Good morning, and welcome to today's ConAgra Foods Fourth Quarter's Earnings Conference Call. This program is being recorded. My name is Jessica Morgan, and I'll be your conference facilitator. All audience lines are currently in a listen-only mode, however our speakers will address your questions at the end of the presentation during the formal question-and-answer session. 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 and welcome to our fourth quarter earnings call. Thanks for joining us today. I am Gary Rodkin and I am here with John Gehring, our CFO; and Chris Klinefelter, our VP of Investor Relations. Before we get started, Chris has a few words.

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 can influence and affect our business perhaps materially, I'll refer you to the documents we file with the SEC, which includes cautionary language. Also, we'll be discussing some non-GAAP financial measures during the call today, and the reconciliations of those measures to the most directly comparable measures for Regulation G compliance can be found in either the earnings press release, the Q&A or on our web site. Now I'll turn it back over to Gary.

Thanks Chris. As we shared in our pre-announcement last week, fourth quarter diluted EPS from continuing operations on a comparable basis was $0.55 versus $0.60 a year ago, and as reported EPS showed a loss due to impairment charges, which we will talk about in a few minutes. Our shortfall to our expectations was driven by two key factors; one, weaker than planned Consumer Foods volumes, and two, significantly lower profitability in our Private Brands operations. As we reevaluated the current and near term profit trends for our private brands business, we concluded that we will be below original estimates for several years, which is the main reason we lowered our EPS outlook for fiscal 2015 to 2017. To state the obvious, we are disappointed with these results. We didn't live up to our expectations, and the year and the quarter were unacceptable. In my book, there are no excuses for that. I want to take the time this morning to explain the root causes of the miss and some details on the improvement initiatives underway. There is nothing more important for me than ensuring we drive improvement in fiscal 2015. We have a tremendous amount of company-wide engagement, resources and energy devoted to improving results in fiscal 2015 and beyond. While fiscal 2014 was not what we wanted in terms of profits, our operating cash flow exceeded $1.5 billion, and we repaid $600 million of debt, both of these items exceeded expectations, and are important factors in the ability for us to succeed going forward. We did this while continuing to pay a strong dividend, and I will emphasize that we remain committed to the current $1 per share annual payout, and a strong dividend policy as well. At a segment level, we will start with our Consumer Foods…

Thank you, Gary, and good morning everyone. I am going to touch on five topics this morning. First, I will start with a brief discussion of the intangible asset impairment charges we recorded this fiscal quarter. Then I will address fiscal fourth quarter and full year performance. Next, I will cover comparability matters, and then on to cash flow, capital and balance sheet items, and finally, I will provide some comments on our outlook. Let's start with our intangible asset impairment charges; in our Private Brands segment, as a result of the continued decline in our gross margins through the second half of the fiscal year, and more modest expectations relative to the timing of improvement in profit margins, as reflected in our recently completed fiscal year 2015 plans, our fourth quarter impairment analysis indicated that goodwill was impaired. We then performed additional analysis to measure the impairment, and as a result, the company recorded non-cash impairment charges of approximately $605 million or $1.35 per share after tax. This charge is principally related to the impairment of goodwill, but also includes some immaterial impairment charges related to certain brand or trademark assets in the Private Brands segment. We also recorded additional non-cash charges of approximately $76 million or $0.12 per share after tax, principally related to the impairment of the Chef Boyardee brand in our Consumer Foods segment. This impairment reflects the impact of lower volume and margin trends for this brand. The total impairment charge of $681 million or $1.47 per share after tax is being treated as an item impacting comparability. The company believes that these non-cash charges will not impact the company's ability or plans to execute these businesses in the future. Next, I'd like to comment on our performance. Overall, the fiscal fourth quarter and full…

Thank you. Now we'd like to get to an important part of today's call, taking your questions. (Operator Instructions). And it looks like our first question today will come from Andrew Lazar with Barclays Capital.

Thanks for the question.

Good morning Andrew.

Two things for me. I guess first Gary, as you have stated in isolation, it’s fair to say the Ralcorp acquisition hasn't gone well so far. And at the same time, the core business trends have deteriorated further still. So I guess my question is whether management and the Board are willing now to take a harder look at the portfolio, and make some reasoned decisions regarding where you take the business from here and sort of what factors would play into those sorts of decisions and analysis, and then I have got a follow-up?

Andrew, that -- clearly a good question, clear point given this year and I completely understand where that's coming from. But keep in mind, this year was highly unusual. I believe that fiscal 2014 really isn't about our portfolio, it's truly about our execution. We do have, I believe a portfolio that can and will deliver sustainable profitable growth, and generate strong cash flow. Our portfolio has some strong categories, like Private Brands. We have got good opportunities in channels like Club, Dollar and C-Store, and we have got some real strong growing geographies, particularly on Lamb Weston international. So we are happy with the breadth and the reach of our portfolio. But what we need to do now, now that the turbulence of F‘14 is behind us, now that we are in the implementation phase of our company-wide effectiveness and efficiency initiative is to execute. Our focus in fiscal 2015 is on execution, and we believe that mid-single digit growth in fiscal 2015 as we stabilize and then high single digit growth in F ‘16 and beyond plus continue to pay good dividend should make for pretty good shareholder returns.

Thanks for that. Then with respect to the consumer branded business, I guess a lot of the reason why advertising and marketing was down in the quarter significantly was shifting a lot of that over to more promotional spend, in store efforts and such. And yet at the same time, obviously the branded pace of volume decelerated pretty significantly. So it doesn't seem like whatever that process was, you got the results that you were looking for, and I understand there is a piece of this which was some SKUs in frozen coming out and such, but that in theory you would have known about, when you were expecting volume to still be down three or four. So I am really just trying to get, I guess, a better understanding of what really happened there, around the consumer volume piece?

Yeah, let me start and then I will turn over to Tom for a little bit more color. To put it very succinctly Andrew, the industry volume in response to merchandising and just overall post Easter across the industry was very weak, so we did not anticipate that, and secondarily there was some late -- in Q4, some late shifting of merchandising on some of our business to spill over into first quarter 2015. Tom, any more color?

Sure Andrew. I think what I'd like to add to that is, what we are seeing in store and the impact that it's having on overall merchandising. I think the challenge that many manufacturers face, including ourselves, is that there is more competition for the limited space in stores. And certainly what we have seen is a lower lift as a result of that. So as we think about it, there is really three components that we are focused on. In Frozen, there has been an increase of overall competitive activity. We have bolstered our support. We have been competitive in our programs, and our market share primarily in the premium and value segments with Marie Callender's, Bertolli and Banquet for the fiscal year are up both in terms of volume and dollar share. We feel like we have struck the right balance there and those are businesses that we will continue to invest in. The second is, being able to -- in this environment of competition is to find ways to break through, and there are two ways that we are doing that. In Chef Boyardee, we have seen a lot of concurrent merchandising. We have traditionally enjoyed exclusivity in our events, and throughout the year, we have experimented with different approaches to get a higher lift. We had some very positive impacts with that, with some customers in Q4. We are going to be implementing that on a much broader basis, throughout the fiscal year, and we will see a better impact from that. And then finally, it’s just about ideas, and where we do really-really well is when we bring those consumer insights, particularly around meal solution, and easy to execute solutions for retailers, we win and we see that on Hunt's, ROTEL, many items in our portfolio. So it’s a challenging environment. We are tackling it category by category and we believe ultimately we will have a positive outcome from that.

And we have a question now from David Driscoll with Citi Research.

Great. Thank you. Good morning.

Good morning David.

Gary, I have two questions. The first one relates to the Consumer Foods business and then it’s going to come back to the strategic issue that Andrew was talking about. So Orville Redenbacher in the popcorn category, when I just look at my Nielsen data, you have a fairly sizeable price advantage versus the number two brand, Pop Secret. That business according to our Nielsen data has lost an unbelievable amount of share, 760 basis points a share, down 17% in our data. The category though looks awesome, the category is up 8%, so I can't even feel like we can give this thing credit for a tough environment, because the environment for popcorn looks terrific. The question here is not so specific about popcorn, it’s just popcorn feels like the piece of evidence that says, why not take a much harder look at strategic review on the portfolio, because you are not getting the value out of this that you need to be getting, and given where the stock is, selling some assets and buying some stock back seems to make phenomenal sense from a shareholder value creation. So can you give us some thoughts on this?

Yes, David, fair question, totally understandable and as concerned you are on the Orville Redenbacher performance, it doesn't come close to how frustrated I am with that performance. We need to do better there, and we have a lot of efforts in place to tackle exactly what you are talking about. Now to segue into your other question and what Andrew touched on as well, let me just say, that we are pragmatic. You have seen me demonstrate that in my 8.5 years here with significant transactions and just last week, we closed on the Ardent Mills JV, so we are still believing in our portfolio. We believe that the things we are doing will improve the performance. But we will always look through the lens of creating long term shareholder value.

We will move now to JP Morgan's Ken Goldman.

Hey, thanks for the question. Gary, the SKU reductions in Healthy Choice you referenced, to what extent, I guess, are they driven by your decisions, to focus on higher growth items versus the customer's decision to concentrate a bit themselves on faster turning SKUs? I am trying to get a sense for the risk of further SKU reductions like you saw with Healthy Choice a year ago, versus what's sort of being pulled back on your own?

Yeah Ken. I clearly understand where you're coming from on that. That is totally us. And it's not to say that they don't have a little bit to do with each other, because velocity is what really counts, that shelf space is valuable. But this is something we have been very proactively tackling over the last 12 months or so, because we do have a very strong piece of that business or sub-line of Cafe Steamers continues to grow very strongly, because it's extremely different in the marketplace, and that continues to grow. So we are very consciously culling other sub-lines and slow moving SKUs to give more prominence and more focus to the Cafe Steamers line, and that has been a very big portion of why the volume is down, once we reach the kind of shelf placement that we want, I think we will start to see better performance in Healthy Choice.

We will take a question now from David Palmer with RBC Capital Markets.

Hi Gary. I would just simply love to understand better the sources of margin pressure on the retailer branded business. The magnitude of each pressure. For instance, during these calls, you had mentioned the need to reinvest in sales, restore the price gaps, and essentially rebid for some portions of your business with certain retailers. Could you talk about the magnitude of these pressures and perhaps, how these drags may be diminishing the coming quarters? Thanks.

Yeah, let me start on that, and then let me turn it over to Paul, who can get more granular for you. You know that we acquired Ralcorp because of our deep conviction in the long term private brand growth, because of its relevance to consumers and customers and its underdevelopment in the U.S., a whole host of reasons and we still strongly believe in that. And you know that our strategy is to bring our operating capabilities, our infrastructure and our scale to a very fragmented industry. But as you have alluded to, we have dug ourselves a whole in the first full year, and a big piece of what you're referencing is because we had execution and service level issues that really put us on shaky ground with our customers, those are fixed; and our organization is maturing, particularly on the sales front, and what that's going to do, is enable us to partner with our customers, because they are gaining confidence in our reliability, our responsiveness, the capabilities we can bring, and we could be much more proactive, versus as I said before, that we were on our heels. So we will grow volume this year. We will begin to improve our margins in the second half. We will get past some of these short term cost issues, and we will start to bring some of those cost synergies to the bottom line and accelerate our performance, as we get into F 2016 and beyond. So we still have very strong conviction, but we did have a whole host of issues to deal with, that culminated to oversimplify in a lot of price concessions to stabilize. So Paul, some more color?

Yeah just, integration itself was challenging; and when you have a situation where your customers are really motivated to change suppliers, because we are letting them down on service and execution issues. You got to really pull the price lever to maintain the volumes. The good news is, we are in a much more stable position. We have fixed service issues and execution issues. Better than me, we don't have a continuous improvement mindset to always look for better ways to run the business and improve. But we are much more stable, and we will drive margin improvement and top line growth here as we go forward.

Jonathan Feeney with Athlos Research has our next question.

Good morning. Thanks very much.

Good morning Jonathan.

Couple of questions. Gary, we talked on these calls about some of the really personnel level and management level changes that were made in a different operating businesses of Ralcorp, and how you had to -- you changed some of those, may be put some resources back in, some people back in, so the decisions are getting made closer to the customer. Can you tell me what comfort you have with the team you have on the field right now there and the structure of those businesses?

Yeah, let me turn it over to Paul, because I think he can give you some real live color on that.

Yeah, we reacted to the reorganization that was done right when we acquired Ralcorp, like it would be beneficial to have decision making, like you said, close to the customer; created six business units with general managers that are running each of those. Yes, disappointed in our fourth quarter results, but have confidence in the structure and the leadership team we have to improve the business and the results going forward, with a really intensified focus on expanding margins.

And I would tell you Jonathan that, a lot of it has to do with the customer interface, and we frankly have done some course correcting very recently in this effectiveness of efficiency work, to make sure that we have got deeper product knowledge on the front line. That's something that I think we tried to go a bit too broad in the first iteration, and now we are narrowing that product focus now, because we have realized just how important it is to really have the expertise at the buyer level, the front line buyer level. So that is a pretty significant change that we have very recently implemented.

We will move now to Robert Moskow with Credit Suisse.

Hi thanks. I guess I agree that it's probably too soon to pass judgment on the marriage of private label and brand and as you said, you have been spending the past year, fighting fires. But Gary I was wondering, is it fair to say that you are also stretching some of your resources of your team, more than they have in the past. Like, when I think about your sales function and Doug Knudsen, to what extent was his time being stretched to have to deal with all these customer issues on private label? And do you think that it had an impact on the branded business' volumes falling as well, just in terms of how he spent his time? And then I just wanted to understand what Al Bolles is doing now. He is now taking on the supply chain role; and private label is a very complicated supply chain function, and I want to know to the extent that he is going to be taking that role of the working capital management and all of that, that's entailed?

Yes. That's a very thoughtful set of questions there, as I would always expect from you. On the first one, in any major acquisition, you are going to stretcher organization, so clearly that has happened. But in recognizing as we have gone through fighting so many fires, more than we anticipated, that really was the basis for this effectiveness of the efficiency work, which has really given us a very granular look at all of our processes, all of our structures. We have been extremely granular on that, and have really worked to have the effectiveness drive the efficiency. So we talk about the savings side of that initiative, but even more important is the effectiveness side of it. Culminating in better resource allocation, faster decision making, more customer responsiveness etcetera. So we clearly have -- are in process of making some pretty significant structural changes, to ensure that we can manage through. Now we are past so much of the fire. It was brutal, to be honest, on the organization in the past year. But I would say that, we are well beyond that. So that's really where I think we are at.

Our next question will come from Jason English with Goldman Sachs.

Good morning folks. Thanks for the question.

Good morning Jason.

So you mentioned, you anticipate improvement in Consumer Foods and top line throughout the year. Can you give us a better sense of the volume growth that your guidance is predicated on for that business?

Jason, this is Tom McGough, and with regard to Consumer Foods volume, what we see is sequential performance improvement throughout the year. It's going to be driven by three factors. Clearly job one is improving the overall volume and share performance on our core business. We have talked about the three challenged businesses that we have, initiatives being put in place and we should see sequential improvement on that. The vast majority of our portfolio is actually done very well in terms of growing share, and we are going to sustain that performance. I think what's different going into next year will be two other factors; one is just a new focus on winning and growing channels. Whether it's Club, Dollar, C-Store, they are growing at a much faster rate than traditional grocery. Over the last year, we have worked, customized our product, packaging, merchandising programs to succeed in those classes of trade and we are well positioned, going into FY 2015 to see a market improvement in our top line as a result of that. And then finally, international, while international is a smaller part of our overall portfolio, its starting to have a more significant impact. Our plan there is to grow with our global customers, as they expand globally, and we are seeing good sales acceleration in emerging markets like Mexico and Latin America. While it's a relatively challenging environment, we expect that our business will show sequential improvement throughout the year.

And Jason, just to put a marker on that, we expect to be about flat to slightly down for the year. So we are not looking for bigger roll-ups, but we are looking for that improvement Tom talked about.

We will move now to Eric Katzman with Deutsche Bank.

Hi good morning. Just one clarification and then a more broader strategy question. The 217 base John that you're using, does that include or exclude the dilution from Ardent?

The 217 base, that's just based off of this year, so there is no dilution from Ardent in the current year. We will be comparing next year, which will have some dilution in it to the 217 base.

This is Chris, the mid-single digit rate of growth that we are signing up for next year, includes dilution from Ardent.

Eric, did you have a follow-up?

Gary if these -- some of these brands like healthy choice and others, you know you put over the last seven, eight years, a tremendous amount of effort to rejuvenate position against the consumer and it has been a struggle. And I am just wondering versus kind of Andrew's point of breaking up the company or something, maybe another option to think about is, why not manage those businesses more for cash, and use that to fund the growth in private label, which obviously you believe in $7 billion plus investment. Why isn't that a viable option for the business?

Yeah Eric, clearly good question. We have built into our guidance, realistic growth expectations, and we do segment our businesses, and as we see rationale for moving things into more of a managed-for-cash mode, which we do in a number of our businesses, they move in there. So I would tell you that the fixes that we have in place on those three problem brands, really are pretty tactical right now, and they really have to prove their mettle with a very high bar to go get any kind of significant marketing investment from this point forward. So that's may be a slightly different way of saying, we are looking at things a bit like you're suggesting.

We will now go to Bryan Spillane with Bank of America/Merrill Lynch. David Lee - Bank of America/Merrill Lynch: Good morning. This is actually David Lee in for Bryan.

Good morning David. David Lee - Bank of America/Merrill Lynch: Good morning. Just had a question on the Private Brands business and some of the pricing concessions that you had taken earlier this year; and given that this work has made progress in stabilizing some of the relationships, is there a sense or evidence or examples that the advantages of having these two businesses under the same roof is coming into play? So I guess customers recognizing the higher quality and what way that's contributing to the better margin outlook for the business? And also I guess my understanding was that, some of these were in part due to the competitive environment, so any detail that you can provide on the overall environment will be helpful.

Yeah, David I would tell you that, we have really been back on our heels this year. So there is no getting around that. We have had to be very reactive in putting out fires and trying to basically maintain our customer relationships. That's pretty much behind us. We put a lot of effort into fixing that, and then a lot of investment into maintaining that business with the price concessions. So we really haven't had the ability in any kind of a big way to take advantage of what we talk about as the one plus one equals three. We do have some specific customer examples where that has worked in combining the two, and that gives us conviction that once we can be much more proactive and have the confidence of our customers, that we will be able to start leveraging those capabilities. But we really haven't seen that, because we haven't been able to focus the energy on that yet. Part of my confidence on our future and private brands, interaction with the customers and the combined strength of having the branded -- and private branded businesses together in those strategic discussions on things we can do, from a strategic partnership.

Operator, this is Chris, I'd like to ask that we just have one final question.

Thank you. And our final question today will come from Akshay Jagdale with KeyBanc.

Thanks for taking the question, I will make it quick. Can you -- I am just trying to understand where and how you are going to get improved performance on private label over time? What would be really helpful is if you could just give us some color on what categories or product groups you have seen the share loss in, and may be if you can comment on -- you have lost share at the expense of margin, and you would have lost more share, I guess, if you hadn't given up pricing. So how do we get back share and improve margins from here? That's really the bigger picture question, but if you can give some color on what category and product groups, that would be helpful. Thank you.

This is Paul. I will just hit on a couple of different things. From a top line perspective, confidence and modest growth, as we go through 2015, distribution gains, improved mix and gaining new profitable incremental business because we are in a much better position from a stable executing environment. What will help drive earnings growth is on the operational side, and Gary had mentioned in his script, the network optimization and some plant closures, the changes in our distribution network. These are really good projects, its really about taking one step back to take two steps forward. There are increased expenses in the short term, benefit us and position us to win long term, and we are accelerating that. Those are good products and -- projects and I could see the benefits on the long haul, and that's where -- we will push them through as fast as we can.

And this concludes our question-and-answer session. Mr. Klinefelter, I will hand the conference back to you for final remarks, for closing comments.

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

This concludes today's ConAgra Food's fourth quarter earnings conference call. Thank you again for attending, and have a good day.