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Spring 2008 Today's K™ Senior Edition - Company News

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"Sustainable, Dependable Performance" Remains Our Company's Goal

In the 21st century business world, what's the bottom line?

Modern stakeholders judge companies by more than profitability. That's why companies like Wal-Mart and Coca-Cola, to name a few, now report on their environmental sustainability and social responsibility as well as finances - what's known as the "triple bottom line" or "people, planet, profit" concept.

Kellogg has a proud and longstanding commitment to corporate responsibility. Watch for our first-annual global corporate responsibility report later in the year.

At the 86th Annual Shareowners Meeting on April 25 in Battle Creek, the remarks of President and Chief Executive Officer David Mackay and Chairman of the Board Jim Jenness reflected the "Sustainable, Dependable Performance" theme of the 2007 Annual Report.

While commodities and energy prices are a challenge for most packaged-food companies, David stressed that it's "our unwavering focus on the fundamentals of our business that has allowed Kellogg to maintain its momentum. These include driving cereal growth, expanding snacks and continued growth of our Frozen Foods and Kashi businesses."

All About Opportunity

In 2007, Kellogg purchased Gardenburger®, a maker of vegetarian, vegan and alternative meat products, and Bear Naked®, a maker of premium all natural and organic granolas, hot cereals and trail mixes. This January, the company acquired the United Bakers Group in Russia. These transactions are designed to enhance the ability to generate long-term growth. Markets like Russia, Central and Eastern Europe, Turkey, Latin America and Asia represent significant growth potential, and the company has already made good progress. Russia, in particular, is one of the emerging markets that now represent a very important part of the long-term growth strategy.

Tackling Key Issues

Other issues impacting the company's ability to deliver dependable performance in the future include: environmental sustainability, marketing to children and obesity. In each of these areas, Kellogg continues to be a leader. With first quarter 2008 earnings showing sales growth of 10 percent and operating profit growth of 9 percent, Kellogg Company continues to deliver sustainable, dependable performance. There's no doubt today's marketplace offers some tough issues to face, but there is continued opportunity for this global organization which now boasts almost 30,000 employees.

Expanding Innovation to Fuel Growth

In 1997, the W.K. Kellogg Institute for Food and Nutrition Research (WKKI) in Battle Creek became our global innovation center. Since WKKI opened its doors, Kellogg Company's net sales have doubled (from $6 billion to almost $12 billion), and net sales linked to innovation have nearly doubled as well.

Today, expansion is underway to grow this facility by more than 150,000 square feet to enhance the famous Kellogg innovation and fuel top-line growth. The facility should be operational by third quarter of 2009.