleration of unamortized debt~~Notes, reflecting issuance discount and ~~fees on the redeemed debt and fees related to the tender offer.~~hedge settlement, was 3.03% at June 27, 2020.

In September 2019, the Company redeemed $309 million of its 4.15% U.S. Dollar Notes due November 2019, the remaining principal balance subsequent to the August redemption. In connection with the debt redemption, the Company incurred $1 million of interest expense, consisting primarily of a premium and also including accelerated losses on pre-issuance interest rate hedges, acceleration of fees and debt discount on the redeemed debt and fees related to the make whole call.

Note 98 Stock compensation

The Company uses various equity-based compensation programs to provide long-term performance incentives for its global workforce. Currently, these incentives consist principally of stock options, restricted stock units, and ~~to a lesser extent,~~ executive performance ~~shares and restricted stock grants.~~shares. The Company also sponsors a discounted stock purchase plan in the United States and matching-grant programs in several international locations. Additionally, the Company awards restricted stock to its outside directors. The interim information below should be read in conjunction with the disclosures included within the stock compensation footnote of the Company’s ~~2018~~2019 Annual Report on Form 10-K.

In April 2020, the Amended and Restated Kellogg Company 2002 Employee Stock Purchase Plan was approved by shareholders, effective July 1, 2020. The plan is a tax-qualified employee stock purchase plan made available to substantially all U.S. employees, which allows participants to acquire Kellogg stock at a discounted price. The purpose of the plan is to encourage employees at all levels to purchase stock and become shareholders.

The Company classifies pre-tax stock compensation expense in COGS and SG&A expense principally within its Corporate segment. For the periods presented, compensation expense for all types of equity-based programs and the related income tax benefit recognized was as follows:


	Quarter ended						Year-to-date period ended
(millions)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Pre-tax compensation expense	$	21	$	18	$	41	$	32
Related income tax benefit	$	6	$	5	$	11	$	8

Quarter ended Year-to-date period ended
(millions) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018
Pre-tax compensation expense $ 14
$ 13
$ 46
$ 46
Related income tax benefit $ 4
$ 3
$ 12
$ 11
In February, the Company granted stock options, restricted stock units, and performance shares, in conjunction with our primary annual award, under the 2017 Long-Term Incentive Plan, approved by shareholders in 2017.

During the year-to-date period ended ~~September 28, 2019,~~June 27, 2020, the Company granted approximately ~~0.9~~0.6 million restricted stock units at a weighted average cost of ~~$56~~$66 per share and ~~2.8~~2.3 million non-qualified stock options at a weighted average cost of $7 per share. Terms of these grants and the Company’s methods for determining grant-date fair value of the awards were consistent with that described within the stock compensation footnote in the Company’s ~~2018~~2019 Annual Report on Form 10-K.

Performance shares

In the first quarter of ~~2019,~~2020, the Company granted performance shares to a limited number of senior ~~executive-level~~level employees, which entitle these employees to receive a specified number of shares of the Company’s common stock upon vesting. The number of shares earned could range between 0% and 200% of the target amount depending upon performance achieved over the three year vesting period. The performance conditions of the award include three year cumulative organic net sales growth and ~~total shareholder return (TSR) of the Company’s common stock relative to a select group of peer companies.~~three year aggregate operating cash flow.

A Monte Carlo valuation model was used to determine the fair value of the awards. The TSR performance metric is a market condition. Therefore, compensation cost of the TSR condition is fixed at the measurement date and is not revised based on actual performance. The TSR metric was valued as a multiplier of possible levels of organic net sales growth achievement. Compensation cost related to organic net sales growth performance isand cash flow targets are revised for changes in the expected outcome. The ~~2019~~2020 target grant currently corresponds to approximately ~~236,000~~338,000 shares, with a grant-date fair value of ~~$59~~$66 per share.

The ~~2016~~2017 performance share award, payable in stock, was settled at ~~85%~~90% of target in February ~~2019~~2020 for a total dollar equivalent of $6 million.

Note 109 Employee benefits

The Company sponsors a number of U.S. and foreign pension plans as well as other nonpension postretirement and postemployment plans to provide various benefits for its employees. These plans are described within the footnotes to the Consolidated Financial Statements included in the Company’s ~~2018~~2019 Annual Report on Form 10-K. Components of Company plan benefit expense for the periods presented are included in the tables below.

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Pension


	Quarter ended						Year-to-date period ended							Quarter ended						Year-to-date period ended
(millions)	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018			(millions)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Service cost	$	9		$	22		$	27		$	66		Service cost	$	9	$	9	$	18	$	18
Interest cost	42			41			131			124			Interest cost	33		44		68		89
Expected return on plan assets	(86		)	(91		)	(254		)	(273		)	Expected return on plan assets	(85)		(83)		(170)		(168)
Amortization of unrecognized prior service cost	1			2			5			6			Amortization of unrecognized prior service cost	2		2		4		4
Recognized net (gain) loss	23			(36		)	34			(47		)	Recognized net (gain) loss	43		10		57		11
Net periodic benefit cost	$	(11	)	$	(62	)	$	(57	)	$	(124	)	Net periodic benefit cost	$	2	$	(18)	$	(23)	$	(46)
Curtailment (gain) loss	(11		)	(30		)	(11		)	(30		)	Curtailment (gain) loss	(7)		—		(7)		—
Total pension (income) expense	$	(22	)	$	(92	)	$	(68	)	$	(154	)	Total pension (income) expense	$	(5)	$	(18)	$	(30)	$	(46)

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KELLOGG COMPANY

PART I—FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Business overview

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand Kellogg Company, our operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying notes thereto contained in Item 1 of this report. Our MD&A references consumption and net sales in discussing our sales trends for certain categories and brands. We record net sales upon delivery of shipments to our customers. Consumption and share data noted within is based on Nielsen x-AOC or other comparable source, for the applicable period. Consumption refers to consumer purchases of our products from our ~~customers,~~customers. Unless otherwise noted, consumption and ~~is based on third party consumption data.~~ shipment trends are materially consistent.

For more than ~~100~~110 years, consumers have counted on Kellogg for great-tasting, high-quality and nutritious foods. These foods include snacks, such as crackers, savory snacks, toaster pastries, cereal bars and bites; and convenience foods, such as, ready-to-eat cereals, frozen waffles, veggie foods and noodles.

Kellogg products are manufactured and marketed globally.

~~Segments~~COVID-19 Response

~~On December 30, 2018 we reorganized~~In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a pandemic, and it continues to spread across the world. To limit the spread of COVID-19, governments took various actions to slow and otherwise control the spread of COVID-19, including the issuance of stay-at-home orders and social distancing guidelines. While many governments have eased stay-at-home orders, some governments have taken steps to reimplement restrictions. The Company has taken proactive steps to protect our ~~North American~~people and otherwise mitigate the impact to our business. The ~~reorganization eliminated~~Company’s business has been designated as “essential services”, “critical infrastructure” and the ~~legacy business unit structure~~like by governments where we operate. The Company has taken numerous measures during the pandemic to fulfill our key objectives: 1) ensuring the health and ~~internal reporting. In addition,~~safety of our employees, 2) safely producing and delivering our foods to customers and consumers, 3) supporting the communities in which we ~~changed~~operate, and 4) maintaining financial flexibility. Our efforts have been led by the ~~internal reporting provided to the chief operating decision maker (CODM)~~Company’s Executive Committee, a committee composed of senior leaders, and ~~segment manager.~~our global Crisis Management Process. As part of that process, we have worked closely with medical, regulatory and other experts as we deliver on our objectives.

Employee health and safety

The health and safety of our employees is our top priority. As a result, the Company has designed and implemented a number of actions across the business. From the outset of the pandemic, the Company restricted travel and visitors to its facilities, prohibited external group meetings and established quarantine procedures for any potentially exposed employees. The Company subsequently required employees who could do so to work remotely to further minimize the exposure of our employees to COVID-19. At this time, most of our office employees continue to work remotely. For those who are not able to work remotely, the Company implemented new protocols at all of our facilities to protect our employees, including temperature checks, social distancing, response plans, face coverings, contact tracing, enhanced sanitation procedures, and additional personal protection equipment

Maintain our ability to produce and deliver essential food supply

In addition to our efforts to keep our people safe, the Company has taken several actions to ensure that we ~~reevaluated~~maintain our ~~operating segments.~~ability to operate effectively during this pandemic, providing our foods to our customers and consumers. While we have experienced limited disruption in the operation of our facilities, we are taking the appropriate actions to ensure the continuity of our business. We are working proactively with our suppliers to maintain our supply of raw materials and packaging during this time of increased demand for our products. We have secured access to contracted labor forces. We have made incremental investments in our workforce, additional warehouse capacity and increased access to transportation so that our products are delivered in a timely manner to our customers. In conjunction with our management of production capacity, we have simplified our operations (as well as our customers' operations) by prioritizing our offerings to increase the ~~reorganization,~~supply of our most demanded products to our customers, as well as delaying innovation launches and commercial activities. At the same time, the Company reinforced food safety practices across our manufacturing network.

We have partnered with our strategic technology providers in order to maintain support for our critical business and finance systems as well as additional network bandwidth and support for the transition to a work-from-home

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environment. We are also working to mitigate system-related risks in this environment through heightened monitoring of cybersecurity and network capacity as well as reevaluation of contingency plans.

Community support

Kellogg is a company with a heart and soul, and we are working together across our company to help our food bank partners and neighbors in need. To date, Kellogg and our charitable funds have donated almost $15 million in cash and food to global COVID-19 hunger relief efforts. As always, through our global Kellogg’s^® Better Days purpose platform, we help deliver critical nourishment to people when they need it most. Local governments have identified food security as a top priority in their fight against COVID-19. With school and business closures and “shelter-at-home” mandates, Kellogg is providing support to our food bank partners on the front-lines, helping those who may not know where their next meal is coming from.

Maintain financial flexibility

At this time, the COVID-19 pandemic has not materially impacted our liquidity and we anticipate current cash and marketable security balances, operating cash flows, together with our credit facilities and other financing sources including commercial paper, credit and bond markets, will be adequate to meet our operating, investing and financing needs. We expect cash provided by operating activities reduced by capital expenditures of approximately $1.0 billion in 2020. We currently have $2.5 billion of unused revolving credit agreements, including $1.5 billion effective through 2023 and $1.0 billion effective through January 2021, as well as continued access to the commercial paper markets. We are currently in compliance with all debt covenants and do not have material uncertainty about our ability to maintain compliance in future periods. In May, we issued $500 million of ten-year 2.10% Notes in anticipation of our $600 million December maturity. We continue to utilize available capacity within the Monetization and Accounts Payable Programs to maintain financial flexibility without negatively impacting working capital. Additionally, we utilized certain ~~global research~~aspects of the Coronavirus Aid, Relief and ~~development resources~~Economic Security Act, to delay the employer share of certain U.S. payroll taxes until 2021 and 2022. Our utilization does not include a government loan and is not expected to result in any restrictions on the Company’s decisions on executive compensation, payment of dividends, or share buy-back programs. As the impact of COVID-19 on the economy and our operations evolves, we will continue to assess our liquidity needs.

Monitoring future impacts

The severity, magnitude and duration of the current COVID-19 pandemic is uncertain and rapidly changing. The Company is actively monitoring the pandemic and related ~~activities were transferred~~governmental actions as they continue to develop and evolve. We will adjust our mitigation strategies as necessary to address any changing health, operational or financial risks that may arise. Beginning in March, the Company experienced a significant increase in demand for our retail products as consumers stocked up on food for at-home consumption in those markets. While this demand has moderated for certain products, we will continue to manage our production capacity during this period of high demand. We continue to monitor the business for adverse impacts of the pandemic, including volatility in the foreign exchange markets, reduced demand in our away from home businesses, supply-chain disruptions in certain markets, increased costs of employee safety and maintaining food supply, and lower revenues for certain emerging market countries with a higher concentration of traditional trade outlets. In the event the Company experiences adverse impacts from the ~~North America business~~above or other factors, the Company would also evaluate the need to ~~Corporate. Prior period segment results were not restated~~perform interim impairment tests for the ~~transfer as~~Company’s goodwill, indefinite lived intangible assets, investments in unconsolidated affiliates and property, plant and equipment. There can be no assurance that volatility and/or disruption in the ~~impacts were~~global capital and credit markets will not ~~considered material.~~impair our ability to access these markets on terms acceptable to us, or at all. See further discussion within Future Outlook.

In addition, we transferred our Middle East, North Africa, and Turkey businesses (MENAT) from Kellogg Europe to Kellogg AMEA, effective December 30, 2018. This consolidated all of the Company's Africa business under a single regional management team. All comparable prior periods have been restated to reflect the change. For the quarter and year-to-date periods ended September 29, 2018, the change resulted in $65 million and $194 million, respectively, of reported net sales and $11 million and $35 million, respectively, of reported operating profit transferring from Europe to AMEA.

Segments

On July 28, 2019, we completed the sale of selected cookies, fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses to Ferrero International S.A. (“Ferrero”) for $1.3 billion in cash, on a cash-free, debt-free basis and subject to a working capital adjustment mechanism. The operating results for these businesses were included in our North America and Latin America reporting segments prior to the sale.

We manage our operations through four operating segments that are based primarily on geographic location – North America which includes the U.S. businesses and Canada; Europe which consists principally of European countries; Latin America which consists of Central and South America and includes Mexico; and AMEA (Asia Middle East Africa) which consists of Africa, Middle East, Australia and other Asian and Pacific markets. These operating segments also represent our reportable segments.

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Non-GAAP financial measures

This filing includes non-GAAP financial measures that we provide to management and investors that exclude certain items that we do not consider part of on-going operations. Items excluded from our non-GAAP financial measures are discussed in the "Significant items impacting comparability" section of this filing. Our management team consistently utilizes a combination of GAAP and non-GAAP financial measures to evaluate business results, to make decisions regarding the future direction of our business, and for resource allocation decisions, including incentive compensation. As a result, we believe the presentation of both GAAP and non-GAAP financial measures provides investors with increased transparency into financial measures used by our management team and improves investors’ understanding of our underlying operating performance and in their analysis of ongoing operating trends. All historic non-GAAP financial measures have been reconciled with the most directly comparable GAAP financial measures.

Non-GAAP financial measures used for evaluation of performance include currency-neutral and organic net sales, adjusted and currency-neutral adjusted operating profit, adjusted and currency-neutral adjusted diluted ~~EPS,~~earnings per share (EPS), currency-neutral adjusted gross profit,

~~currency-neutral~~ currency neutral adjusted gross margin, adjusted other income (expense), net debt, and cash flow. We determine currency-neutral results by dividing or multiplying, as appropriate, the current-period local currency operating results by the currency exchange rates used to translate our financial statements in the comparable prior-year period to determine what the current period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period. These non-GAAP financial measures may not be comparable to similar measures used by other companies.

•

•Currency-neutral net sales and organic net sales: We adjust the GAAP financial measure to exclude the impact of foreign currency, resulting in currency-neutral net sales. In addition, we exclude the impact of acquisitions, divestitures, and foreign currency, resulting in organic net sales. We excluded the items which we believe may obscure trends in our underlying net sales performance. By providing these non-GAAP net sales measures, management intends to provide investors with a meaningful, consistent comparison of net sales performance for the Company and each of our reportable segments for the periods presented. Management uses these non-GAAP measures to evaluate the effectiveness of initiatives behind net sales growth, pricing realization, and the impact of mix on our business results. These non-GAAP measures are also used to make decisions regarding the future direction of our business, and for resource allocation decisions.

•: We adjust the GAAP financial measure to exclude the impact of foreign currency, resulting in currency-neutral sales. In addition, we exclude the impact of acquisitions, divestitures, and foreign currency, resulting in organic net sales. We excluded the items which we believe may obscure trends in our underlying net sales performance. By providing these non-GAAP net sales measures, management intends to provide investors with a meaningful, consistent comparison of net sales performance for the Company and each of our reportable segments for the periods presented. Management uses these non-GAAP measures to evaluate the effectiveness of initiatives behind net sales growth, pricing realization, and the impact of mix on our business results. These non-GAAP measures are also used to make decisions regarding the future direction of our business, and for resource allocation decisions.

•

Adjusted: operating profit and diluted EPS: We adjust the GAAP financial measures to exclude the effect of restructuring programs, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodities and certain foreign currency contracts, multi-employer pension plan exit liabilities, the gain on the divestiture of selected cookies, fruit snacks, pie crusts, and ice cream cone businesses, and other costs impacting comparability resulting in adjusted. We excluded the items which we believe may obscure trends in our underlying profitability. By providing these non-GAAP profitability measures, management intends to provide investors with a meaningful, consistent comparison of the Company's profitability measures for the periods presented. Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability, as well as to evaluate the impacts of inflationary pressures and decisions to invest in new initiatives within each of our segments.

•

~~Currency-neutral adjusted: gross profit, gross margin, operating profit, and diluted EPS:~~ We adjust the GAAP financial measures to exclude the effect of restructuring programs, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodities and certain foreign currency contracts, multi-employer pension plan exit liabilities, the gain on the divestiture of selected cookies, fruit snacks, pie crusts, and ice cream cone businesses, other costs impacting comparability, and foreign currency, resulting in currency-neutral adjusted. We excluded the items which we believe may obscure trends in our underlying profitability. By providing these non-GAAP profitability measures, management intends to provide investors with a meaningful, consistent comparison of the Company's profitability measures for the periods presented. Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability, as well as to evaluate the impacts of inflationary pressures and decisions to invest in new initiatives within each of our segments.

~~Adjusted effective income tax rate:~~ We adjust the GAAP financial measures to exclude the effect of restructuring programs, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodities and certain foreign currency contracts, multi-employer pension plan ~~exit~~withdrawal liabilities, the gain on the divestiture of selected cookies, fruit snacks, pie crusts, and ice cream cone businesses, and other costs impacting comparability resulting in adjusted. We excluded the items which we believe may obscure trends in our underlying profitability. By providing these non-GAAP profitability measures, management intends to provide investors with a meaningful, consistent comparison of the Company's profitability measures for the periods presented. Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability, as well as to evaluate the impacts of inflationary pressures and decisions to invest in new initiatives within each of our segments.

•Currency-neutral adjusted: gross profit, gross margin, operating profit, and diluted EPS: We adjust the GAAP financial measures to exclude the effect of restructuring programs, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodities and certain foreign currency contracts, multi-employer pension plan withdrawal liabilities, the gain on the divestiture of selected cookies, fruit snacks, pie crusts, and ice cream cone businesses, other costs impacting comparability, and foreign currency, resulting in currency-neutral adjusted. We excluded the items which we believe may obscure trends in our underlying profitability. By providing these non-GAAP profitability measures, management intends to provide investors with a meaningful, consistent comparison of the Company's profitability measures for the periods presented. Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability, as well as to evaluate the impacts of inflationary pressures and decisions to invest in new initiatives within each of our segments.

•Adjusted effective income tax rate: We adjust the GAAP financial measures to exclude the effect of restructuring programs, mark-to-market adjustments for pension plans (service cost, interest cost, expected

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return on plan assets, and other net periodic pension costs are not excluded), commodities and certain foreign currency contracts, multi-employer pension plan withdrawal liabilities, the gain on the divestiture of selected cookies, fruit snacks, pie crusts, and ice cream cone businesses, and other costs impacting comparability. We excluded the items which we believe may obscure trends in our pre-tax income and the related tax effect of those items on our adjusted effective income tax rate. By providing this non-GAAP measure, management intends to provide investors with a meaningful, consistent comparison of the Company's effective tax rate, excluding the pre-tax income and tax effect of the items noted above, for the periods presented. Management uses this non-GAAP measure to monitor the effectiveness of initiatives in place to optimize our global tax rate.

•

~~Cash flow:~~•Net debt: Defined as the sum of long-term debt, current maturities of long-term debt and notes payable, Defined as net cash provided by operating activities reduced by expenditures for property additions. Cash flow does not represent the residual cash flow available for discretionary expenditures. We use this non-GAAP financial measure of cash flow to focus management and investors on the amount of cash available for debt repayment, dividend distributions, acquisition opportunities, and share repurchases

less cash and cash equivalents and marketable securities. With respect to net debt, cash and cash equivalents and marketable securities are subtracted from the GAAP measure, total debt liabilities, because they could be used to reduce the Company’s debt obligations. Company management and investors use this non-GAAP measure to evaluate changes to the Company's capital structure and credit quality assessment.

•Cash flow: Defined as net cash provided by operating activities reduced by expenditures for property additions. Cash flow does not represent the residual cash flow available for discretionary expenditures. We use this non-GAAP financial measure of cash flow to focus management and investors on the amount of cash available for debt repayment, dividend distributions, acquisition opportunities, and share repurchases once all of the Company’s business needs and obligations are met. Additionally, certain performance-based compensation includes a component of this non-GAAP measure.

These measures have not been calculated in accordance with GAAP and should not be viewed as a substitute for GAAP reporting measures.

Significant items impacting comparability

Mark-to-market accounting for pension plans, commodities and certain foreign currency contracts

We recognize mark-to-market adjustments for pension plans, commodity contracts, and certain foreign currency contracts as incurred. Actuarial gains/losses for pension plans are recognized in the year they occur. Changes between contract and market prices for commodities contracts and certain foreign currency contracts result in gains/losses that are recognized in the quarter they occur. We recorded a pre-tax mark-to-market ~~benefit~~loss of ~~$21~~$86 million and ~~a pre-tax mark-to-market expense of $15~~$74 million for the quarter and year-to-date periods ended ~~September 28,~~June 27, 2020, respectively. Included within the aforementioned was a pre-tax mark-to-market expense for pension plans of $43 million and $57 million for the quarter and year-to-date periods ended June 27, 2020, respectively. Additionally, we recorded a pre-tax mark-to-market benefit of $35 million and a pre-tax mark-to-market expense of $6 million for the quarter and year-to-date periods ended June 29, 2019, respectively. Included within the aforementioned was a pre-tax mark-to-market ~~benefit~~expense for pension plans of ~~$32~~$11 million and ~~$22~~$10 million for the quarter and year-to-date periods ended ~~September 28, 2019, respectively. We also recorded a pre-tax mark-to-market benefit of $25 million and $69 million for the quarter and year-to-date periods ended September~~June 29, 2018, respectively. Included within the aforementioned was a pre-tax mark-to-market benefit for pension plans of $36 million and $63 million for the quarter and year-to-date periods ended September 29, 2018, respectively.2019.

Project K

In 2019, the Company completed implementation of all Project K ~~continued generating savings used to invest in key strategic areas of focus for the business.~~initiatives. We recorded pre-tax charges related to this program of $15 million and ~~$38~~$23 million for the quarter and year-to-date periods ended ~~September 28,~~June 29, 2019, respectively. ~~We also recorded pre-tax charges related to this program of $34 million and $59 million for the quarter and year-to-date periods ended September 29, 2018, respectively.~~

See the Restructuring Programs section for more information.

Brexit impacts

~~With~~During 2019, with the uncertainty of the United ~~Kingdom~~Kingdom's (U.K.) ~~exiting~~exit from the European Union (EU), commonly referred to as Brexit, we ~~have begun preparations~~incurred certain costs to proactively prepare for the potential adverse impacts, ~~of Brexit,~~ such as delays at ports of entry and departure. As a result, we incurred ~~pre-tax~~pretax charges of $1$3 million and $7$6 million for the quarter and year-to-date periods ended ~~September 28,~~June 29, 2019, respectively.

Business and portfolio realignment

One-time costs related ~~to: completed and prospective divestitures and acquisitions, including the divestiture of our selected cookies, fruit snacks, pie crusts, and ice-cream cone businesses;~~to reorganizations in support of our Deploy for Growth priorities and a reshaped portfolio; ~~and~~ investments in enhancing capabilities prioritized by our Deploy for Growth ~~strategy. We~~strategy; and completed and prospective divestitures and acquisitions, including the divestiture of our cookies, fruit snacks, pie crusts, and ice-cream cone

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businesses. As a result, we incurred pre-tax charges, primarily related ~~primarily~~ to reorganizations, of ~~$21~~$17 million and ~~$135~~$23 million for the quarter and year-to-date periods ended ~~September 28,~~June 27, 2020, respectively. We also recorded pre-tax charges of $83 million and $114 million for the quarter and year-to-date periods ended June 29, 2019, respectively.

Multi-employer pension plan ~~exit liability~~withdrawal

During the ~~third~~second quarter of ~~2019,~~2020, the Company ~~incurred~~recorded a pre-tax ~~charge~~gain of ~~$132~~approximately $5 million ~~due~~related to ~~withdrawing from two~~the settlement of a multi-employer pension ~~plans.~~plan withdrawal liability.

Divestiture

On July 28, 2019, the Company completed its sale of selected cookies, fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses to Ferrero for approximately $1.3 billion in cash, subject to a working capital adjustment mechanism. Both the total assets and net assets of the businesses were approximately $1.3 billion, resulting in a net pre-tax gain of $38 million for the quarter ended September 28, 2019, recorded in Other income and (expense). Additionally, the Company recognized curtailment gains related to the divestiture totaling $17 million in our U.S. pension and nonpension postretirement plans.

The operating results for these businesses were included primarily in our North America reportable segment, and to a lesser extent, Latin America, prior to the sale. Reported net sales for the divested businesses totaled ~~$132~~$194 million ~~for the two month period ended September 29, 2018.~~

~~Adoption of U.S. Tax Reform~~

~~In conjunction with the adoption of U.S. Tax Reform, the Company recorded a $16 million reduction of income tax expense~~and $507 for the quarter and year-to-date periods ended ~~September~~June 29, ~~2018 related to our transition tax liability.~~2019.

~~Gain on unconsolidated entities, net~~

In connection with the Multipro business combination during the second quarter of 2018, the Company recognized a one-time, non-cash gain on the disposition of our previously held equity interest in Multipro of $245 million. Additionally, the Company exercised its call option to acquire a 50% interest in Tolaram Africa Foods, PTE LTD, a holding company with a 49% equity interest in an affiliated food manufacturer, resulting in the Company having a 24.5% interest in the affiliated food manufacturer. In conjunction with the exercise, the Company recognized a one-time, non-cash loss of $45 million, which represents an other than temporary excess of cost over fair value of the investment. These amounts were recorded within Earnings (loss) from unconsolidated entities during the second quarter of 2018.

~~Acquisitions~~

In May of 2018, the Company acquired an incremental 1% ownership interest in Multipro, which along with concurrent changes to the shareholders' agreement, resulted in the Company now having a 51% controlling interest in and began consolidating Multipro, a leading distributor of a variety of food products in Nigeria and Ghana. In our AMEA reportable segment, for the year-to-date period ended September 28, 2019, the acquisition added $271 million, in net sales that impacted the comparability of our reported results.

Foreign currency translation

We evaluate the operating results of our business on a currency-neutral basis. We determine currency-neutral operating results by dividing or multiplying, as appropriate, the current-period local currency operating results by the currency exchange rates used to translate our financial statements in the comparable prior-year period to determine what the current period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period.

Financial results

For the quarter ended ~~September 28, 2019,~~June 27, 2020, our reported net sales ~~decreased 2.8% due primarily to~~were flat versus the prior year as the absence of results from the ~~selected cookies, fruit snacks, pie crusts, and ice cream cones~~ businesses ~~that were~~ divested in July 2019 and unfavorable foreign ~~currency.~~currency were offset by strong organic growth. Net sales growth was mostly attributable to increased demand for packaged foods for at-home consumption as a result of the global pandemic, partially offset by a decline in away-from-home channels and modestly negative price/mix due to country and category mix. Organic net sales increased ~~2.4%~~9% from the prior year after excluding the impact of the divestiture and foreign ~~currency, due to growth and favorable pricing/mix across all of our operating segments.~~currency.

~~Third~~Second quarter reported operating profit ~~decreased 33%~~increased 27% versus the year-ago quarter due primarily to higher net sales and operating leverage, lower business and portfolio realignment charges, and lower brand building due to the ~~recognition~~phasing of ~~a $132 million liability during~~spending towards the back half of the year, partially offset by unfavorable mark-to-market impacts, the absence of results from the divested businesses, incremental safety, sanitation, and labor costs related to the pandemic, and foreign currency impacts. Currency-neutral adjusted operating profit increased almost 27%, after excluding the impact of the divested businesses, mark-to-market, business and portfolio realignment, Project K, and foreign currency.

Reported diluted EPS of $1.02 for the quarter ~~related~~was up 21% compared to ~~our exit from two multi-employer pension plans~~the prior year quarter of $0.84 due to higher operating profit and lower business and portfolio realignment charges versus the prior year. These impacts were partially offset by the absence of results from the businesses divested ~~during the quarter. Additionally,~~in July 2019, a higher ~~business and portfolio realignment costs,~~tax rate and unfavorable foreign currency contributed to the decline. These impacts were partially offset by lower Project K costs during the current quarter. Currency-neutral adjusted operating profit decreased 4.4%, which included 5 percentage points of decline related to the absence of results from the businesses divested during the quarter. Currency-neutral adjusted operating profit excludes the impact of multi-employer pension plan exit liabilities, foreign currency, Project K, business and portfolio realignment, and Brexit.

Reported diluted EPS of $0.72 for the quarter was down 34% compared to the prior year quarter of $1.09 due primarily to the recognition of liabilities related to our exit from multi-employer pension plans during the current quarter, the unfavorable impact of the divestiture, increased business and portfolio realignment costs, U.S. Tax Reform, and unfavorable foreign currency, partially offset by lower Project K costs.currency. Currency-neutral adjusted diluted EPS of ~~$1.05 decreased less than 1%~~$1.26 for the quarter increased 27% compared to prior year quarter of ~~$1.06,~~$0.99, after excluding the impact of ~~multi-employer pension plan exit liabilities, foreign currency,~~ mark-to-market, ~~Project K,~~ business and portfolio realignment, Project K, and ~~Brexit.~~foreign currency.

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Reconciliation of certain non-GAAP Financial Measures

Quarter ended Year-to-date period ended
Consolidated results
(dollars in millions, except per share data)
September 28,
2019 September 29,
2018 September 28,
2019 September 29,
2018
Reported net income $ 247
$ 380
$ 815
$ 1,420
Mark-to-market (pre-tax) 21
25
15
69
Project K (pre-tax) (15 ) (34 ) (38 ) (59 )
Brexit impacts (pre-tax) (1 ) —
(7 ) —
Business and portfolio realignment (pre-tax) (21 ) —
(135 ) —
Multi-employer pension plan exit liability (pre-tax) (132 ) —
(132 ) —
Gain on divestiture (pre-tax) 55
—
55
—
Income tax impact applicable to adjustments, net* (13 ) 4
21
1
Adoption of U.S Tax Reform —
16
—
16
Gain from unconsolidated entities, net —
—
—
200
Adjusted net income $ 353
$ 369
$ 1,036
$ 1,193
Foreign currency impact (6 ) (23 )
Currency-neutral adjusted net income $ 359
$ 369
$ 1,059
$ 1,193
Reported diluted EPS $ 0.72
$ 1.09
$ 2.38
$ 4.07
Mark-to-market (pre-tax) 0.06
0.07
0.04
0.20
Project K (pre-tax) (0.04 ) (0.10 ) (0.11 ) (0.17 )
Brexit impacts (pre-tax) —
—
(0.02 ) —
Business and portfolio realignment (pre-tax) (0.06 ) —
(0.39 ) —
Multi-employer pension plan exit liability (pre-tax) (0.39 ) —
(0.39 ) —
Gain on divestiture (pre-tax) 0.16
—
0.16
—
Income tax impact applicable to adjustments, net* (0.04 ) 0.01
0.06
—
Adoption of U.S Tax Reform —
0.05
—
0.05
Gain from unconsolidated entities, net —
—
—
0.57
Adjusted diluted EPS $ 1.03
$ 1.06
$ 3.03
$ 3.42
Foreign currency impact (0.02 ) (0.07 )
Currency-neutral adjusted diluted EPS $ 1.05
$ 1.06
$ 3.10
$ 3.42
Currency-neutral adjusted diluted EPS growth (0.9 )%

(9.4 )%

~~Note: Tables may not foot due to rounding.~~

* Represents the estimated income tax effect on the reconciling items, using weighted-average statutory tax rates, depending upon the applicable jurisdiction.

~~For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.~~

~~Net sales and operating profit~~

~~The following tables provide an analysis of net sales and operating profit performance for the third quarter of 2019 versus 2018:~~

Quarter ended September 28, 2019
(millions)
North
America
Europe
Latin
America
AMEA Corporate
Kellogg
Consolidated
Reported net sales $ 2,059
$ 527
$ 244
$ 542
$ —
$ 3,372
Foreign currency impact on total business (inc)/dec (3 ) (27 ) (8 ) (7 ) —
(45 )
Currency-neutral net sales $ 2,061
$ 554
$ 251
$ 549
$ —
$ 3,416
Acquisitions —
—
—
—
—
—
Foreign currency impact on acquisitions (inc)/dec —
—
—
—
—
—
Organic net sales $ 2,061
$ 554
$ 251
$ 549
$ —
$ 3,416

Quarter ended September 29, 2018
(millions)
North
America
Europe
Latin
America
AMEA Corporate
Kellogg
Consolidated
Reported net sales $ 2,188
$ 531
$ 239
$ 511
$ —
$ 3,469
Divestiture 130
—
2
—
—
132
Organic net sales $ 2,058
$ 531
$ 237
$ 511
$ —
$ 3,337

% change - 2019 vs. 2018:
Reported growth (5.9 )% (0.7 )% 1.7 % 6.1 % — % (2.8 )%
Foreign currency impact on total business (inc)/dec (0.1 )% (4.9 )% (3.4 )% (1.5 )% — % (1.3 )%
Currency-neutral growth (5.8 )% 4.2 % 5.1 % 7.6 % — % (1.5 )%
Acquisitions — % — % — % — % — % — %
Divestiture (6.0 )% — % (0.8 )% — % — % (3.9 )%
Foreign currency impact on acquisitions (inc)/dec — % — % — % — % — % — %
Organic growth 0.2 % 4.2 % 5.9 % 7.6 % — % 2.4 %
Volume (tonnage) (2.5 )% 2.1 % 2.1 % (0.1 )% — % (0.7 )%
Pricing/mix 2.7 % 2.1 % 3.8 % 7.7 % — % 3.1 %


	Quarter ended								Year-to-date period ended
Consolidated results (dollars in millions, except per share data)	June 27, 2020			June 29, 2019		June 27, 2020			June 29, 2019
Reported net income	$	351		$	286	$	698		$	568
Mark-to-market (pre-tax)	(86)			35		(74)			(6)
Project K (pre-tax)	—			(15)		—			(23)
Brexit impacts (pre-tax)	—			(3)		—			(6)
Business and portfolio realignment (pre-tax)	(17)			(83)		(23)			(114)
Multi-employer pension plan withdrawal (pre-tax)	5			—		5			—

Income tax impact applicable to adjustments, net*	23			15		23			34
Adjusted net income	$	426		$	337	$	766		$	683
Foreign currency impact	(9)			—		(13)			—
Currency-neutral adjusted net income	$	435		$	337	$	780		$	683
Reported diluted EPS	$	1.02		$	0.84	$	2.02		$	1.66
Mark-to-market (pre-tax)	(0.25)			0.10		(0.21)			(0.02)
Project K (pre-tax)	—			(0.05)		—			(0.07)
Brexit impacts (pre-tax)	—			(0.01)		—			(0.02)
Business and portfolio realignment (pre-tax)	(0.05)			(0.24)		(0.07)			(0.33)
Multi-employer pension plan withdrawal (pre-tax)	0.01			—		0.01			—

Income tax impact applicable to adjustments, net*	0.07			0.05		0.07			0.10
Adjusted diluted EPS	$	1.24		$	0.99	$	2.22		$	2.00
Foreign currency impact	(0.02)					(0.04)
Currency-neutral adjusted diluted EPS	$	1.26		$	0.99	$	2.26		$	2.00
Currency-neutral adjusted diluted EPS growth	27.3		%			13.0		%

Note: Tables may not foot due to rounding.

For more information on the reconciling items in the table above, please refer to the Significant items impacting comparability section.

Quarter ended September 28, 2019
(millions)
North
America*
Europe
Latin
America
AMEA Corporate*
Kellogg
Consolidated
Reported operating profit $ 208
$ 68
$ 23
$ 53
$ (89 ) $ 263
Mark-to-market —
—
—
—
(11 ) (11 )
Project K (9 ) (1 ) (4 ) —
—
(15 )
Brexit impacts —
(1 ) —
—
—
(1 )
Business and portfolio realignment (2 ) 1
—
(2 ) (18 ) (21 )
Multi-employer pension plan liability (132 ) —
—
—
—
(132 )
Adjusted operating profit $ 351
$ 69
$ 28
$ 56
$ (61 ) $ 444
Foreign currency impact —
(4 ) (1 ) (1 ) —
(6 )
Currency-neutral adjusted operating profit $ 352
$ 73
$ 29
$ 58
$ (61 ) $ 450

Quarter ended September 29, 2018
(millions)
North
America*
Europe
Latin
America
AMEA Corporate*
Kellogg
Consolidated
Reported operating profit $ 330
$ 63
$ 28
$ 46
$ (71 ) $ 396
Mark-to-market —
—
—
—
(11 ) (11 )
Project K (44 ) (14 ) (3 ) (2 ) (1 ) (64 )
Brexit impacts —
—
—
—
—
—
Business and portfolio realignment —
—
—
—
—
—
Multi-employer pension plan exit liability —
—
—
—
—
—
Adjusted operating profit $ 374
$ 77
$ 31
$ 48
$ (59 ) $ 471

% change - 2019 vs. 2018:
Reported growth (36.7 )% 8.9 % (14.5 )% 14.9 % (27.8 )% (33.4 )%
Mark-to-market — % — % — % — % 5.4 % (0.9 )%
Project K 5.0 % 19.0 % (6.0 )% 4.8 % 2.9 % 6.2 %
Brexit impacts — % (1.9 )% — % — % — % (0.4 )%
Business and portfolio realignment (0.6 )% 1.8 % (0.3 )% (4.9 )% (30.7 )% (4.4 )%
Multi-employer pension plan exit liability (35.4 )% — % — % — % — % (28.2 )%
Adjusted growth (5.7 )% (10.0 )% (8.2 )% 15.0 % (5.4 )% (5.7 )%
Foreign currency impact (0.1 )% (4.7 )% (3.4 )% (2.9 )% — % (1.3 )%
Currency-neutral adjusted growth (5.6 )% (5.3 )% (4.8 )% 17.9 % (5.4 )% (4.4 )%

~~Note: Tables may not foot due to rounding.~~

* ~~Corporate in 2019 includes~~Represents the ~~cost of certain global research and development activities that were previously included in the North America reportable segment in 2018 that totaled approximately $12 million.~~

~~For more information~~estimated income tax effect on the reconciling items, inusing weighted-average statutory tax rates, depending upon the ~~table above, please refer to the Significant items impacting comparability section.~~

~~North America~~

Reported net sales decreased 5.9% versus the comparable quarter of 2018 due primarily to the absence of selected cookies, fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses that were divested in July and unfavorable foreign currency, partially offset by favorable price/mix. Organic net sales increased 0.2% after excluding the impact of the divestiture and foreign currency.

Net sales % change - third quarter 2019 vs. 2018:
North America Reported net sales Foreign currency Currency-neutral net sales Divestiture Organic net sales
Snacks (7.6 )% — % (7.6 )% (12.8 )% 5.2 %
Cereal (5.0 )% (0.2 )% (4.8 )% — % (4.8 )%
Frozen 0.5 % (0.1 )% 0.6 % — % 0.6 %

applicable jurisdiction.

~~North America snacks reported net sales decreased 7.6% due primarily to the divestiture. Organic net sales increased 5.2% in the quarter primarily due to sustained momentum in key brands, including~~ ~~Cheez-It, Rice Krispies Treats, and~~ ~~Pop-Tarts~~.

North America cereal reported net sales declined by 5.0% due primarily to category softness and a gradual return to brand building activity during the quarter following our pack-size harmonization during the first half of the year.

North America frozen foods reported net sales increased 0.5%, lapping strong prior year growth and the impact of phasing out certain SKU’s. More than offsetting these factors was accelerated growth in ~~MorningStar Farms,~~ ~~with double-digit net~~Net sales and ~~consumption growth during the quarter behind innovation and strong commercial programs.~~

~~North America reported~~ operating profit decreased 37% due primarily to the recognition of a $132 million liability during the quarter related to our exit from two multi-employer pension plans and the absence of results from the businesses divested during the quarter. Additionally, higher business and portfolio realignment costs, and unfavorable foreign currency contributed to the decline. These impacts were partially offset by lower Project K costs during the current quarter. Currency-neutral adjusted operating profit declined 5.6%, which included 6 percentage points of decline related to the absence of results from the businesses divested during the quarter. Currency-neutral adjusted operating profit excludes the impact of the multi-employer plan exit liability, Project K, business and portfolio realignment, and foreign currency. Additionally, North America operating profit benefited from the transfer of certain global research and development activities from North America to Corporate at the beginning of 2019.

~~Europe~~

Reported net sales decreased 0.7% due primarily to unfavorable foreign currency. Currency-neutral net sales increased 4.2% after excluding the impact of foreign currency, driven by higher volume and favorable price/mix.

~~Growth was driven by snacks, led by~~ ~~Pringles,~~ ~~with increased net sales and consumption in key markets behind innovation, effective brand-building, and new pack formats.~~ ~~Growth was partially offset by modest declines in certain developed markets' cereal and wholesome snacks businesses.~~

Reported operating profit increased 8.9% due primarily to lower Project K costs partially offset by unfavorable foreign currency, timing of promotional activities, and cost pressures. Currency-neutral adjusted operating profit decreased 5.3% after excluding the impact of foreign currency, and costs related to Project K, business and portfolio realignment, and Brexit.

~~Latin America~~

Reported net sales increased 1.7% due to higher volume and favorable pricing/mix partially offset by the impact of the divestiture and unfavorable foreign currency. Organic net sales increased 5.9% after excluding the impact of the divestiture and foreign currency.

Cereal performance was led by net sales and consumption growth in Mexico for the quarter, despite lapping strong prior year comparisons. Cereal net sales in Brazil also increased despite category softness.

~~Snacks performance was led by~~ ~~Pringles, with increased net sales and consumption in both Mexico and Brazil for the quarter.~~

Reported operating profit decreased 14.5% due primarily to unfavorable foreign currency, higher input costs, and investments in capabilities. These impacts were partially offset by the recognition of an indirect tax receivable for prior periods during the quarter. Currency-neutral adjusted operating profit decreased 4.8% after excluding the impact of foreign currency and Project K.

~~AMEA~~

Reported net sales improved 6.1% due to improved price realization, partially offset by unfavorable foreign currency. Currency-neutral net sales increased 7.6% after excluding the impact of foreign currency.

~~Snacks posted solid growth in the quarter, led by sustained momentum in~~ ~~Pringles,~~ ~~which grew net sales and consumption collectively across the region.~~

~~Cereal net sales growth for the region was led by Asia and MENAT.~~

Africa posted reported net sales growth during the quarter on continued growth of the Multipro business in West Africa as well as expanded distribution of Kellogg-branded noodles elsewhere on the continent.

Reported operating profit increased 15% due to the reversal of indirect excise tax liabilities largely the result of participating in a tax amnesty program and higher net sales partially offset by unfavorable foreign currency. Currency-neutral adjusted operating profit improved 18% after excluding the impact of Project K, business and portfolio realignment, and foreign currency.

~~Corporate~~

Reported operating profit decreased $18 million versus the comparable prior year quarter due primarily to higher business and portfolio realignment costs during the current quarter as well as the transfer of certain global research and development activities from North America to Corporate at the beginning of 2019, partially offset by savings resulting from restructuring programs. Currency-neutral adjusted operating profit decreased $2 million after excluding the impact of mark-to-market, Project K, and business and portfolio realignment.

The following tables provide an analysis of net sales and operating profit performance for the ~~year-to-date periods ended September 28, 2019 and September 29, 2018:~~second quarter of 2020 versus 2019:


Quarter ended June 27, 2020																			Quarter ended June 27, 2020
(millions)																			(millions)	North America			Europe			Latin America			AMEA			Corporate			Kellogg Consolidated
Reported net sales																			Reported net sales	$	2,167		$	546		$	223		$	529		$	—		$	3,465

Year-to-date period ended September 28, 2019

Foreign currency impact on total business (inc)/dec																			Foreign currency impact on total business (inc)/dec	(6)			(18)			(48)			(31)			—			(103)

Organic net sales																			Organic net sales	$	2,173		$	564		$	271		$	560		$	—		$	3,569

Quarter ended June 29, 2019																			Quarter ended June 29, 2019
(millions)	North America			Europe			Latin America			AMEA			Corporate			Kellogg Consolidated			(millions)
Reported net sales	$	6,496		$	1,566		$	707		$	1,586		$	—		$	10,355		Reported net sales	$	2,148		$	541		$	239		$	533		$	—		$	3,461
Foreign currency impact on total business (inc)/dec	(12		)	(100		)	(30		)	(87		)	—			(230		)
Currency-neutral net sales	$	6,508		$	1,666		$	738		$	1,673		$	—		$	10,585
Acquisitions	—			—			—			271			—			271
Foreign currency impact on acquisitions (inc)/dec	—			—			—			49			—			49

Divestiture																			Divestiture	191			—			2			—			—			194

Organic net sales	$	6,508		$	1,666		$	738		$	1,353		$	—		$	10,265		Organic net sales	$	1,956		$	542		$	237		$	533		$	—		$	3,268

Year-to-date period ended September 29, 2018
(millions)	North America			Europe			Latin America			AMEA			Corporate			Kellogg Consolidated
Reported net sales	$	6,645		$	1,610		$	710		$	1,265		$	—		$	10,230
Divestiture	130			—			2			—			—			132
Organic net sales	$	6,515		$	1,610		$	708		$	1,265		$	—		$	10,098
% change - 2020 vs. 2019:																			% change - 2020 vs. 2019:
Reported growth																			Reported growth	0.9		%	0.8		%	(6.9)		%	(0.7)		%	—		%	0.1		%

% change - 2019 vs. 2018:
Reported growth	(2.3		)%	(2.8		)%	(0.4		)%	25.5		%	—		%	1.2		%

Foreign currency impact on total business (inc)/dec	(0.2		)%	(6.2		)%	(4.3		)%	(6.9		)%	—		%	(2.3		)%	Foreign currency impact on total business (inc)/dec	(0.3)		%	(3.3)		%	(20.0)		%	(5.8)		%	—		%	(3.0)		%
Currency-neutral growth	(2.1		)%	3.4		%	3.9		%	32.4		%	—		%	3.5		%	Currency-neutral growth	1.2		%	4.1		%	13.1		%	5.1		%	—		%	3.1		%
Acquisitions	—		%	—		%	—		%	21.5		%	—		%	2.7		%

Divestiture	(2.0		)%	—		%	(0.3		)%	—		%	—		%	(1.3		)%	Divestiture	(9.9)		%	—		%	(1.2)		%	—		%	—		%	(6.1)		%
Foreign currency impact on acquisitions (inc)/dec	—		%	—		%	—		%	3.9		%	—		%	0.5		%

Organic growth	(0.1		)%	3.4		%	4.2		%	7.0		%	—		%	1.6		%	Organic growth	11.1		%	4.1		%	14.3		%	5.1		%	—		%	9.2		%
Volume (tonnage)	(1.9		)%	2.0		%	0.2		%	0.1		%	—		%	(0.7		)%	Volume (tonnage)	13.0		%	8.7		%	11.4		%	5.8		%	—		%	10.3		%
Pricing/mix	1.8		%	1.4		%	4.0		%	6.9		%	—		%	2.3		%	Pricing/mix	(1.9)		%	(4.6)		%	2.9		%	(0.7)		%	—		%	(1.1)		%

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~~Liquidity and capital resources~~

Our principal source of liquidity is operating cash flows supplemented by borrowings for major acquisitions and other significant transactions. Our cash-generating capability is one of our fundamental strengths and provides us with substantial financial flexibility in meeting operating and investing needs.

We have historically reported negative working capital primarily as the result of our focus to improve core working capital by reducing our levels of trade receivables and inventory while extending the timing of payment of our trade payables. The impacts of the extended customer terms program and the monetization programs ~~are included in our~~

~~calculation of~~on core working capital ~~and~~ are largely offsetting. Core working capital was improved by the extension of supplier payment terms. These programs are all part of our ongoing working capital management.

We have a substantial amount of indebtedness which results in current maturities of long-term debt and notes payable which can have a significant impact on working capital as a result of the timing of these required payments. These factors, coupled with the use of our ongoing cash flows from operations to service our debt obligations, pay dividends, fund acquisition opportunities, and repurchase our common stock, reduce our working capital amounts. We had negative working capital of ~~$0.9~~$1.4 billion and ~~$0.6~~$1.5 billion as of ~~September 28,~~June 27, 2020 and June 29, 2019, ~~and September 29, 2018,~~ respectively.

~~With~~The following table reflects net debt amounts:



(millions, unaudited)	June 27, 2020		December 28, 2019
Notes payable	$	121	$	107
Current maturities of long-term debt	1,396		620
Long-term debt	6,929		7,195
Total debt liabilities	$	8,446	$	7,922
Less:
Cash and cash equivalents	(1,047)		(397)
Marketable securities	(200)		—
Net debt	$	7,199	$	7,525

The decrease in net debt from the ~~July 28, 2019 closing of~~prior year-end is primarily due to increased operating cash flow as the ~~sale of selected cookies, fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses to Ferrero for approximately $1.3 billion~~increase in cash and cash equivalents and marketable securities balances more than offset the $500 million debt issue during the second quarter. Marketable securities consists of our investment in a mutual fund holding short-term debt instruments, which we ~~reduced~~expect to hold until our non-GAAP cash flow guidance for the estimated cash tax on proceeds from the sale, the absence of the divested businesses cash flow, working capital impacts of assets and liabilities not sold with the businesses, and transaction-related costs. After-tax proceeds of approximately $1.0 billion were used to redeem outstandingDecember 2020 debt ~~which reduced our leverage and provides additional financial flexibility for future operating and investing needs.~~maturity.

We believe that our operating cash flows, together with our credit facilities and other available financing, will be adequate to meet our operating, investing and financing needs in the foreseeable future. However, there can be no assurance that volatility and/or disruption in the global capital and credit markets will not impair our ability to access these markets on terms acceptable to us, or at all.

The following table sets forth a summary of our cash flows:

Year-to-date period ended
(millions) September 28, 2019 September 29, 2018
Net cash provided by (used in):
Operating activities $ 925
$ 926
Investing activities 931
(785 )
Financing activities (1,731 ) (136 )
Effect of exchange rates on cash and cash equivalents 7
23
Net increase (decrease) in cash and cash equivalents $ 132
$ 28


	Year-to-date period ended
(millions)	June 27, 2020		June 29, 2019
Net cash provided by (used in):
Operating activities	$	971	$	520
Investing activities	(515)		(327)
Financing activities	234		(177)
Effect of exchange rates on cash and cash equivalents	(40)		3
Net increase (decrease) in cash and cash equivalents	$	650	$	19

Operating activities

The principal source of our operating cash flow is net earnings, meaning cash receipts from the sale of our products, net of costs to manufacture and market our products.

Net cash provided by our operating activities for the year-to-date period ended ~~September 28, 2019,~~June 27, 2020, totaled ~~$925~~$971 million ~~flat~~ compared to ~~the same period in 2018. The impact of the divestiture and related restructuring costs and higher input costs~~$520 million in the ~~current year-to-date period were mostly offset by~~prior year period. The increase is due primarily to increased profitability, lower ~~pension contributions.~~cash outflows related to restructuring and business realignment, improved management of core working capital, and lower tax payments.

Our cash conversion cycle (defined as days of inventory and trade receivables outstanding less days of trade payables outstanding, based on a trailing 12 month average), was approximately negative 57 days and negative 7 6

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days for the 12 month periods ended ~~September 28,~~June 27, 2020 and June 29, 2019, ~~and September 29, 2018,~~ respectively. The ~~decrease~~improvement from the prior year is due primarily to ~~a slight decline in days trade payables are outstanding.~~lower inventory balances.

We measure cash flow as net cash provided by operating activities reduced by expenditures for property additions. We use this non-GAAP financial measure of cash flow to focus management and investors on the amount of cash available for debt repayment, dividend distributions, acquisition opportunities, and share repurchases. Our cash flow metric is reconciled to the most comparable GAAP measure, as follows:

Year-to-date period ended
(millions) September 28, 2019 September 29, 2018
Net cash provided by operating activities $ 925
$ 926
Additions to properties (436 ) (389 )
Cash flow $ 489
$ 537


	Year-to-date period ended
(millions)	June 27, 2020		June 29, 2019
Net cash provided by operating activities	$	971	$	520
Additions to properties	(218)		(294)
Cash flow	$	753	$	226

Our non-GAAP measure for cash flow ~~decreased~~increased to ~~$489~~$753 million in the year-to-date period ended ~~September 28, 2019,~~June 27, 2020, from ~~$537~~$226 million in the prior year period due primarily to increased profitability, lower cash outflows related to restructuring and business realignment, improved management of core working capital, lower tax payments, and lower capital expenditures.

Investing activities

Our net cash used in investing activities totaled $515 million for the year-to-date period ended June 27, 2020 compared to cash used of $327 million in the comparable prior year period. The increase is due primarily to the purchase of marketable securities during the current year-to-date period as we invested in a mutual fund holding short-term debt instruments that we expect to hold until our December debt maturity.

Financing activities

Our net cash provided by financing activities for the year-to-date period ended June 27, 2020 totaled $234 million compared to cash used of $177 million during the comparable prior year period, due primarily to proceeds from the ~~divestiture and related restructuring costs, increased input costs, and higher capital expenditures, mostly offset by lower pension contributions.~~

~~Investing activities~~

~~Our net cash provided by investing activities totaled $931 million for the year-to-date period ended September 28, 2019 compared to cash used~~issuance of $785 million in the same period of 2018. The year-over-year increase is due primarily to the sale of selected cookies, fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses to Ferrero for approximately $1.3 billion in cash, and our acquisition of an ownership interest in TAF for $381 million during 2018.

~~Financing activities~~

Our net cash used in financing activities for the year-to-date period ended September 28, 2019 totaled $1,731 million compared to $136 million during the comparable period of 2018 due primarily to the debt redemptions during the third quarter of 2019 totaling approximately $1.0 billion as well as net long-term debt issuances in the prior year period. In August 2019, the Company redeemed $191$500 million of ~~its 4.15% U.S. Dollar~~ten-year 2.10% Notes due November 2019, $248 million of its 4.00% U.S. Dollar Notes due 2020, $202 million of its 3.25% U.S. Dollar Notes due 2021, and $50 million of its 2.65% U.S. Dollar Notes due 2023. In September 2019, the Company redeemed $309 million of its 4.15% U.S. Dollar Notes due November 2019, the remaining principal balance subsequent to the August redemption.2030 in May 2020.

In December 2017, the board of directors approved an authorization to repurchase up to $1.5 billion of our common stock beginning in January 2018 through December 2019. In February 2020, the board of directors approved a new authorization to repurchase up to $1.5 billion ~~in shares beginning in 2018~~of the Company's common stock through December ~~2019.~~2022. These authorizations are intended to allow us to repurchase shares for general corporate purposes and to offset issuances for employee benefit programs. Total purchases for the year-to-date period ended ~~September 28,~~June 29, 2019, were 4 million shares for $220 million. ~~Total purchases for~~The Company did not purchase shares in the year-to-date period ended ~~September 29, 2018, were 2 million~~June 27, 2020 and does not expect to purchase shares ~~for $120 million.~~during the remainder of 2020.

We paid cash dividends of ~~$574~~$390 million in the year-to-date period ended ~~September 28, 2019,~~June 27, 2020, compared to ~~$568~~$380 million during the ~~same period~~comparable prior year period. The increase in ~~2018. During the~~dividends paid reflects our third quarter of 2019 ~~we increased~~increase in the quarterly dividend to $.57 per common share from the previous $.56 per common ~~share.~~share. In ~~October 2019,~~July 2020, the board of directors declared a dividend of $.57 per common share, payable on ~~December 16, 2019~~September 15, 2020 to shareholders of record at the close of business on ~~December 2, 2019. The dividend is broadly in line with our current plan to maintain our long-term dividend pay-out of approximately 50% of adjusted net income.~~September 1, 2020.

~~In January 2018, we~~We entered into an unsecured Five-Year Credit Agreement ~~to replace the existing agreement~~in January 2018, allowing us to borrow, on a revolving credit basis, up to $1.5 billion ~~on a revolving basis.~~and expiring in January 2023.

In January ~~2019,~~2020, we entered into an unsecured 364-Day Credit Agreement to borrow, on a revolving credit basis, up to $1.0 billion at any time outstanding, to replace the $1.0 billion 364-day facility that expired in January ~~2019.~~ 2020.

The ~~new credit facilities contains~~Five-Year and 364 Day Credit Agreements, which had no outstanding borrowings as June 27, 2020, contain customary covenants and warranties, including specified restrictions on indebtedness, liens and a specified interest expense coverage ratio. If an event of default occurs, then, to the extent permitted, the administrative ~~agent~~agents may terminate the commitments under the credit ~~facility,~~facilities, accelerate any outstanding loans under the ~~agreement,~~agreements, and demand the deposit of cash collateral equal to the lender's letter of credit exposure plus interest.

Our Notes contain customary covenants that limit the ability of the Company and its restricted subsidiaries (as defined) to incur certain liens or enter into certain sale and lease-back transactions and also contain a change of

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control provision. There are no ~~borrowings outstanding under~~significant restrictions on the ~~credit facilities.~~

payment of dividends. We ~~are~~were in compliance with all ~~debt covenants. We continue to believe~~covenants as of June 27, 2020.

The Notes do not contain acceleration of maturity clauses that ~~we will be able to meet~~are dependent on credit ratings. A change in our ~~interest and principal repayment obligations and maintain our debt covenants for the foreseeable future. We expect~~credit ratings could limit our access to ~~financing sources, along with operating cash flows, will be adequate~~the U.S. short-term debt market and/or increase the cost of refinancing long-term debt in the future. However, even under these circumstances, we would continue to ~~meet future operating, investing~~have access to our 364-Day Credit Facility, which expires in January 2021, as well as our Five-Year Credit Agreement, which expires in January 2023. This source of liquidity is unused and ~~financing needs, including the pursuit of selected acquisitions.~~available on an unsecured basis, although we do not currently plan to use it.

Monetization and Accounts Payable programs

We have a program in which customers could extend their payment terms in exchange for the elimination of early payment discounts (Extended Terms Program). In order to mitigate the net working capital impact of the Extended Terms Program for discrete customers, we entered into agreements to sell, on a revolving basis, certain trade accounts receivable balances to third party financial institutions (Monetization Programs). Transfers under the Monetization Programs are accounted for as sales of receivables resulting in the receivables being de-recognized from our Consolidated Balance Sheet. The Monetization Programs provide for the continuing sale of certain receivables on a revolving basis until terminated by either party; however the maximum funding from receivables that may be sold at any time is currently $1,033 million, but may be increased or decreased as customers move in or out of the Extended Terms Program and as additional financial institutions move in or out of the Monetization Programs. Accounts receivable sold of ~~$918~~$964 million and ~~$900~~$774 million remained outstanding under this arrangement as of ~~September~~June 27, 2020 and December 28, 2019, ~~and December 29, 2018,~~ respectively.

The Monetization Programs are designed to directly offset the impact the Extended Terms Program would have on the days-sales-outstanding (DSO) metric that is critical to the effective management of the Company's accounts receivable balance and overall working capital. Current DSO levels within North America are consistent with DSO levels prior to the execution of the Extended Term Program and Monetization Programs.

Refer to Note 2 within Notes to Consolidated Financial Statements for further information related to the sale of accounts receivable.

We periodically monitor our supplier payment terms to assess whether our terms are competitive and in line with local market terms. To the extent that such assessment indicates that our supplier payment terms are not aligned with local market terms, we may seek to adjust our terms, including extending our payment due dates as appropriate, however, we do not expect supplier payment term extensions to have a material impact on our cash flows during 2020.

We have agreements with third parties (Accounts Payable Program) to provide accounts payable tracking systems which facilitate participating suppliers’ ability to monitor and, if elected, sell our payment obligations to designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to sell one or more of our payment obligations prior to their scheduled due dates at a discounted price to participating financial institutions. Our goal is to capture overall supplier savings, in the form of payment terms or vendor funding, and the agreements facilitate the suppliers’ ability to sell payment obligations, while providing them with greater working capital flexibility. We have no economic interest in the sale of these suppliers’ receivables and no direct financial relationship with the financial institutions concerning these services. Our obligations to our suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to sell amounts under the arrangements. However, our right to offset balances due from suppliers against payment obligations is restricted by the agreements for those payment obligations that have been sold by suppliers.

Refer to Note 1 within Notes to Consolidated Financial Statements for further information related to accounts payable.

If financial institutions were to terminate their participation in the Monetization Programs, ~~and we were unable secure alternative arrangements, our ability to offer our Extended Terms Program and effectively manage our accounts receivable balance and overall~~ working capital could be negatively impacted. Additionally for the Accounts Payable Programs, financial institutions may terminate their participation or we could experience a downgrade in our credit rating that could result in higher costs to participating suppliers and our extended payment terms being reversed, both of which could negatively impact working capital. If working capital is negatively impacted as a result of these events and we were unable to secure alternative programs, we may have to utilize our various financing arrangements for short-term liquidity or increase our long-term borrowings.

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Future outlook

The Company ~~reaffirmed~~raised full-year ~~guidance:~~guidance, reflecting net sales and profit over-delivery during the first half of the year. The Company has made certain assumptions about the second half amidst an uncertain environment. Notably, the Company assumes at-home consumption growth will moderate to normalized levels by the fourth quarter, with away-from-home demand taking longer to recover, and emerging markets feeling the impact of slowing economies. In addition, the Company expects to sustain direct costs around safety, sanitation, and labor, and has shifted substantial brand building into the second half.

~~Net~~Specifically, based on these assumption, the revised guidance ranges are:

Organic net sales growth for the full year is ~~still expected~~projected to be approximately 5%, versus previous guidance of 1-2% ~~year on year on both a currency-neutral and organic basis.~~growth.

Currency-neutral adjusted operating profit ~~expectations continue~~is expected to ~~be for~~decline approximately 1%, versus previous guidance of a 4% decline, inand still weighed down by the ~~range~~absence of ~~4-5%.~~results from the divested businesses.

Currency-neutral adjusted EPS for the full year is expected to decline by approximately ~~10%~~1%, versus previous guidance of a 3-4% decline, and still weighed down by the ~~favorable~~absence of results from the divested businesses.

Cash provided by operating activities is projected to be $1.6 billion, the high end of our previous guidance ~~due primarily to a slightly lower tax rate and favorable Other income (expense).~~

~~Non-GAAP operating cash flow, defined as operating cash flow less~~range of $1.5-$1.6 billion. Capital expenditures ~~for property additions, is~~are expected to be approximately ~~$0.5~~$0.6 billion. Cash flow, defined as cash provided by operating activities reduced by capital expenditures, is projected to be $1.0 billion, ~~for~~ the ~~year, reflecting~~high end of our previous guidance range of $0.9-$1.0 billion.

Excluded from this guidance are significant supply chain or other market disruptions related to the ~~impact of the divestiture.~~pandemic or global economy.

We are unable to reasonably estimate the potential full-year financial impact of mark-to-market adjustments ~~and costs associated with Brexit~~ because these impacts are dependent on future changes in market ~~and regulatory~~ conditions. Similarly, because of volatility in foreign exchange rates and shifts in country mix of our international earnings, we are unable to reasonably estimate the potential full-year financial impact of foreign currency translation.

As a result, these impacts are not included in the guidance provided. Therefore, we are unable to provide a full reconciliation of these non-GAAP measures used in our guidance without unreasonable effort as certain information necessary to calculate such measure on a GAAP basis is unavailable, dependent on future events outside of our control and cannot be predicted without unreasonable efforts by the Company.

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See the table below that outlines the projected impact of certain other items that are excluded from non-GAAP guidance for ~~2019:~~

2020:


Impact of certain items excluded from Non-GAAP guidance:			Net Sales			Operating Profit		Earnings Per Share
Business and portfolio realignment (pre-tax)						~$60-$70M		~$0.17-$0.20
Income tax impact applicable to adjustments, net**								~$0.04-$0.05


~~Impact of certain items excluded from Non-GAAP guidance:~~			~~Net Sales~~			~~Operating Profit~~		~~Earnings Per Share~~
~~Project K (pre-tax)~~				~~~$50M~~	~~~$0.15~~
~~Business and portfolio realignment (pre-tax)~~		~~~$170-180~~	~~~$0.50-0.53~~
~~Multi-employer pension plan exit liability (pre-tax)~~		~~$132M~~	~~$0.39~~
Income tax impact applicable to adjustments, net**			~~~$0.24~~
Currency-neutral adjusted guidance*	~~1-2%~~2%-3%			~~(4)-(5)~~~(1)%			~~~(10)~~(1)%
~~Subtract: Acquisitions~~Absence of results from divested business			2%~4%
~~Add Back: Divestiture~~53rd Week			~(1)-(2)~~-(3)~~%
Organic ~~guidance~~guidance*			~~1-2%~~~5%

* ~~2019~~2020 full year guidance for net sales, operating profit, and earnings per share are provided on a non-GAAP basis only because certain information necessary to calculate such measures on a GAAP basis is unavailable, dependent on future events outside of our control and cannot be predicted without unreasonable efforts by the Company. These items for ~~2019~~2020 include impacts of ~~Brexit and~~ mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodities and certain foreign currency contracts. The Company is providing quantification of known adjustment items where available.

** Represents the estimated income tax effect on the reconciling items, using weighted-average statutory tax rates, depending upon the applicable jurisdiction.



Reconciliation of Non-GAAP amounts - Cash Flow Guidance
(billions)			Full Year ~~2019~~2020
Net cash provided by (used in) operating activities			~$~~1.0~~1.6
Additions to properties			~~~(0.5)~~($0.6)
Cash Flow			~$~~0.5~~1.0

Forward-looking statements

This Report contains “forward-looking statements” with projections concerning, among other things, the Company’s ~~global growth and efficiency program (Project K),~~restructuring programs, the integration of acquired businesses, our strategy, financial principles, and ~~plans;~~plans, initiatives, improvements and growth; sales, ~~gross~~ margins, advertising, promotion, merchandising, brand building, operating profit, and earnings per share; innovation; investments; capital ~~expenditures;~~expenditures, asset write-offs and expenditures and costs related to productivity or efficiency initiatives; the impact of accounting changes and significant accounting estimates; our ability to meet interest and debt principal repayment obligations; minimum contractual obligations; future common stock repurchases or debt ~~reduction;~~reduction, effective income tax rate; cash flow and core working capital improvements; interest expense; commodity and energy prices; and employee benefit plan costs and funding. Forward-looking statements include predictions of future results or activities and may contain the words “expect,” “believe,” “will,” “can,” “anticipate,” “estimate,” “project,” “should,~~” “estimate,~~” or words or phrases of similar meaning. For example, forward-looking statements are found in this Item 1 and in several sections of Management’s Discussion and Analysis. Our actual results or activities may differ materially from these predictions.

Our future results could be affected by a variety of other factors, ~~including:~~

including uncertainty of the magnitude, duration, geographic reach, impact on the global economy and current and potential travel restrictions of the COVID-19 outbreak, the current, and uncertain future, impact of the COVID-19 outbreak on our business, growth, reputation, prospects, financial condition, operating results (including components of our financial results), and cash flows and liquidity, the expected benefits and costs of the divestiture of selected cookies, fruit and fruit flavored-snacks, pie crusts, and ice-cream cones businesses of the Company, the risk that disruptions from the divestiture will divert management's focus or harm ~~the Company’s~~our business, risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects, risks associated with ~~the Company’s~~our provision of transition services to the divested businesses ~~post-closing;~~

post-closing, the ability to implement restructuring ~~and reorganization plans,~~ as planned, whether the expected amount of costs associated with ~~these plans~~restructuring will ~~exceed~~differ from forecasts, whether ~~the Company~~we will be able to realize the anticipated benefits from ~~these plans~~restructuring in the amounts and times ~~expected;~~

~~the ability to realize the anticipated benefits from our implementation of a more formal revenue growth management discipline;~~

expected, the ability to realize the anticipated benefits and synergies from ~~acquired businesses~~business acquisitions in the amounts and at the times ~~expected;~~

expected, the impact of competitive ~~conditions;~~

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;~~

intangibles, the success of productivity improvements and business ~~transitions;~~

transitions, commodity and energy ~~prices;~~

prices, transportation costs, labor ~~and transportation costs;~~

costs, disruptions or inefficiencies in supply ~~chain;~~

chain, the availability of and interest rates on short-term and long-term ~~financing;~~

financing, actual market performance of benefit plan trust ~~investments;~~

investments, the levels of spending on systems initiatives,

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properties, business opportunities, integration of acquired businesses, and other general and administrative ~~costs;~~

costs, changes in consumer behavior and ~~preferences;~~

preferences, the effect of U.S. and foreign economic conditions on items such as interest rates, statutory tax rates, currency conversion and ~~availability;~~

availability, legal and regulatory factors including changes in food safety, advertising and labeling laws and ~~regulations;~~

regulations, the ultimate impact of product recalls;

~~adverse changes in global climate or extreme weather conditions;~~

business disruption or other losses from ~~natural disasters,~~ war, terrorist acts or political unrest; and

the risks and uncertainties described ~~herein under Part II,~~in Item ~~1A.~~

1A below. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update them.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our Company is exposed to certain market risks, which exist as a part of our ongoing business operations. We use derivative financial and commodity instruments, where appropriate, to manage these risks. Refer to Note 1211 within Notes to Consolidated Financial Statements for further information on our derivative financial and commodity instruments.

Refer to disclosures contained within Item 7A of our ~~2018~~2019 Annual Report on Form 10-K. Other than changes noted here, there have been no material changes in the Company’s market risk as of ~~September 28, 2019.~~June 27, 2020.

~~There have also been periods of increased~~Volatile market ~~volatility and currency exchange rate fluctuations specifically within the United Kingdom and Europe, as a result of the UK referendum held on June 23, 2016, in which voters approved an exit~~conditions arising from the ~~European Union, commonly referred~~COVID-19 pandemic may result in significant changes in foreign exchange rates, and in particular a weakening of foreign currencies relative to ~~as Brexit. As a result~~the U.S. dollar may negatively affect our net sales and operating profit when translated to U.S. dollars. Primary exposures include the U.S. dollar versus the euro, British pound, Australian dollar, Canadian dollar, Mexican peso, Brazilian real, Nigerian naira, Russian ruble and Egyptian pound, and in the case of ~~the referendum,~~inter-subsidiary transactions, the British ~~government formally initiated~~pound versus the process for withdrawal in March 2017. The terms of withdrawal have not yet been ratified by the UK parliament, and the European Union has, therefore, granted a further extension from the original March 29, 2019 deadline to January 31, 2020. If the current agreementeuro. There is ~~not ratified by that date, the United Kingdom will leave the European Union at such time with no agreement. Accordingly, the referendum has created~~ significant uncertainty about the future relationship between the United Kingdom and the European Union, including with respect to the laws and regulations that will apply as the United Kingdom determines which European Union laws to replace or replicate in the eventsurrounding impact of ~~a withdrawal. We recognize that there are still significant uncertainties surrounding the ultimate resolution of Brexit negotiations,~~COVID-19 on financial markets and we will continue to monitor ~~any changes that may arise and assess their potential impact on our business.~~the business for adverse impacts related to the pandemic.

During ~~2019,~~2020, we've entered into forward starting interest swaps with notional amounts totaling ~~$600~~€150 million and $525 million, as hedges against interest rate volatility associated with a forecasted issuance of fixed rate Euro and U.S. Dollar denominated debt. These swaps were designated as cash flow hedges.

~~During 2019, we've settled~~ In May of 2020, the Company issued $500 million of ten-year 2.10% Notes due 2030, resulting in net proceeds after debt discount of $496 million. In connection with this debt issuance, the company terminated forward starting interest rate swaps with notional amounts totaling ~~€1.8 billion that~~$500 million, resulting in a $51 million loss. These forward starting interest rate swaps were ~~previously designated~~accounted for as ~~fair value~~cash flow hedges ~~for certain Euro debt for an aggregate gain of $40 million. This gain~~and the related loss was recorded in accumulated other comprehensive income and will be amortized to interest expense over the ~~life~~term of the ~~related debt. Additionally we've entered into new~~Notes.

We have interest rate ~~swaps~~contracts with notional amounts totaling ~~€1.2~~$2.2 billion ~~that were designated~~representing a net settlement obligation of $3 million as ~~fair value hedges for certain Euro debt.~~

of June 27, 2020. We ~~have~~had interest rate contracts with notional amounts totaling $1.9 billion representing a net settlement obligation of ~~$15 million as of September 28, 2019. We had interest rate contracts with notional amounts totaling $1.6 billion representing a settlement obligation of $5~~$6 million as of December ~~29, 2018.~~28, 2019.

During 2019, we entered into cross currency swaps with notional amounts totaling approximately €300 million, as hedges against foreign currency volatility associated with our net investment in our wholly-owned foreign subsidiaries. These swaps were designated as net investment hedges. We have cross currency swaps with notional amounts totaling $1.5 billion outstanding as of ~~September 28, 2019~~June 27, 2020 representing a net settlement receivable of ~~$143~~$145 million. The total notional amount of cross currency swaps outstanding as of December ~~29, 2018~~28, 2019 was ~~$1.2~~$1.5 billion representing a net settlement receivable of ~~$79~~$85 million.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer as appropriate, to allow timely decisions regarding required disclosure under Rules 13a-15(e) and 15d-15(e). Disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, rather than absolute, assurance of achieving the desired control objectives.

As of ~~September 28, 2019,~~June 27, 2020, we carried out an evaluation under the supervision and with the participation of our chief executive officer and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

Based on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

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KELLOGG COMPANY

PART II — OTHER INFORMATION

Item 1A. Risk Factors

~~There~~

Except as set forth below, there have been no material changes in our risk factors from those disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended December ~~29, 2018.~~28, 2019. The risk factors disclosed under those Reports in addition to the other information set forth in this Report, could materially affect our business, financial condition, or results. Additional risks and uncertainties not currently known to us or that we deem to be immaterial could also materially adversely affect our business, financial condition, or results.

The COVID-19 pandemic could materially adversely affect our business, financial condition, results of operations and/or cash flows.

The severity, magnitude and duration of the current COVID-19 pandemic is uncertain and rapidly changing.

Measures enacted by authorities, and actions taken by the Company, to mitigate the spread of the COVID-19 pandemic, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns, have impacted and may further impact all or portions of our workforce and operations, the operations of our customers, and those of our respective vendors and suppliers. There is no certainty that measures taken by governmental authorities will be sufficient to mitigate the risks posed by the COVID-19 pandemic, and our ability to perform critical functions could be harmed. A shutdown of one or more of our manufacturing, warehousing or distribution facilities as a result of illness, government restrictions or other workforce disruptions orabsenteeism, or reductions in capacity utilization levels, could result in us incurring additional direct costs and experiencing lost revenue. Illness, travel restrictions or workforce disruptions could negatively affect our supply chain, manufacturing, distribution or other business.The COVID-19 pandemic could disrupt our supply chain, operations and routes to market or those of our suppliers, their suppliers or our brokers or distributors. These disruptions or our failure to effectively respond to them, could increase product or distribution costs, or cause delays or inability to deliver products to our customers. We have experienced temporary disruptions to our supply chain in certain markets that, to date, have not been material to our consolidated results. These disruptions to our work force and supply could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Further, we have recently delayed certain capital and innovation projects due to the COVID-19 pandemic. Continued disruptions and uncertainties related to the COVID-19 pandemic for a sustained period could result in additional delays or modifications to these projects and other productivity, capital and innovation projects and hinder our ability to achieve the project objectives.

The COVID-19 pandemic has also significantly increased economic and demand uncertainty, including inflation, interest rates, availability of capital markets, consumer spending rates and energy availability and costs (including fuel surcharges). We expect the COVID-19 pandemic to result in lower revenues in some of our emerging market countries that have a higher concentration of traditional trade outlets (such as small family-run stores).

The duration and significance of this sustained demand is uncertain. Volatility in financial markets and deterioration of national and global economic conditions could impact our business and operations in a variety of ways, including as follows:

•Consumers may shift purchases to more generic, lower-priced, or other value offerings, or may forego certain purchases altogether during economic downturns, which could result in a reduction in sales of higher margin products or a shift in our product mix to lower margin offerings adversely affecting the results of our operations;

•Disruptions or uncertainties related to the COVID-19 pandemic could result in delays or modifications to our strategic plans and initiatives and hinder our ability to achieve our objective to reduce our operating cost structure in both our supply chain and overhead costs;

•A strengthening in the U.S. dollar relative to other currencies in the countries in which we operate would negatively affect our reported results of operations and financial results due to currency translation losses and currency transaction losses;

•Decreased demand for our products due to unemployment as a result of the COVID-19 pandemic;

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•Volatility in commodity and other input costs could substantially impact our result of operations and our commodity hedging activities might not sufficiently offset this volatility;

•Volatility in the equity markets or interest rates could substantially impact our pension costs and required pension contributions; and

•Increased volatility and pricing in the capital markets and commercial paper markets could limit our access to our preferred sources of liquidity when we would like, and our borrowing costs could increase.

These and other impacts of the COVID-19 pandemic could have the effect of heightening many of the other risks described in this “Risk Factors” section of our 10-K, such as those relating to our reputation, brands, product sales, results of operations or financial condition. The severity, magnitude and duration of the current COVID-19 pandemic is uncertain, rapidly changing and depends on events beyond our knowledge or control. We might not be able to anticipate or respond to all impacts on a timely basis to prevent near- or long-term adverse impacts to our results. As a result, the impact of the COVID-19 pandemic could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In ~~December 2017,~~February 2020, the board of directors approved an authorization to repurchase of up to $1.5 billion of ~~our~~the Company's common stock ~~beginning in January 2018~~ through December ~~2019. This authorization is~~2022. These authorizations are intended to allow usthe Company to repurchase shares for general corporate purposes and to offset issuances for employee benefit programs.

The following table provides information with respect to purchases of common shares under programs authorized by our board of directors during the quarter ended ~~September 28, 2019.~~June 27, 2020.

(millions, except per share data)


Period	(a) Total Number of Shares Purchased	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
Month #1:
3/29/2019 - 4/25/2020	—	$	—	—	$	1,500
Month #2:
4/26/2020 - 5/23/2020	—	$	—	—	$	1,500
Month #3:
5/24/2020 - 6/27/2020	—	$	—	—	$	1,500
Total	—	$	—	—

Period
(a) Total Number
of Shares
Purchased
(b) Average Price
Paid Per Share
(c) Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
(d) Approximate
Dollar Value of
Shares that May
Yet Be
Purchased
Under the Plans
or Programs
Month #1:
6/30/2019 - 7/27/2019 —
$ —
—
$ 960
Month #2:
7/28/2019 - 8/24/2019 —
$ —
—
$ 960
Month #3:
8/25/2019 - 9/28/2019 —
$ —
—
$ 960
Total —
$ —
—

Item 6. Exhibits

(a)Exhibits:


~~(a)~~4.1			~~Exhibits:~~

Officers’ Certificate of Kellogg Company (with form of 2.100% Senior Notes due 2030), incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K dated June 1, 2020, Commission file number 1-4171.
31.1

~~31.1~~	Rule 13a-14(e)/15d-14(a) Certification from Steven A. Cahillane
31.2		Rule 13a-14(e)/15d-14(a) Certification from Amit Banati
32.1		Section 1350 Certification from Steven A. Cahillane
32.2		Section 1350 Certification from Amit Banati
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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KELLOGG COMPANY

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 thereunto duly authorized.


KELLOGG COMPANY

~~KELLOGG COMPANY~~

/s/ Amit Banati
Amit Banati
Principal Financial Officer; Senior Vice President and Chief Financial Officer

/s/ Kurt Forche
Kurt Forche
Principal Accounting Officer; Vice President and Corporate Controller

Date: July 31, 2020

~~Date: October 30, 2019~~

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KELLOGG COMPANY

EXHIBIT INDEX



Exhibit No.	Description	Electronic (E) Paper (P) Incorp. By Ref. (IBRF)
~~31.1~~4.1	Officers’ Certificate of Kellogg Company (with form of 2.100% Senior Notes due 2030), incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K dated June 1, 2020, Commission file number 1-4171.	IBRF
31.1	Rule 13a-14(e)/15d-14(a) Certification from Steven A. Cahillane	E
31.2	Rule 13a-14(e)/15d-14(a) Certification from Amit Banati	E
32.1	Section 1350 Certification from Steven A. Cahillane	E
32.2	Section 1350 Certification from Amit Banati	E
101.INS	XBRL Instance Document	E
101.SCH	XBRL Taxonomy Extension Schema Document	E
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	E
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	E
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	E
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	E

5551



						Page
			PART I — Financial Information
			Item 1:
			Financial Statements
			Consolidated Balance Sheet — ~~September~~June 27 , 2020 and December 28, 2019 ~~and December 29, 2018~~			3
			Consolidated Statement of Income — quarter and year-to-date ~~periods~~ period s ended ~~September 28,~~June 27 , 2020 and June 29 , 2019 ~~and September 29, 2018~~			4
			Consolidated Statement of Comprehensive Income – quarter and year-to-date ~~periods~~period s ended ~~September 28, 2019~~June 27, 2020 and ~~September~~June 29, ~~2018~~2019			5
			Consolidated Statement of Equity — quarter and year-to-date ~~periods~~ period ended ~~September 28, 2019~~June 27 , 2020			6
			Consolidated Statement of Equity — quarter and year-to-date ~~periods~~ period ended ~~September~~ June 29 ~~2018~~, 2019			76
			Consolidated Statement of Cash Flows — year-to-date periods ended ~~September 28,~~June 27 , 2020 and June 29 , 2019 ~~and September 29, 2018~~			8
			Notes to Consolidated Financial Statements			9
			Item 2:
			Management’s Discussion and Analysis of Financial Condition and Results of Operations			3228
			Item 3:
			Quantitative and Qualitative Disclosures about Market Risk			5147
			Item 4:
			Controls and Procedures			5247
			PART II — Other Information
			Item 1A:
			Risk Factors			5348
			Item 2:
			Unregistered Sales of Equity Securities and Use of Proceeds			5349
			Item 6:
			Exhibits			5349
			Signatures			5450
			Exhibit Index			5551



	September 28, 2019 (unaudited)			December 29, 2018
Current assets
Cash and cash equivalents	$	453		$	321
Accounts receivable, net	1,643			1,375
Inventories	1,200			1,330
Other current assets	196			131
Total current assets	3,492			3,157
Property, net	3,493			3,731
Operating lease right-of-use assets	464			—
Goodwill	5,842			6,050
Other intangibles, net	2,572			3,361
Investments in unconsolidated entities	405			413
Other assets	1,231			1,068
Total assets	$	17,499		$	17,780
Current liabilities
Current maturities of long-term debt	$	6		$	510
Notes payable	185			176
Accounts payable	2,338			2,427
Current operating lease liabilities	105			—
Other current liabilities	1,755			1,416
Total current liabilities	4,389			4,529
Long-term debt	7,683			8,207
Operating lease liabilities	366			—
Deferred income taxes	589			730
Pension liability	605			651
Other liabilities	579			504
Commitments and contingencies
Equity
Common stock, $.25 par value	105			105
Capital in excess of par value	909			895
Retained earnings	7,910			7,652
Treasury stock, at cost	(4,714		)	(4,551		)
Accumulated other comprehensive income (loss)	(1,483		)	(1,500		)
Total Kellogg Company equity	2,727			2,601
Noncontrolling interests	561			558
Total equity	3,288			3,159
Total liabilities and equity	$	17,499		$	17,780


	June 27, 2020 (unaudited)		December 28, 2019
Current assets
Cash and cash equivalents	$	1,047	$	397
Marketable securities	200		—
Accounts receivable, net	1,692		1,576
Inventories	1,230		1,226
Other current assets	323		232
Total current assets	4,492		3,431
Property, net	3,436		3,612
Operating lease right-of-use assets	662		541
Goodwill	5,768		5,861
Other intangibles, net	2,486		2,576
Investments in unconsolidated entities	399		404
Other assets	1,308		1,139
Total assets	$	18,551	$	17,564
Current liabilities
Current maturities of long-term debt	$	1,396	$	620
Notes payable	121		107
Accounts payable	2,393		2,387
Current operating lease liabilities	115		114
Accrued advertising and promotion	694		641
Other current liabilities	1,137		909
Total current liabilities	5,856		4,778
Long-term debt	6,929		7,195
Operating lease liabilities	532		433
Deferred income taxes	597		596
Pension liability	697		705
Other liabilities	534		543
Commitments and contingencies
Equity
Common stock, $.25 par value	105		105
Capital in excess of par value	929		921
Retained earnings	8,166		7,859
Treasury stock, at cost	(4,613)		(4,690)
Accumulated other comprehensive income (loss)	(1,717)		(1,448)
Total Kellogg Company equity	2,870		2,747
Noncontrolling interests	536		567
Total equity	3,406		3,314
Total liabilities and equity	$	18,551	$	17,564


	Quarter ended						Year-to-date period ended
(unaudited)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Net sales	$	3,465	$	3,461	$	6,877	$	6,983
Cost of goods sold	2,268		2,275		4,536		4,690
Selling, general and administrative expense	691		789		1,375		1,515
Operating profit	506		397		966		778
Interest expense	69		75		133		149
Other income (expense), net	30		45		79		97
Income before income taxes	467		367		912		726
Income taxes	109		74		203		146
Earnings (loss) from unconsolidated entities	(4)		(1)		(5)		(3)
Net income	354		292		704		577
Net income attributable to noncontrolling interests	3		6		6		9
Net income attributable to Kellogg Company	$	351	$	286	$	698	$	568
Per share amounts:
Basic earnings	$	1.02	$	0.84	$	2.04	$	1.66
Diluted earnings	$	1.02	$	0.84	$	2.02	$	1.66

Average shares outstanding:
Basic	343		340		342		341
Diluted	345		341		345		342
Actual shares outstanding at period end					343		341


	Quarter ended June 27, 2020
	Common stock					Capital in excess of par value		Retained earnings	Treasury stock						Accumulated other comprehensive income (loss)		Total Kellogg Company equity		Non-controlling interests	Total equity
(unaudited)	shares	amount									shares		amount
Balance, March 28, 2020	421	$	105	$	911	$	8,010	78	$	(4,625)	$	(1,727)	$	2,674	$	538	$	3,212

Net income						351							351		3		354

Dividends declared ($0.57 per share)						(195)							(195)				(195)
Distributions to noncontrolling interest													—		(1)		(1)
Other comprehensive income											10		10		(4)		6

Stock compensation				18									18				18
Stock options exercised and other				—		—		—	12				12				12
Balance, June 27, 2020	421	$	105	$	929	$	8,166	78	$	(4,613)	$	(1,717)	$	2,870	$	536	$	3,406



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Quarter ended						Year-to-date period ended
(Results are unaudited)	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Net sales	$	3,372		$	3,469		$	10,355		$	10,230
Cost of goods sold	2,372			2,293			7,062			6,593
Selling, general and administrative expense	737			780			2,252			2,257
Operating profit	263			396			1,041			1,380
Interest expense	72			72			221			213
Other income (expense), net	150			130			247			269
Income before income taxes	341			454			1,067			1,436
Income taxes	91			69			237			206
Earnings (loss) from unconsolidated entities	(2		)	(2		)	(5		)	196
Net income	248			383			825			1,426
Net income attributable to noncontrolling interests	1			3			10			6
Net income attributable to Kellogg Company	$	247		$	380		$	815		$	1,420
Per share amounts:
Basic earnings	$	0.73		$	1.10		$	2.39		$	4.10
Diluted earnings	$	0.72		$	1.09		$	2.38		$	4.07
Average shares outstanding:
Basic	341			347			341			346
Diluted	342			349			342			349
Actual shares outstanding at period end							341			347


	Quarter ended June 27, 2020										Year-to-date period ended June 27, 2020
(unaudited)	Pre-tax amount		Tax (expense) benefit		After-tax amount		Pre-tax amount		Tax (expense) benefit		After-tax amount
Net income					$	354					$	704
Other comprehensive income (loss):
Foreign currency translation adjustments:
Foreign currency translation adjustments during period	$	(20)	$	10	(10)		$	(261)	$	(10)	(271)
Cash flow hedges:
Unrealized gain (loss)	12		(3)		9		(53)		14		(39)
Reclassification to net income	5		(2)		3		7		(2)		5
Postretirement and postemployment benefits:


Reclassification to net income:
Net experience (gain) loss	(1)		1		—		(2)		1		(1)
Prior service cost	(1)		—		(1)		(1)		—		(1)
Available-for-sale securities:
Unrealized gain (loss)	5		—		5		2		—		2

Other comprehensive income (loss)	$	—	$	6	$	6	$	(308)	$	3	$	(305)
Comprehensive income					$	360					$	399
Net Income attributable to noncontrolling interests					3						6
Other comprehensive income (loss) attributable to noncontrolling interests					(4)						(36)
Comprehensive income attributable to Kellogg Company					$	361					$	429

	Quarter ended June 29, 2019										Year-to-date period ended June 29, 2019
(unaudited)	Pre-tax amount		Tax (expense) benefit		After-tax amount		Pre-tax amount		Tax (expense) benefit		After-tax amount
Net income					$	292					$	577
Other comprehensive income (loss):
Foreign currency translation adjustments:
Foreign currency translation adjustments during period	$	(5)	$	1	(4)		$	61	$	(9)	52
Cash flow hedges:

Reclassification to net income	2		(1)		1		3		(1)		2
Postretirement and postemployment benefits:


Reclassification to net income:
Net experience (gain) loss	(1)		1		—		(2)		1		(1)

Available-for-sale securities:
Unrealized gain (loss)	1		—		1		3		—		3

Other comprehensive income (loss)	$	(3)	$	1	$	(2)	$	65	$	(9)	$	56
Comprehensive income					$	290					$	633
Net Income attributable to noncontrolling interests					6						9
Other comprehensive income (loss) attributable to noncontrolling interests					—						3
Comprehensive income attributable to Kellogg Company					$	284					$	621



	Quarter ended September 28, 2019
	Common stock			Capital in excess of par value		Retained earnings			Treasury stock				Accumulated other comprehensive income (loss)			Total Kellogg Company equity			Non-controlling interests			Total equity
(unaudited)	shares	amount							shares	amount
Balance, June 29, 2019	421	$	105	$	895	$	7,858		80	$	(4,739	)	$	(1,469	)	$	2,650		$	562		$	3,212
Net income						247										247			1			248
Sale of subsidiary shares to noncontrolling interest																—			—			—
Dividends declared ($0.57 per share)						(194		)								(194		)				(194		)
Distributions to noncontrolling interest																—			—			—
Other comprehensive income													(14		)	(14		)	(2		)	(16		)
Stock compensation				13												13						13
Stock options exercised and other				1		(1		)	—	25						25						25
Balance, September 28, 2019	421	$	105	$	909	$	7,910		80	$	(4,714	)	$	(1,483	)	$	2,727		$	561		$	3,288



	Quarter ended September 29, 2018
	Common stock			Capital in excess of par value		Retained earnings			Treasury stock					Accumulated other comprehensive income (loss)			Total Kellogg Company equity			Non-controlling interests			Total equity
(unaudited)	shares	amount							shares		amount
Balance, June 30, 2018	421	$	105	$	866	$	7,743		74		$	(4,375	)	$	(1,501	)	$	2,838		$	566		$	3,404
Common stock repurchases									1		(70		)				(70		)				(70		)
Net income						380											380			3			383
Acquisition of noncontrolling interest - Multipro																	—			—			—
Dividends declared ($0.56 per share)						(194		)									(194		)				(194		)
Distributions to noncontrolling interest																	—			—			—
Other comprehensive income														(11		)	(11		)	(2		)	(13		)
Stock compensation				12													12						12
Stock options exercised and other				5		—			(1	)	88						93						93
Balance, September 29, 2018	421	$	105	$	883	$	7,929		74		$	(4,357	)	$	(1,512	)	$	3,048		$	567		$	3,615



	Employee Related Costs			Pension curtailment (gain) loss, net		Asset Impairment		Asset Related Costs			Other Costs			Total
Liability as of December 29, 2018	$	93		$	—	$	—	$	1		$	10		$	104
2019 restructuring charges	41			—		—		15			35			91
Cash payments	(58		)	—		—		(7		)	(38		)	(103		)
Non-cash charges and other	—			—		—		(8		)	—			(8		)
Liability as of September 28, 2019	$	76		$	—	$	—	$	1		$	7		$	84



(millions)	Operating leases
2019 (three months remaining)	36
2020	111
2021	86
2022	69
2023	57
2024 and beyond	166
Total minimum payments	$	525
Less interest	$	(54	)
Present value of lease liabilities	$	471



(millions)	Operating leases
2019	121
2020	97
2021	73
2022	57
2023	48
2024 and beyond	129
Total minimum payments	$	525



	September 28, 2019				December 29, 2018
(millions)	Principal amount		Effective interest rate		Principal amount		Effective interest rate
U.S. commercial paper	$	25	2.13	%	$	15	2.75	%
Bank borrowings	160				161
Total	$	185			$	176


(millions)	Pension		Nonpension postretirement		Total
Quarter ended:
June 27, 2020	$	—	$	6	$	6
June 29, 2019	$	3	$	4	$	7
Year-to-date period ended:
June 27, 2020	$	3	$	9	$	12
June 29, 2019	$	4	$	8	$	12
Full year:
Fiscal year 2020 (projected)	$	7	$	19	$	26
Fiscal year 2019 (actual)	$	10	$	18	$	28



December 28, 2019	$	90
Tax positions related to current year:
Additions	3
Reductions	—
Tax positions related to prior years:
Additions	3
Reductions	—
Settlements	(1)
Lapse in statute of limitations	—
June 27, 2020	$	95


(millions)	Line Item in the Consolidated Balance Sheet in which the hedged item is included	Carrying amount of the hedged liabilities				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities (a)					(millions)	Line Item in the Consolidated Balance Sheet in which the hedged item is included	Carrying amount of the hedged liabilities						Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities (a)
		September 28, 2019		December 29, 2018		September 28, 2019		December 29, 2018					June 27, 2020		December 28, 2019		June 27, 2020		December 28, 2019
Interest rate contracts	Current maturities of long-term debt	$	—	$	503	$	—	$	3		Interest rate contracts	Current maturities of long-term debt	$	493	$	493	$	—	$	—
Interest rate contracts	Long-term debt	$	3,114	$	3,354	$	27	$	(18	)	Interest rate contracts	Long-term debt	$	2,802	$	2,643	$	22	$	19



As of June 27, 2020:			Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Received/ Posted		Net Amount
Total asset derivatives	$	250	$	(73)	$	(32)	$	145
Total liability derivatives	$	(87)	$	73	$	—	$	(14)




As of September 28, 2019:				Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet			Financial Instruments			Cash Collateral Received/ Posted			Net Amount
Total asset derivatives	$	181		$	(38	)	$	(9	)	$	134
Total liability derivatives	$	(42	)	$	38		$	—		$	(4	)



As of December 28, 2019:			Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Received/ Posted		Net Amount
Total asset derivatives	$	117	$	(27)	$	(7)	$	83
Total liability derivatives	$	(36)	$	27	$	—	$	(9)




As of December 29, 2018:				Gross Amounts Not Offset in the Consolidated Balance Sheet
	Amounts Presented in the Consolidated Balance Sheet			Financial Instruments			Cash Collateral Received/ Posted			Net Amount
Total asset derivatives	$	102		$	(27	)	$	(2	)	$	73
Total liability derivatives	$	(35	)	$	27		$	—		$	(8	)


(millions)	Gain (loss) recognized in AOCI				Gain (loss) excluded from assessment of hedge effectiveness				Location of gain (loss) in income of excluded component	(millions)	Gain (loss) recognized in AOCI						Gain (loss) excluded from assessment of hedge effectiveness			Location of gain (loss) in income of excluded component
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018				June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Foreign currency denominated long-term debt	$	99	$	16	$	—	$	—		Foreign currency denominated long-term debt	$	(18)	$	(35)	$	—	$	—
Cross-currency contracts	49		9		9		4		Interest expense	Cross-currency contracts	(4)		23		9		8		Interest expense
Total	$	148	$	25	$	9	$	4		Total	$	(22)	$	(12)	$	9	$	8


(millions)	Location of gain (loss) recognized in income	Gain (loss) recognized in income
		June 27, 2020		June 29, 2019
Foreign currency exchange contracts	COGS	$	(5)	$	1
Foreign currency exchange contracts	Other income (expense), net	(3)		—

Interest rate contracts	Interest expense	1		—
Commodity contracts	COGS	(26)		40

Total		$	(33)	$	41



	September 28, 2019						December 29, 2018
			Unrealized						Unrealized
(millions)	Cost		Gain (Loss)		Market Value		Cost		Gain (Loss)		Market Value
Corporate bonds	$	—	$	—	$	—	$	59	$	—	$	59


Consolidated Balance Sheet
(millions)	June 27, 2020 (unaudited)		December 28, 2019
Trade receivables	$	1,452	$	1,315
Allowance for doubtful accounts	(23)		(10)
Refundable income taxes	13		56
Other receivables	250		215
Accounts receivable, net	$	1,692	$	1,576
Raw materials and supplies	$	327	$	303
Finished goods and materials in process	903		923
Inventories	$	1,230	$	1,226
Property	$	8,921	$	9,051
Accumulated depreciation	(5,485)		(5,439)
Property, net	$	3,436	$	3,612
Pension	$	269	$	241
Deferred income taxes	223		231
Nonpension postretirement benefits	312		283
Other	504		384
Other assets	$	1,308	$	1,139
Accrued income taxes	$	146	$	42
Accrued salaries and wages	253		290
Other	738		577
Other current liabilities	$	1,137	$	909
Income taxes payable	$	82	$	81
Nonpension postretirement benefits	31		33
Other	421		429
Other liabilities	$	534	$	543



Consolidated Balance Sheet
(millions)	September 28, 2019 (unaudited)			December 29, 2018
Trade receivables	$	1,399		$	1,163
Allowance for doubtful accounts	(9		)	(10		)
Refundable income taxes	14			28
Other receivables	239			194
Accounts receivable, net	$	1,643		$	1,375
Raw materials and supplies	$	320		$	339
Finished goods and materials in process	880			991
Inventories	$	1,200		$	1,330
Property	$	8,804		$	9,173
Accumulated depreciation	(5,311		)	(5,442		)
Property, net	$	3,493		$	3,731
Pension	$	275		$	228
Deferred income taxes	256			246
Other	700			594
Other assets	$	1,231		$	1,068
Accrued income taxes	$	294		$	48
Accrued salaries and wages	259			309
Accrued advertising and promotion	643			557
Other	559			502
Other current liabilities	$	1,755		$	1,416
Income taxes payable	$	97		$	115
Nonpension postretirement benefits	36			34
Other	446			355
Other liabilities	$	579		$	504



Quarter ended September 28, 2019
(millions)	North America*			Europe			Latin America			AMEA			Corporate*			Kellogg Consolidated
Reported operating profit	$	208		$	68		$	23		$	53		$	(89	)	$	263
Mark-to-market	—			—			—			—			(11		)	(11		)
Project K	(9		)	(1		)	(4		)	—			—			(15		)
Brexit impacts	—			(1		)	—			—			—			(1		)
Business and portfolio realignment	(2		)	1			—			(2		)	(18		)	(21		)
Multi-employer pension plan liability	(132		)	—			—			—			—			(132		)
Adjusted operating profit	$	351		$	69		$	28		$	56		$	(61	)	$	444
Foreign currency impact	—			(4		)	(1		)	(1		)	—			(6		)
Currency-neutral adjusted operating profit	$	352		$	73		$	29		$	58		$	(61	)	$	450

Quarter ended September 29, 2018
(millions)	North America*			Europe			Latin America			AMEA			Corporate*			Kellogg Consolidated
Reported operating profit	$	330		$	63		$	28		$	46		$	(71	)	$	396
Mark-to-market	—			—			—			—			(11		)	(11		)
Project K	(44		)	(14		)	(3		)	(2		)	(1		)	(64		)
Brexit impacts	—			—			—			—			—			—
Business and portfolio realignment	—			—			—			—			—			—
Multi-employer pension plan exit liability	—			—			—			—			—			—
Adjusted operating profit	$	374		$	77		$	31		$	48		$	(59	)	$	471

% change - 2019 vs. 2018:
Reported growth	(36.7		)%	8.9		%	(14.5		)%	14.9		%	(27.8		)%	(33.4		)%
Mark-to-market	—		%	—		%	—		%	—		%	5.4		%	(0.9		)%
Project K	5.0		%	19.0		%	(6.0		)%	4.8		%	2.9		%	6.2		%
Brexit impacts	—		%	(1.9		)%	—		%	—		%	—		%	(0.4		)%
Business and portfolio realignment	(0.6		)%	1.8		%	(0.3		)%	(4.9		)%	(30.7		)%	(4.4		)%
Multi-employer pension plan exit liability	(35.4		)%	—		%	—		%	—		%	—		%	(28.2		)%
Adjusted growth	(5.7		)%	(10.0		)%	(8.2		)%	15.0		%	(5.4		)%	(5.7		)%
Foreign currency impact	(0.1		)%	(4.7		)%	(3.4		)%	(2.9		)%	—		%	(1.3		)%
Currency-neutral adjusted growth	(5.6		)%	(5.3		)%	(4.8		)%	17.9		%	(5.4		)%	(4.4		)%


Net sales % change - second quarter 2020 vs. 2019:
North America	Reported net sales		Foreign currency		Currency-neutral net sales		Divestiture		Organic net sales
Snacks	(12.8)	%	(0.1)	%	(12.7)	%	(18.7)	%	6.0	%
Cereal	25.0	%	(0.6)	%	25.6	%	—	%	25.6	%
Frozen	10.6	%	(0.3)	%	10.9	%	—	%	10.9	%



Net sales % change - third quarter year-to-date 2019 vs. 2018:
North America	Reported net sales		Foreign currency		Currency-neutral net sales		Divestiture		Organic net sales
Snacks	(1.4	)%	(0.1	)%	(1.3	)%	(4.1	)%	2.8	%
Cereal	(4.9	)%	(0.3	)%	(4.6	)%	—	%	(4.6	)%
Frozen	0.6	%	(0.2	)%	0.8	%	—	%	0.8	%


Net sales % change - second quarter year-to-date 2020 vs. 2019:
North America	Reported net sales		Foreign currency		Currency-neutral net sales		Divestiture		Organic net sales
Snacks	(15.1)	%	(0.1)	%	(15.0)	%	(23.4)	%	8.4	%
Cereal	13.5	%	(0.3)	%	13.8	%	—	%	13.8	%
Frozen	9.5	%	(0.2)	%	9.7	%	—	%	9.7	%