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 SALARIED
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 SALARIED
SAVINGS AND INVESTMENT PLAN
INDEX TO FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
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 Salaried 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 Salaried 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
4
KELLOGG COMPANY SALARIED 2
SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
- --------------------------------------------------------------------------------
OCTOBER 31,
2000 1999
ASSETS:
Receivables:
Employer contributions $ - $ 113,039
Employee contributions 288,185
Interest 8,582
---------------- ---------------
Total receivables 409,806
---------------- ---------------
Investments:
Plan's interest in Master Trust 472,394,424 505,161,570
Loans to participants 4,217,598 4,405,252
Cash 19
---------------- ---------------
Total investments 476,612,022 509,566,841
---------------- ---------------
Total assets 476,612,022 509,976,647
---------------- ---------------
LIABILITIES:
Benefits payable 17,041 81,180
Investment services fees 26,615 169,984
---------------- ---------------
Total liabilities 43,656 251,164
---------------- ---------------
Net assets available for benefits $ 476,568,366 $ 509,725,483
================ ===============
See accompanying notes to financial statements
5
KELLOGG COMPANY SALARIED 3
SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
- --------------------------------------------------------------------------------
OCTOBER 31,
2000 1999
Contributions:
Employer $ 6,191,555 $ 6,417,950
Employee 16,347,944 16,054,098
Rollovers from other qualified plans 10,457,407 1,930,412
---------------- ---------------
Total contributions 32,996,906 24,402,460
---------------- ---------------
Earnings on Investments:
Plan's interest in income of Master Trust 8,481,098 65,573,673
Interest income 383,476 408,534
Trustee fees (90,814) (101,642)
Administrative fees (151,307) (394,591)
---------------- ---------------
Total earnings on investments, net 8,622,453 65,485,974
---------------- ---------------
Participant withdrawals (74,776,476) (51,505,431)
---------------- ---------------
Net (decrease) increase (33,157,117) 38,383,003
Net assets available for benefits at
beginning of year 509,725,483 471,342,480
---------------- ---------------
Net assets available for benefits at
end of year $ 476,568,366 $ 509,725,483
================ ===============
See accompanying notes to financial statements
6
KELLOGG COMPANY SALARIED 4
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The Kellogg Company Salaried 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 the
Plan.
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 the ERISA Administrative Committee appointed by
Kellogg Company.
PLAN PARTICIPATION
Generally, all salaried employees of Kellogg Company and its U.S.
subsidiaries are eligible to participate in the Plan.
7
KELLOGG COMPANY SALARIED 5
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. PROVISIONS OF THE PLAN (CONTINUED)
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.
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%).
8
KELLOGG COMPANY SALARIED 6
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. PROVISIONS OF THE PLAN (CONTINUED)
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.
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.
9
KELLOGG COMPANY SALARIED 7
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. MASTER TRUST
Assets of the Plan have been combined for investment purposes with assets
of the Kellogg Company American Federation of Grain Millers 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:
10
KELLOGG COMPANY SALARIED 8
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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) (847,749) (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 44.4% 47.8% 25.0% 25.3%
11
KELLOGG COMPANY SALARIED 9
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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
============================ ================================ ===============================
12
KELLOGG COMPANY SALARIED 10
SAVINGS AND INVESTMENT PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES - OCTOBER 31, 2000
- --------------------------------------------------------------------------------
MARKET UNREALIZED
SECURITY DESCRIPTION COST PRICE VALUE GAIN/LOSS
Loans to participants $ 4,217,598 $ 4,217,598 $ -
================= ================= =========
13
KELLOGG COMPANY SALARIED 11
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
---------------
Jay C. Highman $ 2,008 $ - $ - $ 651 06/17/91 12.95% 08/15/02 $ 651
445 Meacham Run Ct.
Westerville, OH 43081
Gregg Warmbier 5,000 2,743 04/16/97 10.5% 12/15/02 2,743
131 North High St.
Gahanna, OH 43230
Joan M. Lieb 3,000 2,146 03/06/98 10.5% 10/31/03 2,146
2120 Smokymill Rd
Dublin, OH 43017
Joe A. Eldred 25,000 25,000 06/01/00 10.0% 06/07/05 25,000
2214 Dunbar Drive
Plattsmouth, NE 68048
Frederick Jaques 50,000 3,828 1,197 35,386 06/30/98 9.5% 12/18/00 3,828
231 Watson Ave.
Oakville
Ontario, Canada L6J3V2
Brett E. Sanford 31,582 3,899 717 11,043 10/31/96 9.25% 01/08/01 11,043
7726 East M/L Ave.
Kalamazoo, MI 49048
14
KELLOGG COMPANY SALARIED 12
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
---------------
John P. Rutherford $ 8,000 $ - $ - $ 8,000 03/28//00 9.75% 03/31/05 $ 8,000
22835 Saddle Ridge Lane
Battle Creek, MI 49017
Carol Underwood 14,000 2,878 228 1,021 11/30/95 9.75% 01/17/01 1,021
199 Rebecca
Battle Creek, MI 49015
Sheila M. Schwarz 20,000 20,000 11/03/99 9.25% 11/03/03 20,000
4315 Council Crest Circle
Battle Creek, MI 49017
Sally J. Dempsey 12,900 2,586 139 270 08/31/95 9.75% 09/30/00 270
1 J Drive North
Battle Creek, MI 49014
Scott R. Galloway 1,500 56 13 1,444 08/01/00 10.5% 08/17/02 1,444
160 Hidden Forest Rd.
Battle Creek, MI 49014
Barbara Malone 3,000 63 26 2,937 06/22/00 10.5% 06/30/01 2,937
6658 Finch Rd.
Memphis, TN 38141
15
KELLOGG COMPANY SALARIED 13
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
16
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 Kellogg Company Salaried Savings and
Investment Plan
/s/ Thomas J. Webb
-------------------------------------
Thomas J. Webb
Executive Vice President and Chief
Financial Officer, Kellogg Company
17
EXHIBITS
23 Consent of Independent Accountants