Good morning and welcome to today's ConAgra Foods fourth 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. Please go ahead, Mr. Rodkin.

Good morning. This is Gary Rodkin and I'm here with John Gehring, our CFO, and Chris Klinefelter, VP of Investor Relations. Over the next few minutes John and I will provide our views about the strategic, operating, and financial aspects of the quarter, but before we get started Chris will say a few words about housekeeping matters.

Good morning. 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 in either the earnings release today or on our website at www.conagrafoods.com under the Financial Reports and Filings link and in choosing Non-GAAP Reconciliations. In reference to the Regulation G, I will note that our reported diluted EPS from continuing operations of $0.39 has $0.02 of net expense from items impacting comparability as detailed in the press release, resulting in an EPS of $0.41 on a comparable basis for this quarter. On that same basis, the $0.17 of diluted EPS from continuing operations reported in the prior year quarter contained $0.01 of net expense from items impacting comparability, resulting in EPS of $0.18 on a comparable basis. Lastly, as detailed in the press release, Consumer Foods operating profit of $271 million was up 53% as reported this quarter and up 40% on a comparable basis. Now I'll turn it back over to Gary.

Thanks Chris, and good morning. We’re very pleased to be able to report strong results today. As you see in the release we posted significant gains in profits for both of our segments this quarter. We told you that we expected a strong finish to the fiscal year and that’s exactly what happened. EPS from continuing operation more than doubled this quarter on a comparable basis and as reported reflecting very strong and balanced performance and also some benefit of an extra week. We have many bright spots in terms of brands, product lines, supply chain cost savings, moderating inflation, and SG&A cost focus. All of which put us on a very strong foundation as we entered fiscal 2010. Let me start with a few words about our consumer food segment, volume was up 7%, sales grew at 14%, and operating profit improved 53% as reported. Profit was up 40% excluding restructuring charges last year. The extra week helped us at the top and bottom line but even after adjusting for that we posted strong results. I couldn’t be prouder of the turnaround our team has made in this segment. We posted this growth despite absorbing hedge losses, fighting foreign headwinds, and increasing marketing investments. The top line progress shows the traction we’re getting with this year’s innovation, specifically strong results from the frozen transformation we discussed earlier in the year which included great products from Healthy Choice, Marie Callender’s, and Banquet. To call out just a couple of these, our Healthy Choice Naturals line is a big win. Sales there are ahead of expectations. We’re confident this is the right product for the target audience and the connection with consumers is very strong. Another significant win is Marie Callender’s Pasta Al Dente; Restaurant quality pasta offerings with the convenience…

Thank you Gary and good morning everyone. In my comments this morning I’m going to address four main topics; our fourth quarter results, comparability matters, capital and balance sheet items, and some comments on our outlook. With respect to our fourth quarter results, while Gary has provided you with a good summary of our quarter, I would like to highlight and amplify a few key items. First we are very pleased with the continued strong performance turned in by our consumer foods business. Business continues to build momentum across virtually every critical dimension including top line growth, market share, cost control, and margin improvement. Consumer foods operating profit on a comparable basis for the fourth quarter increased 40%. At the same time we were able to accelerate investment behind our brands, increasing marketing expense by approximately $16 million or 18% for the quarter. Our strong consumer foods performance continues to be driven by successful innovation, better marketing and merchandising, improving inflation trends, strong supply chain capabilities, and a stable of brands with strong value appeal. In addition our commercial foods businesses continue to compete very effectively despite a challenging food service environment and we remain confident in the ability of our commercial management teams to navigate this difficult environment well. Our cost control efforts continue to yield very good results, both in our supply chain operations and in our selling, general, and administrative functions. Consistent with our expectations, our consumer supply chain cost savings came in ahead of target with savings in excess of $300 million for the full year. For the first time in many quarters, our cost savings benefits for the quarter more than offset the negative impacts of commodity inflation. In addition we achieved our SG&A targets for the year. Our people are embracing our zero overhead…

(Operator Instructions) Your first question comes from the line of David Palmer - UBS Securities

Question about fiscal 2010 and what do you think the biggest variables as you think about how that year will play out, the three things that I’m thinking about are the competitive behavior in frozen, the repeat levels of your new Healthy Choice line in that segment, and then lastly the demand in the food service area, in other words restaurant demand. Those are three things that I would think of that would be pretty big variables but perhaps you could address that and if there’s anything else that would be higher on the list that would be great to hear about.

First I would tell you one thing you didn’t mention is the overlap that we have with ConAgra Mills, that’s taken into account in our forecast, but we certainly don’t expect to repeat the performance in that segment. As it pertains to frozen competitiveness, we believe we’re in a very good position. We’re not looking there to compete primarily on price. We believe we’ve got our merchandising programs where they need to be from a customer/consumer standpoint. We haven’t gone crazy. We’ve stayed fiscally responsible. We’re looking to fight that battle through strong innovation, continued strong innovation, and strong marketing. So we feel good there. As it pertains to the Healthy Choice repeat levels, at this point everything looks very, very good on our new products and we believe that will continue to be the case. All the feedback is extremely strong. I do think and your last element on food service, yes certainly there are some macro issues in the environment to deal with in the restaurant trade but we believe we’re in a very good position particularly with Lamb Weston to fight through that as well as anybody. The strength of that business obviously is french fries; 85% of the french fries are sold through QSRs, quick serve restaurants, and that’s probably the most stable piece of the food service environment. And we obviously took all of that into consideration in building the plan. However the probably, one really important piece that we did not talk about is the fact that we’ve got very strong productivity programs, cost save programs, that will clearly be bigger than inflation this year. Inflation is moderating. Our cost savings programs are still strong and that gap will help us from a margin standpoint.

How much bigger is your productivity savings this year then perhaps last year, do you have any dimensions on that.

We start each year with a benchmark goal of around $225 million and then update you throughout the year whether or not we’re running ahead of that but it will, we’re expecting inflation to be a low single-digit rate so even our beginning point should comfortably outpace that.

Your next question comes from the line of Bryan Spillane - Bank of America/Merrill Lynch Bryan Spillane - Bank of America/Merrill Lynch: Just actually a follow up I guess to David’s question, when you look at cost inflation for next year, if you can just give us some degree of how much of your input costs are locked in, how far they’re locked in for, and given where protein like hog and cattle prices are, is there a chance that or how much variability is there for the potential for input costs to actually come down relative to what you’re budgeting right now.

Let me talk generally about how we see inflation especially in the consumer space, we’re looking at still seeing some inflation next year in the low single-digits. We’re not looking at deflation. The inflation is going to be driven by tomatoes, tin plate related to cans, and some of the proteins. We typically are not going to get into a discussion of our precise coverages but I will tell you that we are proactive in looking at our cost structure and our procurement plans I think are appropriate given the environment.

Your next question comes from the line of David Driscoll - Citigroup

First off congratulations on a good quarter and it is great to see that ConAgra has its brands gaining momentum. I really just have two questions, the first one is business related and the second one would come back to the manufacturing side, on the first side, by my calculations your fiscal 2010 guidance implies that the consumer business would grow operating profits of about 8%. This growth is even higher if we consider the last of a 53rd week. This is significantly above what we see with like the rest of the food group. Can you put this in perspective, how aggressive do you feel that this figure is.

Clearly we’re going to get the growth from our consumer foods segment next year and it will be bigger then what you stated, but I would tell you that we feel very, very confident in the fundamentals of the business both from an innovation, marketing, productivity standpoint. So we’re very confident that we’ve got really good momentum and yes, we have a 53rd week to go up against, but we’ve already taken that into account in our plan.

Is there any share repurchase benefit factored into the guidance.

No we do not have any share repurchase benefit in the guidance at this point.

Thanks for the comments on the safety of ConAgra’s manufacturing operations, the absence of this information has made it quite challenging to analyze the company, one follow-up here. Will your plant maintenance budget rise to any significant extent in fiscal 2010.

Simple answer is no. We feel very good about our quality, safety, and infrastructure programming. We’ve made significant improvements and upgrades to the infrastructure, capital, and manpower the last three years and we feel we stack up in a good place.

Your next question comes from the line of Jason English - JPMorgan

Couple of quick questions for you, you mentioned marketing expenses up 16% in the quarter, was that just consumer marketing expense and can you comment on how your trade spend line is changing.

Yes we did increase our marketing spend by about $16 million this quarter, year over year, we were confident in our momentum and having that extra week. So we did make that investment. And our trade spend has gone up a little bit to take into account the value equation, the price value needs in the marketplace but it’s pretty minimal. And we feel very, very good that we’ve got that under control particularly with a new program in place for fiscal 2010.

There’s been a lot of chatter about multiple retailers introducing SKU rationalization and brand or product prioritization initiatives, I suspect nearly every company is going to have some products that are going to feel a bit of pain, some that are going to get a little bit of gain, as you look at your portfolio can you identify any areas specific areas where you see some risk or opportunities from these types of initiatives.

We really do see a bit of caution but really an opportunity as well and it’s always important for us to help our customers optimize their shelf real estate to make it more productive. You know our own private label, snack bar, cereal and potato business is doing quite well. It’s got reasonable margins and we expect that’s going to continue to grow. I would tell you on the brand side its obviously our responsibility to make sure that we stay relevant with our key brands to the consumers and customers and we do have a good number of number one brands like Orville Redenbacher, Banquet in the value frozen space, Chef Boyardee, Hunt’s tomatoes, Reddi-Wip, Egg Beaters, Pam and others that will benefit actually from a reduced brand assortment. But I think the real core here, the key part of this issue is making sure that we are proactively eliminating our own SKUs when they have may have questionable returns for the retailer and we have a very robust program that we’re in called active SKU management that tackles this proactively, very proactively. So I’d say the other piece to this to ensure our momentum is to make sure we’ve got the right price gaps with private label. And you know that we’re all over that much better than we were a year ago where I’d say we used more of a blunt instrument so that price gapping with private label is important. So I think we’ve got ourselves in a very good position. We do not see any significant material vulnerabilities and we’re being very proactive in this regard and when I talk about active SKU management, that’s specific SKUs within lines not total brands.

Your next question comes from the line of Edgar Roesch - Soleil Securities

My main question here is on your corporate expense, that was significant savings year over year, fiscal 2009 I think you gained about $0.11 per share from reductions. Is it at a sustainable level heading into fiscal 2010 and can you comment on the bonus factor or any kind of incentive compensation factor on that number.

First of all, related to the sustainability, we have focused on our core SG&A and we have made, we continue to be able to drive our zero overhead growth across that core SG&A and we expect to be able to sustain that for certainly some period of time. As you alluded to, a portion of the decrease you’re seeing year over year is driven by a decrease in incentives from fiscal 2008 to 2009 but we focus on core SG&A for our initiatives and that excludes the impact of those incentives.

Your next question comes from the line of Robert Moskow – Credit Suisse Robert Moskow – Credit Suisse: I was wondering if you could comment a little bit on your asset platform specifically in manufacturing. I did a little bit of math and I found that on a sales per manufacturing facility basis you’re a lot lower than your peers, probably around the line of 50% in your consumer business, when I compared it to Kraft and other brand of companies. Just wondering, it seemed like you have a lot of plants that may be smaller in scale and I think you also have a lot of brands that are kind of mid-tier and I wanted to know what do you think the positives and negatives are of having an asset platform like that.

Well I wouldn’t tell you that the math is exactly on target, but you’re conceptually correct given the way that we were built through acquisitions, we do have an infrastructure that’s like that. Now I’d also tell you that it’s a lot better than it was a few years ago and I think the biggest point is this is where are, a lot of our productivity runway exists. You’ve seen what we’ve been able to do in terms of putting hundreds of millions of dollars per year on the board from a productivity standpoint and we’re saying that that runway remains long and that’s a significant piece of it. So it is clearly in our sights. We are making big progress in that regard and I believe that we will continue to see that as a major component of our productivity and margin improvement. Robert Moskow – Credit Suisse: You talked about the $275 million spent on quality over the past couple of years, is there another incremental investment coming or is that investment kind of tapering now.

Yes, I would tell you that we really went back and shifted our focus toward core infrastructure if you will, and that is changing as we go forward and you will see us invest more in growth versus basic infrastructure. We feel we’ve gotten to a pretty good place there so the capital spend, total capital spend will not change dramatically but the balance will shift toward growth. Robert Moskow – Credit Suisse: Is there any way you can kind of give us like a first half, second half comparison on commodity costs. It seems like the first half will have the easiest comparison on costs and then changing in the back half and maybe if you can add to that, a lot of these commodities have gone up in the last few months, does that make it any easier to go to a retailer and talk about the possibility of even more pricing for next calendar year. Kroger said that the cost to produce their own private label food is starting to rise again. Have you noticed that?

Yes, what I would tell you is that we clearly are not looking at deflation, we’re looking at inflation although moderating. Private label is seeing that as well. Obviously their percentage of cost of goods with the lower price is greater for that. So we’re seeing a rise in the private label pricing which I think gives us confidence that we’re really not going to see wholesale rollbacks. As we take this kind of holistic look and we see where private label is going and the actions that we’ve already taken to get our price value in line, I wouldn’t say that there is going to be more than isolated instances on specific things where there may be pricing warranted. Overall that is not a big piece of our plan for next year. Robert Moskow – Credit Suisse: And then the timing of commodity cost comparisons, is there anything you can tell us.

Yes clearly you’ll see the year over year comparison easier in the first half but the second half still looks pretty good.

Your next question comes from the line of Ann Gurkin - Davenport & Company Ann Gurkin - Davenport & Company : With respect to your commercial foods business, has your outlook become more cautious since comments made in February, or is it still relatively the same.

No I’d say it’s probably about the same. I think we’re feeling pretty good that we can fight our way through as well as anybody can. It is a tougher macro environment but again, the space that we play biggest in with Lamb Weston on french fries in QSRs is probably the most stable and also a really strong profit source for those operators. So yes, still a relatively tough macro environment. Obviously the big delta for next year on commercial is mills, with the comparison and what was happening with the volatility in the wheat markets but other than that, I think we feel reasonably good that we can still grow our Lamb Weston business. Ann Gurkin - Davenport & Company : Just want to ask about Alexia, how is the rollout of the waffle fries going, are you getting shelf space, just an update there.

Yes, the sell-in has gone well. It’s very early, we don’t have enough read yet on the takeaway, but the sell-in part has gone well.

Your next question comes from the line of Chris Growe - Stifel Nicolaus

I just had two questions for you, the first one I want to ask in relation to your comment before about private label, how you’re all over that, and you’ve done a good job with the course correcting, have you found that your price gaps, you’re having to move those lower if you will, in order to be more competitive whether it’s against private label or competition. Have you notice that of late or any change there.

Well I think that there’s a zone that we believe that we can live with and play within. I do believe that consumers are more discerning about value more than they’ve ever been before and that will probably continue to be the case. We’re taking that into account with our merchandising program so I think we’ve got a pretty good hold on our pricing architecture now, much better than it’s been in the past.

Have you said how much in rough terms the profitability for Slim Jim is, what’s kind of in play if you will around the insurance, [interest] and proceeds in fiscal 2010.

We’re basically saying that we will be able to replace the basic operating performance of Slim Jim with our insurance and therefore it is not a hole in our F10 earnings.

Have you said how much that is though or maybe what percentage margin that business is in rough terms.

No, that’s probably too competitive to talk about.

And just in terms of cost inflation for fiscal 2010 have you given a dollar amount, sort of estimate of what we should expect for the year.

We’re looking at low single-digits, beyond that we’ve not commented.

Your next question comes from the line of Alexia Howard - Sanford Bernstein

I wanted to follow up on the pace of introduction of new products, clearly its stepped up quite nicely over the last year or so, consumer takeaway looks good. Do you have a data point in terms of what percentage of sales are coming from products introduced say over the last three years or whatever timeframe you choose, and do you anticipate that that’s going to increase over time or are you pretty much where you want to be on that metric.

I think in real rough terms its probably about 5% over the last three years or so and I think that’s probably around the right zone. Again, we’re about fewer, bigger, better and not about the number of SKUs so we’re looking at a high batting average and having the sustainability and growth over time and also looking at it in terms of platforms. So I believe that introducing good margin new products that will grow over time will continue to be our focus.

But you don’t see an acceleration from what you’ve achieved in fiscal 2009 and you’re pretty much where you want to be.

Maybe a small acceleration.

Your next question comes from the line of Andrew Lazar - Barclays Capital

Quick question on some of the thoughts around the value orientation, we’ve obviously heard that a lot from a lot of companies and yourselves as well and I’m trying to get a sense, the examples are going after value more of just shifting some of the marketing which makes sense to things at the trade, whether it be discounts and allowances, things of that nature and I’m sure there’s some of that but are there any other things that you or you’ve seen others do around delivering value to the consumer that are new and sort of interesting or different ways of sort of leading your merchandising with retailers that you’re doing from a sales perspective that’s truly different or novel.

Well I think one piece would be working backwards from price point and doing some potential reengineering of products which is really the story of what we’ve done on Banquet to enable us to hit that magical $1.00 price point so I think that’s a little bit different. Talking to consumers through our customers on dollar price points for total meals, so like meals for under $10.00 and leading with that with a whole host of things in our portfolio, really shifting some of our emphasis in promotion from national consumer promotions into shopper marketing. So doing programs that are more in line with what our retail partners are looking to do versus running national FSIs. All of those things I think are a bit different. The last thing I’d say in terms of maybe what’s a little different about ConAgra Foods is I think we’ve got the right portfolio to play in this environment and I mentioned the Banquet example, Chef Boyardee is clearly an example that brings a lot of foot traffic in and is a great value. But then there’s products like our Hunt’s Snack Pack Pudding, which is $0.25 or $0.30 per cup and mom sees that as a tremendous value and that business is doing very well. Another one would be our Hunt’s Pasta Sauce which cuts equally as well as the premium jarred products but is a significantly lower price point. So we have a number of products where we’ve got reasonable margins that can really deliver value and when we bundle those together for customers, we’ve got a good package.

Is your gut that, because I’ve heard this from a number of other food companies, that even if, when things start improving a little bit from a macro perspective that perhaps we’ll see a consumer that will still be somewhat more value oriented ongoing then they might have been in years past. I know this is just more of your personal gut feeling. Gary Rodkin I would absolutely agree with that that value-on orientation that let’s call it save versus spend mentality I think is going to be with us for a good time, a good long time, much more discerning consumer looking to really get value for every penny they spend and I think that has to be in our crosshairs and it clearly is very much the case here at ConAgra.

Your next question is a follow-up from the line of David Driscoll - Citigroup

What’s the biggest driver in consumer foods in F10, is it volume growth or is it margin expansion.

I would tell you it’s probably more margin expansion which is fuel for volume growth. We clearly are looking at volume growth but the real key trigger is again really good productivity and cost controls that will outweigh the moderating inflation.

But I think you said earlier in the call that you did expect volume growth in the segment.

We do.

Your next question comes from the line of Eric Serotta – Consumer Edge Research Eric Serotta – Consumer Edge Research: I was surprised that you didn’t talk too much about the initial performance of the Banquet restaging in the quarter, could you give us some commentary as to how that’s going and how that’s, whether that’s meeting your profitability targets at the $1.00 price point.

Sorry if I didn’t hit that specifically, very, very pleased. We’ve got double-digit net sales growth on Banquet in Q4 and we’ve got significant margin improvement in Q4, so a real huge win for us in hitting exactly what consumers and customers what. It’s kind of a win all the way around. Eric Serotta – Consumer Edge Research: And then in the broader frozen portfolio would you say that you are gaining shelf space, freezer space, versus your competitors. Maybe you could address the incrementality of some of the new products. I realize that the Banquet restage, you’re replacing some slower moving SKUs with some faster turning ones, but it seems that some of those are more replacement whereas it seems that other things like the Marie’s Pasta Al Dente and the new, some of the new steamer lines, the Asian Steamers, are more incremental. But net, net are you gaining freezer space in your view or just holding on to what you have.

I’d say we are gaining a bit, I wouldn’t say that’s a huge piece of the equation at this point, a bit of shelf space gain but most importantly we’re clearly gaining market share in single serve meals. All three of the products you mentioned, Banquet and in particularly Healthy Choice and Marie Callender’s are gaining significant market share behind great innovation and great marketing. So we’re very, very pleased with the frozen transformation. Eric Serotta – Consumer Edge Research: And then just a final housekeeping question, I think it said in the press release that there was like an $11 million impact from foreign exchange in the consumer foods segment, I know that you have some export exposure, small international business there and some into Mexico and the like, but it still struck me that that was a large number relative to at least how you are perceived as being a domestic company. Was there anything in particular at play as to why you reached $11 million or was that just the market based impact.

Yes, it’s essentially the market based impact and I don’t think there’s anything unusual in there. I think as I commented earlier we will have some foreign exchange headwinds in the next year, but again we don’t expect those to keep us from hitting the targets we’ve set.

And that’s both transaction and translation so we’ve got some of that happening, we’ve got fairly sizable businesses in Mexico and Canada. But again all that’s taken into account for next year. Nothing outside of plan.

Your next question comes from the line of Karen Lemark – Federated Investors Karen Lemark – Federated Investors : Understanding you still expect to grow Lamb Weston, I just wanted to get a little bit more color on food service. Sequentially in general did sales, were they stable or did they slow and what are you assumptions around that fiscal 2010 versus 2009 and maybe if you could separate out what you’re seeing in QSR versus casual dining if that’s possible.

I don’t think I’m going to go that deep on it, but just from kind of the 10,000 foot level, let me give you some overall trends. Generally if you think of the world as QSR and all other food service, there was pretty decent performance out of QSR. Its stable to growing depending on the chain and we kind of expect that to continue into fiscal 2010. The other food service channels and I’ll call it fine dining more formal/casual dining, they were hit pretty hard in the second half. We do expect that to come back but it’s a slow build and so when we look out over fiscal 2010 we’re expecting most of that comeback to come in the second half because if a chain closes its doors, it doesn’t just reopen them next week when things get better. So I hope that’s helpful but I think that’s as deep as we want to go.

Your final question is a follow-up from the line of Robert Moskow – Credit Suisse Robert Moskow – Credit Suisse: Just lastly you said that 21 of your plants are on SAP now, but you have 94 around the country, what percent of your facilities do you intend to introduce SAP into.

Our focus on SAP is on our consumer platform principally and we are through 21 plants and we have approximately 12 more to go and we will be complete with that in about the next 15 months.

There are no additional questions at this time; I would like to turn it back over to management for any additional or closing comments.

Thank you, this concludes our conference call and as a reminder this conference is being recorded and will be archived on the web as detailed in our news release. And as always we are available for discussions. Thank you very much for your interest in ConAgra Foods.