Kellogg (K) 8-K Results of Operations and Financial Condition

EXHIBIT 99.01

	Kellogg Company News
	For release:	October 29, 2008
	Analyst Contact:	Joel Wittenberg	(269) 961-9089
	Media Contact:	Kris Charles	(269) 961-3799

Kellogg Announces Strong Third-Quarter Results,
Expresses Confidence in Full-Year Earnings Visibility

     BATTLE CREEK, Mich. — Kellogg Company (NYSE: K) today reported third-quarter 2008 sales growth of 9% and earnings per share growth of 17% driven by strong underlying business momentum.

     Reported net earnings for the quarter were $342 million, a 12% increase over last year’s $305 million. The third-quarter performance included the impact of significantly higher commodity inflation and a higher tax rate, offset by lower upfront costs. Earnings were $0.89 per diluted share versus last year’s $0.76, an increase of 17%.

     “The Kellogg business model and strategy continue to give us the ability to offset inflationary headwinds while hitting our targets and delivering sustainable, dependable performance in these very volatile times,” said David Mackay, Kellogg’s chief executive officer.

     Reported net sales in the third quarter increased 9% to $3.3 billion. Internal net sales growth, which excludes the effects of foreign currency translation, acquisitions and differences in the number of shipping days, was 7%.

     Kellogg North America posted broad-based reported net sales growth of 10%; internal net sales growth was 9%. Retail Cereal posted internal net sales growth of 7%, the Retail Snacks business posted internal net sales growth of 10% and the North America Frozen and Specialty Channels businesses delivered internal net sales growth of 11%.

     Kellogg International reported third-quarter net sales growth of 9%, or 3% on an internal basis, which excludes the favorable effects of currency translation, acquisitions and differences in the number of shipping days. Internal net sales in Europe increased 3%, while Latin America internal sales decreased 1% versus last year’s strong 12% growth. Economic weakness and a competitive environment impacted Mexico’s performance. The Asia Pacific region posted strong internal net sales growth of 10%.

     Operating profit was $533 million in the third quarter of 2008, an increase of 9% on a reported and internal basis. Total upfront costs incurred for cost-reduction initiatives were

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approximately $0.01 per share. Kellogg still expects that upfront costs related to cost-reduction initiatives for the full year will be approximately $0.14 of earnings per share.

     Cash flow, defined as cash from operating activities less capital expenditures, was $893 million in the first three quarters of the year versus $961 million during the same period of 2007. For the full year, Kellogg still anticipates cash flow of between $1 billion and $1.075 billion.

Kellogg Expresses Increased Confidence in Achieving High End of 2008 EPS Target

     Kellogg now anticipates that 2008 earnings per share will be closer to the high end of the previous guidance of $2.95 to $3.00 per share. The Company also expects mid single-digit internal sales and internal operating profit growth for the full year. Total cost pressure expectations remain at approximately 9% of cost of goods.

     For 2009, Kellogg anticipates another year of sustainable and dependable performance. Given the current business momentum, the company provided guidance of mid single-digit internal sales growth — above its long-term guidance of low single-digit growth. In addition, internal operating profit is projected to also grow at a mid single-digit rate. The Company remains confident that it can achieve high single-digit EPS growth on a currency neutral basis, which excludes the effects of foreign currency translation but includes the impact of acquisitions, dispositions and differences in the number of shipping days. However, the recent volatility in foreign exchange markets makes forecasting reported EPS growth very difficult at this time.

     CEO Mackay concluded, “We remain confident in our ability to deliver another year of sustainable and dependable performance despite the uncertain economic environment and unpredictable foreign exchange markets.”

About Kellogg Company

With 2007 sales of nearly $12 billion, Kellogg Company is the world’s leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles, and veggie foods. The Company’s brands includeKellogg’s^®,Keebler^®,Pop-Tarts^®,Eggo^®,Cheez-It^®,Nutri-Grain^®,Rice Krispies^®,Morningstar Farms^®,Famous Amos^®,Special K^®,Stretch Island^®,All-Bran^®,Frosted Mini-Wheats^®,Club^® and

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Kashi^®. Kellogg products are manufactured in 19 countries and marketed in more than 180 countries around the world. For more information, visit Kellogg’s web site athttp://www.kelloggcompany.com.

Forward-Looking Statements Disclosure

     This news release contains forward-looking statements related to business performance, earnings, costs, cash flow, brand building, and cost-reduction initiatives. Actual performance may differ materially from these statements due to factors related to competitive conditions and their impact; the effectiveness of advertising, pricing and promotional spending; the success of productivity improvements and business transitions; the success of innovation and new product introductions; the recoverability of the carrying value of goodwill and other intangibles; the availability of and interest rates on short-term financing; commodity and energy prices and labor costs; actual market performance of benefit plan trust investments; the levels of spending on systems initiatives, properties, business opportunities, integration of acquired businesses; changes in consumer behavior and preferences; U.S. and foreign economic factors such as interest rates, statutory tax rates, and foreign currency conversions or unavailability; legal and regulatory factors; business disruption or other losses from terrorist acts or political unrest; and other factors. Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to publicly update them.

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Kellogg Company and Subsidiaries
CONSOLIDATED STATEMENT OF EARNINGS
(millions, except per share data)

	Quarter ended				Year-to-date period ended
	September 27,		September 29,		September 27,			September 29,
(Results are unaudited)	2008		2007		2008			2007
Net sales	$	3,288	$	3,004	$	9,889		$	8,982
Cost of goods sold		1,885		1,662		5,678			4,999
Selling, general and administrative expense		870		850		2,603			2,474
Operating profit		533		492		1,608			1,509
Interest expense		71		79		230			233
Other income (expense), net		13		3		(6	)		5
Earnings before income taxes		475		416		1,372			1,281
Income taxes		133		111		403			354
Net earnings	$	342	$	305	$	969		$	927
Net earnings per share:
Basic	$	.90	$	.77	$	2.54		$	2.34
Diluted	$	.89	$	.76	$	2.51		$	2.31
Dividends per share	$	.3400	$	.3100	$	.9600		$	.8920
Average shares outstanding:
Basic		380		395		382			397
Diluted		384		399		385			401
Actual shares outstanding at period end						381			394

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Kellogg Company and Subsidiaries
SELECTED OPERATING SEGMENT DATA

	Quarter ended						Year-to-date period ended
(millions)	September 27,			September 29,			September 27,			September 29,
(Results are unaudited)	2008			2007			2008			2007
Net sales
North America	$	2,156		$	1,960		$	6,431		$	5,942
Europe		666			604			2,089			1,801
Latin America		277			270			813			752
Asia Pacific (a)		189			170			556			487
Consolidated	$	3,288		$	3,004		$	9,889		$	8,982
Operating profit
North America	$	380		$	333		$	1,163		$	1,059
Europe		113			110			347			345
Latin America		61			66			166			168
Asia Pacific (a)		26			18			79			65
Corporate		(47	)		(35	)		(147	)		(128	)
Consolidated	$	533		$	492		$	1,608		$	1,509

(a) Includes Australia, Asia and South Africa.

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Kellogg Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(millions)

	Year-to-date period ended
	September 27,			September 29,
(unaudited)	2008			2007
Operating activities
Net earnings	$	969		$	927
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization		274			275
Deferred income taxes		(12	)		(114	)
Other (a)		122			138
Postretirement benefit plan contributions		(60	)		(42	)
Changes in operating assets and liabilities		(105	)		69
Net cash provided by operating activities		1,188			1,253
Investing activities
Additions to properties		(295	)		(292	)
Acquisitions of business, net of cash acquired		(212	)		—
Other		11			(4	)
Net cash used in investing activities		(496	)		(296	)
Financing activities
Net issuances of notes payable		48			566
Issuances of long-term debt		756			—
Reductions of long-term debt		(466	)		(730	)
Issuances of common stock		155			141
Common stock repurchases		(650	)		(417	)
Cash dividends		(365	)		(354	)
Other		14			8
Net cash used in financing activities		(508	)		(786	)
Effect of exchange rate changes on cash		(24	)		(6	)
Increase in cash and cash equivalents		160			165
Cash and cash equivalents at beginning of period		524			411
Cash and cash equivalents at end of period	$	684		$	576
Supplemental Financial Data:
Cash Flow (operating cash flow less property additions) (b)	$	893		$	961

(a)	Consists principally of non-cash expense accruals for employee compensation and benefit obligations.
(b)	We use this non-GAAP measure of cash flow to focus management and investors on the amount of cash available for debt reduction, dividend distributions, acquisition opportunities, and share repurchase.

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Kellogg Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(millions, except per share data)

	September 27,			December 29,
	2008			2007
	(unaudited)			*
Current assets
Cash and cash equivalents	$	684		$	524
Accounts receivable, net		1,243			1,011
Inventories:
Raw materials and supplies		236			234
Finished goods and materials in process		671			690
Deferred income taxes		145			103
Other prepaid assets		128			140
Total current assets		3,107			2,702
Property, net of accumulated depreciation of $4,432 and $4,313		3,067			2,990
Goodwill		3,652			3,515
Other intangibles, net of accumulated amortization of $42 and $41		1,449			1,450
Pension		511			481
Other assets		252			259
Total assets	$	12,038		$	11,397
Current liabilities
Current maturities of long-term debt	$	2		$	466
Notes payable		1,539			1,489
Accounts payable		1,134			1,081
Accrued advertising and promotion		417			378
Accrued income taxes		30			—
Accrued salaries and wages		262			316
Other current liabilities		388			314
Total current liabilities		3,772			4,044
Long-term debt		4,008			3,270
Deferred income taxes		708			647
Other liabilities		931			910
Shareholders’ equity
Common stock, $.25 par value		105			105
Capital in excess of par value		424			388
Retained earnings		4,790			4,217
Treasury stock, at cost		(1,812	)		(1,357	)
Accumulated other comprehensive income (loss)		(888	)		(827	)
Total shareholders’ equity		2,619			2,526
Total liabilities and shareholders’ equity	$	12,038		$	11,397

* From audited financial statements.

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