The Tale of the Segments
The segment information from the 1998 annual report of the Kellogg Company follows:
The Company manufactures and markets ready to eat cereal and other grain based convenience food products, including toaster pastries, frozen waffles, cereal bars, and bagels, throughout the world. Principal markets for these products include the United States and Great Britain. Operations are managed via four major geographic areas North America, Europe, Asia Pacific, and Latin America—which are the basis of the Company’s reportable operating segment information disclosed below. The measurement of operating segment results is generally consistent with the presentation of the Consolidated Statement of Earnings and Balance Sheet. Intercompany transactions between reportable operating segments were insignificant in all periods presented.
|
(millions) |
1998 |
1997 |
1996 |
|
Net sales |
|||
|
North America |
$4,175.9 |
$4,260.8 |
$4,086.3 |
|
Europe |
1,698.5 |
1,702.0 |
1,749.6 |
|
Asia Pacific |
377.0 |
411.9 |
433.2 |
|
Latin America |
510.7 |
455.4 |
407.5 |
|
Consolidated |
$6,762.1 |
$6,830.1 |
$6,676.6 |
|
Operating profit excluding non recurring charges |
|||
|
North America |
$ 831.6 |
$ 884.8 |
$ 762.3 |
|
Europe |
211.4 |
305.8 |
305.1 |
|
Asia Pacific |
48.3 |
51.1 |
61.3 |
|
Latin America |
107.2 |
111.8 |
94.2 |
|
Corporate and other |
(232.9) |
(160.3) |
(127.9) |
|
Consolidated (a) |
$ 965.6 |
$1,193.2 |
$1,095.0 |
|
Depreciation and amortization |
|||
|
North America |
$ 152.1 |
$ 153.7 |
$ 135.1 |
|
Europe |
54.6 |
59.6 |
59.9 |
|
Asia Pacific |
21.3 |
21.9 |
20.7 |
|
Latin America |
14.2 |
12.5 |
10.2 |
|
Corporate and other |
35.9 |
39.6 |
25.6 |
|
Consolidated |
$ 278.1 |
$ 287.3 |
$ 251.5 |
|
(millions) |
1998 |
1997 |
1996 |
|
Total assets |
|||
|
North America |
$2,430.8 |
$2,519.2 |
$2,574.0 |
|
Europe |
1,336.0 |
1,154.5 |
1,254.1 |
|
Asia Pacific |
328.4 |
309.5 |
449.2 |
|
Latin America |
380.9 |
361.4 |
285.6 |
|
Corporate and other |
1,516.7 |
1,405.1 |
1,316.5 |
|
Elimination entries |
(941.3) |
(872.1) |
(829.4) |
|
Consolidated |
$5,051.5 |
$4,877.6 |
$5,050.0 |
|
(millions) |
1998 |
1997 |
1996 |
|
Additions to long lived assets |
|||
|
North America |
$ 82.5 |
$ 166.5 |
$ 544.6 |
|
Europe |
169.1 |
60.7 |
71.9 |
|
Asia Pacific |
40.3 |
24.3 |
34.7 |
|
Latin America |
41.7 |
43.3 |
17.7 |
|
Corporate and other |
98.5 |
94.9 |
138.3 |
|
Consolidated |
$ 432.1 |
$ 389.7 |
$ 807.2 |
|
(a) Reconciliation to operating profit as reported: |
1998 |
1997 |
1996 |
|
Operating profit excluding nonrecurring charges |
$ 965.6 |
$1,193.2 |
$1,095.0 |
|
Non recurring charges |
(70.5) |
(184.1) |
(136.1) |
|
Operating profit as reported |
$ 895.1 |
$1,009.1 |
$ 958.9 |
|
Supplemental geographic information is provided below for revenues from external |
|||
|
customers and long lived assets: |
|||
|
(millions) |
1998 |
1997 |
1996 |
|
Net sales |
|||
|
United States |
$3,858.0 |
$3,922.2 |
$3,733.7 |
|
Great Britain |
743.6 |
719.0 |
673.8 |
|
Other foreign countries |
2,160.5 |
2,188.9 |
2,269.1 |
|
Consolidated |
$6,762.1 |
$6,830.1 |
$6,676.6 |
|
Long lived assets |
|||
|
United States |
$1,644.2 |
$1,707.1 |
$1,720.0 |
|
Great Britain |
553.0 |
452.4 |
463.2 |
|
Other foreign countries |
1,330.3 |
1,225.2 |
1,304.3 |
|
Consolidated |
$3,527.5 |
$3,384.7 |
$3,487.5 |
|
Supplemental product information is provided below for revenues from external |
|||
|
customers: |
|||
|
(millions) |
1998 |
1997 |
1996 |
|
Ready to eat cereal net sales |
$5,265.4 |
$5,435.8 |
$5,543.8 |
|
Convenience foods net sales |
1,496.7 |
1,394.3 |
1,132.8 |
|
Consolidated |
$6,762.1 |
$6,830.1 |
$6,676.6 |
Required
a. 1. Prepare horizontal common size analysis for net sales by segment and consolidated total. Use 1996 as the base.
2. Prepare horizontal common size analysis for operating profit, excluding non recurring charges by segment and consolidated total. Use 1996 as the base. (Exclude corporate and other.)
3. Prepare horizontal common size analysis for total assets by segment and consolidated total. Use 1996 as the base. (Exclude corporate and other and elimination entries.)
b. Use the supplemental geographic information for revenues from external customers and long lived assets for the following:
1. Net sales—Prepare horizontal common size. Use 1996 as the base.
2. Long lived assets—Prepare horizontal common size. Use 1996 as the base.
c. Use the supplemental product information for revenues and external customers for the following:
1. Prepare horizontal common size. Use 1996 as the base.
2. Prepare vertical common size for 1996, 1997, and 1998. Use consolidated as the base.
d. Comment on possible significant insights from the analysis in parts (a) through (c).