Kellogg Hist. Hist. Hist.
Hist
Balance Sheet 31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14
Current assets
Cash and cash equivalents 460.0 281.0 273.0 443.0
Accounts receivable, net 1,188.0 1,454.0 1,424.0 1,276.0
Inventories 1,174.0 1,365.0 1,248.0 1,279.0
Other current assets 247.0 280.0 322.0 342.0
Total current assets 3,069.0 3,380.0 3,267.0 3,340.0
Non current assets
Property, net 3,281.0 3,782.0 3,856.0 3,769.0
Goodwill* 3,623.0 5,038.0 5,051.0 4,971.0
Other intangibles, 1,454.0 2,359.0 2,367.0 2,295.0
Investments in unconsolidated affiliates 1.0
Other assets 516.0 610.0 933.0 777.0
Total non current assets 8,874.0 11,789.0 12,207.0 11,813.0
Total Assets 11,943.0 15,169.0 15,474.0 15,153.0
Current Liabilities
Current maturities of long term debt 761.0 755.0 289.0 607.0
Notes payable 234.0 1,065.0 739.0 828.0
Accounts payable 1,189.0 1,402.0 1,432.0 1,528.0
Other current liabilities 1,129.0 1,301.0 1,375.0 1,401.0
Total current liabilities 3,313.0 4,523.0 3,835.0 4,364.0
Non current Liabilities
Long-term debt 5,037.0 6,082.0 6,330.0 5,935.0
Deferred income taxes 643.0 523.0 928.0 726.0
Pension liability 560.0 886.0 277.0 777.0
Other liabilities 592.0 690.0 497.0 500.0
Total non current liabilities 6,832.0 8,181.0 8,032.0 7,938.0
Total Equity 1,798.0 2,465.0 3,607.0 2,851.0
Total Liabilities and Equity 11,943.0 15,169.0 15,474.0 15,153.0
Balance check 0.0 0.0 0.0 0.0
Consensus Forecasts
Capex
Depriciation
PPE
Hist Proj. Proj. Proj.
31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18
251.0
1,344.0
1,250.0
391.0
3,236.0
3,621.0 3,649.4 3,677.1 3,706.3 3,738.9 3,773.7
4,968.0
2,268.0
456.0
716.0
12,029.0
15,265.0
1,266.0
1,204.0
1,907.0
1,362.0
5,739.0
5,289.0
685.0
946.0
468.0
7,388.0
2,138.0
15,265.0
0.0
553.0 570.0 554.8 555.2 588.0
526.0 508.3 504.7 517.0
3,796.0 3,682.7 3,699.5 3,715.3
14.0% 13.8% 14.1%
Kellogg Hist. Hist. Hist.
Balance Sheet 31-Dec-11 31-Dec-12 31-Dec-13
Sales 13,198.0 14,197.0 14,792.0
Sales growth 7.6% 4.2%
COGS 8,046.0 8,763.0 8,689.0
Gross Profit 5,152.0 5,434.0 6,103.0
Gross Profit Margin 39.0% 38.3% 41.3%
Reported Operating Profit 1,427.0 1,562.0 2,837.0
Project K impact 250.0
Mark to market 682.0 452.0 (947.0)
Pringles acquisitions 76.0 65.0
r Product recall 26.0
Cost reduction initiatives 61.0 56.0
VIE deconsolidation and other costs impacting comparability
Integration and transaction costs
Shipping day differences
Venenzuela remeasurement 6.0
Normalized operating Profit 2,170.0 2,172.0 2,211.0
Normalized EBIT margin 16.4% 15.3% 14.9%
Depreciation 367.0 444.0 532.0
Amortization 2.0 4.0 9.0
EBITDA 2,539.0 2,620.0 2,752.0
EBITDA margin 19.2% 18.5% 18.6%
Depreciation
Depreciation as a % of previous years PPE 13.5% 14.1%
Capex 594.0 533.0 637.0
Capex as a % of sales 4.5% 3.8% 4.3%
Accounts receivable, net 1,188.0 1,454.0 1,424.0
Inventories 1,174.0 1,365.0 1,248.0
Other current assets 247.0 280.0 322.0
Total operating current assets (A) 2,609.0 3,099.0 2,994.0
Accounts payable 1,189.0 1,402.0 1,432.0
Other current liabilities 1,129.0 1,301.0 1,375.0
Total operating current liabilities (B) 2,318.0 2,703.0 2,807.0
Operating working capital (A-B) 291.0 396.0 187.0
OWC as a % of sales 2.2% 2.8% 1.3%
Other long term operating assets 516.0 610.0 933.0
Other long term operating liabilities 1,795.0 2,099.0 1,702.0
Other Intangibles 1,454.0 2,359.0 2,367.0
Other long term assets as a % of sales 3.9% 4.3% 6.3%
Other long term liabilities as a % of sales 13.6% 14.8% 11.5%
Revenue Growth 7.6% 4.2%
EBIT margin 16.4% 15.3% 14.9%
EBITDA Margin 19.2% 18.5% 18.6%
OWC to sales 2.2% 2.8% 1.3%
Receivalbe days 32.9 37.4 35.1
Inventory days 53.3 56.9 52.4
Payable days 53.9 58.4 60.2
Cash cycle 32.2 35.8 27.4
Capex/Sales 4.5% 3.8% 4.3%
NOPAT 1,584.1 1,576.9 1,538.9
Invested capital 7,370.0 10,086.0 10,692.0
Return on average invested capital 21.4% 15.3%
Effective income tax rate 27.0% 27.4% 30.4%
Invested capital calculation
Beginning balance
Add capex
add increase in OWC
less depreciation
inc in long term assets
(inc) in long term liabilities
ending invested captial
PPE schedule
Beginning balance
Capex
Less depreciation
Ending balance
Hist. Hist. Proj. Proj. Proj. Proj. Proj.
31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20
14,386.0 13,533.0 13,018.7 13,096.9 13,227.8 13,413.0 13,574.0
(2.7%) (5.9%) (3.8%) 0.6% 1.0% 1.4% 1.2% Consensus Report - Pg 2
8,982.0 8,071.0
5,404.0 5,462.0
37.6% 40.4%
1,024.0 1,091.0
298.0 323.0
784.0 446.0
6.0 (67.0)
43.0 30.0
(36.0)
120.0
2,119.0 1,943.0
14.7% 14.4% 15.5% 16.7% 17.9% 17.9% 17.9% Modi
494.0 526.0 505.3 509.3 513.2 517.2 521.8
9.0 8.0
2,622.0 2,477.0
18.2% 18.3%
505.3 509.3 513.2 517.2 521.8
12.8% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0%
582.0 553.0 533.8 537.0 542.3 549.9 556.5
4.0% 4.1% 4.1% 4.1% 4.1% 4.1% 4.1%
1,276.0 1,344.0
1,279.0 1,250.0
342.0 391.0
2,897.0 2,985.0
1,528.0 1,907.0
1,401.0 1,362.0
2,929.0 3,269.0
(32.0) (284.0) 0.0 0.0 0.0 0.0 0.0
(0.2%) (2.1%)
777.0 716.0 0.0 0.0 0.0 0.0 0.0
2,003.0 2,099.0 0.0 0.0 0.0 0.0 0.0
2,295.0 2,268.0
5.4% 5.3%
13.9% 15.5%
(2.7%) (5.9%)
14.7% 14.4%
18.2% 18.3%
(0.2%) (2.1%)
32.4 36.2
52.0 56.5
62.1 86.2
22.3 6.5
4.0% 4.1%
1,640.1 1,542.7
9,777.0 9,190.0
15.3% 15.8%
22.6% 20.6%
9,190.0 9,800.4 9,828.1 9,857.3 9,889.9
533.8 537.0 542.3 549.9 556.5
(187.0) 0.0 0.0 0.0 0.0
(505.3) (509.3) (513.2) (517.2) (521.8)
(933.0) 0.0 0.0 0.0 0.0
1,702.0 0.0 0.0 0.0 0.0
9,190.0 9,800.4 9,828.1 9,857.3 9,889.9 9,924.7
3,621.0 3,649.4 3,677.1 3,706.3 3,738.9
533.8 537.0 542.3 549.9 556.5
(505.3) (509.3) (513.2) (517.2) (521.8)
3,621.0 3,649.4 3,677.1 3,706.3 3,738.9 3,773.7
Consensus Report - Pg 2
Kellogg Hist. Hist. Hist. Hist Hist
DCF 31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15
Free cash flows
Sales
EBIT
NOPAT
Depreciation
Amortization
(Inc) dec in OWC
Capex
(inc) dec in other long term assets
inc (dec) in other long term liabilities
Free cash flows
Key ratios
Revenue Growth
EBIT margin
EBITDA Margin
OWC to sales
Capex/Sales
Invested capital
Return on invested capital
Reinvestment rate
implied growth
Weighted average cost of capital (WACC)
Marginal tax rate
Risk free rate 2.50%
Market risk premium 6.00%
Levered beta 0.80
Cost of equity 7.30%
Credit rating (for long-term capital structure) BBB+
Credit spread over risk free rate 3.44%
Cost of debt pre-tax 5.94%
Marginal tax rate 36.70%
After tax cost of debt using marginal tax rate 3.76%
Share price 63.39
Diluted number of shares 354.8
Market capitalization
Total debt
Total capital
% equity capital
% debt capital
Weighted average cost of capital
Terminal value
Long-term growth rate 2.0%
Terminal value using growing perpetuity (mid year)
Implied EBITDA multiple
Discounting model
Year count 1.0 2.0
Discount factor
Present value of free cash flows
Value calculation Perpetuity % EV
Total present value of free cash flows
Present value of terminal value
Enterprise value
Implied 2013 EBITDA multiple
Cash and cash equivalents
Total debt
Other claims 0.0
Preference shares 0.0
Minority interest 62.0
Equity value
Implied share price 0.00
Sensitivity analysis
Discount rate variance 0.2%
Terminal value multiple variance
Implied growth rate variance 0.2%
Share price LT growth rate
2.0% 3.0% 4.0%
Implied share price
Discount rate
6.38%
6.18%
5.98%
5.78%
5.58%
Implied terminal value multiple
Discount rate
6.38%
6.18%
5.98%
5.78%
5.58%
Proj. Proj. Proj. Proj. Proj.
31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20
3.0 4.0 5.0
b
Market price 72.3 closing price Dec 31, 2015
Basic Shares outstanding 350.3
net new shares issued 4.6
Diluted number of shares outstanding 354.8
Options in millions Dilution
Stock options 19.0 58.0 3.8
RSU 0.8 0.0 0.8
4.6
