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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 19, 2007
Kellogg Company
(Exact name of registrant as specified in its charter)
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Delaware
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1-4171
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38-0710690 |
(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.) |
One Kellogg Square
Battle Creek, Michigan 49016-3599
(Address of principal executive offices, including zip code)
(269) 961-2000
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions (see General Instruction A.2 below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.05. Costs Associated With Exit or Disposal Activities.
Under authority granted by the Board of Directors of Kellogg Company (the Company), on June 27,
2007, management of the Company (we, our) began to extend offers to exit approximately 517
distribution route franchise agreements with independent contractors, which were substantially
accepted as of July 13, 2007. Based on these acceptances, on July 19, 2007, we announced our plan
to reorganize our direct store-door delivery (DSD) operations in the southeastern United States.
Certain elements of this plan are conditional, pending consultation with union representatives at
certain facilities. This DSD reorganization plan is intended to integrate our southeastern sales
and distribution regions with the rest of our U.S. direct store-door operations, resulting in
greater efficiency across our nationwide network. The plan is expected to result in the involuntary
termination or relocation of approximately 300 employee positions.
The Company began notifying affected
employees on July 19, 2007. To complete this initiative, we currently expect to incur $75-$85
million of total project costs, principally consisting of cash expenditures for route franchise
settlements and to a lesser extent, employee separation benefits. Based on acceptances received
through June 30, 2007, we currently expect to recognize approximately $38 million of charges for
route franchise settlements in our second quarter 2007 financial results. We currently expect to
complete this reorganization by the end of 2007.
We view our continued spending on cost-reduction initiatives as part of our ongoing operating
principles to reinvest earnings so as to provide greater visibility in meeting long-term growth
targets. Initiatives undertaken must achieve at least a five-year expected pay-back target.
This Form 8-K contains forward-looking statements which use the words expect or expected or the
phrase currently expect. Actual events or results may differ materially from those statements.
For information about the factors that could cause such differences, please refer to our Annual
Report on Form 10-K for the year ended December 30, 2006, including the information set forth under
the caption Forward-Looking Statements or Risk Factors.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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KELLOGG COMPANY
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Date: July 19, 2007 |
/s/ John A. Bryant
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Name: |
John A. Bryant |
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Title: |
Executive Vice President, Chief Financial |
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Officer,
Kellogg Company and President, Kellogg International |
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