Kellogg(US:K)2025-02-21 21:16Merger and Financial Transactions - Kellanova's merger with Acquiror 10VB8, LLC is expected to close in the first half of 2025, pending regulatory approvals[11][12]. - Each share of Kellanova's public common stock will be converted into $83.50 in cash upon the merger's completion[13]. - Wal-Mart Stores, Inc. accounted for approximately 16% of consolidated net sales in 2024, with the top five customers collectively representing about 29% of consolidated net sales[41]. - The total notional amount of foreign currency derivative instruments at year-end 2024 was $5.3 billion, representing a net settlement receivable of $120 million[372]. - The total notional amount of interest rate swaps at year-end 2024 was $1.1 billion, with a net settlement obligation of $43 million[374]. - The total notional amount of commodity derivative instruments at year-end 2024 was $285 million, resulting in a settlement obligation of $3 million[377]. Sustainability and Environmental Goals - Kellanova aims to nourish 1.5 billion people and feed 400 million facing food insecurity by the end of 2030[23]. - The company commits to achieving net-zero GHG emissions across its value chain by 2050, with a target approved by the Science Based Targets initiative[23]. - Kellanova plans to achieve 100% renewable electricity by the end of 2030 and reduce water use in high water stress regions by the same deadline[23]. - The company has implemented initiatives to mitigate environmental risks related to climate change and food security[22]. - Kellanova's Better Days™ Promise aims to create better days for 4 billion people by 2030, focusing on sustainability and equitable access to food[20][18]. - Compliance with environmental regulations did not materially affect capital expenditures or earnings in 2024, and is not expected to do so in 2025[46]. Market and Competition - The company markets its products in over 180 countries, with principal products including snacks and convenience foods manufactured in 20 countries[15]. - Kellanova's principal raw materials include corn, wheat, and vegetable oils, with prices subject to fluctuations due to various external factors[26][28]. - The company faces intense competition in its major product categories, competing with both branded and private label products[43]. Financial Performance and Costs - Research and development expenditures were approximately $115 million in 2024, slightly down from $116 million in 2023 and up from $111 million in 2022[44]. - The company does not anticipate significant negative impacts from the loss of large customers due to strong consumer demand for its products[41]. - The backlog of unfilled orders was not material as of December 28, 2024, and December 30, 2023[42]. - The company expects input cost inflation to be flat during 2025, following moderating supply chain cost inflation in the previous fiscal year[376]. - A one percentage point increase in interest rates would have increased interest expense by approximately $8 million at year-end 2024[374]. - Assuming a 10% decrease in year-end commodity prices, the settlement obligation would have increased by $25 million at year-end 2024[377]. Workforce and Diversity - The company employs approximately 24,000 individuals as of December 28, 2024, with a focus on attracting and retaining talent[47]. - The company is committed to equity, diversity, and inclusion, with ten Business Employee Resource Groups supporting these initiatives[48]. - The company has a competitive compensation and benefits package aimed at promoting employee well-being across various aspects of life[51]. - The company maintains processes for compliance with its Code of Conduct and provides targeted ethics training globally[54]. International Operations - Net sales of the Nigerian business accounted for 6% of consolidated net sales year-to-date period ended December 28, 2024[369]. - The Nigerian subsidiaries had a net monetary liability balance of approximately $128 million as of December 28, 2024[368]. - The consolidated assets of the Nigerian business represented approximately 3% of consolidated assets as of December 28, 2024, down from 5% as of December 30, 2023[369]. - The company has accounted for Nigeria and Egypt as highly inflationary economies effective the fourth quarter of 2024, using the U.S. dollar as their functional currency[366].