1
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR FISCAL YEAR ENDED OCTOBER 31, 2000
COMMISSION FILE NUMBER 1-4171
KELLOGG COMPANY
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
(Full Title of the Plan)
--------------
KELLOGG COMPANY
(Name of Issuer)
ONE KELLOGG SQUARE
BATTLE CREEK, MICHIGAN 49016-3599
(Principal Executive Office)
2
KELLOGG COMPANY
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
INDEX TO FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
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PAGE
REPORT OF INDEPENDENT ACCOUNTANTS 1
FINANCIAL STATEMENTS AS OF OCTOBER 31, 2000
AND 1999 AND FOR THE YEARS THEN ENDED:
Statement of net assets available for benefits 2
Statement of changes in net assets available for benefits 3
Notes to financial statements 4-9
ADDITIONAL INFORMATION:
Schedule of assets held for investment purposes - October 31, 2000 10
Schedule of loans or fixed income obligations - October 31, 2000 11-12
Schedule of reportable transactions - Year Ended October 31, 2000 13
3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Participants of the
Kellogg Company American Federation
of Grain Millers Savings and Investment Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Kellogg Company American Federation of Grain Millers Savings and
Investment Plan at October 31, 2000 and 1999, and the changes in net assets
available for benefits for the years then ended, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Plan's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes, loans or fixed income obligations and reportable
transactions are presented for the purpose of additional analysis and are not a
required part of the basic financial statements but are supplemental information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. These
supplementary schedules are the responsibility of the Plan's management. The
supplemental schedules have been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
PricewaterhouseCoopers LLP
Battle Creek, Michigan
April 20, 2001
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KELLOGG COMPANY 2
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
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OCTOBER 31,
2000 1999
ASSETS:
Receivables:
Employer contributions $ - $ 97,299
Employee contributions 254,829
Interest 6,733
---------------- ---------------
Total receivables 358,861
---------------- ---------------
Investments:
Plan's interest in Master Trust 516,813,560 633,692,754
Loans to participants 7,563,150 7,868,259
Cash 299
---------------- ---------------
Total investments 524,376,710 641,561,312
---------------- ---------------
Total assets 524,376,710 641,920,173
---------------- ---------------
LIABILITIES:
Benefits payable 35,897 12,500
Investment services fees 33,007 75,627
---------------- ---------------
Total liabilities 68,904 88,127
---------------- ---------------
Net assets available for benefits $ 524,307,806 $ 641,832,046
================ ===============
See accompanying notes to financial statements
5
KELLOGG COMPANY 3
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
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OCTOBER 31,
2000 1999
Contributions:
Employer $ 4,894,755 $ 5,681,271
Employee 12,436,819 14,218,642
Rollovers from other qualified plans 6,273 36,033
---------------- ---------------
Total contributions 17,337,847 19,935,946
---------------- ---------------
Earnings on Investments:
Plan's interest in income of Master Trust 8,107,125 72,195,128
Interest income 609,780 660,828
Trustee fees (57,571) (176,020)
---------------- ---------------
Total earnings on investments, net 8,659,334 72,679,936
---------------- ---------------
Participant withdrawals (143,521,421) (64,081,064)
---------------- ---------------
Net (decrease) increase (117,524,240) 28,534,818
Net assets available for benefits at
beginning of year 641,832,046 613,297,228
---------------- ---------------
Net assets available for benefits at
end of year $ 524,307,806 $ 641,832,046
================ ===============
See accompanying notes to financial statements
6
KELLOGG COMPANY 4
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The Kellogg Company American Federation of Grain Millers Savings and
Investment Plan ("the Plan") operates as a qualified defined contribution
plan and was established under Section 401(k) of the Internal Revenue Code.
The accounts of the Plan are maintained on the accrual basis. Expenses of
administration are paid by Kellogg Company.
INVESTMENTS
All investments are reported at current quoted market values except for
guaranteed insurance contracts, which are reported at contract value and
represent contributions made plus interest at the contract rate. These
contracts are maintained in the Stable Value Fund of the Kellogg Company
Master Trust.
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses and the
unrealized appreciation (depreciation) on those investments.
ALLOCATION OF NET INVESTMENT INCOME TO PARTICIPANTS
Net investment income is allocated to participant accounts daily, in
proportion to their respective ownership on that day.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Plan's management to make
estimates and assumptions that affect the reported amounts of net assets
available for benefits at the date of the financial statements and changes
in net assets available for benefits during the reporting period. Actual
results could differ from those estimates.
2. PROVISIONS OF THE PLAN
PLAN ADMINISTRATION
The Plan is administered by trustees appointed by Kellogg and employees
represented by the American Federation of Grain Millers.
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KELLOGG COMPANY 5
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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2. PROVISIONS OF THE PLAN (CONTINUED)
PLAN PARTICIPATION
Generally, all Kellogg Company hourly employees belonging to American
Federation of Grain Millers Union Local Nos. 3, 50, 211, 252, 374 and 401
are eligible to participate in the Plan.
Subject to limitations prescribed by the Internal Revenue Service,
participants may elect to contribute from 1 percent to 16 percent of their
annual wages. Total deferrals in any taxable year may not exceed $10,500.
Employee contributions not exceeding 5 percent of wages are matched by
Kellogg Company at an 80 percent rate, with 12.5 percent of the Company
match restricted for investment in the Kellogg Company stock fund.
Employees may contribute to the Plan from their date of hire; however, the
monthly contributions are not matched by the Company until the participant
has completed one year of service.
Participants of the Plan may elect to invest the contributions to their
accounts as well as their account balances in various equity, bond, fixed
income or Kellogg Company stock funds or a combination thereof in multiples
of one percent. Following is a summary of the Plan's investment options:
The BOND INDEX FUND invests only in top-rated securities, as well as
certain mortgage-backed securities to compensate for yield. This fund
seeks to meet or exceed the total return of the Lehman Brothers
Government/Corporate Bond Index, a standard benchmark for this type of
fund.
The STABLE VALUE FUND invests primarily in investment contracts issued
by a diversified group of insurance companies and other financial
institutions. This fund seeks to provide a generally steady level of
current income, plus stability of principal.
The U.S. EQUITY INDEX FUND buys and holds securities in the same
capitalization weight ratio as they appear in the S&P 500 Index.
Securities are traded only when there is contribution or redemption
activity, a change in the composition of the S&P 500 Index or the
receipt of dividend income.
The KELLOGG COMPANY STOCK FUND provides returns in the form of dividend
income and stock price changes. Return is based solely on the Company's
stock performance.
The LARGE COMPANY EQUITY FUND is a value-oriented growth and income
fund. The fund seeks investment opportunities in U.S. common stocks that
are not overly recommended and are considered to be good values.
The SMALL COMPANY EQUITY FUND invests primarily in common stocks of
small, rapidly growing U.S. Companies. The fund seeks to provide
long-term growth of capital and income by investing in U.S.-based equity
securities.
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KELLOGG COMPANY 6
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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2. PROVISIONS OF THE PLAN (CONTINUED)
The INTERNATIONAL EQUITY FUND invests in common and preferred stocks,
convertibles, American Depositary Receipts, Global Depositary Receipts,
bonds (generally rated "A" or better), government securities,
nonconvertible preferred stocks, and cash. At least 65% of assets will
be invested in issuers in Europe or the Pacific Basin.
The CONSERVATIVE PRE-MIXED FUND is a combination of the Fixed Income
Fund (10%), the Bond Index Fund (50%), the U.S. Equity Index Fund (20%),
the International Equity Fund (10%) and the Small Company Equity Fund
(10%).
The AGGRESSIVE PRE-MIXED FUND is a combination of the U.S. Equity Index
Fund (25%), the Large Company Equity Fund (25%), the International
Equity Fund (20%) and the Small Company Equity Fund (30%).
VESTING
Participant account balances are fully vested.
PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $1,000 up to
a maximum equal to the lesser of $50,000 or 50% of their account balance.
Loan transactions are treated as transfers between the Loan fund and the
other funds. Loan terms range from 12 to 60 months. Interest is paid at a
constant rate equal to one percent over the prime rate in the month the
loan begins. Principal and interest are paid ratably through monthly
payroll deductions. Loans that are considered to be uncollectible at year
end result in the outstanding principal being considered a hardship
withdrawal from the participant's plan account.
PARTICIPANT DISTRIBUTIONS
Participants may elect to withdraw all or a portion of their contributions
made after October 31, 1978, plus related net investment income. The
withdrawal of any participant contributions which were not previously
subject to income tax is restricted by Internal Revenue Service
regulations. Under certain circumstances and subject to approval by the
Trustees, participants may request withdrawal of a portion of Company
contributions and their own contributions made prior to November 1, 1978,
including net investment income thereon.
Participants who terminate employment before retirement, by reasons other
than death or disability, may remain in the Plan or receive payment of
their account balances in a lump sum. If the account balance is less than
$5,000, the terminated participant will receive the account balance in a
lump sum.
Participants are eligible to retire from the Company at age 62, upon
reaching 55 with 20 years of service, or after 30 years of service. Upon
retirement, disability, or death, a participant's account balance may be
received in a lump sum or installment payments.
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KELLOGG COMPANY 7
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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2. PROVISIONS OF THE PLAN (CONTINUED)
TERMINATION
While the Company has expressed no intentions to do so, the Plan may be
terminated at any time. In the event of termination of the Plan, the
account of each participant will be fully vested.
3. INCOME TAX STATUS
The Plan administrator has received a favorable letter from the Internal
Revenue Service dated November 25, 1996 regarding the Plan's qualification
under applicable income tax regulations as an entity exempt from federal
income taxes.
4. MASTER TRUST
Assets of the Plan have been combined for investment purposes with assets
of the Kellogg Company Salaried Savings and Investment Plan and Kellogg
Company sponsored pension plans in a Master Trust.
The Plan has an undivided interest in the net assets held in the Master
Trust in which interests are determined on the basis of cumulative funds
specifically contributed on behalf of the Plan adjusted for an allocation
of income. Such income allocation is based on the Plan's funds available
for investment during the year.
Master Trust net assets at October 31, 2000 and 1999 and the changes in net
assets for the periods then ended are as follows:
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KELLOGG COMPANY
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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4. MASTER TRUST (CONTINUED)
KELLOGG COMPANY MASTER TRUST
SCHEDULE OF ASSETS AND LIABILITIES FOR MASTER TRUST INVESTMENT ACCOUNTS
PENSION PLANS SAVINGS & INVESTMENT PLANS TOTAL
10/31/1999 10/31/2000 10/31/1999 10/31/2000 10/31/1999 10/31/2000
---------------------------- ----------------------------- ------------------------------
CASH/EQUIVALENTS:
Non-Interest Bearing $ 14,657 $ -- $ -- $ 190,786 $ 14,657 $ 190,786
Interest Bearing Cash 36,158 23,743 472,627 36,158 496,370
---------------------------- ----------------------------- ------------------------------
TOTAL CASH/EQUIVALENTS 50,815 23,743 663,413 50,815 687,156
---------------------------- ----------------------------- ------------------------------
RECEIVABLES 23,574,559 39,320,271 1,038,888 3,323,841 24,613,447 42,644,112
---------------------------- ----------------------------- ------------------------------
GENERAL INVESTMENTS:
Long Term U.S. Gov't Securities 61,379,222 194,205,671 14,548,720 10,019,273 75,927,942 204,224,944
Short Term U.S. Gov't Securities (28,334) (28,334)
Corporate Debt - Long Term 106,986,013 100,421,709 7,132,367 6,747,697 114,118,380 107,169,406
Corporate Debt - Short Term 1,072,045 72,075 1,144,120
Corporate Stocks - Preferred 463,000 902,900 463,000 902,900
Corporate Stocks - Convertible 1,300,767 1,060,539 1,300,767 1,060,539
Corporate Stocks - Common 703,540,062 651,736,336 515,745,616 454,948,112 1,219,285,678 1,106,684,448
Real Estate Pooled Funds 11,121,415 7,654,432 11,121,415 7,654,432
Value of Interest in Pooled Funds 8,857,891 24,333,746 31,630,627 14,015,544 40,488,518 38,349,290
Guaranteed Investment Contracts 568,829,667 499,923,163 568,829,667 499,923,163
---------------------------- ----------------------------- ------------------------------
TOTAL INVESTMENTS 894,720,415 980,286,999 1,137,959,072 985,653,789 2,032,679,487 1,965,940,788
---------------------------- ----------------------------- ------------------------------
TOTAL ASSETS 918,345,789 1,019,631,013 1,138,997,960 989,641,043 2,057,343,749 2,009,272,056
---------------------------- ----------------------------- ------------------------------
PAYABLES
Unsettled Trades (38,878,979) (138,538,930) (143,636) (347,078) (39,022,615) (138,886,008)
Investment Service Fees (847,748) (983,952) (847,748) (983,952)
---------------------------- ----------------------------- ------------------------------
TOTAL LIABILITIES (39,726,727) (139,522,882) (143,636) (347,078) (39,870,363) (139,869,960)
---------------------------- ----------------------------- ------------------------------
NET ASSETS $878,619,062 $ 880,108,131 $1,138,854,324 $989,293,965 $2,017,473,386 $1,869,402,096
============================ ============================= ==============================
Percentage Interest held by the Plan 55.6% 52.2% 31.4% 27.6%
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KELLOGG COMPANY 9
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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4. MASTER TRUST (CONTINUED)
KELLOGG COMPANY MASTER TRUST
SCHEDULE OF INCOME AND EXPENSES, CHANGES IN NET ASSETS
AND NET INCREASE (DECREASE) IN NET ASSETS OF MASTER TRUST INVESTMENT ACCOUNTS
PENSION PLANS SAVINGS & INVESTMENT PLANS TOTAL
10/31/1999 10/31/2000 10/31/1999 10/31/2000 10/31/1999 10/31/2000
------------------------------- ------------------------------- -------------------------------
Transfer of Assets Into
Investment Account $58,559,477 $43,770,563 $418,241,471 $634,660,118 $476,800,948 $678,430,681
Earnings on Investments
Interest 11,651,791 13,452,506 39,044,057 34,233,989 50,695,848 47,686,495
Dividends 2,889,101 4,332,396 3,356,244 4,300,646 6,245,345 8,633,042
Corporate Actions 1,307,988 247,797 1,307,988 247,797
Pooled Fund Income 698,314 471,987 698,314 471,987
Miscellaneous 4,496 (57,530) 80 (3) 4,576 (57,533)
Net Realized Gain/(Loss) 32,986,430 75,156,499 18,365,583 23,830,925 51,352,013 98,987,424
------------------------------- ------------------------------- -------------------------------
TOTAL ADDITIONS 108,097,597 137,374,218 479,007,435 697,025,675 587,105,032 834,399,893
------------------------------- ------------------------------- -------------------------------
Transfer of Assets Out of
Investment Account (102,383,002) (98,028,663) (488,585,583) (800,395,482) (590,968,585) (898,424,145)
Fees and Commissions (3,251,323) (3,257,254) (482,824) (541,627) (3,734,147) (3,798,881)
------------------------------- ------------------------------- -------------------------------
TOTAL DISTRIBUTIONS (105,634,325) (101,285,917) (489,068,407) (800,937,109) (594,702,732) (902,223,026)
------------------------------- ------------------------------- -------------------------------
Change in Unrealized Appreciation 109,113,740 (34,599,231) 77,623,576 (45,648,925) 186,737,316 (80,248,156)
------------------------------- ------------------------------- -------------------------------
NET CHANGE IN ASSETS 111,577,012 1,489,070 67,562,604 (149,560,359) 179,139,616 (148,071,289)
Net Assets at Beginning of Year 767,042,050 878,619,061 1,071,291,720 1,138,854,324 1,838,333,770 2,017,473,385
------------------------------- ------------------------------- -------------------------------
Net Assets at End of Year $878,619,062 $880,108,131 $1,138,854,324 $989,293,965 $2,017,473,386 $1,869,402,096
=============================== =============================== ===============================
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KELLOGG COMPANY 10
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES - OCTOBER 31, 2000
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MARKET UNREALIZED
SECURITY DESCRIPTION COST PRICE VALUE GAIN/LOSS
Loans to participants $ 7,563,150 $ 7,563,150 $ -
================= ================= ==========
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KELLOGG COMPANY 11
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS - OCTOBER 31, 2000
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AMOUNT RECEIVED
DURING REPORTING
ORIGINAL YEAR UNPAID TERMS
IDENTITY AND ADDRESS AMOUNT ------------------- BALANCE AT ------------------------------------
OF OBLIGOR OF LOAN PRINCIPAL INTEREST YEAR END LOAN DATE INTEREST RATE MATURITY AMOUNTS OVERDUE
---------------
Linda D. Davis $ 3,000 $ - $ - $ 2,722 09/30/96 9.27% 03/31/02 $ 2,722
918-B Live Oak Circle
Harlingen, TX 78550
Linda J. Morrow 3,546 3,546 06/02/00 10.5% 06/07/05 3,546
Box 24
Silver Springs, PA 17575
Ronald M. Sweet 19,998 19,998 11/08/99 9.25% 11/10/04 19,998
P.O. Box 734
Battle Creek, MI 49016
Arthur L. Belk 23,000 122 23,000 02/02/00 9.50% 02/03/05 23,000
31 Broadway Blvd.
Battle Creek, MI 49017
Debra A. Iden 3,500 3,500 10/12/99 9.25% 10/12/04 3,500
219 Dundee Dr.
Battle Creek, MI 49014
Kevin D. Andrews 22,300 22,300 11/01/99 9.25% 11/03/04 22,300
1130 Patricia Dr.
Papillion, NE 68046
Denise L. Brice 10,200 10,200 11/05/99 9.25% 11/10/04 10,200
220 East Emmett St.
Battle Creek, MI 49017
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KELLOGG COMPANY 12
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS - OCTOBER 31, 2000
- --------------------------------------------------------------------------------
AMOUNT RECEIVED
DURING REPORTING
ORIGINAL YEAR UNPAID TERMS
IDENTITY AND ADDRESS AMOUNT ------------------- BALANCE AT ------------------------------------
OF OBLIGOR OF LOAN PRINCIPAL INTEREST YEAR END LOAN DATE INTEREST RATE MATURITY AMOUNTS OVERDUE
---------------
Dave L. McKeen $ 22,000 $ - $ - $ 2,965 08/31/94 8.25% 11/12/99 $ 2,965
22980 B Drive South
Marshall, MI 49068
Jeff S. McClung 15,000 15,000 04/01/99 8.75% 04/07/04 15,000
8381 17 Mile Rd.
Marshall, MI 49068
Mary E. Brown 13,000 13,000 04/13/00 10.0% 04/19/05 13,000
22321 East Ave. N
Battle Creek, MI 49017
Amyjon Smith 14,788 77 6,573 06/30/96 9.25% 01/29/01 6,573
12442 S. 32nd St.
Omaha, NE 68123
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KELLOGG COMPANY 13
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS - YEAR ENDED OCTOBER 31, 2000
- --------------------------------------------------------------------------------
CURRENT VALUE AT TRANSACTION DATE
--------------------------------- COST OF NET
NET NET SECURITIES REALIZED
IDENTITY OF ISSUE PURCHASE PRICE SALES PRICE SOLD GAIN
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: April 30, 2001 American Federation of Grain Millers
Savings and Investment Plan
/s/ Thomas J. Webb
-------------------------------------
Thomas J. Webb
Executive Vice President and Chief
Financial Officer, Kellogg Company
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EXHIBITS
23 Consent of Independent Accountants