10q10k10q10k.net
Kellanova

KellanovaK決算レポート

必須消費財 · 包装食品及び食肉

Kellanova, formerly known as the Kellogg Company, is an American multinational food manufacturing company owned by Mars Inc. headquartered in Chicago, Illinois. The renaming took effect on October 2, 2023, and the company's North American cereal operations were spun off to form the WK Kellogg Co at the same time.

What changed in Kellanova's 10-K — 2023 vs 2024

Top changes in Kellanova's 2024 10-K

367 paragraphs added · 312 removed · 257 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

55 edited+12 added−9 removed53 unchanged
Other brand names include Kellogg’s Corn Flake Crumbs; Choco Krispis , Crunchy Nut , Kashi , Nutri-Grain , Special K , Squares , Zucaritas , Rice Krispies Treats , and Sucrilhos for cereal bars; Pop-Tarts for toaster pastries; Eggo and MorningStar Farms for frozen breakfast foods; Nutri-Grain cereal bars for convenience foods in the United States and elsewhere; K-Time , Sunibrite , Split Stix and LCMs for convenience foods in Australia; Nutri-Grain , Coco Pops , Crunchy Nut , Krave , Frosties , and Rice Krispies Squares for convenience foods in Europe; Special K for meal bars; Pringles for crisps; and Morningstar Farms , Incogmeato , Veggitizers , and Gardenburger for certain meat alternatives.
Other brand names include Kellogg’s Corn Flake Crumbs; Choco Krispis , Crunchy Nut , Kashi , Nutri-Grain , Special K , Squares , Zucaritas , Rice Krispies Treats , and Sucrilhos for cereal bars; Pop-Tarts for toaster pastries; Eggo and MorningStar Farms for frozen breakfast foods; Nutri-Grain cereal bars for convenience foods in the United States and elsewhere; K-Time , Sunibrite , Split Stix and LCMs for convenience foods in Australia; Nutri-Grain , 5 Coco Pops , Crunchy Nut , Krave , Frosties , and Rice Krispies Squares for convenience foods in Europe; Special K for meal bars; Pringles for crisps; and Morningstar Farms , Incogmeato , Veggitizers , and Gardenburger for certain meat alternatives.
The Company also maintains an ethics related hotline, managed by a third party, through which individuals can anonymously raise concerns or ask questions about business behavior. Financial Information About Geographic Areas. Information on geographic areas is located in Note 18 within Notes to the Consolidated Financial Statements, which are included herein under Part II, Item 8. 7 Executive Officers.
The Company also maintains an ethics related hotline, managed by a third party, through which individuals can anonymously raise concerns or ask questions about business behavior. Financial Information About Geographic Areas. Information on geographic areas is located in Note 18 within Notes to the Consolidated Financial Statements, which are included herein under Part II, Item 8. 8 Executive Officers.
As further discussed herein under Part II, Item 7A, we also use commodity futures and options to hedge some of our costs. 4 Raw materials and packaging needed for internationally based operations are available in adequate supply and are sourced both locally and imported from countries other than those where used in manufacturing.
As further discussed herein under Part II, Item 7A, we also use commodity futures and options to hedge some of our costs. Raw materials and packaging needed for internationally based operations are available in adequate supply and are sourced both locally and imported from countries other than those where used in manufacturing.
Our products compete with advertised and branded products of a similar nature as well as unadvertised and private label products, which are typically distributed at lower prices, and generally with other food products. Principal methods and factors of competition include new product introductions, product quality, taste, convenience, nutritional value, price, advertising and promotion. Research and Development.
Our products compete with advertised and branded products of a similar nature as well as unadvertised and private label products, which are typically distributed at lower prices, and generally with other food products. Principal methods and factors of competition include new product introductions, product quality, taste, convenience, nutritional value, price, advertising and promotion. 6 Research and Development.
Registrations of trademarks can also generally be renewed indefinitely as long as the trademarks are in use. 5 Seasonality. Demand for our products is generally level throughout the year, although some of our convenience foods have a bias for stronger demand in the second half of the year due to events and holidays. Working Capital.
Registrations of trademarks can also generally be renewed indefinitely as long as the trademarks are in use. Seasonality. Demand for our products is generally level throughout the year, although some of our convenience foods have a bias for stronger demand in the second half of the year due to events and holidays. Working Capital.
Most of our locations now use the My Total Health framework to guide how they communicate and engage with employees in support of their wellbeing.
Most of our 7 locations now use the My Total Health framework to guide how they communicate and engage with employees in support of their wellbeing.
He was promoted to Vice President and General Manager for Mexico in October 2016. In November 2019, Mr. Amaya was promoted to SVP and President Kellanova Latin America. Prior to Kellanova, Mr. Amaya held various marketing roles at Unilever Andina in the personal care division . Kris Bahner 54 Senior Vice President & Chief Global Corporate Affairs Officer, Kellanova Ms.
He was promoted to Vice President and General Manager for Mexico in October 2016. In November 2019, Mr. Amaya was promoted to SVP and President Kellanova Latin America. Prior to Kellanova, Mr. Amaya held various marketing roles at Unilever Andina in the personal care division. Kris Bahner 55 Senior Vice President & Chief Global Corporate Affairs Officer, Kellanova Ms.
Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update them. 11
Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update them.
Our principal products are snacks, such as crackers, savory snacks, toaster pastries, cereal bars, granola bars and bites; and convenience foods, such as, ready-to-eat cereals, frozen waffles, veggie foods and noodles. These products were, as of February 20, 2024, manufactured by us in 21 countries and marketed in more than 180 countries.
Our principal products are snacks, such as crackers, savory snacks, toaster pastries, cereal bars, granola bars and bites; and convenience foods, such as, ready-to-eat cereals, frozen waffles, veggie foods and noodles. These products were, as of February 21, 2025, manufactured by us in 20 countries and marketed in more than 180 countries.
Cahillane served as President of various Coca-Cola operating groups from 2007 to 2012. He has also been a trustee of the W. K. Kellogg Foundation Trust since 2018. Mr. Cahillane is a director of Colgate-Palmolive Company. Kurt D. Forche 54 Vice President and Corporate Controller Mr.
Cahillane served as President of various Coca-Cola operating groups from 2007 to 2012. He has also been a trustee of the W. K. Kellogg Foundation Trust since 2018. Mr. Cahillane is a director of Colgate-Palmolive Company. Kurt D. Forche 55 Vice President and Corporate Controller Mr.
They are sold to retailers through direct sales forces for resale to consumers. We use broker and distributor arrangements for certain products and channels, as well as in certain geographies. Our snacks brands are marketed under brands such as Kellogg’s , Cheez-It , Pringles , Austin , Parati , and RXBAR .
They are sold to retailers and other customers through direct sales forces for resale to consumers. We use broker and distributor arrangements for certain products and channels, as well as in certain geographies. Our snacks brands are marketed under brands such as Kellogg’s , Cheez-It , Pringles , Austin , Parati , and RXBAR .
Our vision and purpose are brought to life through our Better Days™ Promise, our promise to advance sustainable and equitable access to food by addressing the intersection of wellbeing, hunger, sustainability, and equity, diversity and inclusion (ED&I) for 4 billion people by the end of 2030 (from a 2015 baseline).
Our vision and purpose are brought to life through our Better Days™ Promise, our promise to advance sustainable and equitable access to food by addressing the intersection of wellbeing, hunger, sustainability, and equity, diversity and inclusion for 4 billion people by the end of 2030 (from a 2015 baseline).
She is the President of Kellanova’s Fund Board of Trustees and President of Kellanova’s 25‐Year Employees’ Fund, Inc. Amit Banati 55 Vice Chairman and Chief Financial Officer Mr. Banati has been Senior Vice President, Chief Financial Officer and Principal Financial Officer, Kellanova (formerly known as Kellogg Company) since July 2019 and Vice Chairman since January 2023. Mr.
She is the President of Kellanova’s Fund Board of Trustees and President of Kellanova’s 25‐Year Employees’ Fund, Inc. Amit Banati 56 Vice Chairman and Chief Financial Officer Mr. Banati has been Senior Vice President, Chief Financial Officer and Principal Financial Officer, Kellanova (formerly known as Kellogg Company) since July 2019 and Vice Chairman since January 2023. Mr.
As a result of the distribution, Kellanova shareholders of record on September 21, 2023, received one share of WK Kellogg Co common stock for every four shares of Kellanova common stock. Reported results were prepared in accordance with U.S.
As a result of the distribution, Kellanova shareowners of record on September 21, 2023, received one share of WK Kellogg Co common stock for every four shares of Kellanova common stock. Reported results were prepared in accordance with U.S.
This Report contains “forward-looking statements” with projections and expectations concerning, among other things, the Company’s restructuring programs; the integration of acquired businesses; our strategy, financial principles, and plans; initiatives, improvements and growth; sales, margins, advertising, promotion, merchandising, brand building, operating profit, and earnings per share; innovation; investments; capital expenditures; asset write-offs and expenditures and costs related to productivity or efficiency initiatives; the impact of accounting changes and significant accounting estimates; our ability to meet interest and debt principal repayment obligations; minimum contractual obligations; future common stock repurchases or debt reduction; effective income tax rate; cash flow and core working capital improvements; interest expense; commodity and energy prices; ESG performance; and employee benefit plan costs and funding.
This Report contains “forward-looking statements” with projections and expectations concerning, among other things, the Company’s restructuring programs; the timing, completion and other effects of the Merger; the integration of acquired businesses; our strategy, financial principles, and plans; initiatives, improvements and growth; sales, margins, advertising, promotion, merchandising, brand building, operating profit, and earnings per share; innovation; investments; capital expenditures; asset write-offs and expenditures and costs related to productivity or efficiency initiatives; the impact of accounting changes and significant accounting estimates; our ability to meet interest and debt principal repayment obligations; minimum contractual obligations; future common stock repurchases or debt reduction; effective income tax rate; cash flow and core working capital improvements; interest expense; commodity and energy prices; sustainability performance; and employee benefit plan costs and funding.
Our Chief Sustainability Officer (CSO) reports to the Senior Vice President Chief Global Corporate Affairs Officer. Additionally, numerous leaders are accountable for achieving specific ESG commitments, based on their roles. In addition, Kellanova has a Global Better Days™ Promise Council and regional Better Days™ Promise Councils.
Our Chief Sustainability Officer (CSO) reports to the Senior Vice President Chief Global Corporate Affairs Officer. Additionally, numerous leaders are accountable for achieving specific social and environmental commitments, based on their roles. In addition, Kellanova has a Global Better Days™ Promise Council and Regional Better Days™ Promise Councils.
No other customer accounted for greater than 10% of net sales in 2023. During 2023, our top five customers, collectively, including Wal-Mart, accounted for approxima tely 26% of our consolidated net sales and approximately 46% of U.S. net sales. There has been significant worldwide consolidation in the grocery industry and we believe that this trend is likely to continue.
No other customer accounted for greater than 10% of net sales in 2024. During 2024, our top five customers, collectively, including Wal-Mart, accounted for approxima tely 29% of our consolidated net sales and approximately 46% of U.S. net sales. There has been significant worldwide consolidation in the grocery industry and we believe that this trend is likely to continue.
He also served as the Chief Financial Officer for Cadbury Schweppes Asia Pacific. Mr. Banati is a director of Fortune Brands Home Innovations. 8 Steven A. Cahillane 58 Chairman and Chief Executive Officer Mr. Cahillane has been Chairman of the Board of Kellanova (formerly known as Kellogg Company) since March 2018, and President and Chief Executive Officer since October 2017.
He also served as the Chief Financial Officer for Cadbury Schweppes Asia Pacific. Mr. Banati is a director of Fortune Brands Home Innovations. 9 Steven A. Cahillane 59 Chairman and Chief Executive Officer Mr. Cahillane has been Chairman of the Board of Kellanova (formerly known as Kellogg Company) since March 2018, and President and Chief Executive Officer since October 2017.
Research to support and expand the use of our existing products and to develop new food products is carried on at the W. K. Kellogg Institute for Food and Nutrition Research in Battle Creek, Michigan, and at other locations around the world. Our expenditures for research and development were approximately (in millions): 2023-$116; 2022-$111; 2020-$117.
Research to support and expand the use of our existing products and to develop new food products is carried on at the W. K. Kellogg Institute for Food and Nutrition Research in Battle Creek, Michigan, and at other locations around the world. Our expenditures for research and development were approximately (in millions): 2024-$115; 2023-$116; 2022-$111.
A description of our working capital is included in the Liquidity section of MD&A within Item 7 of this Report. Customers. Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 15% of consolidated net sales during 2023, comprised principally of sales within the United States.
A description of our working capital is included in the Liquidity section of MD&A within Item 7 of this Report. Customers. Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 16% of consolidated net sales during 2024, comprised principally of sales within the United States.
GAAP, include all net sales and expenses recognized during the periods, and reflect WK Kellogg Co as discontinued operations for all periods presented. All amounts, percentages and disclosures for all periods presented reflect only the continuing operations of Kellanova unless otherwise noted. See the discussion in Item 1A. Risk Factors, Item 7.
GAAP, include all net sales and expenses recognized during the periods, and reflect WK Kellogg Co as discontinued operations for fiscal years 2023 and 2022. All amounts, percentages and disclosures for all periods presented reflect only the continuing operations of Kellanova unless otherwise noted. See the discussion in Item 1A. Risk Factors, Item 7.
The backlog of any unfilled orders at December 30, 2023 and December 31, 2022 was not material to us. Competition. We have experienced, and expect to continue to experience, intense competition for sales of all of our principal products in our major product categories, both domestically and internationally.
The backlog of any unfilled orders at December 28, 2024 and December 30, 2023 was not material to us. Competition. We have experienced, and expect to continue to experience, intense competition for sales of all of our principal products in our major product categories, both domestically and internationally.
Specific risks including water stress and social accountability are specifically identified and assessed on a regular basis, especially in emerging market expansion that fuels company growth. Due to these risks, Kellanova has implemented short and long-term initiatives to mitigate and adapt to these environmental pressures, as well as the resulting challenge of food security.
Specific risks including climate change, deforestation, water, plastics, and social accountability are specifically identified and assessed on a regular basis, especially in emerging market expansion that fuels company growth. Due to these risks, Kellanova has implemented short and long-term initiatives to mitigate and adapt to these environmental pressures, as well as the resulting challenge of food security.
Kellanova's Board of Directors, including its Social Responsibility and Public Policy Committee, oversees our Better Days™ Promise strategy.
Kellanova's Board of Directors, including its Social Responsibility and Public Policy Committee, oversees our Better Days™ Promise social and environmental purpose strategy.
The names, ages, and positions of our executive officers (as of February 20, 2024) are listed below, together with their business experience. Executive officers are elected annually by the Board of Directors. Nicolas Amaya 50 Senior Vice President, Kellanova President, Kellanova North America Mr. Amaya assumed his current position on February 1, 2024. Prior to that, Mr.
The names, ages, and positions of our executive officers (as of February 21, 2025) are listed below, together with their business experience. Executive officers are elected annually by the Board of Directors. Nicolas Amaya 51 Senior Vice President, Kellanova President, Kellanova North America Mr. Amaya assumed his current position on February 1, 2024. Prior to that, Mr.
Kellanova’s vision is to be the world’s best snacks-led powerhouse, unleashing the full potential of our differentiated brands and passionate people. Our purpose is creating better days, and a place at the table for everyone, through our trusted food brands.
Environmental, Social and Governance Leadership. Kellanova’s vision is to be the world’s best snacks-led powerhouse, unleashing the full potential of our differentiated brands and passionate people. Our purpose is creating better days, and a place at the table for everyone, through our trusted food brands.
Our Senior Vice President Chief Global Corporate Affairs Officer, Senior Vice Presid ent Global Supply Chain, Senior Vice President Chief Global Human Resources Officer, Senior Vice President Research and Development and other executives who report to the Chairman and CEO, are responsible for successfully implementing the strategy and regularly updating the CEO and Board Committee.
Our Senior Vice President Chief Global Corporate Affairs Officer, Senior Vice President Global Supply Chain, Senior Vice President Chief Global Human Resources Officer, Senior Vice President, Global Growth Officer and other executives who report to the Chairman and CEO, are responsible for successfully implementing the strategy and regularly updating the CEO and 4 Board Committee.
Howell assumed her current position in June 2016. Prior to joining Kellanova (formerly known as Kellogg Company), she was Chief Human Resources Officer for Rockford, Michigan-based Wolverine since 2014. Prior to Wolverine, Ms.
Howell 58 Senior Vice President, Global Human Services Ms. Howell assumed her current position in June 2016. Prior to joining Kellanova (formerly known as Kellogg Company), she was Chief Human Resources Officer for Rockford, Michigan-based Wolverine since 2014. Prior to Wolverine, Ms.
Marroquin served as VP & General Manager Andean Region – Colombia, Ecuador, Peru & Bolivia from July 2018 through 2020, General Manager – Kellogg Brazil from December 2016 to July 2018 and General Manager of – Ecuador & Peru from June 2014 through December 2016. Prior to that, Mr.
Mr. Marroquin joined Kellanova (formerly Kellogg Company) in 1997. Mr. Marroquin served as VP & General Manager Andean Region – Colombia, Ecuador, Peru & Bolivia from July 2018 through 2020, General Manager – Kellogg Brazil from December 2016 to July 2018 and General Manager of – Ecuador & Peru from June 2014 through December 2016. Prior to that, Mr.
The cost of such commodities may fluctuate widely due to government policy and regulation, changing weather patterns and conditions, climate change, and other supply and/or demand impacting events such as pandemics, geopolitical events, wars or other unforeseen circumstances.
The cost of such commodities may fluctuate widely due to changes in government policy and regulation (including as a result of new or increased tariffs), changing weather patterns and conditions, climate change, and other supply and/or demand impacting events such as pandemics, geopolitical events, wars or other unforeseen circumstances.
We report to our Board of Directors on a periodic basis about the actions we have taken to make progress on our ED&I journey, and we are firmly committed to continuing to advance ED&I. Our focus on equity, diversity and inclusion enables us to build a culture where employees are inspired to share their passion, talents and ideas.
We report to our Board of Directors on a periodic basis about the actions we have taken to make progress on our talent strategy, and we are firmly committed to continuing to advance an inclusive work environment. Our equity, diversity and inclusion approach enables us to build a culture where employees are inspired to share their passion, talents and ideas.
Our activities in the United States are subject to regulation by various government agencies, including but not limited to the Food and Drug Administration, the Federal Trade Commission and the Departments of Agriculture, Commerce and Labor, as well as voluntary regulation by other bodies. Various state and local agencies also regulate our activities.
Our activities in the United States are subject to regulation by various government agencies, including but not limited to the Food and Drug Administration, the Federal Trade Commission the Departments of Agriculture, Commerce and Labor, the Environmental Protection Agency and the Occupational Health and Safety Administration, as well as voluntary regulation by other bodies.
She is responsible for driving the growth agenda for the company through leadership of Global Brands, Innovation and R&D, Commercial Advanced Analytics, Marketing Excellence, and Licensing & Cultural Initiatives. Prior to joining Kellanova, Ms. Hughes was the Chief Marketing Officer for Pandora Americas.
Hughes joined Kellanova in 2020 as Chief Marketing Officer. Prior to her current role, she served as Chief Brand & Advanced Analytics Officer. She is responsible for driving the growth agenda for the company through leadership of Global Brands, Innovation and R&D, Commercial Advanced Analytics, Marketing Excellence, and Licensing & Cultural Initiatives. Prior to joining Kellanova, Ms.
Our eight Business Employee Resource Groups, which include KVets and Supporters, Kellanova Multinational Employee Resource Group, Kellanova’s Young Professionals, Kellanova African American Resource Group, Women of Kellogg, Hola (our Latino resource group), KPride & Allies (our LBGTQ+ resource group), and Kapable (our resource group for people with disabilities and their supporters), also play a critical role in attracting diverse talent, providing mentoring and career development 6 opportunities, delivering commercial business insights and connecting people to the Company and the communities where we do business.
Our ten Business Employee Resource Groups (BERGs) which include GenK, Gender Equity, Hola (our Latino resource group), Kapable (our resource group for people with disabilities and their supporters), Kellanova African American Resource Group, KVets and supporters, Multicultural, Origens, Proud (our LBGTQ+ resource group), and Women of Kellanova, also play a critical role in attracting talent, providing mentoring and career development opportunities, delivering commercial business insights and connecting people to the Company and the communities where we do business.
Management's Discussion and Analysis of Financial Condition and Results of Operations, and in Note 2 within Notes to the Consolidated Financial Statements, which are located herein under Part II, Item 8. Financial Information About Segments. Information on segments is located in Note 18 within Notes to the Consolidated Financial Statements. Principal Products.
Management's Discussion and Analysis of Financial Condition and Results of Operations, and in Note 2 within Notes to the Consolidated Financial Statements, which are located herein under Part II, Item 8. Proposed Merger .
Forche joined Kellanova as an internal auditor in 1997, subsequently holding a number of Finance roles in the North American business until being named Senior Director, Corporate Financial Reporting in April 2014. Prior to joining Kellanova in 1997, he spent four years at Price Waterhouse as an auditor. Melissa A. Howell 57 Senior Vice President, Global Human Services Ms.
Forche joined Kellanova as an internal auditor in 1997, subsequently holding a number of Finance roles in the North American business until being named Senior Director, Corporate Financial Reporting in April 2014. Prior to joining Kellanova in 1997, he spent four years at Price Waterhouse as an auditor. Todd W. Haigh 54 Senior Vice President and Chief Legal Officer Mr.
Although we are unable to predict the impact to our ability to source these materials and services in the future, supply pressures are generally decreasing, though weather and geopolitical issues are resulting in other disruptions and logistical delays into 2024.
Although we are unable to predict the impact to our ability to source these materials and services in the future, and supply pressures have decreased, weather and geopolitical issues could result in other disruptions and logistical delays in 2025.
Her experience also includes marketing and brand leadership roles with The Estee Lauder Companies, Avon Products, Inc. and Sara Lee Corporation. Ms. Hughes serves on the Board of Directors for Crocs, Inc.
Hughes was the Chief Marketing Officer for Pandora Americas. Her experience also includes marketing and brand leadership roles with The Estee Lauder Companies, Avon Products, Inc. and Sara Lee Corporation. Ms. Hughes serves on the Board of Directors for Crocs, Inc. She is also a Board Advisor for Pixability and a member of the Executive Leadership Council.
Over the following years, she served in a series of key human resources leadership roles in Europe, Asia and U.S. leading teams on six continents across an array of functional areas. Ms. Howell was promoted to Executive Director of North American Human Resources in 2011 and subsequently promoted to Senior Vice President of Global Human Resources.
Over the following years, she served in a series of key human resources leadership roles in Europe, Asia and U.S. leading teams on six continents across an array of functional areas. Ms.
Our future results could be affected by a variety of other factors, including the impact of macroeconomic conditions; business disruptions; consumers' and other stakeholders' perceptions of our brands; the ability to implement restructurings as planned, whether the expected amount of costs associated with restructurings will differ from forecasts, whether the Company will be able to realize the anticipated benefits from restructurings in the amounts and times expected; the ability to realize the anticipated benefits and synergies from business acquisitions in the amounts and at the times expected; the impact of competitive conditions; the ability to realize the intended benefits of the separation of WK Kellogg Co (the "separation"); the possibility of disruption from the separation, including changes to existing business relationships, disputes, litigation or unanticipated costs; uncertainty of the expected financial performance of the Company following completion of the separation; the effectiveness of pricing, advertising, and promotional programs; the success of innovation, renovation and new product introductions; the success of our Better Days and sustainability programs; the recoverability of the carrying value of goodwill and other intangibles; the success of productivity improvements and business transitions; commodity and energy prices, transportation costs, labor costs, disruptions or inefficiencies in supply chain; the availability of and interest rates on short-term and long-term financing; actual market performance of benefit plan trust investments; the levels of spending on systems initiatives, properties, business opportunities; integration of acquired businesses; other general and administrative costs; changes in consumer behavior and preferences; the effect of U.S. and foreign economic conditions on items such as interest rates; statutory tax rates; currency conversion and availability; legal and regulatory factors including changes in food safety, advertising and labeling laws and regulations, the ultimate impact of product recalls; business disruption or other losses from war, terrorist acts or political unrest; and the risks and uncertainties described in Item 1A below.
Our future results could be affected by a variety of other factors, including the risk that the Merger may not be completed at all or the occurrence of any event, change, or other circumstances that could give rise to the termination of the Merger Agreement, including circumstances requiring a party to pay the other party a termination fee pursuant to the Merger Agreement; the risk that the conditions to closing of the Merger may not be satisfied or waived; the risk that a governmental or regulatory approval that may be required for the Merger is not obtained or is obtained subject to conditions that are not anticipated; potential litigation relating to, or other unexpected costs resulting from, the Merger; legislative, regulatory, and economic developments; risks that the proposed Merger disrupts the Company's current plans and operations; the risk that certain restrictions during the pendency of the Merger may impact the Company's ability to pursue certain business opportunities or strategic transactions; the diversion of management's time on transaction-related issues; continued availability of capital and financing and rating agency actions; the risk that any announcements relating to the Merger could have adverse effects on the market price of the Company's common stock, credit ratings or operating results; the impact of macroeconomic conditions; business disruptions; consumers' and other stakeholders' perceptions of our brands; the ability to implement restructurings as planned, whether the expected amount of costs associated with restructurings will differ from forecasts, whether the Company will be able to realize the anticipated benefits from restructurings in the amounts and times expected; the ability to realize the anticipated benefits and synergies from business acquisitions in the amounts and at the times expected; the impact of competitive conditions; the ability to realize the intended 12 benefits of the separation of WK Kellogg Co (the "separation"); uncertainty of the expected financial performance of the Company following completion of the separation; the effectiveness of pricing, advertising, and promotional programs; the success of innovation, renovation and new product introductions; the success of our Better Days and sustainability programs; the recoverability of the carrying value of goodwill and other intangibles; the success of productivity improvements and business transitions; commodity and energy prices, transportation costs, labor costs, disruptions or inefficiencies in supply chain; the availability of and interest rates on short-term and long-term financing; actual market performance of benefit plan trust investments; the levels of spending on systems initiatives, properties, business opportunities; integration of acquired businesses; other general and administrative costs; changes in consumer behavior and preferences; the effect of U.S. and foreign economic conditions on items such as interest rates; statutory tax rates; currency conversion and availability; legal and regulatory factors including changes in food safety, advertising and labeling laws and regulations, the ultimate impact of product recalls; business disruption or other losses from war, terrorist acts or political unrest; and the risks and uncertainties described in Item 1A below.
Employee Engagement: We communicate frequently and transparently with our employees through a variety of engagement vehicles, from externally managed global opinion surveys to weekly check-ins via our internal global recognition platform.
Training and Development: We invest in ongoing leadership development through programs for future managers, for experienced managers and our executive leadership training program for developing our future leaders. Employee Engagement: We communicate frequently and transparently with our employees through a variety of engagement vehicles, from externally managed global opinion surveys to weekly check-ins via our internal global recognition platform.
Lance began his career at Kellanova and served in various roles including Production Supervisor at the Queretaro, Mexico, plant. He also served as the Plant Manager in Guatemala; Linares, Mexico, and Columbus, Georgia, U.S. David Lawlor 56 Senior Vice President, Kellanova President, Kellanova Europe Mr. Lawlor assumed his current position in July 2018.
Prior to his Supply Chain roles, Mr. Lance served as Vice President, Snacks Engineering beginning in 2011. In 1997, Mr. Lance began his career at Kellanova and served in various roles including Production Supervisor at the Queretaro, Mexico, plant. He also served as the Plant Manager in Guatemala; Linares, Mexico, and Columbus, Georgia, U.S.
He most recently served as Vice President, European Cereal from November 2017 to June 2018. Mr. Lawlor began his career at Kellanova (formerly known as Kellogg Company) in 1991, joining as a sales manager in its Dublin office. Following this, he held a number of senior roles, including running the company’s Middle Eastern business, setting up its Dubai office. Mr.
David Lawlor 57 Senior Vice President, Kellanova President, Kellanova Europe Mr. Lawlor assumed his current position in July 2018. He most recently served as Vice President, European Cereal from November 2017 to June 2018. Mr. Lawlor began his career at Kellanova (formerly known as Kellogg Company) in 1991, joining as a sales manager in its Dublin office.
Prior to his current role, he was Senior Vice President, KNA Supply Chain from October 2019 to March 2022 and Vice President, Supply Chain Europe and Vice President, Supply Chain Latin America from May 2017 to October 2019. Prior to his Supply Chain roles, Mr. Lance served as Vice President, Snacks Engineering beginning in 2011. In 1997, Mr.
Lance has been Senior Vice President, Global Supply Chain, Kellanova (formerly known as Kellogg Company) since March 2022. Prior to his current role, he was Senior Vice President, KNA Supply Chain from October 2019 to March 2022 and Vice President, Supply Chain Europe and Vice President, Supply Chain Latin America from May 2017 to October 2019.
Prior to joining Kellanova (formerly known as Kellogg Company), he was Regional President, Pet Nutrition, Asia Pacific for Mars Inc. from January 2017 to June 2020 . In this role, Mr. Kapoor had additional oversight of the confectionary and food business in Japan and New Zealand.
Shumit Kapoor 54 Senior Vice President, Kellanova President, Kellanova Asia Pacific, Middle East and Africa Mr. Kapoor assumed his current position in July 2020. Prior to joining Kellanova (formerly known as Kellogg Company), he was Regional President, Pet Nutrition, Asia Pacific for Mars Inc. from January 2017 to June 2020 . In this role, Mr.
Other agencies and bodies outside of the United States, including those of the European Union and various countries, states and municipalities, also regulate our activities. Environmental Matters. Our facilities are subject to various U.S. and foreign, federal, state, and local laws and regulations regarding the release of material into the environment and the protection of the environment in other ways.
Various state and local agencies also regulate our activities. Other agencies and bodies outside of the United States, including those of the European Union and various countries, states and municipalities, also regulate our activities. Environmental Matters.
Prior to that, he was Regional President, Asia Pacific, for Mars’ Royal Canin business from January 2015 to December 2016 . Mr. Kapoor served in various leadership roles at Mars Inc., starting his career as General Manager, South East Asia and India Mars Multisales in July 2011. Prior to Mars Inc., Mr.
Kapoor served in various leadership roles at Mars Inc., starting his career as General Manager, South East Asia and India Mars Multisales in July 2011. Prior to Mars Inc., Mr. Kapoor was with Nokia from 2005 to 2011 and Procter & Gamble from 1993 to 2005. Rodrigo Lance 50 Senior Vice President, Global Supply Chain Mr.
Lawlor then served as General Manager of Kellogg Russia from October 2008 to August 2016 and led the integration of United Bakers Group, a local biscuit and cracker manufacturer. In August 2016, he was appointed Managing Director, UK/ROI where he refocused the company’s efforts to stabilize and grow its core cereal business.
Following this, he held a number of senior roles, including running the company’s Middle Eastern business, setting up its Dubai office. Mr. Lawlor then served as General Manager of Kellogg Russia from October 2008 to August 2016 and led the integration of United Bakers Group, a local biscuit and cracker manufacturer.
Our frozen foods are marketed under the Eggo and Morningstar Farms brands. We also market crackers, crisps, and other convenience foods, under brands such as Kellogg’s , Cheez-It , Pringles , and Austin , to supermarkets in the United States through a variety of distribution methods.
We also market crackers, crisps, and other convenience foods, under brands such as Kellogg’s , Cheez-It , Pringles , and Austin , to supermarkets in the United States through a variety of distribution methods. 3 Additional information pertaining to the sales across our segments for the years 2022 through 2024 is located in Note 18 within Notes to the Consolidated Financial Statements, which are included herein under Part II, Item 8.
The information contained on, or accessible through, our website is not part of or incorporated into this Annual Report on Form 10-K. All reports required to be filed with the U.S. Securities and Exchange Commission are available and can be accessed through the Investor Relations section of our website.
All reports required to be filed with the U.S. Securities and Exchange Commission are available and can be accessed free of charge on the SEC’s website at www.sec.gov and are also accessible as soon as reasonably practicable after we file or furnish them to the SEC through the Investor Relations section of our website.
We are not a party to any material proceedings arising under these regulations. We believe that compliance with existing environmental laws and regulations will not materially affect our consolidated financial condition or our competitive position. Human Capital Resources. On December 30, 2023, we had approximately 23,000 employees. The majority of our employees work on a full-time basis.
In 2024, compliance with existing environmental laws and regulations applicable to us did not have a material effect on our capital expenditures, earnings, or competitive position nor do we believe that compliance with existing environmental laws and regulations will materially affect our consolidated financial condition or our competitive position in 2025. Human Capital Resources.
Victor Marroquin 48 Senior Vice President, Kellanova Latin America Mr. Marroquin was appointed Senior Vice President & President Kellanova Latin America, in February 2024. Previously, Mr. Marroquin served as General Manager, Kellanova Mexico, since December 2020. Mr. Marroquin joined Kellanova (formerly Kellogg Company) in 1997. Mr.
In August 2016, he was appointed Managing Director, UK/ROI where he refocused the company’s efforts to stabilize and grow its core cereal business. 11 Victor Marroquin 49 Senior Vice President, Kellanova Latin America Mr. Marroquin was appointed Senior Vice President & President Kellanova Latin America, in February 2024. Previously, Mr. Marroquin served as General Manager, Kellanova Mexico, since December 2020.
We are also party to numerous collective bargaining agreements. Our human capital objectives include attracting, developing, engaging, rewarding and retaining our employees. Equity, Diversity and Inclusion: In 2005, Kellanova established an Office of Diversity & Inclusion. Since this time, our Company has enhanced our strategy and is currently known as the Office of Equity, Diversity and Inclusion.
On December 28, 2024, we had approximately 24,000 employees. The majority of our employees work on a full-time basis. We are also party to numerous collective bargaining agreements. Our human capital objectives include attracting, developing, engaging, rewarding and retaining our employees. Equity, Diversity and Inclusion: Our goal is to create a place at the table for everyone.
Charisse Hughes 53 Senior Vice President, Chief Growth Officer Ms. Hughes has been Senior Vice President, Chief Growth Officer, Kellanova (formerly known as Kellogg Company) since May 2023. Ms. Hughes joined Kellanova in 2020 as Chief Marketing Officer. Prior to her current role, she served as Chief Brand & Advanced Analytics Officer.
Howell was promoted to Executive Director of North American Human Resources in 2011 and subsequently promoted to Senior Vice President of Global Human Resources. 10 Charisse Hughes 54 Senior Vice President, Chief Growth Officer Ms. Hughes has been Senior Vice President, Chief Growth Officer, Kellanova (formerly known as Kellogg Company) since May 2023. Ms.
Kellanova Better Days™ Promise, is our promise to create 4 billion better days by the end of 2030 (from a 2015 baseline, unless otherwise indicated), includes the following commitments: • Nourishing 1.5 billion people with our foods that deliver nutrients of need by the end of 2030. • Feeding 400 million people facing food insecurity or crisis by the end of 2030. 3 • Nurturing people and planet by creating a climate-positive future, including advancing the wellbeing of 250,000 people in our food chain, from farming communities to processors, prioritizing support for vulnerable groups by the end of 2030 (from a 2023 baseline). • Committing to set company-wide emission reductions in line with the Science Based Targets initiative (SBTi) Net-Zero Standard. • Valuing ED&I in our workforce by aspiring for gender 50/50 parity at the management level globally and 25% People of Color at the management level in the U.S. by the end of 2025. • And, engaging 2 billion people along our journey by the end of 2030.
Kellanova Better Days™ Promise, is our promise to create better days for 4 billion people by the end of 2030 (from a 2015 baseline, unless otherwise indicated), includes the following commitments: • Nourishing 1.5 billion people with our foods and, in doing so, providing clear, science-based, front-of-pack nutrition labeling and by removing industrial trans fats from our recipes by the end of 2030. • Feeding 400 million people facing food insecurity through food donations, expanded child feeding programs and disaster relief by the end of 2030. • Advancing the wellbeing of 250,000 people in our food value chain, from farming communities to processors, prioritizing support for vulnerable groups by the end of 2030. • Kellanova commits to reach net-zero GHG emissions across the value chain by 2050.
Removed
Additional information pertaining to the relative sales of our products for the years 2021 through 2023 is located in Note 18 within Notes to the Consolidated Financial Statements, which are included herein under Part II, Item 8. Environmental, Social and Governance (ESG) Leadership.
Added
On August 13, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Acquiror 10VB8, LLC, a Delaware limited liability company (“Acquiror”), Merger Sub 10VB8, LLC, a Delaware limited liability company and a wholly owned subsidiary of Acquiror (“Merger Sub”), and, solely for the limited purposes specified in the Merger Agreement, Mars, Incorporated, a Delaware corporation (“Mars”).
Removed
This office has been focused on recruiting and retaining employees, creating awareness, fostering a supportive, positive environment where inclusive behaviors are the norm, and embedding accountability for inclusion throughout the organization. Our goal is to create a place at the table for everyone.
Added
Completion of the Merger is subject to customary closing conditions, including the receipt of required regulatory approvals. At a special meeting of shareowners held on November 1, 2024, the Company's shareowners approved the Merger Agreement.
Removed
Through many initiatives, supported by our Business Employee Resource Groups and ED&I Champions, several leading organizations recognized Kellanova for our commitment to building and supporting equity, diversity and inclusion in our workplace, marketplace and the communities where we work and live.
Added
Currently, the Company expects the Merger to close in the first half of 2025; however, the exact timing of the completion of the Merger, if at all, cannot be predicted with any certainty.
Removed
These include Diversity Inc., Social Corporate Equity Index, Diversity Best Practice Index and Human Rights Campaign (HRC) Best Places to Work for LGBTQ Equality, to name a few. Training and Development: We invest in ongoing leadership development through programs for future managers, for experienced managers and our executive leadership training program for developing our future leaders.
Added
The Merger Agreement provides that, subject to the terms and conditions set forth therein, at the effective time of the Merger (the “Effective Time”), (1) Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and a wholly owned subsidiary of Acquiror, and (2) each share of public common stock, par value $0.25 per share, of the Company issued and outstanding immediately prior to Effective Time (other than shares owned by (i) the Company or its subsidiaries or Mars or its subsidiaries (including Acquiror and its subsidiaries) or (ii) shareowners who have properly exercised and perfected appraisal rights under Delaware law) will be automatically cancelled and converted into the right to receive $83.50 per share in cash, without interest.
Removed
She is also a Board Advisor for Pixability and a member of the Executive Leadership Council. 9 Shumit Kapoor 53 Senior Vice President, Kellanova President, Kellanova Asia Pacific, Middle East and Africa Mr. Kapoor assumed his current position in July 2020.
Added
Completion of the Merger is subject to customary closing conditions, including the receipt of required regulatory approvals. Financial Information About Segments. Information on segments is located in Note 18 within Notes to the Consolidated Financial Statements. Principal Products.
Removed
Kapoor was with Nokia from 2005 to 2011 and Procter & Gamble from 1993 to 2005. Rodrigo Lance 49 Senior Vice President, Global Supply Chain Mr. Lance has been Senior Vice President, Global Supply Chain, Kellanova (formerly known as Kellogg Company) since March 2022.
Added
Our frozen foods are marketed under the Eggo and Morningstar Farms brands.
Removed
Marroquin held a number of marketing, customer development and commercial management roles at the Company across Latin American countries. 10 John Min 44 Senior Vice President and Chief Legal Officer Mr. Min has been Senior Vice President, Chief Legal Officer, Kellanova (formerly known as Kellogg Company) since October 2023. Previously, Mr.
Added
Our net-zero target has been approved by the Science Based Targets initiative (SBTi). • Achieving 100% renewable electricity by the end of 2030. • Reducing water use in global Kellanova-owned manufacturing facilities in high water stress regions by the end of 2030. • Reducing food waste across our global Kellanova-owned manufacturing facilities by the end of 2030 (from a 2016 baseline). • Working towards 100% reusable, recyclable or compostable packaging (by volume) by the end of 2030. • Responsibly sourcing priority ingredients by the end of 2030. • And, engaging 2 billion people in advocating for sustainable and equitable access to food by the end of 2030.
Removed
Min served as Regional General Counsel in Europe and Asia Pacific, Middle East and Africa regions. Prior to that, he served as Corporate Counsel, specializing in corporate governance, securities, and litigation. Mr.
Added
Our facilities are subject to various U.S. and foreign, federal, state, and local laws and regulations regarding the release of material into the environment and the protection of the environment in other ways. We are not a party to any material proceedings arising under these regulations.
Removed
Min joined Kellanova in 2010 and has since worked in a variety of different areas, including food safety and regulatory compliance, class action litigation defense, recoveries, corporate governance and securities. Prior to Kellanova, Mr. Min was an attorney at the law firm of Jenner & Block. Availability of Reports; Website Access; Other Information. Our internet address is http://www.kellanova.com.
Added
Haigh was appointed Interim Chief Legal Officer of Kellanova in June 2024 and became Chief Legal Officer in August 2024. Mr. Haigh previously served as Vice President – Chief Counsel of Kellanova (formerly Kellogg Company). Prior to joining Kellogg Company in 2005, Mr.
Added
Haigh was a partner at Kirkland & Ellis LLP, where he worked from 2000 – 2005 and was previously an attorney at the law firm of Jenner & Block from 1997 – 2000. Mr. Haigh holds a Juris Doctor from University of Iowa College of Law and a BBA and MA, Accounting from University of Iowa. Melissa A.
Added
Kapoor had additional oversight of the confectionary and food business in Japan and New Zealand. Prior to that, he was Regional President, Asia Pacific, for Mars’ Royal Canin business from January 2015 to December 2016 . Mr.
Added
Marroquin held a number of marketing, customer development and commercial management roles at the Company across Latin American countries. Availability of Reports; Website Access; Other Information. Our internet address is http://www.kellanova.com. The information contained on, or accessible through, our website is not part of or incorporated into this Annual Report on Form 10-K.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

68 edited+61 added−6 removed190 unchanged
In addition, given the variety of backgrounds and identities of consumers in our consumer base, we must offer a sufficient array of products to satisfy the broad spectrum of consumer preferences. Further, if the Company does not innovate and successfully to respond to shifting consumer demands, our business may suffer.
In addition, given the variety of backgrounds and identities of consumers in our consumer base, we must offer a sufficient array of products to satisfy the broad spectrum of consumer preferences. Further, if the Company does not innovate and successfully respond to shifting consumer demands, our business may suffer.
If the Company suffers a loss as a result of a breach or other breakdown in its technology, including such cyber incidents, security incidents, privacy breaches, data breaches, security breaches, issues with or errors in system 23 maintenance or security, migration of applications to the cloud, power outages, hardware or software failures, denial of service, telecommunication or other incident involving one of the Company's vendors, that result in unauthorized disclosure or significant unavailability of business, financial, personal or stakeholder information, the Company may suffer reputational, competitive and/or business harm and may be exposed to legal liability and government investigations, which may adversely affect the Company's results of operations and/or financial condition.
If the Company suffers a loss as a result of a breach or other breakdown in its technology, including such cyber incidents, security incidents, privacy breaches, data breaches, security breaches, issues with or errors in system maintenance or security, migration of applications to the cloud, power outages, hardware or software failures, denial of service, telecommunication or other incident involving one of the Company's vendors, that result in unauthorized disclosure or significant unavailability of business, financial, personal or stakeholder information, the Company may suffer reputational, competitive and/or business harm and may be exposed to legal liability and government investigations, which may adversely affect the Company's results of operations and/or financial condition.
Those regulations control such matters as food quality and safety (including the condition and operation of our manufacturing facilities where food is processed), ingredients, advertising and marketing (including, among other limitations, restricting the age of consumers to whom products are marketed and data privacy requirements), product or production requirements, labeling, sustainability of packaging (including plastics), import or export of our products or ingredients, relations with distributors and retailers, health and safety, the environment, and restrictions on the use of government programs, such as Supplemental Nutritional Assistance Program and the Special Supplemental Nutrition Program for Women, Infants and Children, to purchase certain of our products.
Those regulations control such matters as food quality and safety (including the condition and operation of our manufacturing facilities where food is processed), ingredients, advertising and marketing (including, among other limitations, restricting the age of consumers to whom products are marketed and data privacy requirements), product or production requirements, labeling, sustainability of packaging (including 28 plastics), import or export of our products or ingredients, relations with distributors and retailers, health and safety, the environment, and restrictions on the use of government programs, such as Supplemental Nutritional Assistance Program and the Special Supplemental Nutrition Program for Women, Infants and Children, to purchase certain of our products.
Our information technology systems, and the systems of the parties we communicate and collaborate with, may be vulnerable to a variety of interruptions, such as a result of our employees working remotely, the updating of our enterprise platform or due to events beyond our or their control, including, but not limited to, network or hardware failures, malicious or disruptive software, unintentional or malicious actions of employees or contractors, cyberattacks by common hackers, criminal groups or nation-state organizations or social-activist (hacktivist) organizations, geopolitical events, natural disasters, a pandemic illness, failures or impairments of telecommunications networks, or other catastrophic events.
Our information technology systems, and the systems of the parties we communicate and collaborate with, may be vulnerable to a variety of interruptions, such as a result of our 29 employees working remotely, the updating of our enterprise platform or due to events beyond our or their control, including, but not limited to, network or hardware failures, malicious or disruptive software, unintentional or malicious actions of employees or contractors, cyberattacks by common hackers, criminal groups or nation-state organizations or social-activist (hacktivist) organizations, geopolitical events, natural disasters, a pandemic illness, failures or impairments of telecommunications networks, or other catastrophic events.
We may encounter difficulty recruiting sufficient numbers of personnel at acceptable wage and benefit levels due to the competitive labor market. Our inability to attract, develop and retain the personnel necessary for the efficient operation of our business could result in higher costs and decreased productivity and efficiency, which may have a material adverse effect on our performance.
We may encounter difficulty recruiting sufficient numbers of personnel at acceptable wage and benefit levels due to the competitive labor market. Our inability to attract, develop and retain the personnel 25 necessary for the efficient operation of our business could result in higher costs and decreased productivity and efficiency, which may have a material adverse effect on our performance.
In addition, we have agreements with third parties (Accounts Payable Tracking Systems) to offer structured payables programs to our suppliers. Participating suppliers may, if elected at their discretion, make offers to sell one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions.
In addition, we have agreements with third parties (Accounts Payable Tracking Systems) to offer structured payables programs to our suppliers. Participating 26 suppliers may, if elected at their discretion, make offers to sell one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions.
If WK Kellogg Co or its successor entities are unable to satisfy their obligations under these agreements, we could incur operational difficulties or losses. In addition, the terms of the separation include licenses and other arrangements to provide for certain ongoing use of intellectual property in the operations of both businesses.
If WK Kellogg Co or its successor entities are unable to satisfy their obligations under these 20 agreements, we could incur operational difficulties or losses. In addition, the terms of the separation include licenses and other arrangements to provide for certain ongoing use of intellectual property in the operations of both businesses.
Food processing equipment at our facilities is regularly fueled by natural gas or propane, as well as electricity, oil and solar, which are obtained from local utilities, other local suppliers or onsite. Short-term stand-by propane and/or oil storage exists at several plants for use in case of interruption in natural gas supplies.
Food processing equipment at our facilities is regularly 22 fueled by natural gas or propane, as well as electricity, oil and solar, which are obtained from local utilities, other local suppliers or onsite. Short-term stand-by propane and/or oil storage exists at several plants for use in case of interruption in natural gas supplies.
Our businesses could be materially affected if we fail to develop or maintain our relationships with these third parties, if any of these third parties is unable to fulfill its obligations to us, if any of these third parties fails to comply with governmental regulations applicable to the supply of materials for or the manufacturing of our products or if any of these third parties ceases doing business with us or goes out of business.
Our businesses could be materially affected if we fail to develop or maintain our relationships with these third parties, if any of these third parties is unable to fulfill its obligations to us, if any of these third parties fails to 19 comply with governmental regulations applicable to the supply of materials for or the manufacturing of our products or if any of these third parties ceases doing business with us or goes out of business.
If we do not succeed in offering 16 products that consumers want to buy, our sales and market share will decrease, resulting in reduced profitability. If we are unable to accurately predict which shifts in consumer preferences will be long-lasting, or are unable to introduce new and improved products to satisfy those preferences, our sales will decline.
If we do not succeed in offering products that consumers want to buy, our sales and market share will decrease, resulting in reduced profitability. If we are unable to accurately predict which shifts in consumer preferences will be long-lasting, or are unable to introduce new and improved products to satisfy those preferences, our sales will decline.
Unattractive placement or pricing may put our products at a disadvantage compared to those of our competitors. Even if we obtain shelf space or preferable shelf placement, our new and existing products may fail to achieve the sales expectations set by our retailers, potentially causing these retailers to remove our products from their shelves.
Unattractive placement or pricing may put our products at a disadvantage compared to those of our competitors. Even if we 23 obtain shelf space or preferable shelf placement, our new and existing products may fail to achieve the sales expectations set by our retailers, potentially causing these retailers to remove our products from their shelves.
If our access to such financing was 19 unavailable or reduced, or if such financing were to become significantly more expensive for any reason, we may not be able to fund daily operations, which would cause material harm to our business or could affect our ability to operate our business as a going concern.
If our access to such financing was unavailable or reduced, or if such financing were to become significantly more expensive for any reason, we may not be able to fund daily operations, which would cause material harm to our business or could affect our ability to operate our business as a going concern.
Our 21 activities and products, including our operation of our manufacturing facilities, both in and outside of the United States, are subject to regulation by various federal, state, provincial and local laws, regulations and government agencies, including the U.S. Food and Drug Administration, U.S. Federal Trade Commission, the U.S. Departments of Agriculture, Commerce and Labor, U.S.
Our activities and products, including our operation of our manufacturing facilities, both in and outside of the United States, are subject to regulation by various federal, state, provincial and local laws, regulations and government agencies, including the U.S. Food and Drug Administration, U.S. Federal Trade Commission, the U.S. Departments of Agriculture, Commerce and Labor, U.S.
Additionally, from time to time, we experience operational difficulties with these third parties, which may include increases in costs, reductions in 13 the availability of materials or production capacity, delays in the addition of incremental capacity, failures to meet shipment or production deadlines, including as a result of public health crises (such as the COVID-19 pandemic) and related governmental restrictions or mandates and any naturally occurring or climate change induced acute (including extreme weather and natural disasters) or chronic (including prolonged temperature and weather patterns) climatic events, fire and water stress, cybersecurity incidents, errors in complying with specifications and insufficient quality control.
Additionally, from time to time, we experience operational difficulties with these third parties, which may include increases in costs, reductions in the availability of materials or production capacity, delays in the addition of incremental capacity, failures to meet shipment or production deadlines, including as a result of public health crises (such as the COVID-19 pandemic) and related governmental restrictions or mandates and any naturally occurring or climate change induced acute (including extreme weather and natural disasters, such as wildfires) or chronic (including prolonged temperature and weather patterns) climatic events, fire and water stress, cybersecurity incidents, errors in complying with specifications and insufficient quality control.
Our success in emerging markets is critical to our growth strategy. If we cannot 22 successfully increase our business in emerging markets and manage associated political, economic and regulatory risks, our product sales, financial condition and results of operations could be materially and adversely affected.
Our success in emerging markets is critical to our growth strategy. If we cannot successfully increase our business in emerging markets and manage associated political, economic and regulatory risks, our product sales, financial condition and results of operations could be materially and adversely affected.
We may not be able to locate suitable replacements for any key employees who terminate their employment, or offer employment to potential replacements on reasonable terms, each of which may adversely affect our business and 15 financial results.
We may not be able to locate suitable replacements for any key employees who terminate their employment, or offer employment to potential replacements on reasonable terms, each of which may adversely affect our business and financial results.
Because our consolidated financial statements are presented in U.S. dollars, we must translate our assets, liabilities, revenue and expenses into U.S. dollars at then-applicable exchange rates and face exposure to adverse movements in foreign currency exchange rates.
Because our consolidated financial statements are presented in U.S. dollars, we must translate our assets, liabilities, revenue and expenses into U.S. dollars at then-applicable exchange rates and face exposure to 32 adverse movements in foreign currency exchange rates.
In addition, these alternative retail channels may create consumer price deflation, affecting our large retail and wholesale customer relationships and presenting additional challenges to 17 increasing prices in response to commodity or other cost increases.
In addition, these alternative retail channels may create consumer price deflation, affecting our large retail and wholesale customer relationships and presenting additional challenges to increasing prices in response to commodity or other cost increases.
We have also outsourced several information technology support services and administrative functions to third-party service providers, including cloud-based service providers, and may outsource other functions in the future to achieve cost savings and efficiencies.
We have also outsourced several information technology support services and administrative functions to third-party service 30 providers, including cloud-based service providers, and may outsource other functions in the future to achieve cost savings and efficiencies.
While trading through Brexit has become normal course of business, we continue to closely monitor and manage our inventory levels of imported raw materials, packaging and 25 finished goods in the UK.
While trading through Brexit has become normal course of business, we continue to closely monitor and manage our inventory levels of imported raw materials, packaging and finished goods in the UK.
The cost of such commodities may fluctuate widely due to government policy, regulation, and/or shutdown, import and export requirements (including tariffs), global geopolitical conditions (including war and conflicts, such as the conflicts in Ukraine and the Middle East), general economic conditions (including inflationary pressures), sanctions, drought and other weather conditions (including the potential effects of climate change), a pandemic illness, environmental or other sustainability regulation, or other unforeseen circumstances.
The cost of such commodities may fluctuate widely due to government policy, regulation, and/or shutdown, import and export requirements (including tariffs and trade restrictions), global geopolitical conditions (including war and conflicts, such as the conflicts in Ukraine and the Middle East), general economic conditions (including inflationary pressures), sanctions, drought and other weather conditions (including the potential effects of climate change), a pandemic illness, environmental or other sustainability regulation, or other unforeseen circumstances.
In addition, considerable amounts of diesel fuel are used in connection with the distribution of our products. The cost of fuel may fluctuate widely due to economic and political conditions, government policy, regulation and/or shutdown, war, or other unforeseen circumstances which could have a material adverse effect on our consolidated operating results or financial condition.
In addition, considerable amounts of diesel fuel are used in connection with the distribution of our products. The cost of fuel may fluctuate widely due to economic and political conditions, trade tensions, government policy, regulation and/or shutdown, war, or other unforeseen circumstances which could have a material adverse effect on our consolidated operating results or financial condition.
In certain circumstances if future significant acquisitions of our stock or the stock of WK Kellogg Co are determined to be part of a plan or series of related transactions that included the spin-off, the distribution would be taxable to us (but not to the Company’s shareholders). In this event, the resulting tax liability could be substantial.
In certain circumstances if future significant acquisitions of our stock or the stock of WK Kellogg Co are determined to be part of a plan or series of related transactions that included the spin-off, the distribution would be taxable to us (but not to the Company’s shareowners). In this event, the resulting tax liability could be substantial.
All of these factors could result in increased costs or decreased revenues, and could materially and adversely affect our product sales, financial condition and results of operations. There may be uncertainty as a result of key global events during 2023 that are expected to continue throughout 2024.
All of these factors could result in increased costs or decreased revenues, and could materially and adversely affect our product sales, financial condition and results of operations. There may be uncertainty as a result of key global events during 2024 that are expected to continue throughout 2025.
Several countries in which we operate have adopted, and others are in the process of introducing and finalizing legislation to implement the global minimum corporate income tax. Many aspects of the framework will be effective for tax years beginning in January 2024, with certain remaining impacts to be effective in 2025.
Several countries in which we operate have adopted, and others are in the process of introducing and finalizing legislation to implement the global minimum corporate income tax. Many aspects of the framework were effective for tax years beginning in January 2024, with certain remaining impacts to be effective in 2025.
In the event that we withdraw from participation in one of these plans, then applicable law could require us to make withdrawal liability payments, and we would have to reflect that as an expense in our consolidated statement of operations and as a liability on our consolidated balance sheet.
In the event that we withdraw from participation in one of these plans, then applicable law could require us to make withdrawal liability payments, and we would have to reflect that as an expense in our Consolidated Statement of Income and as a liability on our consolidated balance sheet.
In addition, we may be impacted by litigation trends, including class action lawsuits involving consumers, employees, and shareholders, which could have a material adverse effect on our reputation, the market price of our common stock, results of operations and financial condition.
In addition, we may be impacted by litigation trends, including class action lawsuits involving consumers, employees, and shareowners, which could have a material adverse effect on our reputation, the market price of our common stock, results of operations and financial condition.
While we do not expect the global minimum corporate income tax to have a material impact to our effective tax rate in 2024, as the OECD releases additional guidance and countries implement legislation, we will continue to analyze any potential impacts.
While we do not expect the global minimum corporate income tax to have a material impact to our effective tax rate in 2025, as the OECD releases additional guidance and countries implement legislation, we will continue to analyze any potential impacts.
Internal Revenue Service (the “IRS”) regarding the qualification of the spin-off of WK Kellogg Co and certain related transactions as a transaction that is generally tax-free to the Company and the shareholders of the Company for U.S. federal income tax purposes.
Internal Revenue Service (the “IRS”) regarding the qualification of the spin-off of WK Kellogg Co and certain related transactions as a transaction that is generally tax-free to the Company and the shareowners of the Company for U.S. federal income tax purposes.
Changes in legal or regulatory requirements (such as new food safety requirements and revised nutrition facts labeling, including front of pack labeling, and serving size regulations, and new corporate sustainability reporting requirements in the EU and elsewhere), or evolving interpretations of existing legal or regulatory requirements, may result in increased compliance costs, capital expenditures and other financial obligations that could adversely affect our business or financial results.
Changes in legal or regulatory requirements (such as new food safety requirements and revised nutrition facts labeling, including front of pack labeling, regulations regarding ingredient content, and serving size regulations, and new corporate sustainability reporting requirements in the EU and elsewhere), or evolving interpretations of existing legal or regulatory requirements, may result in increased compliance costs, capital expenditures and other financial obligations that could adversely affect our business or financial results.
If our food products become adulterated, misbranded or mislabeled, we might need to recall those items and may experience regulatory enforcement and product liability claims if consumers are injured or damaged as a result.
If our food products become adulterated, misbranded or mislabeled, we might need to recall those items and may experience regulatory enforcement and product liability and/or consumer fraud claims if consumers are injured or damaged as a result.
Those risks include (i) compliance with U.S. laws affecting operations outside of the United States, such as OFAC trade sanction regulations and Anti-Boycott regulations, (ii) compliance with anti-corruption laws, including the FCPA and UK Bribery Act (the “UKBA”), (iii) compliance with antitrust and competition laws, data privacy laws, and a variety of other local, national and multi-national regulations and laws in multiple regimes, (iv) changes in tax laws, interpretation of tax laws and tax audit outcomes, (v) fluctuations or devaluations in currency values, especially in emerging markets, (vi) changes in capital controls, including currency exchange controls, government currency policies or other limits on our ability to import raw materials or finished product or repatriate cash from outside the United States, (vii) changes in local regulations and laws, the lack of well-established, reliable and/or impartial legal systems in certain countries in which we operate and the uncertainty of enforcement of remedies in such jurisdictions, and foreign ownership restrictions and the potential for nationalization or expropriation of property or other resources, (viii) laws relating to information security, privacy (including the GDPR), cashless payments, and consumer protection, (ix) the ongoing longer-term impact of changes in international trade policies (including Brexit) on the local and international markets, the flow of goods and materials across borders, and political environments, (x) discriminatory or conflicting fiscal policies, (xi) challenges associated with cross-border product distribution, (xii) increased sovereign risk, such as default by or deterioration in the economies and credit worthiness of local governments, (xiii) varying abilities to enforce intellectual property, contractual, and other legal rights, (xiv) greater risk of uncollectible accounts and longer collection cycles, (xv) loss of ability to manage our operations in certain markets which could result in the deconsolidation of such businesses, (xvi) design and implementation of effective control environment processes across our diverse operations and employee base, (xvii) imposition of more or new tariffs, quotas, trade barriers, price controls, and similar restrictions in the countries in which we or our suppliers or manufacturers operate or regulations, taxes or policies that might negatively affect our 24 sales, (xviii) changes in trade policies and trade relations, (xix) greater risk of uncollectible accounts or trade receivables and longer collection cycles, and (xx) political sentiment impacting global trade, including the willingness of non-U.S. consumers to purchase from U.S. corporations.
Those risks include: (i) compliance with U.S. laws affecting operations outside of the United States, such as OFAC trade sanction regulations and Anti-Boycott regulations; (ii) compliance with anti-corruption laws, including the FCPA and UK Bribery Act (the “UKBA”); (iii) compliance with antitrust and competition laws, data privacy laws, artificial intelligence, and a variety of other local, national and multi-national regulations and laws in multiple regimes; (iv) imposition of more or new tariffs, quotas, trade barriers, trade sanctions, embargoes, price controls, and similar restrictions in the countries in which we or our suppliers or manufacturers operate or regulations, taxes or policies that might negatively affect our sales, including on trade between the United States and other countries where Kellanova's products are manufactured or sold; (v) changes in trade policies and trade relations; (vi) political sentiment impacting global trade, including the willingness of non-U.S. consumers to purchase from U.S. corporations; (vii) changes in tax laws, interpretation of tax laws and tax audit outcomes; (viii) fluctuations or devaluations in currency values, especially in emerging markets; (ix) changes in capital controls, including currency exchange controls, government currency policies or other limits on our ability to import raw materials or finished product or repatriate cash from outside the United States; (x) changes in local regulations and laws, the lack of well-established, reliable and/or impartial legal systems in certain countries in which we operate and the uncertainty of enforcement of remedies in such jurisdictions, and foreign ownership restrictions and the potential for nationalization or expropriation of property or other resources; (xi) laws relating to information security, privacy (including the GDPR), cashless payments, and consumer protection; (xii) the ongoing longer-term impact of changes in international trade policies (including Brexit) on the local and international markets, the flow of goods and materials across borders, and political environments; (xiii) discriminatory or conflicting fiscal policies; 31 (xiv) challenges associated with cross-border product distribution; (xv) increased sovereign risk, such as default by or deterioration in the economies and credit worthiness of local governments; (xvi) varying abilities to enforce intellectual property, contractual, and other legal rights; (xxvii) greater risk of uncollectible accounts and longer collection cycles, (xviii) loss of ability to manage our operations in certain markets which could result in the deconsolidation of such businesses; (xix) design and implementation of effective control environment processes across our diverse operations and employee base; and (xx) greater risk of uncollectible accounts or trade receivables and longer collection cycles.
If the IRS ultimately determines that the spin-off is taxable, then the spin-off could be treated as a taxable dividend or capital gain to the Company’s shareholders for U.S. federal income tax purposes, and the Company could incur significant U.S. federal income tax 14 liabilities.
If the IRS ultimately determines that the spin-off is taxable, then the spin-off could be treated as a taxable dividend or capital gain to the Company’s shareowners for U.S. federal income tax purposes, and the Company could incur significant U.S. tax liabilities.
To the extent that additional OECD and legislative changes take place in countries we operate, it is possible the changes may adversely impact our effective tax rate. We are also subject to regular reviews, examinations and audits by the Internal Revenue Service and other taxing authorities with respect to taxes inside and outside of the U.S.
To the extent that additional OECD and legislative changes take place in countries we operate, it is possible the changes may adversely impact our effective tax rate. We are also subject to regular reviews, examinations and audits by the IRS and other taxing authorities with respect to taxes inside and outside of the U.S.
The changing retail environment and the growing presence of alternative retail channels, could negatively impact our sales and profits . Our businesses are largely concentrated in the traditional retail grocery trade. Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 15% of consolidated net sales during 2023, comprised principally of sales within the United States.
The changing retail environment and the growing presence of alternative retail channels, could negatively impact our sales and profits . Our businesses are largely concentrated in the traditional retail grocery trade. Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 16% of consolidated net sales during 2024, comprised principally of sales within the United States.
There is no guarantee that we will be successful in defending our self in civil, criminal or regulatory actions (inclusive of class action lawsuits and foreign litigation), including under general, commercial, employment, environmental, data privacy or security, intellectual property, food quality and safety, anti-trust and trade, advertising and claims, and environmental laws and regulations, or in asserting our rights under various laws.
There is no guarantee that we will be successful in defending ourselves in civil, criminal or regulatory actions (inclusive of class action lawsuits and foreign litigation), including under general, commercial, employment, environmental, data privacy or security, intellectual property, food quality and safety, anti-trust and trade, advertising and marketing claims, consumer health claims, and environmental laws and regulations, or in asserting our rights under various laws.
We manufacture our products in 21 countries and have operations in more than 180 countries, so we are subject to risks inherent in multinational operations.
We manufacture our products in 20 countries and have operations in more than 180 countries, so we are subject to risks inherent in multinational operations.
Specifically, certain ingredients, packaging and other goods and services have been impacted by an unfavorable macroeconomic environment, including as a result of (among other things) labor shortages and inflationary pressures, and although we are unable to predict the impact to our ability to source such materials and services in the future, we expect some supply pressures and market disruptions to continue into 2024.
Specifically, certain ingredients, packaging and other goods and services have been impacted by an unfavorable macroeconomic environment, including as a result of (among other things) labor shortages and persistent levels of inflation, and although we are unable to predict the impact to our ability to source such materials and services in the future, we expect some supply pressures and market disruptions to continue into 2025.
General Risk Factors We are subject to risks generally associated with companies that operate globally . We are a global company and generated almost half of our net sales for both 2023 and 2022 outside the United States.
General Risk Factors We are subject to risks generally associated with companies that operate globally . We are a global company and generated approximately half of our net sales for both 2024 and 2023 outside the United States.
No other customer accounted for greater than 10% of net sales in 2023. During 2023, our top five customers, collectively, including Wal-Mart, accounted for approximately 26% of our consolidated net sales and approximately 46% of U.S. net sales.
No other customer accounted for greater than 10% of net sales in 2024. During 2024, our top five customers, collectively, including Wal-Mart, accounted for approximately 29% of our consolidated net sales and approximately 46% of U.S. net sales.
We compete with other companies both within and outside of our industry for talented personnel, and we may lose key personnel or fail to attract, recruit, train, develop and retain other talented personnel. Recruiting and retention of talent has become especially challenging in the current employment market.
We compete with other companies both within and outside of our industry for talented personnel, and we may lose key personnel or fail to attract, recruit, train, develop and retain other talented personnel. Recruiting and retention of talent has become especially challenging in the current employment market and may be further impacted by the pendency of the Merger.
For example, during the second quarter of 2023, the Nigerian government removed certain currency restrictions over the Nigerian Naira leading to a significant decline in the exchange rate of the Naira to the U.S. dollar on the official market in Nigeria.
For example, during the second quarter of 2023, the Nigerian government removed certain currency restrictions over the Nigerian Naira leading to a significant decline in the exchange rate of the Naira to the U.S. dollar on the official market in Nigeria, with elevated inflation rates continuing.
Our business may face increased scrutiny from the investment community, customers, consumers, employees, activists, media, regulators and other stakeholders related to our sustainability initiatives, including the goals, targets and objectives that we announce, and our methodologies and timelines for pursuing them.
Our business may face increased scrutiny from the investment community, customers, consumers, employees, activists, media, regulators and other stakeholders, some of which may have conflicting opinions, related to our sustainability initiatives, including the goals, targets and objectives that we announce, and our methodologies and timelines for pursuing them.
As of December 30, 2023, the carrying value of intangible assets totaled approximately $7.0 billion, of which $5.2 billion was goodwill and $1.8 billion represented trademarks, tradenames, and other acquired intangibles compared to total assets of $15.6 billion and total Kellanova equity of $3.2 billion.
As of December 28, 2024, the carrying value of intangible assets totaled approximately $6.8 billion, of which $5.0 billion was goodwill and $1.8 billion represented trademarks, tradenames, and other acquired intangibles compared to total assets of $15.6 billion and total Kellanova equity of $3.8 billion.
We have indebtedness that is substantial in relation to our shareholders’ equity, and we may incur additional indebtedness in the future, or enter into off-balance sheet financing, which would increase our leverage risks. As of December 30, 2023, we had total debt of approximately $5.9 billion and total Kellanova equity of $3.2 billion.
We have indebtedness that is substantial in relation to our shareholders’ equity, and we may incur additional indebtedness in the future, or enter into off-balance sheet financing, which would increase our leverage risks. As of December 28, 2024, we had total debt of approximately $5.7 billion and total Kellanova equity of $3.8 billion.
Modifications to international trade policy, including the ratification of the United States-Mexico-Canada Agreement, changes in the European Union (such as Brexit), or the imposition of increased or new tariffs, quotas or trade barriers on key commodities with other countries could have a negative impact on us or the industries we serve, including as a result of related uncertainty, and could materially and adversely impact our business, financial condition, results of operations and cash flows.
Modifications to international trade policy, including the possible withdrawal or termination of the United States-Mexico-Canada Agreement, changes in the European Union (such as Brexit), or the imposition of increased or new tariffs, regulatory retaliatory actions imposed by various governments, quotas or trade barriers on key commodities with other countries could have a negative impact on us or the industries we serve, including as a result of related uncertainty, and could materially and adversely impact our business, financial condition, results of operations and cash flows.
In an inflationary environment, such as the current economic environment, depending on the market conditions of the food industry and the raising of interest rates by the United States Federal Reserve, we may be unable to raise the prices of our products enough to keep up with the rate of inflation, which would reduce our profit margins, and continued inflationary pressures could impact our business, financial condition, and results of operations.
In an inflationary environment, depending on the market conditions of the food industry and mitigating actions, if any, taken by the United States Federal Reserve, we may be unable to raise the prices of our products enough to keep up with the rate of inflation, which would reduce our profit margins, and continued inflationary pressures could impact our business, financial condition, and results of operations.
These include changing consumer dietary trends and consumer concerns regarding the health effects of ingredients such as sodium, trans fats, genetically modified organisms, sugar, or other product ingredients or attributes, and the availability of substitute products.
These include changing consumer dietary trends and consumer concerns regarding the health effects of ingredients such as sodium, trans fats, genetically modified organisms, sugar, or other product ingredients or attributes, or a shift in consumer demand away from processed foods, and the availability of substitute products.
As a result, climate change as well as actions taken to mitigate climate change could negatively affect our business and operations. 18 Risks Related to Our Operations A shortage in the labor pool, failure to successfully negotiate collectively bargained agreements, or other general inflationary pressures or changes in applicable laws and regulations could increase labor cost, which could have a material adverse effect on our consolidated operating results or financial condition .
Risks Related to Our Operations A shortage in the labor pool, failure to successfully negotiate collectively bargained agreements, or other general inflationary pressures or changes in applicable laws and regulations could increase labor cost, which could have a material adverse effect on our consolidated operating results or financial condition .
Our future results and our ability to maintain or improve our competitive position will depend on our capacity to gauge the direction of our key markets and upon our ability to successfully identify, develop, manufacture, market and sell new or improved products in these changing markets, including through the expansion into complementary product categories.
Our future results and our ability to maintain or improve our competitive position will depend on our capacity to gauge the direction of our key markets and upon our ability to successfully identify, develop, manufacture, market and sell new or improved products in these changing markets, including through the expansion into complementary product categories. 24 Adverse changes in the global climate or extreme weather conditions could adversely affect our business or operations.
Risks Related to Our Business Our business is significantly impacted by general macroeconomic conditions, and accordingly, our business, results of operations and financial condition could be materially adversely affected by further deterioration or a protracted extension of current macroeconomic challenges.
Risks Related to Our Business Our business is significantly impacted by general macroeconomic conditions, and accordingly, our business, results of operations and financial condition could be materially adversely affected by a negative macroeconomic e nvironment or persistent macroeconomic challenges.
Higher duties on existing tariffs or additional tariffs imposed by the United States on a broader range of imports, or further retaliatory trade measures taken by China or other countries in response, could result in an increase in supply chain costs that we are not able to offset.
Higher duties on existing tariffs or additional tariffs imposed by the United States on a broader range of imports, including those imposed, or pending imposition, by the current U.S. presidential administration on imports from Canada, Mexico and China, or retaliatory trade measures taken by those other countries in response, could result in an increase in supply chain costs that we are not able to offset.
The occurrence of other widespread public health concerns (including a resurgence of the COVID-19 pandemic) in some markets could lead to the implementation of restrictions and impact our ability to perform critical functions.
The occurrence of widespread public health concerns (such as was the case with the COVID-19 pandemic) in some markets could lead to the implementation of restrictions and impact our ability to perform critical functions.
For example, risks related to our ability to find appropriate buyers, to execute transactions on favorable terms, to separate divested businesses from our remaining operations, and to effectively manage any transitional service arrangements. Any of these factors could materially and adversely affect our financial condition and operating results.
For example, risks related to our ability to find appropriate buyers, to execute transactions on favorable terms, to separate divested businesses from our remaining operations, and to effectively manage any transitional service arrangements.
In particular, increasing regulation of fuel emissions could substantially increase the distribution and supply chain costs associated with our products. In addition, consumers and customers may put an increased priority on purchasing products that are sustainably grown and made, requiring us to incur increased costs for additional transparency, due diligence and reporting.
In addition, consumers and customers may put an increased priority on purchasing products that are sustainably grown and made, requiring us to incur increased costs for additional transparency, due diligence and reporting.
Customs and Border Protection, as well as similar and other authorities outside of the United States, International Accords and Treaties and others, including voluntary regulation by other bodies. Legal and regulatory systems can change quickly. In addition, legal and regulatory systems in emerging and developing markets may be less developed, and less certain.
Customs and Border Protection, the Environmental Protection Agency and the Occupational Health and Safety Administration, as well as similar and other authorities outside of the United States, International Accords and Treaties and others, including voluntary regulation by other bodies. Legal and regulatory systems can change quickly.
If we pursue strategic acquisitions, alliances, divestitures or joint ventures, we may not be able to successfully consummate favorable transactions or successfully integrate acquired businesses . From time to time, we may evaluate potential acquisitions, alliances, divestitures or joint ventures that would further our strategic objectives.
From time to time, we may evaluate potential acquisitions, alliances, divestitures or joint ventures that would further our strategic objectives.
For example, our marketing or claims could face allegations of false or deceptive advertising or other criticisms which could end up in litigation and result in potential liabilities or costs. As a result, we could incur substantial costs and fees in defending our self or in asserting our rights in these actions or meeting new legal requirements.
For example, our marketing or claims could face allegations of false or deceptive advertising or other criticisms which could end up in litigation and result in potential liabilities or costs.
These laws and regulations and interpretations thereof may change, sometimes dramatically, as a result of a variety of factors, including political, economic, regulatory or social events. In addition, the enforcement of remedies in certain foreign jurisdictions may be less certain, resulting in varying abilities to enforce intellectual property and contractual rights.
In addition, legal and regulatory systems in emerging and developing markets may be less developed, and less certain. These laws and regulations and interpretations thereof may change, sometimes dramatically, as a result of a variety of factors, including political, economic, regulatory or social events.
The costs and other effects of potential and pending litigation and administrative actions against us, and new legal requirements, cannot be determined with certainty and may differ from expectations.
As a result, we could incur substantial costs and fees and/or damage to our reputation in defending ourselves or in asserting our rights in these actions or meeting new legal requirements. The costs and other effects of potential and pending litigation and administrative actions against us, and new legal requirements, cannot be determined with certainty and may differ from expectations.
These and related demands on our resources may divert the organization's attention from other business issues and have adverse effects on existing business relationships with suppliers and customers.
These and related demands on our resources may divert the organization's attention from other business issues and have adverse effects on existing business relationships with suppliers and customers. Any failure to execute revenue growth management in accordance with our plans, including as a result of our revenue growth management process, could adversely affect our business or financial condition.
The future effective tax rate could be effected by changes in mix of earnings in countries with differing statutory tax rates, changes in valuation of deferred tax asset and liabilities, or changes in tax laws or their interpretation which includes the Tax Cuts and Jobs Act (the “U.S.
The future effective tax rate could be affected by changes in mix of earnings in countries with differing statutory tax rates, changes in valuation of deferred tax asset and liabilities, or changes in tax laws or their interpretation. The Organization for 27 Economic Cooperation and Development (OECD) has introduced a framework to implement a global minimum corporate income tax.
Any of the foregoing could negatively affect the price and availability of our products and impact our supply chain. If disruptions caused by a widespread public health concern continue for an extended period of time, our ability to meet the demand for our products may be materially impacted.
If disruptions caused by a widespread public health concern continue for an extended period of time, our ability to meet the demand for our products may be materially impacted. 18 Our results may be negatively impacted if consumers do not maintain their favorable perception of our brands . We have a number of iconic brands with significant value.
The manufacturing, marketing and distribution of food products are subject to governmental regulations that impose additional regulatory requirements.
In addition, the enforcement of remedies in certain foreign jurisdictions may be less certain, resulting in varying abilities to enforce intellectual property and contractual rights. The manufacturing, marketing and distribution of food products are subject to governmental regulations that impose additional regulatory requirements.
As a result of this decline in the exchange rate, the U.S. dollar value of the assets, liabilities, expenses and revenues of our Nigerian business in our consolidated financial statements decreased significantly compared to prior periods. Geopolitical and international regulatory events, uncertainty or other factors may have a negative effect on global economic conditions, financial markets and our business.
As a result of this decline in the exchange rate, the U.S. dollar value of the assets, liabilities, expenses and revenues of our Nigerian business in our consolidated financial statements decreased significantly compared to prior periods. In the fourth quarter of 2024, we determined that Nigeria is considered a highly inflationary economy for US GAAP purposes.
The macroeconomic environment is and has been characterized by record-high inflation, supply chain challenges, labor shortages, high interest rates, foreign currency exchange volatility, volatility in global capital markets and growing recession risk. Such economic volatility could adversely affect our business, financial condition, results of operations and cash flows, and future market disruptions could negatively impact us.
In the recent past, the macroeconomic environment had been characterized by record-high inflation, supply chain challenges, labor shortages, high interest 17 rates, foreign currency exchange volatility, volatility in global capital and credit markets and increased recession risk.
Should the value of one or more of the acquired intangibles become impaired, our consolidated earnings and net worth may 20 be materially adversely affected.
Should the value of one or more of the acquired intangibles become impaired, our consolidated earnings and net worth may be materially adversely affected. The Company has, in the past, recognized non-cash impairments. Any significant sustained adverse change in consumer purchasing behaviors, government restrictions, financial results, or macroeconomic conditions could result in future impairments.
There is an increased focus by foreign, federal, state and local regulatory and legislative bodies regarding environmental policies relating to climate change, regulating greenhouse gas emissions, energy policies and sustainability, including single use plastics.
Climate change is a significant topic of discussion among foreign, federal, state and local regulatory and legislative bodies and regulatory activity and environmental policies relating to climate change has generated and may continue to generate regulatory responses, including laws regulating greenhouse gas emissions, water consumption, the security of certain chemicals, and single use plastics.
Removed
Any failure to execute revenue growth management in accordance with our plans, including as a result of our revenue growth management process, could adversely affect our business or financial condition. 12 Our results may be negatively impacted if consumers do not maintain their favorable perception of our brands . We have a number of iconic brands with significant value.
Added
Risk Factors Summary Below is a summary of the principal risks associated with an investment in the Company.
Removed
Adverse changes in the global climate or extreme weather conditions could adversely affect our business or operations.
Added
This summary should not be relied upon as an exhaustive list of the material risks facing our business. • We may not complete the proposed Merger within the time frame we anticipate or at all, which could have an adverse effect on our business, financial results and/or operations. • Uncertainties associated with the Merger could adversely affect our business, results of operations and financial condition. • Completion of the Merger is conditioned on, among other things, the receipt of certain regulatory approvals, which may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that cannot be met, and if these approvals are not received or waived (as applicable), the Merger will not be completed. • While the Merger Agreement is in effect, we are subject to restrictions on our business activities. • Failure to complete the Merger could adversely affect our business and the market price of our shares of common stock. • In certain instances, the Merger Agreement requires us to pay a termination fee to Acquiror, which could affect the decisions of a third party considering making an alternative acquisition proposal. • The Merger Agreement contains provisions that limit our ability to pursue alternatives to the Merger. • We have incurred, and will continue to incur, direct and indirect costs as a result of the Merger. • We and our directors may be subject to litigation challenging the Merger, and an unfavorable judgment or ruling in any such lawsuits could prevent or delay the consummation of the Merger and/or result in substantial costs. • Our business is significantly impacted by general macroeconomic conditions, and accordingly, our business, results of operations and financial condition could be materially adversely affected by a negative macroeconomic environment or persistent macroeconomic challenges. • Pandemics, epidemics or disease outbreaks, may disrupt our business, including, among other things, our supply chain and production processes, each of which could materially affect our operations, liquidity, financial condition and results of operations. • Our results may be negatively impacted if consumers do not maintain their favorable perception of our brands. • Business disruptions could have an adverse effect on our business, financial condition and results of operations. • We may not achieve our targeted cost savings and efficiencies from cost reduction initiatives. • We may not realize the benefits we expect from revenue growth management. • We may not realize the anticipated benefits from the separation of WK Kellogg Co, which could harm our business. • The separation could result in substantial tax liability to us and our stockholders. • If we pursue strategic acquisitions, alliances, divestitures or joint ventures, we may not be able to successfully consummate favorable transactions or successfully integrate acquired businesses. • We may not be able to attract, develop and retain the highly skilled people we need to support our business. • Our results may be materially and adversely impacted as a result of increases in the price of raw materials, including agricultural commodities, packaging, fuel and labor. 13 • Our results may be adversely affected by increases in transportation costs and reduced availability of or increases in the price of oil or other fuels. • We operate in the highly competitive food industry, including with respect to retail shelf space. • The changing retail environment and the growing presence of alternative retail channels, could negatively impact our sales and profits. • Our consolidated financial results and demand for our products are dependent on the successful development of new products and processes, identification of changing consumer and customer preferences and behaviors, and meeting these preferences and behaviors. • Adverse changes in the global climate or extreme weather conditions could adversely affect our business or operations. • A shortage in the labor pool, failure to successfully negotiate collectively bargained agreements, or other general inflationary pressures or changes in applicable laws and regulations could increase labor cost, which could have a material adverse effect on our consolidated operating results or financial condition. • Multiemployer pension plans could adversely affect our business. • Our postretirement benefit-related costs and funding requirements could increase as a result of volatility in the financial markets, changes in interest rates and actuarial assumptions. • We use available borrowings under the credit facilities and other available debt financing for cash to operate our business, which subjects us to market and counter-party risk, some of which is beyond our control. • We utilize extended payment terms for customers supplemented with receivable sales programs (or “monetization programs”).
Removed
This new or increased focus may result in new or increasingly stringent laws and regulations that could increase the risk that we are subject to litigation or government enforcement actions and require us to incur increased legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place strain on our personnel, systems and resources.
Added
If the extension of customer payment terms is reversed, if we shorten supplier payment terms through negotiation or due to regulation, or if financial institutions terminate their participation in these programs, our ability to maintain current levels of core working capital could be adversely impacted. • We have a substantial amount of indebtedness. • An impairment of the carrying value of goodwill or other acquired intangibles could negatively affect our consolidated operating results and net worth. • We face risks related to tax matters, including changes in tax rates, disagreements with taxing authorities and imposition of new taxes. • If our food products become adulterated, misbranded or mislabeled, we might need to recall those items and may experience regulatory enforcement and product liability and/or consumer fraud claims if consumers are injured or damaged as a result. • Evolving tax, advertising, environmental, licensing, labeling, trade, food quality and safety, intellectual property, data privacy, artificial intelligence, or other regulations or failure to comply with existing regulations and laws could have a material adverse effect on our consolidated financial condition. • Our operations in certain emerging markets expose us to political, economic and regulatory risks. • Technology failures, cyber incidents, security incidents, privacy breaches or data breaches could disrupt our operations or reputation and negatively impact our business. • Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products and brands. • We are subject to risks generally associated with companies that operate globally. • Our performance is affected by general economic, political and social conditions and taxation policies. • Our operations face significant foreign currency exchange rate exposure and currency restrictions which could negatively impact our operating results. • Geopolitical and international regulatory events, uncertainty or other factors may have a negative effect on global economic conditions, financial markets and our business. • Potential liabilities and costs from litigation could adversely affect our business.
Removed
For example, as a result of the annual impairment testing in 2023 the Company recognized a non-cash impairment of $34 million in selling, general and administrative expense related to a brand in the North America operating segment that relates to snack category products.
Added
The following are detailed descriptions of our Risk Factors summarized above. Risks Related to the Merger We may not complete the proposed Merger within the timeframe we anticipate or at all, which could have an adverse effect on our business, financial results and/or operations.
Removed
Any significant sustained adverse change in consumer purchasing behaviors, government restrictions, financial results, or macroeconomic conditions could result in future impairments.
Added
On August 13, 2024, the Company entered into the Merger Agreement with Acquiror, Merger Sub and, solely for the limited purposes set forth therein, Mars, pursuant to which Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of Acquiror.
Removed
Tax Reform”) and contemplated changes in other countries of long-standing tax principles if finalized and adopted could have a material impact on our income tax expense and deferred tax balances. The Organization for Economic Cooperation and Development (OECD) has introduced a framework to implement a global minimum corporate income tax.
Added
Completion of the Merger is subject to a number of closing conditions, including the receipt of required regulatory approvals. The failure to satisfy these closing conditions could jeopardize or delay the consummation of the Merger. The parties to the Merger Agreement may not receive the necessary approvals for the transaction or receive them within the expected timeframe.

… 55 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+0 added−0 removed17 unchanged
Business continuity and disaster recovery plans are used to prepare for the potential for a disruption in technology we rely on. The Company is a member of cybersecurity intelligence and risk sharing organizations. Employees undergo security awareness training.
Business continuity and disaster recovery plans are used to prepare for a potential disruption in technology we rely on. The Company is a member of cybersecurity intelligence and risk sharing organizations. Employees undergo security awareness training.
As mentioned above, the CISO is the management position with primary responsibility for the development, operation, and maintenance of our information security program. The Company’s CISO has work experience in various roles in risk management, including developing information and cybersecurity strategy/programs, information security audit and assessments, cybersecurity operations focused on identification, mitigation and response to cybersecurity threats.
As mentioned above, the CISO is the management position with primary responsibility for the development, operation, and maintenance of our information security program. The Company’s CISO has work experience in various roles in risk management, including developing information and cybersecurity strategy/programs, information security audit and assessments, cybersecurity operations focused on identification, mitigation and 34 response to cybersecurity threats.
As the enterprise risk owner for cybersecurity, 26 the Chief Digital and Information Officer supports the Chief Information Security Officer (“CISO”) and the information security team, which includes a Governance, Risk, and Compliance (GRC) function, to manage cybersecurity risk. The information security team collaborates on privacy and security governance.
As the enterprise risk owner for cybersecurity, the Chief Digital and Information Officer supports the Chief Information Security Officer (“CISO”) and the information security team, which includes a Governance, Risk, and Compliance (GRC) function, to manage cybersecurity risk. The information security team collaborates on privacy and security governance.

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−0 removed3 unchanged
Our manufacturing facilities in the United States are located in San Jose, California; Rome, Georgia; Kansas City, Kansas; Pikeville, Kentucky; Grand Rapids and Wyoming, Michigan; Blue Anchor, New Jersey; Cary, North Carolina; Cincinnati and Zanesville, Ohio; Muncy, Pennsylvania; and Jackson and Rossville, Tennessee.
Our manufacturing facilities in the United States are located in San Jose, California; Rome, Georgia; Kansas City, Kansas; Pikeville, Kentucky; Grand Rapids and Wyoming, Michigan; Blue Anchor, New Jersey; Cary, North Carolina; Cincinnati and Zanesville, Ohio; Muncy, Pennsylvania; and Jackson, Tennessee.
Outside the United States, we had, as of February 20, 2024, additional manufacturing locations, some with warehousing facilities, in Australia, Belgium, Brazil, Colombia, Ecuador, Egypt, Ghana, Great Britain, India, Japan, Malaysia, Mexico, Nigeria, Poland, South Africa, South Korea, Spain, Thailand, and Turkey.
Outside the United States, we had, as of February 21, 2025, additional manufacturing locations, some with warehousing facilities, in Australia, Belgium, Brazil, Colombia, Ecuador, Egypt, Ghana, Great Britain, India, Japan, Malaysia, Mexico, Nigeria, Poland, South Africa, South Korea, Spain, Thailand, and Turkey.
We own many of our principal properties, including our principal research and development center and manufacturing facilities in the United States, and no owned property is subject to any major lien or other encumbrance. We lease our corporate headquarters, and our distribution facilities (including related warehousing 27 facilities) and offices of non-plant locations are also typically leased.
We own many of our principal properties, including our principal research and development center and manufacturing facilities in the United States, and no owned property is subject to any major lien or other encumbrance. We lease our corporate headquarters, our distribution facilities (including related warehousing facilities) and offices of non-plant locations.
ITEM 2. PROPERTIES Our corporate headquarters are located in Chicago, Illinois and we maintain corporate offices and our principal research and development facilities in Battle Creek, Michigan. We operated, as of February 20, 2024, offices, manufacturing plants and distribution and warehousing facilities totaling more than 36.5 million square feet of building area in the United States and other countries.
ITEM 2. PROPERTIES Our corporate headquarters are located in Chicago, Illinois and we maintain corporate offices and our principal research and development facilities in Battle Creek, Michigan. We operated, as of February 21, 2025, offices, manufacturing plants and distribution and warehousing facilities totaling more than 32 million square feet of building area in the United States and other countries.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
ITEM 3. LEGAL PROCEEDINGS We are subject to various legal proceedings, claims, and governmental inspections, audits or investigations arising out of our business which cover matters such as general commercial, governmental regulations, antitrust and trade regulations, product liability, environmental, intellectual property, employment and other actions.
ITEM 3. LEGAL PROCEEDINGS We are subject to various legal proceedings, claims, and governmental inspections, audits or investigations arising out of our business which cover matters such as general commercial, governmental regulations, antitrust and trade regulations, product liability, product labeling, environmental, intellectual property, employment and other actions.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−1 removed0 unchanged
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The principal market for trading Kellanova shares (Ticker symbol: K) is the New York Stock Exchange (NYSE). At December 30, 2023 there were approximately 23,633 shareholders of record.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The principal market for trading Kellanova shares (Ticker symbol: K) is the New York Stock Exchange (NYSE). At December 28, 2024 there were approximately 21,967 shareholders of record.
(millions, except per share data) Period (a) Total Number of Shares Purchased (b) Average Price Paid Per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs Month #1: 10/01/23-10/28/23 — $ — — $ 1,440 Month #2: 10/29/23-11/25/23 2.1 $ 52.61 2.1 $ 1,330 Month #3: 11/26/23-12/30/23 — $ — — $ 1,330
The following table provides information with respect to purchases of common shares under programs authorized by our Board of Directors during the quarter ended December 28, 2024. 35 (millions, except per share data) Period (a) Total Number of Shares Purchased (b) Average Price Paid Per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs Month #1: 9/29/24-10/26/24 — $ — — $ 1,330 Month #2: 10/27/24-11/23/24 — $ — — $ 1,330 Month #3: 11/24/24-12/28/24 — $ — — $ 1,330
In February 2020, the Board of Directors approved an authorization to repurchase up to $1.5 billion of our common stock expiring in December 2022. In December 2022, the Board of Directors approved a new authorization to repurchase up to $1.5 billion of our common stock through December 2025.
In December 2022, the Board of Directors approved an authorization to repurchase up to $1.5 billion of the Company's common stock through December 2025. This authorization is intended to allow the Company to repurchase shares for general corporate purposes and to offset issuances for employee benefit programs.
Removed
These authorizations were intended to allow us to repurchase shares for general corporate purposes and to offset issuances for employee benefit programs. The following table provides information with respect to purchases of common shares under programs authorized by our Board of Directors during the quarter ended December 30, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

105 edited+32 added−37 removed97 unchanged
We excluded the items which we believe may obscure trends in our underlying profitability. By providing these non-GAAP profitability measures, management intends to provide investors with a meaningful, consistent comparison of the Company's profitability measures for the periods presented.
We excluded the items which we believe may obscure trends in our underlying profitability. By providing these non-GAAP profitability measures, management intends to provide investors with a meaningful, consistent comparison of the Company's profitability measures for the periods presented.
The reporting unit’s fair value is estimated using a combination of a market multiples and discounted cash flow methodologies. The market multiples approach is based on either sales or earnings before interest, taxes, depreciation and amortization for companies that are comparable to our reporting units.
The reporting unit’s fair value is estimated using a combination of market multiples and discounted cash flow methodologies. The market multiples approach is based on either sales or earnings before interest, taxes, depreciation and amortization for companies that are comparable to our reporting units.
For more information on reconciling items in the table above, please refer to the Significant items impacting comparability section. 35 Year ended December 30, 2023 (millions) North America Europe Latin America AMEA Corporate Kellanova Consolidated Reported operating profit $ 1,024 $ 357 $ 130 $ 270 $ (276) $ 1,505 Mark-to-market — — (3) — (14) (17) Separation costs (42) — (3) — (14) (60) Business and portfolio realignment — 1 (2) — (1) (2) Intangible asset impairment (34) — — — — (34) Adjusted operating profit $ 1,100 $ 356 $ 138 $ 270 $ (247) $ 1,618 Foreign currency impact — 9 10 (32) 4 (10) Currency-neutral adjusted operating profit $ 1,101 $ 348 $ 128 $ 303 $ (251) $ 1,628 Year ended December 31, 2022 (millions) North America Europe Latin America AMEA Corporate Kellanova Consolidated Reported operating profit $ 907 $ 329 $ 116 $ 252 $ (393) $ 1,212 Mark-to-market — — (2) — (138) (140) Separation costs (8) — — — — (8) Business and portfolio realignment (12) 1 — — (4) (15) Adjusted operating profit $ 927 $ 328 $ 118 $ 252 $ (252) $ 1,374 % change - 2023 vs. 2022: Reported growth 12.8 % 8.5 % 12.0 % 7.1 % 29.9 % 24.3 % Mark-to-market — % — % (0.5) % — % 32.3 % 11.7 % Separation costs (3.6) % — % (2.6) % — % (5.6) % (3.7) % Business and portfolio realignment 1.5 % — % (1.6) % — % 1.1 % 1.2 % Intangible asset impairment (3.8) % — % — % — % — % (2.6) % Adjusted growth 18.7 % 8.5 % 16.7 % 7.1 % 2.1 % 17.7 % Foreign currency impact — % 2.6 % 8.7 % (12.8) % 1.8 % (0.7) % Currency-neutral adjusted growth 18.7 % 5.9 % 8.0 % 19.9 % 0.3 % 18.4 % Note: Tables may not foot due to rounding.
For more information on reconciling items in the table above, please refer to the Significant items impacting comparability section. 47 Year ended December 30, 2023 (millions) North America Europe Latin America AMEA Corporate Kellanova Consolidated Reported operating profit $ 1,024 $ 357 $ 130 $ 270 $ (276) $ 1,505 Mark-to-market — — (3) — (14) (17) Separation costs (42) — (3) — (14) (60) Business and portfolio realignment — 1 (2) — (1) (2) Intangible asset impairment (34) — — — — (34) Adjusted operating profit $ 1,100 $ 356 $ 138 $ 270 $ (247) $ 1,618 Foreign currency impact — 9 10 (32) 4 (10) Currency-neutral adjusted operating profit $ 1,101 $ 348 $ 128 $ 303 $ (251) $ 1,628 Year ended December 31, 2022 (millions) North America Europe Latin America AMEA Corporate Kellanova Consolidated Reported operating profit $ 907 $ 329 $ 116 $ 252 $ (393) $ 1,212 Mark-to-market — — (2) — (138) (140) Separation costs (8) — — — — (8) Business and portfolio realignment (12) 1 — — (4) (15) Adjusted operating profit $ 927 $ 328 $ 118 $ 252 $ (252) $ 1,374 % change - 2023 vs. 2022: Reported growth 12.8 % 8.5 % 12.0 % 7.1 % 29.9 % 24.3 % Mark-to-market — % — % (0.5) % — % 32.3 % 11.7 % Separation costs (3.6) % — % (2.6) % — % (5.6) % (3.7) % Business and portfolio realignment 1.5 % — % (1.6) % — % 1.1 % 1.2 % Intangible asset impairment (3.8) % — % — % — % — % (2.6) % Adjusted growth 18.7 % 8.5 % 16.7 % 7.1 % 2.1 % 17.7 % Foreign currency impact — % 2.6 % 8.7 % (12.8) % 1.8 % (0.7) % Currency-neutral adjusted growth 18.7 % 5.9 % 8.0 % 19.9 % 0.3 % 18.4 % Note: Tables may not foot due to rounding.
In addition to our consolidated Nigerian business, the Company also has an investment in an unconsolidated entity, Tolaram Africa Foods PTE LTD (TAF), that holds an investment in a Nigerian food manufacturer. This investment is accounted for under the equity method of accounting and is evaluated for indicators of other than temporary impairment.
In addition to our consolidated Nigerian business, the Company also has an investment in an unconsolidated entity, Tolaram Africa Foods PTE LTD, that holds an investment in a Nigerian food manufacturer. This investment is accounted for under the equity method of accounting and is evaluated for indicators of other than temporary impairment.
Additionally, the rate could be impacted by tax legislation and if pending uncertain tax matters, including tax positions that could be affected by planning initiatives, are resolved more or less favorably than we currently expect. 44 LIQUIDITY AND CAPITAL RESOURCES At this time we anticipate current cash and marketable security balances, operating cash flows, together with our credit facilities and other financing sources including commercial paper, credit and bond markets, will be adequate to meet our operating, investing and financing needs.
Additionally, the rate could be impacted by tax legislation and if pending uncertain tax matters, including tax positions that could be affected by planning initiatives, are resolved more or less favorably than we currently expect. 52 LIQUIDITY AND CAPITAL RESOURCES At this time we anticipate current cash and marketable security balances, operating cash flows, together with our credit facilities and other financing sources including commercial paper, credit and bond markets, will be adequate to meet our operating, investing and financing needs.
Although we review our expected long-term rates of return annually, our benefit trust investment performance for one particular year does not, by itself, significantly influence 50 our evaluation.
Although we review our expected long-term rates of return annually, our benefit trust investment performance for one particular year does not, by itself, significantly influence our evaluation.
The Monetization Programs provide for the continuing sale of certain 47 receivables on a revolving basis until terminated by either party; however the maximum funding from receivables that may be sold at any time is currently $975 million, but may be increased or decreased as customers move in or out of the Extended Terms Program and as additional financial institutions move in or out of the Monetization Programs.
The Monetization Programs provide for the continuing sale of certain receivables on a revolving basis until terminated by either party; however the maximum funding from receivables 55 that may be sold at any time is currently $975 million, but may be increased or decreased as customers move in or out of the Extended Terms Program and as additional financial institutions move in or out of the Monetization Programs.
A change in our credit ratings could limit our access to the U.S. short-term debt market and/or increase the cost of refinancing long-term debt in the future. However, even under these circumstances, we would continue to have access to our 364-Day Credit Facility, which expires in December 2024, as well as our Five-Year Credit Agreement, which expires in December 2026.
A change in our credit ratings could limit our access to the U.S. short-term debt market and/or increase the cost of refinancing long-term debt in the future. However, even under these circumstances, we would continue to have access to our 364-Day Credit Facility, which expires in December 2025, as well as our Five-Year Credit Agreement, which expires in December 2026.
Actual 2024 contributions could be different from our current projections, as influenced by our decision to undertake discretionary funding of our benefit trusts versus other competing investment priorities, future changes in government requirements, trust asset performance, renewals of union contracts, or higher-than-expected health care claims cost experience.
Actual 2025 contributions could be different from our current projections, as influenced by our decision to undertake discretionary funding of our benefit trusts versus other competing investment priorities, future changes in government requirements, trust asset performance, renewals of union contracts, or higher-than-expected health care claims cost experience.
Within this total, approximately $1.8 billion of non-goodwill intangible assets were classified as indefinite-lived, including $1.6 billion related to trademarks, comprised principally of Pringles and cracker-related trademarks. The majority of all goodwill and other intangible assets are recorded in our North America operating segment.
Within this total, approximately $1.7 billion of non-goodwill intangible assets were classified as indefinite-lived, including $1.6 billion related to trademarks, comprised principally of Pringles and cracker-related trademarks. The majority of all goodwill and other intangible assets are recorded in our North America operating segment.
Net sales % change - 2023 vs. 2022: Latin America Reported Net Sales Growth Foreign Currency Currency-Neutral Net Sales Growth Divestiture Organic Net Sales Growth Snacks 12.4 % 5.6 % 6.8 % — % 6.8 % Cereal 18.9 % 9.5 % 9.4 % — % 9.4 % Snacks net sales growth was led by double-digit consumption growth in key markets for salty snacks, including Mexico and Brazil.
Net sales % change - 2023 vs. 2022: Latin America Reported Net Sales Growth Foreign Currency Organic Net Sales Growth Snacks 12.4 % 5.6 % 6.8 % Cereal 18.9 % 9.5 % 9.4 % Snacks net sales growth was led by double-digit consumption growth in key markets for salty snacks, including Mexico and Brazil.
Management uses this non-GAAP measure to monitor the effectiveness of initiatives in place to optimize our global tax rate. 31 • Net debt : Defined as the sum of long-term debt, current maturities of long-term debt and notes payable, less cash and cash equivalents, and marketable securities.
Management uses this non-GAAP measure to monitor the effectiveness of initiatives in place to optimize our global tax rate. 39 • Net debt : Defined as the sum of long-term debt, current maturities of long-term debt and notes payable, less cash and cash equivalents, and marketable securities.
Separation costs The Company successfully completed the separation of its North America cereal business on October 2, 2023. As a result, we incurred pre-tax charges related to the separation, primarily related to legal and consulting costs, of $60 million for 2023 and $8 million for 2022.
Separation costs The Company successfully completed the separation of its North America cereal business on October 2, 2023. As a result, we incurred pre-tax charges related to the separation, primarily related to legal and consulting costs, of $36 million for 2024, $60 million for 2023, and $8 million for 2022.
These non-GAAP financial measures may not be comparable to similar measures used by other companies. 30 • Currency-neutral net sales and organic net sales : We adjust the GAAP financial measure to exclude the impact of foreign currency, resulting in currency-neutral net sales. In addition, we exclude the impact of acquisitions, divestitures, and foreign currency, resulting in organic net sales.
These non-GAAP financial measures may not be comparable to similar measures used by other companies. • Currency-neutral net sales and organic net sales : We adjust the GAAP financial measure to exclude the impact of foreign currency, resulting in currency-neutral net sales. In addition, we exclude the impact of 38 acquisitions, divestitures, and foreign currency, resulting in organic net sales.
For information on the reconciling items in the table above, please refer to the Significant items impacting comparability section. (a) Reported gross margin as a percentage of net sales. Gross margin is equal to net sales less cost of goods sold.
For information on the reconciling items in the table above, please refer to the Significant items impacting comparability section. (a) Reported gross margin equals gross profit as a percentage of net sales. Gross profit is equal to net sales less cost of goods sold.
For information on the reconciling items in the table above, please refer to the Significant items impacting comparability section. (a) Reported gross margin as a percentage of net sales. Gross margin is equal to net sales less cost of goods sold.
For information on the reconciling items in the table above, please refer to the Significant items impacting comparability section. (a) Reported gross margin equals gross profit as a percentage of net sales. Gross profit is equal to net sales less cost of goods sold.
The recast operating profit includes certain costs that are reported in continuing operations but relate to items that will be reimbursed by the transition services agreement (“TSA”) with WK Kellogg Co. We expect that the costs for such services will be fully reimbursed under the TSA for the applicable future periods.
The recast operating profit for 2023 and 2022 includes certain costs that are reported in continuing operations but relate to items that will be reimbursed by the transition services agreement (“TSA”) with WK Kellogg Co. We expect that the costs for such services will be fully reimbursed under the TSA for the applicable future periods.
Significant adjustments to our liability for unrecognized tax benefits impacting our effective tax rate are separately presented in the rate reconciliation table of Note 14 within Notes to Consolidated Financial Statements.
Significant adjustments to our liability for unrecognized tax benefits impacting our effective tax rate are separately presented in the rate reconciliation table of Note 15 within Notes to Consolidated Financial Statements.
Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability, as well as to evaluate the impacts of inflationary pressures and decisions to invest in new initiatives within each of our segments. • Currency-neutral adjusted: gross profit, gross margin, operating profit, operating margin, and diluted EPS : We adjust the GAAP financial measures to exclude the effect of restructuring programs, costs of the separation transaction, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodity contracts, certain equity investments and certain foreign currency contracts, a gain on interest rate swaps, other costs impacting comparability, and foreign currency, resulting in currency-neutral adjusted.
Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability, as well as to evaluate the impacts of inflationary pressures and decisions to invest in new initiatives within each of our segments. • Currency-neutral adjusted: gross profit, gross margin, operating profit, operating margin, and diluted EPS : We adjust the GAAP financial measures to exclude the effect of restructuring programs, costs of the separation transaction, costs of the proposed merger, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodity contracts, certain equity investments and certain foreign currency contracts, other costs impacting comparability, and foreign currency, resulting in currency-neutral adjusted.
Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability. • Adjusted effective income tax rate: We adjust the GAAP financial measures to exclude the effect of restructuring programs, costs of the separation transaction, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodity contracts, certain equity investments, and certain foreign currency contracts, a gain on interest rate swaps, and other costs impacting comparability .
Management uses these non-GAAP financial measures to evaluate the effectiveness of initiatives intended to improve profitability. • Adjusted effective income tax rate: We adjust the GAAP financial measures to exclude the effect of restructuring programs, costs of the separation transaction, costs of the proposed merger, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodity contracts, certain equity investments, and certain foreign currency contracts, and other costs impacting comparability .
Our U.S. plan model, corresponding to approximately 56% of our trust assets globally, currently incorporates a long-term inflation assumption of 2.5% and a 2023 weighted-average active management premium of 0.84% for the pension plans and 0.93% for the retiree medical plan, (net of fees) validated by historical analysis and future return expectations.
Our U.S. plan model, corresponding to approximately 56% of our trust assets globally, currently incorporates a long-term inflation assumption of 2.5% and a 2024 weighted-average active management premium of 0.84% for the pension plans and 0.95% for the retiree medical plan, (net of fees) validated by historical analysis and future return expectations.
The experience gain arising from recognition of 2023 claims experience was approximately $4 million. Assumed mortality rates of plan participants are a critical estimate in measuring the expected payments a participant will receive over their lifetime and the amount of expense we recognize. In 2019, the Society of Actuaries (SOA) published updated mortality tables and an updated improvement scale.
The experience gain arising from recognition of 2024 claims experience was approximately $2 million. Assumed mortality rates of plan participants are a critical estimate in measuring the expected payments a participant will receive over their lifetime and the amount of expense we recognize. In 2019, the Society of Actuaries (SOA) published updated mortality tables and an updated improvement scale.
These non-GAAP measures are also used to make decisions regarding the future direction of our business, and for resource allocation decisions. • Adjusted: gross profit, gross margin, operating profit, operating margin, and diluted EPS : We adjust the GAAP financial measures to exclude the effect of restructuring programs, costs of the separation transaction , mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodity contracts, certain equity investments and certain foreign currency contracts, a gain on interest rate swaps, and other costs impacting comparability resulting in adjusted.
These non-GAAP measures are also used to make decisions regarding the future direction of our business, and for resource allocation decisions. • Adjusted: gross profit, gross margin, operating profit, operating margin, and diluted EPS : We adjust the GAAP financial measures to exclude the effect of restructuring programs, costs of the separation transaction , costs of the proposed merger, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodity contracts, certain equity investments and certain foreign currency contracts, and other costs impacting comparability resulting in adjusted.
The Company was in compliance with all financial covenants contained in these agreements at December 30, 2023. Our Notes contain customary covenants that limit the ability of the Company and its restricted subsidiaries (as defined) to incur certain liens or enter into certain sale and lease-back transactions and also contain a change of control provision.
The Company was in compliance with all financial covenants contained in these agreements at December 28, 2024. Our Notes contain customary covenants that limit the ability of the Company and its restricted subsidiaries (as defined) to incur certain liens or enter into certain sale and lease-back transactions and also contain a change of control provision.
(a) Gross profit is equal to net sales less cost of goods sold. 2022 versus 2021 gross margin performance was as follows: Change vs. prior year (pts.) 2022 2021 Reported gross margin (a) 30.1 % 32.5 % (2.4) Mark-to-market (1.1) % (0.1) % (1.0) Business and portfolio realignment (0.1) % (0.1) % — Adjusted gross margin 31.3 % 32.7 % (1.4) Foreign currency impact 0.1 % — % 0.1 Currency-neutral adjusted gross margin 31.2 % 32.7 % (1.5) Note: Tables may not foot due to rounding.
(a) Gross profit is equal to net sales less cost of goods sold. 2023 versus 2022 gross margin performance was as follows: Change vs. prior year (pts.) 2023 2022 Reported gross margin (a) 32.6 % 30.1 % 2.5 Mark-to-market (0.1) % (1.1) % 1.0 Business and portfolio realignment — % (0.1) % 0.1 Adjusted gross margin 32.7 % 31.3 % 1.4 Foreign currency impact 0.8 % — % 0.8 Currency-neutral adjusted gross margin 31.9 % 31.3 % 0.6 Note: Tables may not foot due to rounding.
Supplier payment term modifications did not have a material impact on our cash flows during 2023, and are not expected to have a material impact in 2024.
Supplier payment term modifications did not have a material impact on our cash flows during 2024 and are not expected to have a material impact in 2025.
In 2021, the SOA released an improvement scale that incorporated an additional year of data. In 2022 and 2023, the SOA did not release an updated improvement scale. In determining the appropriate mortality assumptions as of 2023 fiscal year-end, we used the 2019 SOA tables with collar adjustments based on Kellanova’s current population, consistent with the prior year.
In 2021, the SOA released an improvement scale that incorporated an additional year of data. In 2022 through 2024, the SOA did not release an updated improvement scale. In determining the appropriate mortality assumptions as of 2024 fiscal year-end, we used the 2019 SOA tables with collar adjustments based on Kellanova’s current population, consistent with the prior year.
Despite the previously-described policies for selecting major actuarial assumptions, we periodically experience material actuarial gains or losses due to differences between assumed and actual experience and due to changing economic conditions. During 2023, we recognized a net actuarial loss of approximately $142 million compared to a net actuarial loss of approximately $228 million in 2022.
Despite the previously-described policies for selecting major actuarial assumptions, we periodically experience material actuarial gains or losses due to differences between assumed and actual experience and due to changing economic conditions. During 2024, we recognized a net actuarial loss of approximately $14 million compared to a net actuarial loss of approximately $142 million in 2023.
The following table provides a reconciliation of reported to adjusted income taxes and effective income tax rate for 2023 and 2022.
The following table provides a reconciliation of reported to adjusted income taxes and effective income tax rate for 2024 and 2023.
Dollar Notes due 2023, upon maturity. During the first quarter of 2023, the Company issued $400 million of ten-year 5.25% Notes due 2033, resulting in net proceeds after discount and underwriting commissions of $396 million.
During the first quarter of 2023, the Company issued $400 million of ten-year 5.25% Notes due 2033, resulting in net proceeds after discount and underwriting commissions of $396 million.
Based on consolidated obligations at December 30, 2023, a 25 basis point decline in the yield curve used for benefit plan measurement purposes would decrease 2024 benefits expense by approximately $2 million and would result in an immediate loss recognition of $174 million. All obligation-related actuarial gains and losses are recognized immediately in the year in which they occur.
Based on consolidated obligations at December 28, 2024, a 25 basis point decline in the yield curve used for benefit plan measurement purposes would decrease 2025 benefits expense by approximately $2 million and would result in an immediate loss recognition of $59 million. All obligation-related actuarial gains and losses are recognized immediately in the year in which they occur.
Our 2022 and 2021 currency-neutral adjusted gross profit is reconciled to the most comparable U.S.
Our 2023 and 2022 currency-neutral adjusted gross profit is reconciled to the most comparable U.S.
In December 2023, we entered into an unsecured 364-Day Credit Agreement to borrow, on a revolving credit basis, up to $1.0 billion at any time outstanding, to replace the $1.0 billion 364-day facility that was set to expire in December 2023.
In December 2024, we entered into an unsecured 364-Day Credit Agreement to borrow, on a revolving credit basis, up to $750 million at any time outstanding, to replace the $1.0 billion 364-day facility that was set to expire in December 2024.
There are no significant restrictions on the payment of dividends. We were in compliance with all covenants as of December 30, 2023. The Notes do not contain acceleration of maturity clauses that are dependent on credit ratings.
There are no significant restrictions on the payment of dividends. We were in compliance with all covenants as of December 28, 2024. The Notes do not contain acceleration of maturity clauses that are dependent on credit ratings.
Reaching a determination on useful life requires significant judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, known technological advances, legislative action that results in an uncertain or changing regulatory environment, and expected changes in distribution channels), the level of required maintenance expenditures, and the expected lives of other related groups of assets. 49 At December 30, 2023, goodwill and other intangible assets amounted to $7.0 billion, consisting primarily of goodwill and brands.
Reaching a determination on useful life requires significant judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, known technological advances, legislative action that results in an uncertain or changing regulatory environment, and expected changes in distribution channels), the level of required maintenance expenditures, and the expected lives of other related groups of assets. 57 At December 28, 2024, goodwill and other intangible assets amounted to $6.8 billion, consisting primarily of goodwill and brands.
Included within the aforementioned totals was a pre-tax mark-to-market loss for pension plans of $146 million for 2023, a pre-tax mark-to-market loss for pension plans of $229 million for 2022, and a pre-tax mark-to-market gain for pension plans of $98 million for 2021.
Included within the aforementioned totals was a pre-tax mark-to-market gain for pension plans of $14 million for 2024, a pre-tax mark-to-market loss for pension plans of $146 million for 2023, and a pre-tax mark-to-market loss for pension plans of $229 million for 2022.
Reported gross margin increased 250 basis points versus the prior year due primarily to less unfavorable mark-to-market impacts, higher service levels, and revenue growth management initiatives that were partially offset by high input cost inflation.
Reported gross margin increased 250 basis points versus the prior year due primarily to less unfavorable mark-to-market impacts, higher service levels, and revenue growth management initiatives that were partially offset by high input cost inflation. Currency-neutral adjusted gross margin increased 60 basis points compared to 2022.
The Five-Year and 364 Day Credit Agreements which had no outstanding borrowings as December 30, 2023, contain customary covenants and warranties, including specified restrictions on indebtedness, liens and a specified interest expense coverage ratio.
The Five-Year and 364 Day Credit Agreements which had no outstanding borrowings as of December 28, 2024, contain customary covenants and warranties, including specified restrictions on indebtedness, liens and a specified interest expense coverage ratio.
These factors, coupled with the use of our ongoing cash flows from operations to service our debt obligations, pay dividends, fund acquisition opportunities, and repurchase our common stock, reduce our working capital amounts. We had negative working capital of $1.7 billion and $2.2 billion as of December 30, 2023 and December 31, 2022, respectively.
These factors, coupled with the use of our ongoing cash flows from operations to service our debt obligations, pay dividends, fund acquisition opportunities, and repurchase our common stock, reduce our working capital amounts. We had negative working capital of $0.9 billion and $1.7 billion as of December 28, 2024 and December 30, 2023, respectively.
In accordance with applicable accounting guidance, the results of WK Kellogg Co are presented as discontinued operations in the Kellanova consolidated statement of income and, as such, have been excluded from both continuing operations and segment results for all periods presented.
In accordance with applicable accounting guidance, the results of WK Kellogg Co are presented as discontinued operations in the Kellanova Consolidated Statement of Income and, as such, have been excluded from both continuing operations and segment results for fiscal years 2023 and 2022.
Net sales of our Nigerian business were 8% of our consolidated net sales for the year ended December 30, 2023 but could become a smaller percentage of our overall sales if exchange rates as of the end of the year persist or decline further in 2024.
Net sales of our Nigerian business were 6% of our consolidated net sales for the year ended December 28, 2024 but could become a smaller percentage of our overall sales if exchange rates as of year-end persist or decline further in 2025.
Foreign trust investments represent approximately 44% of our global benefit plan assets. Based on consolidated benefit plan assets at December 30, 2023, a 100 basis point increase or decrease in the assumed rate of return would correspondingly decrease or increase 2024 benefits expense by approximately $23 million.
Foreign trust investments represent approximately 44% of our global benefit plan assets. 58 Based on consolidated benefit plan assets at December 31, 2024, a 100 basis point increase or decrease in the assumed rate of return would correspondingly decrease or increase 2025 benefits expense by approximately $21 million.
AMEA Reported net sales decreased 5.1% driven by unfavorable foreign currency primarily due to the devaluation of the Nigerian Naira, which more than offset growth in volume and price/mix.
AMEA Reported net sales decreased 5.1% driven by unfavorable foreign currency primarily due to the devaluation of the Nigerian Naira, which more than offset growth in volume and price/mix. Organic net sales increased 16.9% after excluding foreign currency.
We recorded a pre-tax mark-to-market loss of $163 million for 2023, a pre-tax mark-to-market loss of $369 million for 2022, and a pre-tax mark-to-market gain of $100 million in 2021.
We recorded a pre-tax mark-to-market gain of $155 million in 2024, a pre-tax mark-to-market loss of $163 million for 2023, and a pre-tax mark-to-market loss of $369 million for 2022.
This could have significant impact on our results if such increase or decrease in the value of the U.S. dollar is substantial. 43 Interest expense and interest income Interest expense was $303 million and $201 million for the years ended December 30, 2023 and December 31, 2022, respectively.
This could have significant impact on our results if such increase or decrease in the value of the U.S. dollar is substantial. 51 Interest expense and interest income Interest expense was $311 million and $303 million for the years ended December 28, 2024 and December 30, 2023, respectively.
A summary of our operating and finance lease obligations as of December 30, 2023 can be found in Note 8 “Leases and Other Commitments”, to the Consolidated Financial Statements contained in this report.
A summary of our operating and finance lease obligations as of December 28, 2024 can be found in Note 9 “Leases and Other Commitments”, to the Consolidated Financial Statements contained in this report.
Our assumed rate of return for U.S. plans in 2023 was 7.75% for the pension plans and 8.00% for the retiree medical plan, which equated to approximately the 55th and 53rd percentile expectations of our model, respectively. Similar methods are used for various foreign plans with invested assets, reflecting local economic conditions.
Our assumed rate of return for U.S. plans in 2024 was 8.00% for the pension and retiree medical plan, which equated to approximately the 58 th and 59 th percentile expectations of our model, respectively. Similar methods are used for various foreign plans with invested assets, reflecting local economic conditions.
The following table sets forth a summary of our cash flows: (dollars in millions) 2023 2022 Net cash provided by (used in): Operating activities $ 1,645 $ 1,651 Investing activities (562) (448) Financing activities (1,110) (1,081) Effect of exchange rates on cash and cash equivalents 2 (109) Net increase (decrease) in cash and cash equivalents $ (25) $ 13 Operating activities The principal source of our operating cash flows is net earnings, primarily cash receipts from the sale of our products, net of costs to manufacture and market our products.
The following table sets forth a summary of our cash flows: (dollars in millions) 2024 2023 Net cash provided by (used in): Operating activities $ 1,760 $ 1,645 Investing activities (750) (562) Financing activities (607) (1,110) Effect of exchange rates on cash and cash equivalents 17 2 Net increase (decrease) in cash and cash equivalents $ 420 $ (25) Operating activities The principal source of our operating cash flows is net earnings, primarily cash receipts from the sale of our products, net of costs to manufacture and market our products.
As a result of this decline in the exchange rate, the U.S. dollar value of the assets, liabilities, expenses and revenues of our Nigerian business in our consolidated financial statements has decreased significantly compared to prior periods.
As a result of the decline in the exchange rate, the U.S. dollar value of the assets, liabilities, expenses and revenues of our Nigerian business in our consolidated financial statements has decreased significantly compared to prior periods. The country of Nigeria has continued to experience elevated inflation rates.
As of December 30, 2023, unconditional purchase obligations totaled approximately $1.5 billion. Approximately $1.3 billion of these unconditional purchase obligations will be settled in the ordinary course of business in the next 12 months. As of December 30, 2023, we did not have any material off-balance sheet arrangements.
Approximately $1.0 billion of these unconditional purchase obligations will be settled in the ordinary course of business in the next 12 months. As of December 28, 2024, we did not have any material off balance sheet arrangements.
For the years ended December 30, 2023 and December 31, 2022, our actual return on plan assets was more than the recognized assumed return by $52 million and less than the recognized by $1.5 billion, respectively. Pension assets include a level 3 investment comprising 32% of total plan assets as of December 30, 2023.
For the years ended December 28, 2024 and December 30, 2023, our actual return on plan assets was less than the recognized assumed return by $108 million and more than the recognized by $52 million, respectively. Pension assets include a level 3 investment comprising 30% of total plan assets as of December 28, 2024.
Currency-neutral adjusted gross margin increased 60 basis points compared to 2022. 42 Our 2023 and 2022 currency-neutral adjusted gross profit is reconciled to the most comparable U.S.
Currency-neutral adjusted gross margin increased 130 basis points compared to 2023. 50 Our 2024 and 2023 currency-neutral adjusted gross profit is reconciled to the most comparable U.S.
Net sales % change - 2023 vs. 2022: North America Reported Net Sales Growth Foreign Currency Currency-Neutral Net Sales Growth Divestiture Organic Net Sales Growth Snacks 4.6 % (0.1) % 4.7 % — % 4.7 % Frozen (0.4) % (0.2) % (0.2) % — % (0.2) % North America snacks net sales increased 4.6% on price/mix growth in crackers, salty snacks, and portable wholesome snacks. 36 North America frozen foods net sales decreased 0.4%, as rising price elasticities offset price/mix growth.
Net sales % change - 2023 vs. 2022: North America Reported Net Sales Growth Foreign Currency Organic Net Sales Growth Snacks 4.6 % (0.1) % 4.7 % Frozen (0.4) % (0.2) % (0.2) % North America snacks net sales increased 4.6% on price/mix growth in crackers, salty snacks, and portable wholesome snacks.
Currency-neutral adjusted diluted EPS of $3.18 for the year increased 7.4% compared to prior year EPS of $2.96, after excluding the impact of significant items impacting comparability.
Currency-neutral adjusted diluted EPS of $3.92 for the year increased 21.4% compared to prior year EPS of $3.23, after excluding the impact of significant items impacting comparability.
Margin performance 2023 versus 2022 gross margin performance was as follows: Change vs. prior year (pts.) 2023 2022 Reported gross margin (a) 32.6 % 30.1 % 2.5 Mark-to-market (0.1) % (1.1) % 1.0 Separation costs — % — % — Business and portfolio realignment — % (0.1) % 0.1 Adjusted gross margin 32.7 % 31.3 % 1.4 Foreign currency impact 0.8 % — % 0.8 Currency-neutral adjusted gross margin 31.9 % 31.3 % 0.6 Note: Tables may not foot due to rounding.
Margin performance 2024 versus 2023 gross margin performance was as follows: Change vs. prior year (pts.) 2024 2023 Reported gross margin (a) 35.6 % 32.6 % 3.0 Mark-to-market 1.3 % (0.1) % 1.4 Separation costs (0.1) % — % (0.1) Network optimization (1.1) % — % (1.1) Business and portfolio realignment — % — % — Gain on property sale 0.2 % — % 0.2 Adjusted gross margin 35.3 % 32.7 % 2.6 Foreign currency impact 1.3 % — % 1.3 Currency-neutral adjusted gross margin 34.0 % 32.7 % 1.3 Note: Tables may not foot due to rounding.
Our initial trend rate for 2024 of 6.50% reflects the recognition of increased short-term inflation and the health care provisions of the Inflation Reduction Act. Our initial rate remains flat through 2025 before trending downward by 0.25% per year, until the ultimate trend rate of 4.5% is reached.
Our initial trend rate for 2025 of 7.00% reflects the recognition of increased short-term inflation and the health care provisions of the Inflation Reduction Act. Our initial rate trends downward by 0.25% per year, until the ultimate trend rate of 4.5% is reached.
Accounts receivable sold of $697 million and $609 million remained outstanding under this arrangement as of December 30, 2023 and December 31, 2022, respectively.
Accounts receivable sold of $653 million and $697 million remained outstanding under this arrangement as of December 28, 2024 and December 30, 2023, respectively.
We paid quarterly dividends to shareholders totaling $2.34 per share in 2023 versus $2.34 per share in 2022. On February 16, 2024, the Board of Directors declared a dividend of $.56 per common share, payable on March 15, 2024 to shareholders of record at the close of business on March 1, 2024.
We paid quarterly dividends to shareholders totaling $2.26 per share in 2024 versus $2.34 per share in 2023. On February 21, 2025, the Board of Directors declared a dividend of $.57 per common share, payable on March 14, 2025 to shareholders of record at the close of business on March 3, 2025.
Currency-neutral adjusted operating profit increased 19.9%, after excluding the impact of foreign currency. Corporate Reported operating profit increased significantly versus the prior year due primarily to less unfavorable mark-to-market impacts.
Corporate Reported operating profit increased significantly versus the prior year due primarily to less unfavorable mark-to-market impacts. Currency-neutral adjusted operating profit increased $1 million from the prior year after excluding the impact of mark-to-market and separation costs.
Cereal net sales declined on a reported basis, as unfavorable foreign currency more than offset higher price/mix. Noodles and other net sales decreased due to unfavorable foreign currency that more than offset higher volume and price/mix growth. Reported operating profit increased 7.1% due primarily to the recovery of gross margins partially offset by unfavorable foreign currency.
Noodles and other net sales decreased due to unfavorable foreign currency that more than offset higher volume and price/mix growth. Reported operating profit increased 7.1% due primarily to the recovery of gross margins partially offset by unfavorable foreign currency. Currency-neutral adjusted operating profit increased 19.9%, after excluding the impact of foreign currency.
Business and portfolio realignment One-time costs related to reorganizations in support of our Deploy for Growth priorities and a reshaped portfolio; investments in enhancing capabilities prioritized by our Deploy for Growth strategy; and completed and prospective divestitures and acquisitions.
Gain on sale of property In December 2024, the Company sold property resulting in a gain of $23 million. Business and portfolio realignment One-time costs related to reorganizations in support of our Deploy for Growth priorities and a reshaped portfolio; investments in enhancing capabilities prioritized by our Deploy for Growth strategy; and completed and prospective divestitures and acquisitions.
A summary of principal payments for long-term debt as of December 30, 2023 can be found in Note 9 “Debt”, to the Consolidated Financial Statements contained in this report. Interest payments will be approximately $142 million per year from 2024 through 2028 and approximately $646 million in total from 2029 through the last debt maturity date.
A summary of principal payments for long-term debt as of December 28, 2024 can be found in Note 10 “Notes Payable and Long-term Debt”, to the Consolidated Financial Statements contained in this report. Interest payments will be approximately $175 million per year from 2025 through 2029 and approximately $1.1 billion in total from 2030 through the last debt maturity date.
Consolidated results (dollars in millions) 2023 2022 Reported income taxes $ 258 $ 180 Mark-to-market (28) (81) Separation costs (22) (6) Business and portfolio realignment 4 (3) Intangible asset impairment (8) — Gain related to interest rate swaps — 5 Foreign valuation allowance 21 — Adjusted income taxes $ 291 $ 265 Reported effective income tax rate 24.8 % 20.0 % Mark-to-market 1.1 (0.6) Separation costs (0.6) (0.3) Business and portfolio realignment 0.2 — Intangible asset impairment — — Loss on divestiture 1.8 — Gain related to interest rate swaps — 0.1 Foreign valuation allowance 1.6 — UK tax rate change — Adjusted effective income tax rate 20.7 % 20.8 % Note: Tables may not foot due to rounding.
Consolidated results (dollars in millions) 2024 2023 Reported income taxes $ 304 $ 258 Mark-to-market 39 (28) Separation costs (7) (22) Network optimization (34) — Business and portfolio realignment (2) 4 Intangible asset impairment — (8) Proposed merger costs (7) — Gain on property sale 5 — Foreign valuation allowance — 21 Domestic tax benefit (41) — Adjusted income taxes $ 350 $ 291 Reported effective income tax rate 18.4 % 24.8 % Mark-to-market 0.7 1.1 Separation costs — (0.6) Network optimization (0.3) — Business and portfolio realignment — 0.2 Proposed merger costs — — Intangible asset impairment — — Loss on divestiture — 1.8 Foreign valuation allowance — 1.6 Domestic tax benefit (2.8) — Adjusted effective income tax rate 20.7 % 20.7 % Note: Tables may not foot due to rounding.
The Company's annual reporting unit goodwill impairment testing, performed through the fourth quarter of 2023, consisted of quantitative testing due primarily to the passage of time since the last quantitative test. No heightened risk or qualitative indicators of impairment of any reporting units was identified.
The Company's annual reporting unit goodwill impairment testing, performed through the fourth quarter of 2024, consisted of qualitative and quantitative testing. No heightened risk or qualitative indicators of impairment of any reporting units was identified.
Organic net sales increased 16.9% after excluding foreign currency. 37 Net sales % change - 2023 vs. 2022: AMEA Reported Net Sales Growth Foreign Currency Currency-Neutral Net Sales Growth Divestiture Organic Net Sales Growth Snacks 8.3 % (7.3) % 15.6 % — % 15.6 % Cereal (1.0) % (7.0) % 6.0 % — % 6.0 % Noodles and Other (14.0) % (38.4) % 24.4 % — % 24.4 % Snacks net sales increased due primarily to strong growth in Pringles across the region.
Net sales % change - 2024 vs. 2023: AMEA Reported Net Sales Growth Foreign Currency Currency-Neutral Net Sales Growth Divestiture Organic Net Sales Growth Snacks 0.8 % (5.9) % 6.7 % — % 6.7 % Cereal (3.2) % (5.4) % 2.2 % — % 2.2 % Noodles and Other (29.3) % (77.2) % 47.9 % — % 47.9 % Snacks net sales increased due primarily to strong growth in Pringles across the region.
For more information on reconciling items in the table above, please refer to the Significant items impacting comparability section. * Represents the estimated income tax effect on the reconciling items, using weighted-average statutory tax rates, depending upon the applicable jurisdiction. 34 Net sales and operating profit 2023 compared to 2022 The following tables provide an analysis of net sales and operating profit performance for 2023 versus 2022: Year ended December 30, 2023 (millions) North America Europe Latin America AMEA Corporate Kellanova Consolidated Reported net sales $ 6,574 $ 2,501 $ 1,265 $ 2,785 $ (4) $ 13,122 Foreign currency (9) 54 86 (643) — (513) Organic net sales $ 6,583 $ 2,448 $ 1,179 $ 3,428 $ (3) $ 13,635 Year ended December 31, 2022 (millions) North America Europe Latin America AMEA Corporate Kellanova Consolidated Reported net sales $ 6,330 $ 2,310 $ 1,088 $ 2,933 $ (9) $ 12,653 Divestitures — 68 — — — 68 Organic net sales $ 6,330 $ 2,243 $ 1,088 $ 2,933 $ (9) $ 12,585 % change - 2023 vs. 2022: Reported growth 3.8 % 8.3 % 16.3 % (5.1) % n/m 3.7 % Foreign currency (0.2) % 2.3 % 7.9 % (22.0) % n/m (4.1) % Currency-neutral growth 4.0 % 6.0 % 8.4 % 16.9 % n/m 7.8 % Divestitures — % (3.2) % — % — % n/m (0.5) % Organic growth 4.0 % 9.2 % 8.4 % 16.9 % n/m 8.3 % Volume (tonnage) (6.1) % (6.2) % (7.0) % 0.8 % n/m (4.0) % Pricing/mix 10.1 % 15.4 % 15.4 % 16.1 % n/m 12.3 % Note: Tables may not foot due to rounding.
For more information on reconciling items in the table above, please refer to the Significant items impacting comparability section. * Represents the estimated income tax effect on the reconciling items, using weighted-average statutory tax rates, depending upon the applicable jurisdiction. 42 Net sales and operating profit 2024 compared to 2023 The following tables provide an analysis of net sales and operating profit performance for 2024 versus 2023: Year ended December 28, 2024 (millions) North America Europe Latin America AMEA Corporate Kellanova Consolidated Reported net sales $ 6,580 $ 2,499 $ 1,261 $ 2,413 $ (4) $ 12,749 Foreign currency (5) 19 (63) (1,009) — (1,058) Organic net sales $ 6,586 $ 2,479 $ 1,324 $ 3,422 $ (4) $ 13,807 Year ended December 30, 2023 (millions) North America Europe Latin America AMEA Corporate Kellanova Consolidated Reported net sales $ 6,574 $ 2,501 $ 1,265 $ 2,785 $ (4) $ 13,122 Divestitures — 48 — — — 48 Organic net sales $ 6,574 $ 2,453 $ 1,265 $ 2,785 $ (4) $ 13,073 % change - 2024 vs. 2023: Reported growth 0.1 % (0.1) % (0.3) % (13.3) % n/m (2.8) % Foreign currency (0.1) % 0.8 % (4.9) % (36.2) % n/m (8.0) % Currency-neutral growth 0.2 % (0.9) % 4.6 % 22.9 % n/m 5.2 % Divestitures — % (2.0) % — % — % n/m (0.4) % Organic growth 0.2 % 1.1 % 4.6 % 22.9 % n/m 5.6 % Volume (tonnage) (0.8) % (4.5) % 1.3 % (0.5) % n/m (1.1) % Pricing/mix 1.0 % 5.6 % 3.3 % 23.4 % n/m 6.7 % Note: Tables may not foot due to rounding.
Our principal source of liquidity is operating cash flows supplemented by borrowings for major acquisitions and other significant transactions. Our cash-generating capability is one of our fundamental strengths and provides us with substantial financial flexibility in meeting operating and investing needs.
We continue to utilize available capacity within the Monetization Programs to maintain financial flexibility without negatively impacting working capital. Our principal source of liquidity is operating cash flows supplemented by borrowings for major acquisitions and other significant transactions. Our cash-generating capability is one of our fundamental strengths and provides us with substantial financial flexibility in meeting operating and investing needs.
A summary of our pension and postretirement benefit obligations as of December 30, 2023 can be found in Notes 11 “Pension Benefits” and Note 12 “Nonpension Postretirement and Postemployment Benefits”, to the Consolidated Financial Statements contained in this report.
A summary of our pension and postretirement benefit obligations as of December 28, 2024 can be found in Notes 12 “Pension Benefits” and Note 13 “Nonpension Postretirement and Postemployment Benefits”, to the Consolidated Financial Statements contained in this report. See Note 15 “Income Taxes”, to the Consolidated Financial Statements contained in this report for discussion of uncertain tax positions.
Reconciliation of certain non-GAAP Financial Measures Consolidated results (dollars in millions, except per share data) 2023 2022 Reported net income attributable to Kellanova $ 951 $ 960 Mark-to-market (pre-tax) (163) (370) Separation costs (pre-tax) (60) (8) Business and portfolio realignment (pre-tax) (2) (15) Intangible asset impairment (pre-tax) (34) — Gain related to interest rate swaps (pre-tax) — 18 Loss on divestiture (113) — Income tax impact applicable to adjustments, net* 55 85 Valuation allowance (21) — Adjusted net income attributable to Kellanova $ 1,289 $ 1,250 Foreign currency impact 16 Currency-neutral adjusted net income attributable to Kellanova 1,273 $ 1,250 Reported diluted EPS $ 2.25 $ 2.12 Mark-to-market (pre-tax) (0.47) (1.07) Separation costs (pre-tax) (0.17) (0.03) Business and portfolio realignment (pre-tax) (0.01) (0.04) Intangible asset impairment (pre-tax) (0.10) — Gain related to interest rate swaps (pre-tax) — 0.05 Loss on divestiture (pre-tax) (0.33) — Income tax impact applicable to adjustments, net* 0.17 0.25 Valuation allowance (0.06) — Adjusted diluted EPS from continuing operations $ 3.23 $ 2.96 Foreign currency impact 0.05 — Currency-neutral adjusted diluted EPS from continuing operations 3.18 $ 2.96 Currency-neutral adjusted diluted EPS growth 7.4 % Note: Tables may not foot due to rounding.
Reconciliation of certain non-GAAP Financial Measures Consolidated results (dollars in millions, except per share data) 2024 2023 Reported net income attributable to Kellanova $ 1,343 $ 951 Mark-to-market (pre-tax) 155 (163) Separation costs (pre-tax) (36) (60) Network optimization (pre-tax) (143) — Proposed merger costs (pre-tax) (30) — Business and portfolio realignment (pre-tax) (7) (2) Intangible asset impairment (pre-tax) — (34) Loss on divestiture — (113) Gain on property sale (pre-tax) 23 — Income tax impact applicable to adjustments, net* 5 55 Valuation allowance — (21) Domestic tax benefit 41 — Adjusted net income attributable to Kellanova $ 1,336 $ 1,289 Foreign currency impact (22) — Currency-neutral adjusted net income attributable to Kellanova 1,358 $ 1,289 Reported diluted EPS $ 3.88 $ 2.25 Mark-to-market (pre-tax) 0.45 (0.47) Separation costs (pre-tax) (0.10) (0.17) Network optimization (pre-tax) (0.41) — Proposed merger costs (pre-tax) (0.09) — Business and portfolio realignment (pre-tax) (0.03) (0.01) Intangible asset impairment (pre-tax) — (0.10) Loss on divestiture — (0.33) Gain on property sale (pre-tax) 0.07 — Income tax impact applicable to adjustments, net* 0.01 0.17 Valuation allowance — (0.06) Domestic tax benefit 0.12 — Adjusted diluted EPS $ 3.86 $ 3.23 Foreign currency impact (0.06) — Currency-neutral adjusted diluted EPS 3.92 $ 3.23 Currency-neutral adjusted diluted EPS growth 21.4 % Note: Tables may not foot due to rounding.
Estimating the fair value of individual reporting units or indefinite-lived intangible assets requires making assumptions and estimates regarding the Company’s future plans, as well as industry, economic, and regulatory conditions.
Fair value determinations used in the annual testing require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of individual reporting units or indefinite-lived intangible assets requires making assumptions and estimates regarding the Company’s future plans, as well as industry, economic, and regulatory conditions.
Currency-neutral adjusted operating profit increased 18.7%, after excluding the impact of separation costs, intangible asset impairment, and business and portfolio realignment. Europe Reported net sales increased 8.3% due primarily to favorable price/mix, momentum in snacks, and favorable foreign currency translation. Organic net sales increased 9.2% after excluding the impact of the divestiture of our business in Russia and foreign currency.
These impacts were partially offset by a $34 million impairment charge taken on an intangible asset during the fourth quarter. Currency-neutral adjusted operating profit increased 18.7%, after excluding the impact of separation costs, intangible asset impairment, and business and portfolio realignment. Europe Reported net sales increased 8.3% due primarily to favorable price/mix, momentum in snacks, and favorable foreign currency translation.
Capital spending in 2023 included investments in our supply chain infrastructure, including manufacturing capacity expansions in multiple markets as well as investments in conjunction with the separation transaction. Cash paid for additions to properties as a percentage of net sales was 5.1% and 3.9% in 2023 and 2022, respectively.
Capital spending in 2024 included investments in our supply chain infrastructure, including manufacturing capacity expansions in multiple markets. Cash paid for additions to properties as a percentage of net sales was 4.9% and 5.1% in 2024 and 2023, respectively. Financing activities Our net cash used in financing activities totaled $607 million compared to $1,110 million during the prior year.
The consolidated statements of cash flows are presented on a consolidated basis for both continuing operations and discontinued operations. Nigerian Naira During the second quarter of 2023, the Nigerian government removed certain currency restrictions over the Nigerian Naira leading to a significant decline in the exchange rate of the Naira to the U.S. dollar on the official market in Nigeria.
Nigerian Naira During the second quarter of 2023, the Nigerian government removed certain currency restrictions over the Nigerian Naira leading to a significant decline in the exchange rate of the Naira to the U.S. dollar on the official market in 37 Nigeria. Exchange rates have declined further since the second quarter of 2023.
Organic net sales exclude the impact of acquisitions, including the foreign currency impact calculated by applying the prior year foreign currency rates to current period results. 33 Financial results For the full year ended December 30, 2023, our reported net sales increased 3.7% versus the prior year on positive price/mix across all regions which more than offset the impacts of price elasticity on volume and adverse foreign currency translation.
Organic net sales exclude the impact of acquisitions, including the foreign currency impact calculated by applying the prior year foreign currency rates to current period results. 41 Financial results For the full year ended December 28, 2024, our reported net sales decreased 2.8% versus the prior year due to adverse foreign currency translation, the extended impact of elasticity on volume, and the mid-2023 divestiture of its business in Russia, partially offset by positive price/mix.
The total net loss recognized in 2023 was driven by a loss of approximately $184 million from assumption changes, including decreases in the discount rate and from the UK 51 buy-in of annuities for existing scheme participants, and a loss of approximately $10 million from plan experience, partially offset by a gain of approximately $52 million from higher than expected asset returns.
The total net loss recognized in 2024 was driven by a loss of approximately $108 million from lower than expected asset returns and a loss of approximately $9 million from plan experience, partially offset by a gain of approximately $102 million from assumption changes, including increases in the discount rate.
Currency-neutral adjusted operating profit increased $1 million from the prior year after excluding the impact of mark-to-market and separation costs. 38 Net sales and operating profit 2022 compared to 2021 The following tables provide an analysis of net sales and operating profit performance for 2022 versus 2021: Year ended December 31, 2022 (millions) North America Europe Latin America AMEA Corporate Kellanova Consolidated Reported net sales $ 6,331 $ 2,310 $ 1,089 $ 2,933 $ (9) $ 12,653 Foreign currency impact (12) (245) 7 (228) — (478) Organic net sales $ 6,343 $ 2,555 $ 1,082 $ 3,161 $ (9) $ 13,131 Year ended January 1, 2022 (millions) North America Europe Latin America AMEA Corporate Kellanova Consolidated Reported net sales $ 5,775 $ 2,397 $ 962 $ 2,613 $ — $ 11,747 % change - 2022 vs. 2021: Reported growth 9.6 % (3.6) % 13.2 % 12.2 % — % 7.7 % Foreign currency impact (0.2) % (10.2) % 0.8 % (8.8) % — % (4.0) % Organic growth 9.8 % 6.6 % 12.4 % 21.0 % — % 11.7 % Volume (tonnage) (1.2) % (3.4) % (5.2) % (2.5) % — % (2.5) % Pricing/mix 11.0 % 10.0 % 17.6 % 23.5 % — % 14.2 % Note: Tables may not foot due to rounding.
Currency-neutral adjusted operating profit decreased $33 million from the prior year after excluding the impact of mark-to-market, proposed merger costs, and separation costs. 46 Net sales and operating profit 2023 compared to 2022 The following tables provide an analysis of net sales and operating profit performance for 2023 versus 2022: Year ended December 30, 2023 (millions) North America Europe Latin America AMEA Corporate Kellanova Consolidated Reported net sales $ 6,574 $ 2,501 $ 1,265 $ 2,785 $ (4) $ 13,122 Foreign currency impact (9) 54 86 (643) — (513) Organic net sales $ 6,583 $ 2,448 $ 1,179 $ 3,428 $ (3) $ 13,635 Year ended December 31, 2022 (millions) North America Europe Latin America AMEA Corporate Kellanova Consolidated Reported net sales $ 6,330 $ 2,310 $ 1,088 $ 2,933 $ (9) $ 12,653 Divestitures — 68 — — — 68 Organic net sales $ 6,330 $ 2,243 $ 1,088 $ 2,933 $ (9) $ 12,585 % change - 2023 vs. 2022: Reported growth 3.8 % 8.3 % 16.3 % (5.1) % n/m 3.7 % Foreign currency (0.2) % 2.3 % 7.9 % (22.0) % n/m (4.1) % Currency-neutral growth 4.0 % 6.0 % 8.4 % 16.9 % n/m 7.8 % Divestitures — % (3.2) % — % — % n/m (0.5) % Organic growth 4.0 % 9.2 % 8.4 % 16.9 % n/m 8.3 % Volume (tonnage) (6.1) % (6.2) % (7.0) % 0.8 % n/m (4.0) % Pricing/mix 10.1 % 15.4 % 15.4 % 16.1 % n/m 12.3 % Note: Tables may not foot due to rounding.
Our free cash flow metric is reconciled to the most comparable GAAP measure, as follows: (dollars in millions) 2023 2022 Net cash provided by operating activities $ 1,645 $ 1,651 Additions to properties (677) (488) Free cash flow $ 968 $ 1,163 Investing activities Our net cash used in investing activities for 2023 totaled $562 million compared to $448 million in 2022 due primarily to higher capital expenditures in preparation of the separation transaction as well as phasing of capital expenditures over the two preceding years.
Our free cash flow metric is reconciled to the most comparable GAAP measure, as follows: (dollars in millions) 2024 2023 Net cash provided by operating activities $ 1,760 $ 1,645 Additions to properties (628) (677) Free cash flow $ 1,132 $ 968 Investing activities Our net cash used in investing activities for 2024 totaled $750 million compared to $562 million in 2023 due primarily to the purchase of marketable securities in conjunction with the distribution from the postretirement healthcare plan partially offset by lower capital expenditures.
Valuation allowances were recorded to reduce deferred tax assets to an amount that will, more likely than not, be realized in the future. FUTURE OUTLOOK The Company affirmed the financial guidance for 2024 that it had first provided in August, 2023, at its Day@K investor event.
Valuation allowances were recorded to reduce deferred tax assets to an amount that will, more likely than not, be realized in the future.
For more information on reconciling items in the table above, please refer to the Significant items impacting comparability section. North America Reported net sales increased 9.6% versus the prior year as a result of revenue growth management actions and sustained momentum in snacks. Organic net sales increased 9.8% after excluding the impact of foreign currency.
For more information on reconciling items in the table above, please refer to the Significant items impacting comparability section. North America Reported net sales increased 0.1% year on year, as the positive impact of prior-year revenue growth management actions more than offset pressure on volume from prolonged industry-wide demand softness.
Net sales % change - 2022 vs. 2021: AMEA Reported Net Sales Growth Foreign Currency Organic Net Sales Growth Snacks 19.0 % (7.4) % 26.4 % Cereal (3.1) % (10.3) % 7.2 % Noodles and other 21.4 % (8.1) % 29.5 % 41 Snacks net sales increased due primarily to strong growth in Pringles across the region.
Net sales % change - 2023 vs. 2022: AMEA Reported Net Sales Growth Foreign Currency Organic Net Sales Growth Snacks 8.3 % (7.3) % 15.6 % Cereal (1.0) % (7.0) % 6.0 % Noodles and other (14.0) % (38.4) % 24.4 % Snacks net sales increased due primarily to strong growth in Pringles across the region. 49 Cereal net sales declined on a reported basis, as unfavorable foreign currency more than offset higher price/mix.

… 94 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

18 edited+5 added−2 removed8 unchanged
Additionally, volatile market conditions arising from geopolitical events may result in significant changes in foreign exchange rates, and in particular a weakening of foreign currencies relative to the U.S. dollar may negatively affect the translation of foreign currency denominated earnings to U.S. dollars.
Volatile market conditions arising from geopolitical events may result in significant changes in foreign exchange rates, and in particular a weakening of foreign currencies relative to the U.S. dollar may negatively affect the translation of foreign currency denominated earnings to U.S. dollars.
Refer to Note 15 within Notes to Consolidated Financial Statements for further information on our derivative financial and commodity instruments. Foreign exchange risk Our company is exposed to fluctuations in foreign currency cash flows related primarily to third-party purchases, intercompany transactions, and when applicable, nonfunctional currency denominated third-party debt.
Refer to Note 16 within Notes to Consolidated Financial Statements for further information on our derivative financial and commodity instruments. Foreign exchange risk Our company is exposed to fluctuations in foreign currency cash flows related primarily to third-party purchases, intercompany transactions, and when applicable, nonfunctional currency denominated third-party debt.
These agreements call for the posting of collateral in the form of cash, treasury securities or letters of credit if a net liability position to us or our counterparties exceeds a certain amount. As of December 30, 2023 and December 31, 2022, we had posted collateral of $59 million and $9 million, respectively.
These agreements call for the posting of collateral in the form of cash, treasury securities or letters of credit if a net liability position to us or our counterparties exceeds a certain amount. As of December 28, 2024 and December 30, 2023, we had posted collateral of $57 million and $59 million, respectively.
During the second quarter of 2023, the Nigerian government removed certain currency restrictions over the Nigerian Naira leading to a significant decline in the exchange rate of the Naira to the U.S. dollar on the official market in Nigeria.
During the second quarter of 2023, the Nigerian government removed certain currency restrictions over the Nigerian Naira leading to a significant decline in the exchange rate of the Naira to the U.S. dollar on the official market in Nigeria. Exchange rates have declined further since the second quarter of 2023.
We entered into interest rate swaps, and in some instances terminated interest rate swaps, in connection with certain U.S. Dollar and Euro Notes. The total notional amount of interest rate swaps at year-end 2023 was $2.3 billion, representing a net settlement obligation of $93 million.
We entered into interest rate swaps, and in some instances terminated interest rate swaps, in connection with certain U.S. Dollar and Euro Notes. The total notional amount of interest rate swaps at year-end 2024 was $1.1 billion, representing a net settlement obligation of $43 million.
Assuming an unfavorable 10% change in year-end exchange rates, the settlement obligation would have increased by $329 million, resulting in a net settlement obligation of $350 million at year-end 2023 and the settlement receivable would have decreased by $342 million at year-end 2022.
Assuming an unfavorable 10% change in year-end exchange rates, the settlement receivable would have decreased by $353 million, resulting in a net settlement obligation of $233 million at year-end 2024 and the settlement obligation would have increased by $329 million at year-end 2023.
We continue to expect input cost inflation to be flat during 2024. The total notional amount of commodity derivative instruments at year-end 2023 was $201 million, representing a settlement obligation of less than a $1 million. The total notional amount of commodity derivative instruments at year-end 2022 was $230 million, representing a settlement receivable of approximately $2 million.
We continue to expect input cost inflation to be flat during 2025. The total notional amount of commodity derivative instruments at year-end 2024 was $285 million, representing a settlement obligation of $3 million. The total notional amount of commodity derivative instruments at year-end 2023 was $201 million, representing a settlement obligation of less than $1 million.
Assuming a 10% 54 decrease in year-end commodity prices, the settlement obligation would have increased by $11 million, resulting in a net settlement obligation of approximately $11 million at year-end 2023, and the settlement receivable would have decreased by approximately $18 million at year-end 2022, generally offset by a reduction in the cost of the underlying commodity purchases.
Assuming a 10% decrease in year-end commodity prices, the settlement obligation would have increased by $25 million, resulting in a net settlement obligation of approximately $28 million at year-end 2024, and the settlement obligation would have increased by approximately $11 million at year-end 2023, generally offset by a reduction in the cost of the underlying commodity purchases.
The consolidated assets of our Nigerian business represented approximately 5% of our consolidated assets as of December 30, 2023, compared to 8% as of December 31, 2022.
The consolidated assets of our Nigerian business represented approximately 3% of our consolidated assets as of December 28, 2024, compared to 5% as of December 30, 2023.
As of December 30, 2023 and December 31, 2022, margin deposits for exchange-traded commodity derivative instruments, were immaterial. 55
As of December 28, 2024 and December 30, 2023, margin deposits for exchange-traded commodity derivative instruments, were immaterial. 62
During the fiscal year ended December 30, 2023 we continued to experience elevated commodity and supply chain costs, including procurement and manufacturing costs, although certain supply chain challenges have eased. We continue to mitigate the dollar impact of this input cost inflation through the execution of productivity initiatives and revenue growth management actions.
During the fiscal year ended December 28, 2024, we have experienced moderating supply chain cost inflation, including procurement and manufacturing costs, and last year's supply chain challenges have eased. We continue to mitigate the dollar impact of this input cost inflation through the execution of productivity initiatives and revenue growth management actions.
We have historically used the combination of long-term contracts with suppliers, and exchange-traded futures and option contracts to reduce price fluctuations in a desired percentage of forecasted raw material purchases over a duration of generally less than 18 months.
Primary exposures include corn, wheat, potato flakes, soybean oil, sugar, cocoa, cartonboard, natural gas, and diesel fuel. We have historically used the combination of long-term contracts with suppliers, and exchange-traded futures and option contracts to reduce price fluctuations in a desired percentage of forecasted raw material purchases over a duration of generally less than 18 months.
The total notional amount of foreign currency derivative instruments at year-end 2022 was $4.5 billion, representing a net settlement receivable of $153 million. All of these derivatives were hedges of anticipated transactions, translational exposure, or existing assets or liabilities. Foreign currency contracts generally mature within 18 months and cross currency contracts mature with the related debt.
All of these derivatives were hedges of anticipated transactions, translational exposure, or existing assets or liabilities. Foreign currency contracts generally mature within 18 months and cross currency contracts mature with the related debt.
Net sales of our Nigerian business were 8% of our consolidated net sales year-to-date period ended December 30, 2023, but could become a smaller percentage of our overall sales if exchange rates as of year-end persist or decline further in 2024. 53 In addition to our consolidated Nigerian business, the Company also has an investment in an unconsolidated entity, Tolaram Africa Foods PTE LTD (TAF), that holds an investment in a Nigerian food manufacturer.
Net sales of our Nigerian business were 6% of our consolidated net sales year-to-date period ended December 28, 2024, but could become a smaller percentage of our overall sales if exchange rates as of year-end persist or decline further in 2025.
Forward contracts and options are generally less than 18 months duration. Currency swap agreements may be established in conjunction with the term of underlying debt issuances. The total notional amount of foreign currency derivative instruments, including cross currency swaps, at year-end 2023 was $4.8 billion, representing a net settlement obligation of $21 million.
The total notional amount of foreign currency derivative instruments, including cross currency swaps, at year-end 2024 was $5.3 billion, representing a net settlement receivable of $120 million. The total notional amount of foreign currency derivative instruments at year-end 2023 was $4.8 billion, representing a net settlement obligation of $21 million.
The total notional amount of interest rate swaps at year-end 2022 was $2.7 billion, representing a net settlement obligation of $23 million. Assuming average variable rate debt levels during the year, a one percentage point increase in interest rates would have increased interest expense by approximately $14 million and $12 million at year-end 2023 and 2022, respectively.
Assuming average variable rate debt levels during the year, a one percentage point increase in interest rates would have increased interest expense by approximately $8 million and $14 million at year-end 2024 and 2023, respectively. 61 Price risk Our company is exposed to price fluctuations primarily as a result of anticipated purchases of raw and packaging materials, fuel, and energy.
The aggregate effect of these adjustments for the year resulted in translation losses of approximately $141 million, which have been recognized in other comprehensive income. We assess foreign currency risk based on transactional cash flows and translational volatility and may enter into forward contracts, options, and currency swaps to reduce fluctuations in long or short currency positions.
We assess foreign currency risk based on transactional cash flows and translational volatility and may enter into forward contracts, options, and currency swaps to reduce fluctuations in long or short currency positions. Forward contracts and options are generally less than 18 months in duration. Currency swap agreements may be established in conjunction with the term of underlying debt issuances.
This investment is accounted for under the equity method of accounting and is evaluated for indicators of other than temporary impairment. During 2023, the Company recorded significant foreign currency translation adjustments due to the devaluation of the Nigerian Naira.
In addition to our consolidated Nigerian business, the Company also has an investment in an unconsolidated entity, Tolaram Africa Foods PTE LTD (TAF), that holds an investment in a Nigerian food manufacturer. This investment is accounted for under the equity method of accounting and is evaluated for indicators of other than temporary impairment.
Removed
The Company, following its accounting practice of recording the operations of its subsidiary, TAF, on a one-month lag basis has recognized these adjustments based on the foreign currency exchange rates as of the end of November 2023.
Added
The impact of possible currency devaluations in countries experiencing high inflation rates or significant exchange fluctuations, including Nigeria and Egypt, can impact our results and financial guidance. Effective the fourth quarter of 2024, we have accounted for Nigeria and Egypt as highly inflationary economies, as the three-year cumulative inflation rate exceeded 100%.
Removed
Price risk Our company is exposed to price fluctuations primarily as a result of anticipated purchases of raw and packaging materials, fuel, and energy. Primary exposures include corn, wheat, potato flakes, soybean oil, sugar, cocoa, cartonboard, natural gas, and diesel fuel.
Added
Accordingly, our Nigeria and Egypt subsidiaries will use the U.S. dollar as their functional currency. Highly inflationary accounting requires monetary assets and liabilities, such as cash, 60 receivables and payables, to be remeasured in U.S. dollars at the current exchange rate at the end of each period with the impact of any changes in exchange rates being recorded in income.
Added
Our Nigerian subsidiaries had a net monetary liability balance of approximately $128 million as of December 28, 2024. Net monetary assets denominated in Egyptian pound are not material as of December 28, 2024.
Added
Non-monetary assets and liabilities, such as inventory, property, plant and equipment and intangible assets are carried forward at their historical dollar cost, which is calculated using the exchange rate at the date which hyperinflationary accounting is implemented. The impact of highly inflationary accounting in 2024 was not material to the Company financials.
Added
The total notional amount of interest rate swaps at year-end 2023 was $2.3 billion, representing a net settlement obligation of $93 million.

Other K 10-K year-over-year comparisons