1
EXHIBIT 99.02
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, 1998
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
FINANCIAL STATEMENTS
AND ADDITIONAL INFORMATION
OCTOBER 31, 1998
3
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, 1998 AND 1997 AND FOR THE YEARS THEN
ENDED:
Statement of net assets available for benefits, with fund information 2-4
Statement of changes in net assets available for benefits, with
fund information 5-7
Notes to financial statements 8-13
ADDITIONAL INFORMATION:
Item 27a - Schedule of assets held for investment
purposes - October 31, 1998 14
Item 27b - Schedule of loans or fixed income obligations -
October 31, 1998 15
Item 27d - Schedule of reportable transactions -
year ended October 31, 1998 16
4
REPORT OF INDEPENDENT ACCOUNTANTS
To the ERISA Finance Committee
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, 1998
and 1997, and the changes in net assets available for benefits for the years
then ended, in conformity with generally accepted accounting principles. 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
generally accepted auditing standards 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 the opinion expressed
above.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included on
pages 14-16 is presented for purposes of additional analysis and is not a
required part of the basic financial statements but is additional information
required by ERISA. The fund information in the statements of net assets
available for benefits and the statements of changes in net assets available for
benefits is presented for purposes of additional analysis rather than to present
the net assets available for benefits and changes in net assets available for
benefits of each fund. The additional information and the fund information have
been subjected to the auditing procedures applied in the audit 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.
/s/ PriceWaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Battle Creek, Michigan
March 18, 1999
5
KELLOGG COMPANY SALARIED 2
SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
U.S. KELLOGG
BOND FIXED EQUITY COMPANY
LOAN INDEX INCOME INDEX STOCK
TOTAL FUND FUND FUND FUND FUND
ASSETS:
Receivables:
Employer contributions $ 117,351 $ -- $ 5,050 $ 25,693 $ 45,887 $ 34,740
Employee contributions 297,580 14,452 69,700 135,938 57,924
Employee loan repayments -- (36,455) 1,104 11,420 14,092 8,011
Interest 1,521 37 212 842 422
------------ ------------ ------------ ------------ ------------ ------------
Total receivables 416,452 (36,455) 20,643 107,025 196,759 101,097
------------ ------------ ------------ ------------ ------------ ------------
Investments:
Plan's interest in Master Trust 466,657,474 16,849,994 237,312,736 151,593,421 44,571,805
Loans to participants 4,714,004 4,714,004
------------ ------------ ------------ ------------ ------------ ------------
Total investments 471,371,478 4,714,004 16,849,994 237,312,736 151,593,421 44,571,805
------------ ------------ ------------ ------------ ------------ ------------
Total assets 471,787,930 4,677,549 16,870,637 237,419,761 151,790,180 44,672,902
------------ ------------ ------------ ------------ ------------ ------------
LIABILITIES:
Benefits payable 124,349 118,621 5,728
Investment services fees 321,101 16,667 165,563 97,149 29,232
------------ ------------ ------------ ------------ ------------ ------------
Total liabilities 445,450 -- 16,667 284,184 102,877 29,232
------------ ------------ ------------ ------------ ------------ ------------
Net assets available for benefits $471,342,480 $ 4,677,549 $ 16,853,970 $237,135,577 $151,687,303 $ 44,643,670
============ ============ ============ ============ ============ ============
See accompanying notes to financial statements
6
KELLOGG COMPANY SALARIED 3
SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
OCTOBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
LARGE SMALL
COMPANY COMPANY INTERNATIONAL CONSERVATIVE AGGRESSIVE
EQUITY EQUITY EQUITY PRE-MIXED PRE-MIXED
FUND FUND FUND FUND FUND
ASSETS:
Receivables:
Employer contributions $ 2,118 $ 1,141 $ 825 $ 588 $ 1,309
Employee contributions 6,911 3,891 2,559 2,035 4,170
Employee loan repayments 1,031 347 224 172 62
Interest
---------- ---------- ---------- ---------- ----------
Total receivables 10,060 5,379 3,608 2,795 5,541
---------- ---------- ---------- ---------- ----------
Investments:
Plan's interest in Master Trust 5,186,415 2,739,634 1,569,488 3,581,656 3,252,325
Loans to participants
---------- ---------- ---------- ---------- ----------
Total investments 5,186,415 2,739,634 1,569,488 3,581,656 3,252,325
---------- ---------- ---------- ---------- ----------
Total assets 5,196,475 2,745,013 1,573,096 3,584,451 3,257,866
---------- ---------- ---------- ---------- ----------
LIABILITIES:
Benefits payable
Investment services fees 4,026 2,039 1,411 2,589 2,425
---------- ---------- ---------- ---------- ----------
Total liabilities 4,026 2,039 1,411 2,589 2,425
---------- ---------- ---------- ---------- ----------
Net assets available for benefits $5,192,449 $2,742,974 $1,571,685 $3,581,862 $3,255,441
========== ========== ========== ========== ==========
See accompanying notes to financial statements
7
KELLOGG COMPANY SALARIED 4
SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
U.S. KELLOGG
BOND FIXED EQUITY COMPANY
LOAN INDEX INCOME INDEX STOCK
TOTAL FUND FUND FUND FUND FUND
ASSETS:
Receivables:
Employer contributions $ 427,924 $ -- $ 15,699 $ 101,037 $ 200,915 $ 110,273
Employee contributions 266,297 266,297
Interest 4,242 4,242
------------ ------------ ------------ ------------ ------------ ------------
Total receivables 698,463 -- 15,699 371,576 200,915 110,273
------------ ------------ ------------ ------------ ------------ ------------
Investments:
Plan's interest in Master Trust 209,461,284 10,510,300 13,236,293 134,577,719 51,136,972
Guaranteed investment contracts 234,272,998 234,272,998
Loans to participants 4,696,214 4,696,214
TBC Pooled Funds Daily Liquidity 20,922 20,922
------------ ------------ ------------ ------------ ------------ ------------
Total investments 448,451,418 4,696,214 10,510,300 247,530,213 134,577,719 51,136,972
------------ ------------ ------------ ------------ ------------ ------------
Total assets 449,149,881 4,696,214 10,525,999 247,901,789 134,778,634 51,247,245
------------ ------------ ------------ ------------ ------------ ------------
LIABILITIES:
Investment services fees 55,869 1,573 22,216 30,553 1,527
------------ ------------ ------------ ------------ ------------ ------------
Net assets available for benefits $449,094,012 $ 4,696,214 $ 10,524,426 $247,879,573 $134,748,081 $ 51,245,718
============ ============ ============ ============ ============ ============
See accompanying notes to financial statements
8
KELLOGG COMPANY SALARIED 5
SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
U.S. KELLOGG
BOND FIXED EQUITY COMPANY
LOAN INDEX INCOME INDEX STOCK
TOTAL FUND FUND FUND FUND FUND
Contributions:
Employer $ 7,026,760 $ -- $ 288,086 $ 1,591,419 $ 3,211,632 $ 1,845,034
Employee 16,315,254 810,657 3,819,005 8,441,530 3,062,518
Loans repaid 1,521 (2,767,734) 88,772 896,009 1,186,695 568,734
Rollovers from other
qualified plans 2,078,031 141,408 369,562 1,007,585 486,698
------------- ------------- ------------- ------------- ------------- -------------
Total contributions 25,421,566 (2,767,734) 1,328,923 6,675,995 13,847,442 5,962,984
------------- ------------- ------------- ------------- ------------- -------------
Earnings on Investments:
Plan's interest in income of
Master Trust 25,921,688 1,507,256 5,900,659 28,781,742 (10,476,779)
Interest income 10,137,312 438,616 9,698,696
Trustee fees (48,766) (1,162) (26,908) (14,988) (5,708)
Administrative fees (587,747) (25,050) (309,570) (173,873) (62,612)
------------- ------------- ------------- ------------- ------------- -------------
Total earnings on
investments, net 35,743,588 438,616 1,481,044 15,262,877 28,592,881 (10,545,099)
------------- ------------- ------------- ------------- ------------- -------------
Net transfers between funds -- 4,758,562 (5,754,246) (15,529,550) 660,962
Participant withdrawals (38,759,279) (236,743) (1,136,875) (26,127,289) (8,946,400) (2,259,426)
New loans distributions -- 2,513,955 (82,343) (759,436) (1,117,413) (521,324)
Net transfers between Plans 163,694 33,241 (19,767) (41,897) 92,262 99,855
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) 22,248,468 (18,665) 6,329,544 (10,743,996) 16,939,222 (6,602,048)
Net assets available for benefits at
beginning of year 449,094,012 4,696,214 10,524,426 247,879,573 134,748,081 51,245,718
------------- ------------- ------------- ------------- ------------- -------------
Net assets available for benefits at
end of year $ 471,342,480 $ 4,677,549 $ 16,853,970 $ 237,135,577 $ 151,687,303 $ 44,643,670
============= ============= ============= ============= ============= =============
See accompanying notes to financial statements
9
KELLOGG COMPANY SALARIED 6
SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED OCTOBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
LARGE SMALL
COMPANY COMPANY INTERNATIONAL CONSERVATIVE AGGRESSIVE
EQUITY EQUITY EQUITY PRE-MIXED PRE-MIXED
FUND FUND FUND FUND FUND
Contributions:
Employer $ 32,114 $ 21,306 $ 13,513 $ 11,322 $ 12,334
Employee 58,645 34,852 21,982 13,771 52,294
Loans repaid 9,372 4,075 3,077 7,686 4,835
Rollovers from other qualified plans 17,870 1,797 45,524 7,587
----------- ----------- ----------- ----------- -----------
Total contributions 118,001 62,030 38,572 78,303 77,050
----------- ----------- ----------- ----------- -----------
Earnings on Investments:
Plan's interest in income of Master Trust 133,144 (61,486) 30,405 78,621 28,126
Interest income
Trustee fees
Administrative fees (5,553) (2,615) (1,763) (3,509) (3,202)
----------- ----------- ----------- ----------- -----------
Total earnings on investments, net 127,591 (64,101) 28,642 75,112 24,924
----------- ----------- ----------- ----------- -----------
Net transfers between funds 4,972,289 2,749,194 1,521,582 3,433,950 3,187,257
Participant withdrawals (20,544) (2,965) (16,388) (3,837) (8,812)
New loan distributions (4,888) (1,184) (723) (1,666) (24,978)
Net transfers between Plans
----------- ----------- ----------- ----------- -----------
Net increase (decrease) 5,192,449 2,742,974 1,571,685 3,581,862 3,255,441
Net assets available for benefits at
beginning of year -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net assets available for benefits at
end of year $ 5,192,449 $ 2,742,974 $ 1,571,685 $ 3,581,862 $ 3,255,441
=========== =========== =========== =========== ===========
See accompanying notes to financial statements
10
KELLOGG COMPANY SALARIED 7
SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED OCTOBER 31, 1997
- --------------------------------------------------------------------------------
U.S. KELLOGG
BOND FIXED EQUITY COMPANY
LOAN INDEX INCOME INDEX STOCK
TOTAL FUND FUND FUND FUND FUND
Contributions:
Employer $ 5,720,190 $ -- $ 227,627 $ 1,704,900 $ 2,305,661 $ 1,482,002
Employee 13,930,880 612,257 4,537,488 6,567,524 2,213,611
Loans repaid -- (2,504,968) 72,536 976,226 981,527 474,679
Rollovers from other
qualified plans 3,258,456 132,940 231,832 512,818 1,693,361 687,505
------------- ------------- ------------- ------------- ------------- -------------
Total contributions 22,909,526 (2,372,028) 1,144,252 7,731,432 11,548,073 4,857,797
------------- ------------- ------------- ------------- ------------- -------------
Earnings on Investments:
Plan's interest in income of
Master Trust 42,838,918 846,887 877,745 28,602,004 12,512,282
Interest income 16,935,316 406,769 16,528,547
Trustee fees (16,540) (380) (10,980) (3,575) (1,605)
Administrative fees (210,509) (4,370) (142,590) (45,761) (17,788)
------------- ------------- ------------- ------------- ------------- -------------
Total earnings on
investments, net 59,547,185 406,769 842,137 17,252,722 28,552,668 12,492,889
------------- ------------- ------------- ------------- ------------- -------------
Net transfers between funds 164,008 (15,749,040) 15,499,371 85,661
Participant withdrawals (36,330,356) (189,123) (886,131) (28,472,787) (4,524,626) (2,257,689)
New loans distributions -- 2,179,693 (89,823) (880,617) (839,830) (369,423)
Net transfers between Plans 158,642 20,666 2,038 115,089 (9,432) 30,281
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) 46,284,997 45,977 1,176,481 (20,003,201) 50,226,224 14,839,516
Net assets available for benefits at
beginning of year 402,809,015 4,650,237 9,347,945 267,882,774 84,521,857 36,406,202
------------- ------------- ------------- ------------- ------------- -------------
Net assets available for benefits at
end of year $ 449,094,012 $ 4,696,214 $ 10,524,426 $ 247,879,573 $ 134,748,081 $ 51,245,718
============= ============= ============= ============= ============= =============
See accompanying notes to financial statements
11
KELLOGG COMPANY 8
AMERICAN FEDERATION OF GRAIN MILLERS
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. The
following investments exceeded five percent of the net assets available for
benefits at October 31, 1998 or 1997:
INTEREST OCTOBER 31,
DESCRIPTION RATE 1998 1997
Putnam Horizon Managed Synthetic
GIC Fund Variable $ - $ 31,701,110
Brundage Story & Rose Managed
Synthetic GIC Fund Variable 32,009,730
Allstate Life Ins. GAC #5686-01 8.13% 28,210,134
John Hancock GAC #7606 7.87% 27,302,372
New York Life GAC #30320002 6.72% 32,347,720
Plan's interest in Master Trust Variable 466,657,474 209,461,284
During 1998, the Plan's investments in guaranteed insurance contracts were
transferred to the Kellogg Company Master Trust.
ALLOCATION OF NET INVESTMENT INCOME TO PARTICIPANTS
Subsequent to August 1, 1998, net investment income is allocated to
participants daily, in proportion to their respective ownership on that
day. Prior to August 1, 1998, net investment income related to the
respective investment options was allocated monthly to participant accounts
in proportion to their respective ownership at the beginning of the month.
This change was made concurrent with changes in the Plan that allows
participants to make changes to investment elections on a daily basis.
Previously, such changes were only permitted on a monthly basis.
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.
12
KELLOGG COMPANY 9
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
Subject to limitations prescribed by the Internal Revenue Service,
participants may elect to contribute from 1 percent to 16 percent of their
annual wages. 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 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 FIXED INCOME 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 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.
13
KELLOGG COMPANY SALARIED 10
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. PROVISIONS OF THE PLAN (CONTINUED)
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%).
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.
14
KELLOGG COMPANY 11
AMERICAN FEDERATION OF GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. PROVISIONS OF THE PLAN (CONTINUED)
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
$3,500 the terminated participant will re6ceive the account balance in a
lump sum.
Participants are eligible to retire from the Company at age 62, upon
reaching 55 with 20 years of service, or after 30 years of service. Upon
retirement, disability, or death, a participant's account balance may be
received in a lump sum or installment payments.
3. INCOME TAX STATUS
The Plan administrator has received a favorable letter from the Internal
Revenue Service dated November 25, 1996 regarding the Plan's qualification
under applicable income tax regulations as an entity exempt from federal
income taxes.
4. MASTER TRUST
Assets of the Plan have been combined for investment purposes with assets
of the Kellogg Company American Federation of Grain Millers Savings and
Investment Plan and Kellogg Company sponsored pension plans in a Master
Trust.
The Plan has an undivided interest in the net assets held in the Master
Trust in which interests are determined on the basis of cumulative funds
specifically contributed on behalf of the Plan adjusted for an allocation
of income. Such income allocation is based on the Plan's funds available
for investment during the year.
Master Trust net assets at October 31, 1998 and 1997 and the changes in net
assets for the periods then ended are as follows:
15
KELLOGG COMPANY SALARIED 12
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. MASTER TRUST (CONTINUED)
KELLOGG COMPANY MASTER TRUST
SCHEDULE OF ASSETS AND LIABILITIES FOR MASTER TRUST INVESTMENT ACCOUNTS
PENSION PLANS SAVINGS & INVESTMENT PLANS
10/31/97 10/31/98 10/31/97 10/31/98
------------------------------------ -----------------------------------
CASH/EQUIVALENTS:
Non-Interest Bearing ($ 535,778) ($ 110,637) ($ 32,619) $ 0
Interest Bearing Cash $ 2,683,385 ($ 98,966) $ 0 $ 0
--------------- --------------- --------------- ---------------
TOTAL CASH/EQUIVALENTS $ 2,147,607 ($ 203,885) ($ 32,619) $ 0
--------------- --------------- --------------- ---------------
RECEIVABLES $ 100,949,571 $ 54,319,006 $ 11,609,621 $ 545,837
--------------- --------------- --------------- ---------------
GENERAL INVESTMENTS:
Long Term U.S. Gov't Securities $ 26,106,325 $ 77,973,815 $ 18,251,094 $ 21,817,176
Short Term U.S. Gov't Securities $ 0 $ 3,796,364 $ 133,414 $ 0
Corporate Debt - Long Term $ 39,280,506 $ 57,499,636 $ 7,542,524 $ 8,163,564
Corporate Debt - Short Term $ 3,142,545 $ 38,641,199 $ 100,380 $ 100,018
Corporate Stocks - Preferred $ 1,697,910 $ 5,120,921 $ 0 $ 0
Corporate Stocks - Convertible $ 0 $ 922,024 $ 0 $ 0
Corporate Stocks - Common $ 568,799,792 $ 589,754,595 $ 380,020,756 $ 418,732,477
Shares of Registered Investment Co. $ 0 $ 6,935,960 $ 0 $ 0
Real Estate Pooled Funds $ 0 $ 31,667,191 $ 0 $ 0
Value of Interest in Pooled Funds $ 94,003,448 $ 5,132,335 $ 14,663,025 $ 25,600,238
Guaranteed Investment Contracts $ 41,790,582 $ 0 $ 0 $ 596,453,446
--------------- --------------- --------------- ---------------
TOTAL INVESTMENTS $ 774,821,108 $ 817,444,040 $ 420,711,193 $ 1,070,866,919
--------------- --------------- --------------- ---------------
TOTAL ASSETS $ 877,918,286 $ 871,559,161 $ 432,288,195 $ 1,071,412,756
--------------- --------------- --------------- ---------------
PAYABLES
Unsettled Trades ($ 103,169,276) ($ 103,673,829) ($ 14,289,335) ($ 121,036)
Investment Service Fees ($ 495,436) ($ 843,282) ($ 96,265)
--------------- --------------- --------------- ---------------
TOTAL LIABILITIES ($ 103,664,712) ($ 104,517,111) ($ 14,385,600) ($ 121,036)
--------------- --------------- --------------- ---------------
NET ASSETS $ 774,253,574 $ 767,042,050 $ 417,902,595 $ 1,071,291,720
=============== =============== =============== ===============
Percentage Interest held by the Plan 0.0% 0.0% 50.1% 43.6%
TOTAL
10/31/97 10/31/98
------------------------------------
CASH/EQUIVALENTS:
Non-Interest Bearing ($ 568,397) ($ 110,637)
Interest Bearing Cash $ 2,683,385 ($ 98,966)
--------------- ---------------
TOTAL CASH/EQUIVALENTS $ 2,114,988 ($ 203,885)
--------------- ---------------
RECEIVABLES $ 112,559,192 $ 54,864,843
--------------- ---------------
GENERAL INVESTMENTS:
Long Term U.S. Gov't Securities $ 44,357,419 $ 99,790,991
Short Term U.S. Gov't Securities $ 133,414 $ 3,796,364
Corporate Debt - Long Term $ 46,823,030 $ 65,663,200
Corporate Debt - Short Term $ 3,242,925 $ 38,741,217
Corporate Stocks - Preferred $ 1,697,910 $ 5,120,921
Corporate Stocks - Convertible $ 0 $ 922,024
Corporate Stocks - Common $ 948,820,548 $ 1,008,487,072
Shares of Registered Investment Co. $ 0 $ 6,935,960
Real Estate Pooled Funds $ 0 $ 31,667,191
Value of Interest in Pooled Funds $ 108,666,473 $ 30,732,573
Guaranteed Investment Contracts $ 41,790,582 $ 596,453,446
--------------- ---------------
TOTAL INVESTMENTS $ 1,195,532,301 $ 1,888,310,959
--------------- ---------------
TOTAL ASSETS $ 1,310,206,481 $ 1,942,971,917
--------------- ---------------
PAYABLES
Unsettled Trades ($ 117,458,611) ($ 103,794,865)
Investment Service Fees ($ 591,701) ($ 843,282)
--------------- ---------------
TOTAL LIABILITIES ($ 118,050,312) ($ 104,638,147)
--------------- ---------------
NET ASSETS $ 1,192,156,169 $ 1,838,333,770
=============== ===============
Percentage Interest held by the Plan 17.6% 25.4%
16
KELLOGG COMPANY SALARIED 13
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
10/31/97 10/31/98 10/31/97 10/31/98
---------------------------------- ----------------------------------
Transfer of Assets Into
Investment Account $ 187,169,786 $ 255,942,199 $ 441,501,150 $ 983,281,696
Earnings on Investments
Interest $ 10,683,275 $ 11,632,552 $ 1,679,043 $ 15,642,346
Dividends $ 4,790,038 $ 4,119,739 $ 2,409,770 $ 2,870,015
Corporate Actions $ 86,594 $ 863,853 $ 0 $ 0
Pooled Fund Distributions $ 2,662,638 ($ 1,419,783) $ 0 $ 0
Miscellaneous $ 2,762 $ 27,366 $ 0 $ 84,218
Net Realized Gain/(Loss) $ 84,030,675 $ 60,398,448 $ 10,375,664 $ 144,506,990
---------------------------------- ----------------------------------
TOTAL ADDITIONS $ 289,425,768 $ 331,564,373 $ 455,965,627 $ 1,146,385,265
---------------------------------- ----------------------------------
Transfer of Assets Out of
Investment Account ($ 197,877,441) ($ 301,407,880) ($ 378,952,686) ($ 371,933,159)
Fees and Commissions ($ 1,627,714) ($ 2,981,585) ($ 180,330) ($ 572,075)
---------------------------------- ----------------------------------
TOTAL DISTRIBUTIONS ($ 199,505,155) ($ 304,389,465) ($ 379,133,016) ($ 372,505,234)
---------------------------------- ----------------------------------
Change in Unrealized Appreciation $ 39,043,479 ($ 34,386,432) $ 72,487,435 ($ 120,490,906)
---------------------------------- ----------------------------------
NET CHANGE IN ASSETS $ 128,964,092 ($ 7,211,524) $ 149,320,046 $ 653,389,125
Net Assets at Beginning of Year $ 645,289,482 $ 774,253,574 $ 268,582,549 $ 417,902,595
---------------------------------- ----------------------------------
Net Assets at End of Year $ 774,253,574 $ 767,042,050 $ 417,902,595 $ 1,071,291,720
================================== ==================================
TOTAL
10/31/97 10/31/98
----------------------------------
Transfer of Assets Into
Investment Account $ 628,670,936 $ 1,239,223,895
Earnings on Investments
Interest $ 12,362,318 $ 27,274,898
Dividends $ 7,199,808 $ 6,989,754
Corporate Actions $ 86,594 $ 863,853
Pooled Fund Distributions $ 2,662,638 ($ 1,419,783)
Miscellaneous $ 2,762 $ 111,584
Net Realized Gain/(Loss) $ 94,406,339 $ 204,905,438
----------------------------------
TOTAL ADDITIONS $ 745,391,395 $ 1,477,949,638
----------------------------------
Transfer of Assets Out of
Investment Account ($ 576,830,127) ($ 673,341,039)
Fees and Commissions ($ 1,808,044) ($ 3,553,660)
----------------------------------
TOTAL DISTRIBUTIONS ($ 578,638,171) ($ 676,894,699)
----------------------------------
Change in Unrealized Appreciation $ 111,530,914 ($ 154,877,338)
----------------------------------
NET CHANGE IN ASSETS $ 278,284,138 $ 646,177,601
Net Assets at Beginning of Year $ 913,872,031 $ 1,192,156,169
----------------------------------
Net Assets at End of Year $ 1,192,156,169 $ 1,838,333,770
==================================
17
KELLOGG COMPANY SALARIED 14
SAVINGS AND INVESTMENT PLAN
ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES - OCTOBER 31, 1998
- --------------------------------------------------------------------------------
MARKET UNREALIZED
SECURITY DESCRIPTION COST PRICE VALUE GAIN/LOSS
Loans to participants $4,677,549 1.00 $4,677,549 $ --
========== ========== =====
18
KELLOGG COMPANY SALARIED 15
SAVINGS AND INVESTMENT PLAN
ITEM 27B - SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS - OCTOBER 31, 1998
- --------------------------------------------------------------------------------
AMOUNT RECEIVED
DURING REPORTING
IDENTITY AND ADDRESS ORIGINAL YEAR UNPAID TERMS
AMOUNT --------------------- BALANCE AT ------------------------------------
OF OBLIGOR OF LOAN PRINCIPAL INTEREST YEAR END LOAN DATE INTEREST RATE MATURITY AMOUNTS OVERDUE
Richard D. Chaney $4,000 $ 191 $ 3 $ 78 11/30/92 6.00% 7/30/98 $ 78
RR 3, Box 220
Sullivan, IL 61951
James Earl McGehee 6,000 -- -- 5,413 2/29/96 9.50% 2/28/01 5,413
2310 Cowan Loop
Moscow, TN 38057
Darrell D. Glover 4,174 -- -- 3,610 11/30/95 9.76% 8/31/02 3,610
11 North Broad
Battle Creek, MI 49017
Rebecca L. Dawson 6,000 634 124 2,657 9/30/95 9.75% 1/31/00 2,657
1129 N. Jackson Street, 13
Milwaukee, WI 53202
Janette R. Jeffries 4,000 350 153 3,650 10/31/97 9.51% 1/31/02 3,650
3124 Kings Canyon Drive
Plano, TX 75025
Martha M. Misenheimer 2,000 90 4 62 11/1/94 7.75% 7/30/98 62
2413 Shelby
Mattoon, IL 61938
William J. Snowden 1,200 420 15 2 5/30/96 8.75% 7/30/98 2
1301 S. 17th
Mattoon, IL 61938
19
KELLOGG COMPANY SALARIED 16
SAVINGS AND INVESTMENT PLAN
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS - YEAR ENDED OCTOBER 31, 1998 (1)
- --------------------------------------------------------------------------------
CURRENT VALUE AT TRANSACTION DATE
--------------------------------- COST OF NET
NET NET SECURITIES REALIZED
IDENTITY OF ISSUE PURCHASE PRICE SALES PRICE SOLD GAIN
TBC Inc., Pooled Employee Funds -
Daily Liquidity Fund $55,780,034 $55,800,956 $55,800,956 $--
(1) Represents Plan's interest in a transaction (or a series of transactions of
the same issue) in excess of five percent of the Plan's assets available at
November 1, 1997.