Welcome to the ConAgra Foods first quarter earnings conference call. (Operator Instructions) At this time I’d like to introduce your host for today’s program, Gary Rodkin, Chief Executive Officer of ConAgra Foods.

I’m here with André Hawaux our CFO, Rob Sharpe, who has also recently added the title of President of our Commercial segment to existing duties of EVP of External Affairs, and Chris Klinefelter the VP of Investor Relations. Over the next few minutes André and I will provide our views about the strategic operating and financial aspect of the quarter but before we get started Chris will say a few words about housekeeping matters.

During today's remarks we will make some forward looking statements, and while we're making those statements in good faith and are confident about our company's direction, we do not have any guarantee about the results that we will achieve, so if you'd like to learn more about the risks and factors that could influence and affect our business, I'll refer you to the documents we file with the SEC which include cautionary language. Also, we'll be discussing some non-GAAP financial measures during the call today and the reconciliations of those measures for Regulation G compliance can be found on our website at https://Investor.ConAgraFoods.com under the Financial Reports and Filings link and then choosing Non-GAAP Reconciliations. Now I’ll turn it back over to Gary.

As our investors know it was a difficult quarter for us. While comparable EPS of $0.27 turned out to be a little better than we indicated in our pre-announcement a couple of weeks ago there are several shortfalls that have our focus. While we have a lot to talk about today on the quarter and the year I want to emphasize two things at the outset. First, the core top line performance of our brands is solid and second, we have a clear view on the full year outlook. I also want you to know that no one is more focused than me on eliminating the first quarter difficulties. We know what the issues were and we’re addressing them. Before discussing our business performance and outlook I’ll spend just a minute on the pre-announcement. As you know the Lehman Brothers Back to School Conference falls right in the middle of our first quarter accounting close process each year. Because we only have preliminary closing numbers at that time it always creates a little bit of a challenge for us. The preliminary closing numbers available to us immediately prior to the conference indicated two things. One, product costs were higher than our latest estimates. Two, when taken in context with some recent market performance in the consumer segment this could adversely impact our year and also have caused us to finish a bit short of our guidance for the quarter. Attending the conference without a clear view of the impact on the year would have generated more speculation than we thought prudent. As a result, we felt we had no choice but to cancel our participation. At the same time, give investors directional insight into what we were seeing. André will elaborate further on this in a minute as well as…

(Operator Instructions) Your first question comes from David Driscoll – Citi Investment Research. David Driscoll – Citi Investment Research: Certainly I wish I wanted to spend my time talking about the Consumer Foods improvements and revenues but I just want to go back to the key parts of your initial opening comments. The appearance from the outside is that ConAgra does not have control over its business as that September 2nd press really was very inaccurate. How often does management get financial updates and why did this cost error only creep up on you at the end of August. What can you say to address some of these concerns?

Let’s talk about the first part of that, which I believe how often does management get information on the business. I would say that depending on the nature of that information it runs the gamut from daily updates on our volume performance to weekly updates on things such as share, customer performance, etc. We close the books every period and we go through an extensive period review with senior management around all of our components of our business. We have what we call a balance score card that starts with the top line and how we perform brand by brand all the way to what innovation is doing for us, how we’re spending our A&P dollars to how we’re spending our G&A. The processes are very thorough and complete. Let me be clear on what happened in the quarter and what you saw transpire before all of you is what I would probably call live TV. We had to go to a conference; we were in the midst of our close, as I said. Our close process has preliminary numbers and then all of our folks go through and exercise that where we reconcile our trial balances we reconcile our sub systems. We were in the process of doing that and we were operating with a brand new system in SAP and we’re operating with four legacy cost systems. The first core is also the most intricate relative to cost accounting because you revalue your standards from the previous year to your new year. There is different functionality in our systems both in SAP and the other systems it just took us a long time to reconcile. Had we not had to go to that Conference nobody would have seen us go through this process and we would have been…

Your next question comes from Ann Gurkin – Davenport. Ann Gurkin – Davenport: I wanted to start with respect to spending to support your brands are you changing how you spend to support brands either the amount you’re spending or the target say against the healthy trend if you can comment on that. Secondly, do you think you can get this Consumer Foods business back to mid teens operating margin is that still a doable target over the next several years or can you comment on that as well.

I would tell you that we certainly are making some adjustments in how we spend our dollars. We are spending more dollars than a year ago but we are adjusting to the realities of the marketplace. You will see us spend a bit more in what we call value positioning. I think the best example of that you’ll see, I believe, starting next week the first comprehensive marketing support against one of our very biggest brands Banquet. That clearly is going to talk about the tagline so much for so little. You’re going to see more of our dollars go straight to our customer marketing so in store marketing at our key accounts. We’re working and we clearly are spending more money on our key brands particularly in the healthy space, Healthy Choice. The Healthy Choice Asian Steamers is being supported strongly as well as our new introduction that’s just hitting the shelves, Healthy Choice Fresh Mixers which goes into the shelf stable aisle and is going to be a very big win. You’ll start to see the support on that in about a month or so. We are making some adjustments, we’re also accelerating in some cases our innovation particularly in some our strongest brands like Healthy Choice, Marie Callender, etc. I think your second question went to margins and we are continuing to say that over time we will continue to close that gap with the pure group.

Your next question comes from Andrew Lazar – Lehman Brothers. Andrew Lazar – Lehman Brothers: If we think about the $190 million in costs increases that you spoke of in the quarter looking at the benefit that fully 9% pricing would have given you it would seem like would go a long way to covering if not more than covering those cost increases. I’m trying to get a sense of the significant gross margin degradation and just trying to reconcile those two.

The best way to think about it is in many of our brands had very good profit performance. The issue was really isolated to two businesses, two big businesses, Wesson Oil where we got upside down on our cost in pricing and on Banquet which is a big value segment where the inflation just was too great for us to price big enough and fast enough. We are making big adjustments in both of those but if we were just even to a year ago on those two businesses in terms of operating profit we would have been at almost 10% for Consumer Foods. It really was isolated. It was not across the board. Andrew Lazar – Lehman Brothers: You’ve talked about over delivering on productivity for the year still expecting a manageable trade off with respect to volume versus I know what you talked about as being also very conservative assumptions last quarter on that front. It seemed like some of that is actually more positive rather than negative. I want to make sure I understand the driving force around the full year earnings revision so that I’m totally clear on that.

I’ll just reiterate that the Frozen competitive situation is probably the single biggest issue. We saw a dramatic acceleration of price discounting at the end of Q1 and continuing into Q2. We had priced what we believed to be very responsibly and expected a rational market. That has not happened; obviously we need to do some course correcting. It is not all going to be in the form of price discounting but we do need to in a measured way get more competitive. We’re also accelerating some investment in our Frozen business. I would say that’s the number one factor along with the significant increase in inflation that’s hit us again in the biggest place in Wesson Oil.

Your next question comes from Christine McCracken – Cleveland Research. Christine McCracken – Cleveland Research: Just a few points of clarification, first on Banquet, I’m a little bit confused on exactly where you saw the cost inflation is that a function of the mix of the chicken in that box or was it more cooking and oil related?

There were many elements of inflation on Banquet. That’s a value segment and we’ve always had pretty attractive price points so that transition with a significant amount of inflation whether it was protein, wheat on our pasta, oil on our chicken products, it was much bigger than we had anticipated. We are making significant adjustments in our product mix in the way we market that product. We will start to see benefits of that in Q2. It really was significant inflation on a brand that’s always been marketed as a value brand. Christine McCracken – Cleveland Research: It probably wasn’t on the chicken side given the deflation we saw during the quarter. André Hawaux: It was largely the number one commodity was probably oil that affected that franchise, number two was probably pasta with wheat and third was in fact some of the proteins did also rise. Christine McCracken – Cleveland Research: In terms of Frozen, we’ve seen the retailers really start to focus a lot on prepared foods and I’m wondering how much of that competitive activity might be a function of the sector really trying to take a more defensive stance relative to that shift. It seems like consumers are really drawn toward a fresher product similar to the Steamer type product that you guys have come out with. It seems like it’s really put a big strain on the industry I’m wondering is that what’s happening that’s creating this environment that you’re competitors are reacting to and therefore changing maybe the long term focus of that sector and will that precipitate your change in focus?

No, that’s absolutely not the case. Every indicator we have from both customers and consumers is that Frozen is an extremely vibrant category, a growth category and what’s really happened is pricing dynamics in terms of market share. One key competitor never moved off of the old merchandising price points and the other key competitor after losing a good bit of share finally overreacted with some what I would call nuclear pricing. We’ve gotten into the old fashioned merchandising price war. It’s very unfortunate; we hope and expect that rationality will return to that segment because that’s not a good way to manage that business. Innovation is what drives that category and we believe that we’re taking a measured response but really the driver is going to be innovation, it’s a very, very vibrant category.

Your next question comes from Eric Katzman – Deutsche Bank. Eric Katzman – Deutsche Bank: As a follow up to the Frozen issue because I know that’s such an important business for you. In terms of your outlook for the full year you’re obviously expecting a lot in the second half. What kind of assumption are you making that those two big players, I assume you’re referring to Nestle and Heinz, what kind of assumption are you making that they become a bit more rational. Was there some kind of negative manufacturing situation where you were kind of planning on more Healthy Choice but in fact the consumer kind of went towards the more value oriented product and you actually had to ramp up on Banquet instead?

Clearly Banquet will do well in an environment like this and we are fixing Banquet as Banquet in terms of its margin structure. That’s not really the case; it’s not really the same consumer that buys in that premium segment. Brands like Healthy Choice don’t really cross over much to Banquet. I’d say we believe that as in many instances and in many categories that after everybody steps back and takes a deep breath rationality will return. We believe this is a short term issue and that medium term the category will return to being driven by innovation. Eric Katzman – Deutsche Bank: If you could mention the situation with the Peter Pan and how that business is doing and then the equity affiliates line it’s not an area that we normally focus on but it was much lower than I had expected and maybe some view on the outlook there is that going to be a tough year for you on that line item?

First on Peter Pan, we’re very pleased with the business, it is rebounding almost back to where it was from a market share standpoint and the profitability is returning as well. André Hawaux: The issued we had there really is all attributable to joint venture Lamb Weston Meyer which is our specialty potato joint venture in Europe they had a very tough first quarter related to both inflation on that side as well as pricing in the marketplace. Rob’s on the call as well I’d say that I think probably for the full year that joint venture year on year it had record profits last year just to put that into perspective and crop years and crop cycles tend to go every other year in Europe. We see ourselves with some inflation issues and with the crop where it is I think we’re going to have a struggle with pricing. We’ll still have good results there I don’t know that they’ll equate to the record year we had last year.

In that business the dynamics in the sourcing of potatoes in Europe are just different than they are here. If you get into a time period where there are lots of cheap potatoes you have a lot of small competitors who will take advantage of that and force prices down in the marketplace. There will be some continuing impact of that in this quarter we expect but for Q3 and Q4 we’ll be back on track.

Your next question comes from Terry Bivens – JP Morgan. Terry Bivens – JP Morgan: On the volume front I guess you guys changed some of the reporting there but do we have a number for what the domestic Consumer Foods business would have looked like volume wise ‘x’ the International?

We’re now reporting that segment as you see it. I don’t know that we have the International as a separate volume today. André Hawaux: I don’t have that, we could follow up with you after the call we could break that out. If memory serves me right Canada was relatively flat year on year volumetrically. I think Mexico we were up a little bit but I don’t have those numbers at my disposal because of the way we now collapse those. We’ll get that back to you.

Your next question comes from Robert Moskow - Credit Suisse.

Can I understand the opening comments again, are you guys saying that the profit warning for first quarter that you thought was going to result because your input costs were higher than you thought and then a couple weeks later you realized that your input costs really weren’t that high and therefore it really wasn’t a profit warning for first quarter is that correct? André Hawaux: I think that’s fair, what we saw in our preliminary cost reads through our cost accounting systems was very different then our estimates and absent the time to be able to go back and reconcile and find the issues through the four legacy systems and the new SAP system we believe that our costs were out of line versus our estimate. It turned out had we been able to go through a normal close like we normally do without having to get all the external attention we would have found out that we were essentially pretty much on track ‘x’ the two things that Gary has called out relative to Frozen and Wesson which did impact our quarter.

Those two issues had nothing to do with our call. That was purely an early pre-reconciliation call that we had to make because we were going to the conference.

Your next question comes from Eric Serotta – Merrill Lynch. Eric Serotta – Merrill Lynch: On Banquet have you seen competition increase from the mid tier or upper tier players and product lines bring merchandise price points down closer to where you get to Banquet or has it really been the value oriented lines where competition got even steeper? Was it coming from like for like or coming from above is what I’m asking.

It’s hard to say exactly. There’s probably some wind when some of the price points get so deep like they did late in the first quarter there’s probably some impact from that. Then you also have the traditional value competitors that have basically kept their price points. I would tell you that Banquet volume was good. It’s just that we’ve got to get our margin structure more in line given the intensity of inflation. That is what we’re working on and we will have some significant changes as we move into the back half of the year.

Your next question comes from Ed Roesch – Soleil Securities. Ed Roesch – Soleil Securities: I wanted to take advantage really quickly of having a potato expert on the call. If you look at the PPI for russet potatoes it’s up quite a bit. I think in May a 23% increase year over year, June very high number around 90%. Is it safe to say that that is not impacting ConAgra to nearly that extent?

I think the best way to think about it and the way we look at it is pretty similar to our Consumer Business is at the core you’ve got to either price or drive more volume or find cost saves to get by inflation. When we look at the overall inflation for our commercial businesses, I’m going to put ConAgra Mills aside for a second, we’re calling the year in the double digit range but it’s not going to be as severe as Consumer saw in the first quarter. At the core there is potato inflation, I think all our customers understand it, and we’ve been pretty successful in pricing accordingly.

I would just amplify that Lamb Weston probably does as good a job in terms of managing their costs and their revenue as any operating unit that I’ve seen in any company that I’ve been in. They’ve got a very, very strong operating system and give us great confidence that we’ll have another great year at Lamb. Ed Roesch – Soleil Securities: Any update, I think a quarter or two ago you mentioned, a couple categories where private label is your primary competition their pricing had been lagging, is that improved a little bit in those categories?

Absolutely, we have to respond to the marketplace and we have course corrected. A couple of examples would be brands like Pam and Egg Beaters, Reddi-Wip where our primary competition is private label. There we have prudently closed the price gap and we are starting to see the benefit from that.

Your next question comes from Terry Bivens – JP Morgan. Terry Bivens – JP Morgan: Back on the volume question if you look at Nielsen numbers granted they have limited utility but they show volume for a period roughly corresponding to the quarter roughly about down 6% indicating you’re making a good deal of that in unmeasured channels. Can you give us an idea what’s working there volume wise in those unmeasured channels?

Your numbers are pretty accurate. Clearly we see a shift, the biggest up side for us is club where I would say a bit underdeveloped. We are really starting to accelerate our progress there plus we’ve got a good strong partnership with Wal-Mart. We are seeing consumers move out of traditional grocery to some degree it’s still a very important segment for us but our club and our mass business like a Target is very, very strong.

Your next question comes from Eric Serotta – Merrill Lynch. Eric Serotta – Merrill Lynch: You expressed a lot of confidence that the first quarter issue in terms of timing of closing the books and the Back to School Conference was behind you and this was not going to be an issue going forward. At the same time you then went on to say I think four more plants coming live on SAP I think it was this month or this quarter and eight by the end of the fiscal year. Needless to say this is a company that’s had its share of execution issues and implementing SAP and bringing plants online. Could you comment on your overall degree of confidence that the wiring in Gary’s words in the past is in place to make sure that we don’t have similar types of shortfalls and disappointments over the coming quarters? André Hawaux: I am very, very confident, this was not, and I apologize for not being clear to listeners. This was not an SAP issue, this was a timing issue. Had we had time, anywhere between another day or two days to properly reconcile our systems like we do in every close nobody would have seen us go through this process. We went through it fairly publicly because we had to go to this conference. I’ve got all the confidence in the world that SAP is doing what we said it was going to do. Again, Q1 was slightly trickier because of the reval issues that you have in your systems but we brought nine plants up to date and have not had any issues. What also gives me confidence is our service levels as a result of our new systems are very strong and our cost savings we continue to deliver our cost savings. Quite frankly it was not an issue with our systems it was really a timing issue that we had to play out our close in a public venue which we never ever do.

We also learned, it was a very isolated issue that we have learned from and therefore it will not be repeated again. We now know a lot more than we did before. I would amplify André’s issue it was purely timing. We would have, we did, and we figured it out a few days right after that.

Your next question comes from David Driscoll – Citi Investment Research. David Driscoll – Citi Investment Research: Can you make some comments on price elasticity that you expect from the latest price increases and second and also related to volumes the private label threat, last conference call you did mention that you were monitoring Pam and Reddi-Wip just to name two of them. Big picture, this is the question on how well this portfolio will do in the current environment, so again price elasticity in private label?

Clearly we have built significant amount of elasticity into our outlook. We have also taken a number of measures to mitigate that. We have told you we’re going to make some intentional trade offs on tonnage where it just doesn’t make sense for us to repeat on some programs or products that were too low margin particularly given the inflation we’ve gotten. We have course corrected on some of our products like a Pam, a Reddi-Wip and Egg Beaters and clearly on Wesson we have as well. Given all that, built into our outlook we’re still making very good profits on a go forward basis with all of that built in.

Your next question comes from Eric Katzman – Deutsche Bank. Eric Katzman – Deutsche Bank: It’s a very difficult environment and lord knows you inherited a tough situation do you, given the consumer really is moving pretty noticeably away from home to in home do you think that the organization in terms of overall volume should be doing better or is it that you need to get out in front on more innovation across a greater percentage of the line to drive the business even with that tailwind at retail. How do you think about that?

That’s a very good question, I think a lot about that issue. We all do here. I would tell you that when you’ve got this much inflation there are certain segments of our business that are very difficult to pass all of that increase on without making some significant changes. Banquet is a great example of that and that’s where we’re being extremely aggressive in terms of our sense of urgency to really revamp and rebuild that business so that we can still live up to our mantra of so much for so little. That takes some effort but that will be in place in the later half of the year. You do need to make some course corrections as I talked about on some of the price gaps and understand that when you get in to a very difficult economic environment like this some of those value brands, cooking oil is a great example of it. We got ahead of our skis because the intensity of the inflation and when that absolute price gap gets too big it just drives people to private label. We recognize that but in the end it’s really about three things. Focused selling, I believe we’re making great strides in store and I’d ask you to take a look as our Healthy Choice Fresh Mixers get in store over the next month. Take a look at that as an example; it’s more effective marketing, more high impact marketing. I’ll go back to watch and listen and look around you next week and example Banquet a brand that we have probably not advertised in decades you’ll see that. Most importantly innovation, we’ve hit very big on our Asian Steamers as a follow up to our Café Steamers on Healthy Choice. Our Healthy Choice Fresh Mixers is in very early stages but off to an excellent start and we have a significant amount of big innovation coming throughout the rest of this year as well as beyond. Those three elements are really what I believe will bend the trend ultimately on volume. Right now we’re doing what’s right for the environment.

Your next question comes from Todd Duvick – Bank of America Securities. Todd Duvick – Bank of America Securities: I wanted to ask a bit on the cash flow side, last year seemed to be an unusual year if my numbers are correct in terms of working capital build there was a pretty significant investment in working capital. I’m wondering if you can provide us some guidance on what you’re expecting to see cash flow wise this year is it going to be more like your fiscal year 2007 and what you intend to use your cash flow for in terms of share repurchases, acquisitions, basically your priorities? André Hawaux: As you rightly pointed out 2008 was a challenging year relative to cash flow for a couple reasons. One is the volatility and the commodity inflation that we saw in a lot of our areas both on the Commercial side and the Consumer side with even the same kind of levels of inventory we saw significantly higher rates and therefore we had a lot of working capital that we put up on our books. I think we’ll see that, what we’ve said is on the working capital side we see that as neutral to slightly positive meaning a source of cash for us. I’ve talked about our CapEx being about $475 million which would be running slightly ahead of our depreciation numbers. Relative to what we’re going to use and deploy our excess cash for, I think we’re still evaluating that. As you know our Board approved $900 million in share repurchase. We’ve actually exhausted that approval and have that in the marketplace today with our ASR. We’ve paid down opportunistically $40 million of our long term debt and we did take out all our commercial paper balances after the CTG transaction closed. Right now we’re going through and evaluating what we would use our excess cash for. We have nothing that’s at the top of the agenda right now; we don’t have any share authorized approval. We’ll be talking to our Board about going forward. Right now we’re still in the phase where we’re evaluating where we would go with that.

Your next question comes from Robert Moskow - Credit Suisse.

I didn’t quite hear you if you said whether your plan for Consumer marketing advertising increases this year, has anything changed there and what is your plan for how much more you intend to spend. I would imagine that being in front of consumers at a time of tougher macro economic conditions is going to be very important and in order for them to buy you in the grocery store they’ve got to know that your brands are out there. Are you increasing or has anything changed?

We are increasing our marketing investment. Clearly it is important to make sure that our brands are strong. You will see us on the plus side on our A&P spend.

At double digit?

I’m not going to comment specifically on that detail.

There are no further questions, Mr. Klinefelter I’ll had the conference back to you for final remarks or closing comments.

This concludes our conference call. Just as a reminder this conference is being recorded and will be archived on the web as detailed in our news release. As always, we are available for discussions and we thank you for your interest in our company.