FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
TRANSITION REPORT
PURSUANT TO SECTION 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TWO MONTH TRANSITION PERIOD ENDED DECEMBER 31, 2001
COMMISSION FILE NUMBER 1-4171
KELLOGG COMPANY
BAKERY, CONFECTIONERY, TOBACCO WORKERS AND 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)
KELLOGG COMPANY
BAKERY, CONFECTIONERY, TOBACCO WORKERS AND GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
INDEX TO FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
PAGE
REPORT OF INDEPENDENT ACCOUNTANTS 1
FINANCIAL STATEMENTS FOR THE TWO MONTHS ENDED
DECEMBER 31, 2001 AND THE YEAR ENDED OCTOBER 31, 2001
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 at end of year) - December 31, 2001 10
Schedule of reportable transactions - For the Two Months Ended
December 31, 2001 11
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Participants of the
Kellogg Company
Bakery, Confectionery, Tobacco Workers
and 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 Bakery, Confectionery, Tobacco Workers and Grain Millers
Savings and Investment Plan (the "Plan") at December 31, 2001 and October 31,
2001, and the changes in net assets available for benefits for the two months
ended December 31, 2001 and year ended October 31, 2001, 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 at end of year) and reportable transactions as of and for the two months
ended December 31, 2001 are presented for the purpose of additional analysis and
are not a required part of the basic financial statements but are supplementary
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 supplemental 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.
Battle Creek, Michigan
June 12, 2002
KELLOGG COMPANY 2
BAKERY, CONFECTIONERY, TOBACCO WORKERS AND GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
FOR THE TWO MONTHS FOR THE YEAR
ENDED ENDED
DECEMBER 31, 2001 OCTOBER 31, 2001
ASSETS:
Receivables:
Employer contributions $ 72,905 $ 88,754
Employee contributions 179,221 222,118
Interest 8,018 13,126
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Total receivables 260,144 323,998
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Investments:
Plan's interest in Master Trust 493,505,408 486,712,927
Loans to participants 7,002,483 7,162,379
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Total investments 500,507,891 493,875,306
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Total assets 500,768,035 494,199,304
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LIABILITIES:
Investment services fees 34,459 31,310
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Total liabilities 34,459 31,310
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Net assets available for benefits $ 500,733,576 $ 494,167,994
============= =============
See accompanying notes to financial statements
KELLOGG COMPANY 3
BAKERY, CONFECTIONERY, TOBACCO WORKERS AND GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE TWO MONTHS FOR THE YEAR
ENDED ENDED
DECEMBER 31, 2001 OCTOBER 31, 2001
CONTRIBUTIONS:
Employer $ 814,470 $ 4,986,894
Employee 2,007,008 12,415,157
Rollovers from other qualified plans 1,638
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Total contributions 2,821,478 17,403,689
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Earnings on Investments:
Plan's interest in income (loss) of Master Trust 11,641,598 (595,177)
Interest income 84,336 636,509
Trustee fees (21,070) (102,563)
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Total earnings (loss) on investments, net 11,704,864 (61,231)
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Participant withdrawals (7,960,760) (47,389,010)
Net transfers between Plans (93,260)
------------- -------------
Net increase (decrease) 6,565,582 (30,139,812)
Net assets available for benefits at beginning of year 494,167,994 524,307,806
------------- -------------
Net assets available for benefits at end of year $ 500,733,576 $ 494,167,994
============= =============
See accompanying notes to financial statements
KELLOGG COMPANY 4
BAKERY, CONFECTIONERY, TOBACCO WORKERS AND GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CHANGE IN PLAN YEAR
On November 1, 2001, the Kellogg Company Bakery, Confectionery, Tobacco
Workers and Grain Millers Savings and Investment Plan ("the Plan") was
amended. As a result of the amendment, the Plan's year now ends on December
31. Previously, the Plan year began on November 1 and ended on October 31.
As such, the Plan will report on a short Plan year for the two months ended
December 31, 2001.
BASIS OF ACCOUNTING
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 Bakery, Confectionery, Tobacco Workers and Grain Millers
Union.
KELLOGG COMPANY 5
BAKERY, CONFECTIONERY, TOBACCO WORKERS AND GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
2. PROVISIONS OF THE PLAN (CONTINUED)
PLAN PARTICIPATION
Generally, all Kellogg Company hourly employees belonging to the Bakery,
Confectionery, Tobacco Workers and Grain Millers Union Local Nos. 3-G,
50-G, 252-G, 274-G and 401-G 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 21 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.
KELLOGG COMPANY 6
BAKERY, CONFECTIONERY, TOBACCO WORKERS AND GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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.
Participants may have only one loan outstanding at any time. 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.
KELLOGG COMPANY 7
BAKERY, CONFECTIONERY, TOBACCO WORKERS AND GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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. The Plan has been amended since receiving the determination
letter. However, the Plan administrator believes the Plan is designed and
is currently being operated in compliance with the applicable requirements
of the Internal Revenue Code.
4. KELLOGG COMPANY MASTER TRUST
Through May 31, 2001, assets of the Plan have been combined for investment
purposes with assets of the Kellogg Company Savings and Investment Plan and
Kellogg Company sponsored pension plans in the Kellogg Company Master
Trust. On June 1, 2001, the assets of the Kellogg Company sponsored pension
plans were transferred from the Kellogg Company Master Trust to the Kellogg
Company Master Retirement Trust.
The Plan has an undivided interest in the net assets held in the Kellogg
Company 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.
Kellogg Company Master Trust net assets at December 31, 2001 and October
31, 2001 and the changes in net assets for the two months and year then
ended are as follows:
KELLOGG COMPANY 8
BAKERY, CONFECTIONERY, TOBACCO WORKERS AND GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
4. KELLOGG COMPANY MASTER TRUST (CONTINUED)
KELLOGG COMPANY MASTER TRUST
SCHEDULE OF ASSETS AND LIABILITIES FOR MASTER TRUST INVESTMENT ACCOUNTS
PENSION PLANS SAVINGS & INVESTMENT PLANS TOTAL
12/31/2001 10/31/2001 12/31/2001 10/31/2001 12/31/2001 10/31/2001
--------------------------- ------------------------------ -----------------------------
CASH/EQUIVALENTS:
Interest Bearing Cash $ 0 $ 0 $ 20,270,332 $ 15,268,851 20,270,332 15,268,851
--------------------------- ------------------------------ -----------------------------
TOTAL CASH/EQUIVALENTS 20,270,332 15,268,851 20,270,332 15,268,851
--------------------------- ------------------------------ -----------------------------
RECEIVABLES 3,264,407 2,472,616 3,264,407 2,472,616
--------------------------- ------------------------------ -----------------------------
GENERAL INVESTMENTS:
Long Term U.S. Gov't Securities 13,158,671 20,021,549 13,158,671 20,021,549
Short Term U.S. Gov't Securities 4,099,850 2,077,233 4,099,850 2,077,233
Corporate Debt - Long Term 11,246,043 10,902,625 11,246,043 10,902,625
Corporate Debt - Short Term 3,415,615 2,758,280 3,415,615 2,758,280
Corporate Stocks - Common 349,904,057 334,188,529 349,904,057 334,188,529
Guaranteed Investment Contracts 524,256,792 531,282,331 524,256,792 531,282,331
--------------------------- ------------------------------ -----------------------------
TOTAL INVESTMENTS 906,081,028 901,230,547 906,081,028 901,230,547
--------------------------- ------------------------------ -----------------------------
TOTAL ASSETS 929,615,767 918,972,014 929,615,767 918,972,014
--------------------------- ------------------------------ -----------------------------
PAYABLES
Unsettled Trades (409,909) (6,755,042) (409,909) (6,755,042)
--------------------------- ------------------------------ -----------------------------
TOTAL LIABILITIES (409,909) (6,755,042) (409,909) (6,755,042)
--------------------------- ------------------------------ -----------------------------
NET ASSETS $ 0 $ 0 $929,205,858 $912,216,972 $929,205,858 $912,216,972
=========================== ============================== =============================
Percentage Interest held by the Plan 53.1% 53.4% 53.1% 53.4%
KELLOGG COMPANY 9
BAKERY, CONFECTIONERY, TOBACCO WORKERS AND GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
4. KELLOGG COMPANY 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
12/31/2001 10/31/2001 12/31/2001 10/31/2001 12/31/2001 10/31/2001
------------------------------- ------------------------------ ------------------------------
Transfer of Assets Into
Investment Account $ 0 $ 36,648,054 $150,385,669 $714,055,873 $150,385,669 $ 750,703,927
Earnings on Investments
Interest 8,833,924 5,560,100 32,788,527 5,560,100 41,622,451
Dividends 2,952,001 2,021,123 4,335,875 2,021,123 7,287,876
Pooled Fund Income 221,702 221,702
Miscellaneous (97,541) (97,541)
Net Realized Gain/(Loss) 32,433,806 4,938,051 (7,923,772) 4,938,051 24,510,034
------------------------------- ------------------------------ ------------------------------
TOTAL ADDITIONS 80,991,946 162,904,943 743,256,503 162,904,943 824,248,449
------------------------------- ------------------------------ ------------------------------
Transfer of Assets Out of
Investment Account (68,736,883) (158,959,024) (771,745,394) (158,959,024) (840,482,277)
Fees and Commissions (909,924) (82,194) (502,897) (82,194) (1,412,821)
Transfers Out of Master Trust
Transfers Out of Master Trust (839,885,857) (839,885,857)
------------------------------- ------------------------------ ------------------------------
TOTAL DISTRIBUTIONS (909,532,664) (159,041,218) (772,248,291) (159,041,218) (1,681,780,955)
------------------------------- ------------------------------ ------------------------------
Change in Unrealized Appreciation (51,567,413) 13,125,161 (48,085,205) 13,125,161 (99,652,618)
------------------------------- ------------------------------ ------------------------------
NET CHANGE IN ASSETS (880,108,131) 16,988,886 (77,076,993) 16,988,886 (957,185,124)
Net Assets at Beginning of Year 880,108,131 912,216,972 989,293,965 912,216,972 1,869,402,096
------------------------------- ------------------------------ ------------------------------
Net Assets at End of Year $ 0 $ 0 $929,205,858 $912,216,972 $929,205,858 $ 912,216,972
=============================== ============================== ==============================
KELLOGG COMPANY 10
BAKERY, CONFECTIONERY, TOBACCO WORKERS AND GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
SCHEDULE OF ASSETS (HELD AT END OF YEAR) - DECEMBER 31, 2001
MARKET
SECURITY DESCRIPTION COST VALUE
Loans to participants $ - $ 7,002,483
=========== ==============
KELLOGG COMPANY 11
BAKERY, CONFECTIONERY, TOBACCO WORKERS AND GRAIN MILLERS
SAVINGS AND INVESTMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS - FOR THE TWO MONTHS ENDED DECEMBER 31, 2001
CURRENT VALUE AT TRANSACTION DATE
---------------------------------------- COST OF NET
NET NET SECURITIES REALIZED
IDENTITY OF ISSUE PURCHASE PRICE SALES PRICE SOLD GAIN
None
12
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: June 27, 2002 Bakery, Confectionery, Tobacco Workers
and Grain Millers
Savings and Investment Plan
/s/ John Bryant
-------------------------------------
John A. Bryant
Senior Vice President and Chief
Financial Officer, Kellogg Company
EXHIBIT DESCRIPTION OF EXHIBIT
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23 Consent of Independent Accountants