KELLOGG CONSIDERING CAPACITY RATIONALIZATION, REAFFIRMS GUIDANCE
Mar 17, 2005
KELLOGG CONSIDERING CAPACITY RATIONALIZATION, REAFFIRMS GUIDANCE

BATTLE CREEK, Mich. - Kellogg Company (NYSE: K) today announced that it is considering closing its Keebler bakeries in Macon, Georgia and Des Plaines, Illinois to improve operational efficiency and to better position the Company for future growth. The Company stated that it intends to bargain over the proposed plant closings with the Bakery, Confectionery, Tobacco Workers, and Grain Millers International Union and the International Brotherhood of Teamsters, the unions that represent hourly employees at the respective facilities.

“We are committed to continual improvement,” said Brad Davidson, Kellogg Company’s president of U.S. Snacks. “Our snacks business achieved solid growth in 2004. This initiative would provide the increased efficiency necessary to support future growth in today’s competitive environment.”

Should the Company proceed, up-front costs associated with the capacity rationalization are expected to be approximately $120 million, much of which will be incurred during 2005. Consequently, total up-front costs for the year are now expected to be approximately $0.15 per share, a significant increase from the $0.08-0.10 expected previously. Despite this increase, the Company continues to expect full-year earnings in a range of $2.28-2.32 per share.

In addition, the Company announced that the business momentum discussed during February’s webcast presentation at the CAGNY conference continued during the remainder of February and into March. Consequently, Kellogg now expects that first-quarter earnings will increase by as much as a mid-teens rate despite the absorption of approximately $0.04 per share in up-front costs associated with cost-reduction initiatives. This investment in the first quarter is also an increase from initial estimates of less than $0.03 per share.

“The strong business momentum we posted during 2004 has continued into 2005,” said Jim Jenness, Kellogg Company’s chairman and chief executive officer. “We have managed to maintain sales growth, while investing in cost-saving initiatives and brand building. This investment in the business will help us deliver sustainable, dependable growth in 2005 and beyond.”

About Kellogg Company
With 2004 sales of almost $10 billion, Kellogg Company (NYSE:K) is the world’s leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, toaster pastries, cereal bars, frozen waffles, meat alternatives, pie crusts, and ice cream cones. The company’s brands include Kellogg’s, Keebler, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain, Rice Krispies, Murray, Austin, Morningstar Farms, Famous Amos, Carr’s, and Kashi. Kellogg products are manufactured in 17 countries and marketed in more than 180 countries around the world. For more information, visit Kellogg’s web site at www.kelloggcompany.com.

Forward-Looking Statements Disclosure
This news release contains forward-looking statements related to business performance, earnings, costs, brand building, and cost-saving initiatives. Actual performance may differ materially from these statements due to factors related to competitive conditions and their impact; the effectiveness of advertising, pricing and promotional spending; the success of productivity improvements and business transitions; the success of innovation and new product introductions; the recoverability of the carrying value of goodwill and other intangibles; the availability of and interest rates on short-term financing; commodity and energy prices and labor costs; actual market performance of benefit plan trust investments; the levels of spending on systems initiatives, properties, business opportunities, integration of acquired businesses; changes in consumer behavior and preferences; U.S. and foreign economic factors such as interest rates, statutory tax rates, and foreign currency conversions or unavailability; legal and regulatory factors; business disruption or other losses from terrorist acts or political unrest; and other factors.