Case 3-1 CONVENIENCE FOODS 2009 $ 334 1.093 910 221 $ 2,558 3,010 3,643 1.458 531 $11,200 Kellogg Company and Subsidiaries Consolidated Balance Sheet (millions, except share data) 2010 Current sets Cash and cash equivalents $ 444 Accounts receivable, net 1,190 Inventories 1,056 Other current assers Total current assets $ 2,915 Property, net 3,128 Goodwill 3,628 Other intangibles, et 1,456 Other assets 720 Total assets $11,847 Current liabilities Current maturities of long-term debt $ 952 Notes payable 44 Accounts payable 1,149 Other current liabilities 1,039 Total current liabilities $ 3,184 Long-term dels 4,908 Deferred income taxes 697 Pension liability Other liabilities 639 Commitments and contingencies Equity Common stock, $.25 par valuc, 1,000,000,000 shares authorized. Issued: 419,272,027 shares in 2010 and 419,058,168 shares in 2009 105 Capital in excess of par value 495 Retained earnings 6,122 Treasury stock at cost: 53,667,635 shares in 2010 and 37,678,215 shares in 2009 ( (2,650) Accumulated other comprehensive income (los) (1,914 Total Kellogg Company equity $ 2,158 Noncontrolling interests Total equity 2,154 Total liabilities and equity $11,847 1 44 1,077 1,166 $ 2,288 4,835 425 430 947 265 105 472 5,481 (1.8201 (1.966 $ 2.272 $ 3 2,275 $11,200 **Kelbows Company founded in 1996 and incorporated in Delaware in 1923, and its subsidiaries are engaged in the manufacture and marketing ready to eatceroul end convenience Soods. 10K Source: Kellogg Company and Subsidiaries 2010 10K (continued) CASE 3.1 CONTINUED) Kellogg Company and Subsidiaries Notes to Consolidated Financial Statements (In Part) NOTE 1 ACCOUNTING POLICIES (In Part) Basis of presentation The consolidated financial statements include the accounts of Kellogg Company and its majority-owned subsidiaries (Kellogg or the Company). Intercompany balances and transac tions are eliminated. The Company's fiscal year normally ends on the Saturday closest to December 31 and as a result, a 53rd week is added approximately every sixth year. The Company's 2010 and 2009 fiscal years cach contained 52 weeks and ended on January 1, 2011 and January 2 2010, respectively. The Company's 2008 fiscal year ended on January 3, 2009, and included a 53rd week. While quarters normally consist of 13-week periods, the fourth quarter of fis- cal 2008 included a 14th weck. Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of con tingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods reported. Actual results could differ from those estimates. Cash and cash equivalents Highly liquid investments with remaining stated maturities of three months or less when per chased are considered cash equivalents and recorded at cost. Accounts receivable Acounts receivable consists principally of trade receivables, which are recorded at the invoiced amount, nct of allowances for doubtful accounts and prompt payment discounts. Trade rcociy- ables do not hear interest. The allowance for doubtfal accounts represents management's esti mate of the amount of probable credit losses in existing accounts receivable, as determined from a review of past due balances and other specific account data. Account balances are writ ten off against the allowance when management determines the receivable is uncollestīble. The Company does not have off-balance sheet credit exposure related to its customers. Tretories Inventories are valued at the lower of cost or market. Cost is determined on an average cost basis. Property The Company's property consists mainly of plants and equipment used for manufacturing activities. These assets are recorded at cost and depreciated over estimated useful lives using straight line methods for financial reporting and accelerated methods, where permitted, for tax reporting. Major property categories are depreciated over various periods as follows (in years): manufacturing machinery and equipment 5-20; office equipment 4-5; computer equipment and capitalized software 3-5; building components 15-30; building structures 50. Cost includes interest associated with significant capital projects. Plant and equipment are reviewed for impairment when conditions indicate that the carry- ing vale may not be recoverable. Such conditions include an extended period of idleness or a plan of disposal. Assets to be disposed of at a future date are depreciated over the remaining period of use. Assets to be sold are written down to realizable value at the time the assets are being actively marketed for sale and a sale is expected to occur within one year. As of year- end 2010 and 2009, the carrying value of assets held for sale was insignificant. Goodwill and other intangible assets Goodwill and indefinite-lived intangibles are not amortized, but are tested at least annually for impairment. An intangible asset with a finite life is amortized on a straight-line basis over the estimated useful life.
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