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DISCONTINUED OPERATIONS | 12 Months Ended
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Dec. 28, 2024
Discontinued Operations and Disposal Groups [Abstract] |
Disposal Groups, Including Discontinued Operations, Disclosure | DISCONTINUED OPERATIONS As disclosed in Note 1, on October 2, 2023, the Company completed the separation of its North America cereal business resulting in two independent companies, Kellanova and WK Kellogg Co. As a result of the distribution, Kellanova shareholders of record on September 21, 2023, received one share of WK Kellogg Co common stock for every four shares of Kellanova common stock. In accordance with applicable accounting guidance, the results of WK Kellogg Co are presented as discontinued operations in the Consolidated Statement of Income and, as such, have been excluded from both continuing operations and segment results for fiscal years 2023 and 2022. There were no discontinued operations in fiscal year 2024. The consolidated statements of cash flows are presented on a consolidated basis for both continuing operations and discontinued operations. The following table presents key components of “Income from discontinued operations, net of income taxes” for the fiscal years ended December 30, 2023 and December 31, 2022:
(millions) | 2023 | 2022
Net sales | $ | 2,085 |  | $ | 2,662 |
Cost of goods sold | 1,387 |  | 1,858 |
Selling, general and administrative expense | 479 |  | 381 |
Operating profit | $ | 219 |  | $ | 423 |
Interest expense | 26 |  | 17 |
Other income (expense), net | 54 |  | (111) |
Income from discontinued operations before income taxes | $ | 247 |  | $ | 295 |
Income taxes | 71 |  | 64 |
Net income from discontinued operations, net of tax | $ | 176 |  | $ | 231 |
The following table presents significant cash flow items from discontinued operations for the fiscal years ended December 30, 2023 and December 31, 2022:
(millions) | 2023 | 2022
Depreciation and amortization | $ | 52 |  | $ | 74 |
Additions to properties | $ | 107 |  | $ | 87 |
Postretirement benefit plan expense (benefit) | $ | (53) |  | $ | 123 |
On September 29, 2023, in connection with the planned separation, WK Kellogg Co entered into a Credit Agreement (the “Credit Agreement”) and borrowed $664 million under the term loan and revolving credit facility under the Credit Agreement. Approximately $663 million of these borrowings was paid by WK Kellogg Co to Kellanova in the form of a dividend. Pursuant to the conditions of the private letter ruling from the Internal Revenue Service, Kellanova used the proceeds from the dividend, along with cash on hand to repay outstanding commercial paper and the 2.65% Senior Notes due 2023, which had an outstanding principal balance of $550 million. In a pro rata spin-off of consolidated subsidiaries, the distribution of the assets and liabilities are recognized through equity instead of net income. Accordingly, Kellanova has recognized the distribution of net assets to WK Kellogg Co in retained earnings. Following the completion of the separation on October 2, 2023, the term loan and revolving credit facility under the Credit Agreement are no longer obligations of Kellanova. In connection with the separation, WK Kellogg Co entered into several agreements with Kellanova that govern the relationship of the parties following the spin-off including a Separation and Distribution Agreement, a Manufacturing and Supply Agreement (“Supply Agreement”), a Tax Matters Agreement, Employee Matters Agreement, Transition Services Agreement (“TSA”), and various lease agreements. Pursuant to the TSA, both Kellanova and WK Kellogg Co agree to provide certain services to each other, on an interim, transitional basis from and after the separation and the distribution for up to two years following the spin-off. The TSA covers various services such as supply chain, IT, commercial, sales, Finance, HR, R&D and other Corporate. The remuneration to be paid for such services is generally intended to allow the company providing the services to recover all of its costs and expenses of providing such services. The costs and reimbursements related to services provided by Kellanova under the TSA are recorded in continuing operations with the Consolidated Statement of Income. Kellanova recorded approximately $157 million and $52 million of cost reimbursements related to the TSA for the years ended December 28, 2024 and December 30, 2023, respectively, of which $101 million and $37 million is recognized in cost of goods sold (COGS) and $56 million and $15 million in selling, general, and administrative expense (SGA) in the Consolidated Statement of Income for the years ended, respectively. These reimbursements are a direct offset within the Consolidated Statement of Income to the costs incurred related to providing services under the TSA. Pursuant to the Supply Agreement, Kellanova will continue to supply certain inventory to WK Kellogg Co for a period of up to 3 years following the spin-off. During the years ended December 28, 2024 and December 30, 2023, the Company recognized net sales to WK Kellogg Co of $45 million and $18 million and cost of sales of $39 million and $16 million, respectively.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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