United States securities and exchange commission logo
March 9, 2023
Gary Pilnick
President
North America Cereal Co.
One Kellogg Square
Battle Creek, Michigan 49016
Re: North America
Cereal Co.
Draft Registration
Statement on Form 10
Submitted February
10, 2023
CIK No. 0001959348
Dear Gary Pilnick:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form 10, submitted February 10, 2023
Summary, page 1
1. Please revise your
summary to provide a more balanced discussion of your company and
products. Balance the
discussion of your strengths on page 2 with an equally prominent
discussion of your
weaknesses, including your plan to incur indebtedness prior to or at the
time of the
distribution.
Gary Pilnick
FirstName LastNameGary
North America Cereal Co. Pilnick
Comapany
March NameNorth America Cereal Co.
9, 2023
March2 9, 2023 Page 2
Page
FirstName LastName
Conditions to the Spin-Off, page 16
2. We note your disclosure that the spin-off is subject to the
satisfaction or waiver of certain
conditions. Please revise to disclose any material consequences to
stockholders if Kellogg
ParentCo Board waives any of the conditions described and proceeds
with the spin-off.
Please include appropriate risk factor disclosure.
Business disruptions could have an adverse effect on our business, financial
condition and results
of operations, page 23
3. We note your risk factor that you may be subject to cyberattacks.
Update your risks
characterized as potential if you have experienced a cyberattack.
Risk Factors, page 23
4. We note your disclosure that you were adversely impacted by a fire and
strike in 2021.
Please revise your related risk factor disclosure so that investors
have a better appreciation
of these related risks.
Our amended and restated certificate of incorporation will designate Delaware
as the exclusive
forum, page 51
5. Please revise to update the disclosure so that it is consistent with
the scope of your
exclusive forum provision disclosed on page 146.
Unaudited Pro Forma Combined Financial Statements, page 70
6. Although you indicate that the pro forma financial statements will
give effect to the
Separation and Distribution Agreement, the Transition Services
Agreement and the Tax
Matters Agreement between you and Kellogg ParentCo, your disclosures
throughout the
filing indicate that such agreements have not yet been finalized.
Please tell us when you
expect to finalize these agreements and how such status will impact
your pro forma
presentation, if at all.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
74
7. Where you describe two or more factors that contributed to a material
change in a
financial statement line item between periods, please quantify
throughout your results of
operations discussion, where possible, the extent to which each factor
contributed to the
overall change in that line item. As an example, you attribute the
decline in net sales and
gross profit from fiscal year 2020 to 2021 to strong 2020
pandemic-related growth and
challenging supply conditions in 2021, including a third-quarter fire
at one of your U.S.
plants and a subsequent fourth-quarter strike affecting all U.S.
plants. Please quantify the
extent to which the overall change is attributable to each identified
factor and, for net
sales, further describe the extent to which fluctuations are
attributable to changes in prices,
Gary Pilnick
FirstName LastNameGary
North America Cereal Co. Pilnick
Comapany
March NameNorth America Cereal Co.
9, 2023
March3 9, 2023 Page 3
Page
FirstName LastName
changes in the volume or amount of goods being sold, or to the
introduction of new
products. Refer to Item 303 of Regulation S-K and SEC Releases No.
33-6835 and 33-
8350.
8. We note your discussion of inflationary pressures on page 77. Please
revise your MD&A
disclosures to expand upon the principal factors contributing to your
inflationary
pressures, the actions planned or taken, if any, to mitigate the
inflationary pressures, and
to quantify the resulting impact on your results of operations and
financial condition.
9. On page 80, you cite "challenging supply conditions" as a reason for
the decline in gross
margin from fiscal year 2020 to 2021. Please address the following
comments related to
your supply chain disruptions:
Revise your MD&A disclosures to more fully address whether and
how supply
disruptions materially affect your outlook or business goals.
Specify whether these
challenges have materially impacted your results of operations or
capital resources
and quantify, to the extent possible, how your sales, profits,
and/or liquidity have
been impacted.
Discuss known trends or uncertainties resulting from mitigation
efforts undertaken, if
any, to alleviate supply chain disruptions. Explain whether any
mitigation efforts
introduce new material risks, including those related to product
quality, reliability, or
regulatory approval of products.
Liquidity and Capital Resources, page 81
10. You indicate that the decrease in your operating cash flows for the
periods presented was
primarily due to lower profitability in 2021, as a result of strong
2020 pandemic-related
net sales growth and challenging supply conditions in 2021, and
changes in inventory,
without further discussion of working capital components. Please
expand your disclosure
to discuss the underlying reasons for material working capital
fluctuations, such as
changes in trade receivables, accounts payable and accrued advertising
and promotions.
See Section IV.B of SEC Release No. 33-8350.
Business
Proven Strength in Product and Marketing Innovation, page 89
11. We note your disclosure that you have "a number of high-profile
partnerships." Please
elaborate on these partnerships and disclose the material terms of
these partnerships.
Please file any material agreements as exhibits in a future amendment.
Management, page 98
12. Please describe the extent and nature of the role of the board of
directors in overseeing
cybersecurity risks, including in connection with the company s
supply
chain/suppliers/service providers.
Gary Pilnick
North America Cereal Co.
March 9, 2023
Page 4
Notes to Combined Financial Statements
General, page F-8
13. Please tell us and disclose, as applicable under ASC 855-10-50-1, the
date through which
subsequent events have been evaluated.
Note 10. Related Party Transactions, page F-25
14. We note your disclosure that your financial statement do not
necessarily include all the
expenses that would have been incurred had you been a separate,
stand-alone entity.
Please disclose, when practicable, management s estimate of what
your expenses would
have been on a stand-alone basis, that is, the cost that would have
been incurred if you had
operated as an unaffiliated entity. Provide this disclosure for each
year for which an
income statement was required when such basis produced materially
different results. See
Question 2 of SAB Topic 1.B.1.
General
15. You state that the company experienced inflationary pressures. Please
expand to identify
the principal factors contributing to the inflationary pressures the
company has
experienced and clarify the resulting impact to the company.
16. Please update your disclosure to identify actions planned or taken, if
any, to mitigate
inflationary pressures.
17. Please disclose whether and how your business segments, products,
lines of service,
projects, or operations are materially impacted by supply chain
disruptions, especially in
light of Russia s invasion of Ukraine. For example, discuss whether
you have or expect to:
suspend the production, purchase, sale or maintenance of certain
items;
experience higher costs due to constrained capacity or increased
commodity prices of
challenges sourcing materials;
experience surges or declines in consumer demand for which you are
unable to
adequately adjust your supply; or
be unable to supply products at competitive prices or at all due
to export restrictions,
sanctions, or the ongoing invasion.
Explain whether and how you have undertaken efforts to mitigate the
impact and where
possible, quantify the impact to your business.
FirstName LastNameGary Pilnick
18. To the extent material, disclose any new or heightened risk of potential
cyberattacks by
Comapany
stateNameNorth America
actors or others sinceCereal Co.invasion of Ukraine and whether you
have taken
Russia s
March actions
9, 2023 to mitigate
Page 4 such potential risks.
FirstName LastName
Gary Pilnick
FirstName LastNameGary
North America Cereal Co. Pilnick
Comapany
March NameNorth America Cereal Co.
9, 2023
March5 9, 2023 Page 5
Page
FirstName LastName
19. Please revise your disclosures to ensure that the sections your cross
reference are accurate
and consistent. In that regard, we note your cross reference on page
16 to The
Separation Conditions to the Distribution does not appear to
exist. Please advise or
revise.
You may contact Ernest Greene at 202-551-3733 or Andrew Blume at
202-551-3254 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Erin Donahue at 202-551-6063 or Asia Timmons-Pierce at 202-551-3754
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Manufacturing