Good morning and welcome to ConAgra Foods second quarter 2010 conference call. (Operator Instructions) At this time I’d like to introduce your host for today’s program, Gary Rodkin, Chief Executive Officer, ConAgra Foods.

Good morning. Happy Holidays. This is Gary Rodkin and I am 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 are 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 would like to learn more about the risks and factors that could influence and affect our business, I will refer you to the documents we filed with the SEC which include cautionary language. Also, we will 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 press release or on our website under the financial reports and filings link, and then choosing non-GAAP reconciliations. In reference to Regulation G, I will note that our reported diluted EPS from continuing operations of $0.55 has $0.03 of net benefit from items impacting comparability as detailed in the press release, resulting in EPS of $0.52 on a comparable basis for this quarter. On that same basis, the $0.38 of diluted EPS from continuing operations reported in the prior year quarter contained $0.05 of net expense from items impacting comparability, resulting in EPS of $0.43 on a comparable basis. Now I’ll turn it back over to Gary.

Good morning and thanks for joining us. Today I’ll recap our second quarter results and will talk about the drivers of our strong performance particularly our good top line results in market shares in consumer foods. I’ll also discuss other areas of significant progress that are giving us a great deal of confidence about our ability to keep delivering high quality growth. After that, John Gehring our CFO, will run you through a few more financial details. We’re very pleased with the numbers we turned in for the quarter but also with how we got there meaning that market shares, units, dollar sales, and brand investment all moved in the right direction to produce very high quality results in our consumer foods segment. For those of you who’ve been following us, you know that we needed to put some fundamentals in place and build greater brand strength to get to where we could deliver the results that investors will value. Those fundamentals are centered on more and better marketing, real innovation, great in store execution, and very strong cost savings efforts in our consumer foods supply chain. I’m happy to say that we’re seeing the results of our efforts and are benefitting from stronger consumer pull for our products and more tightly run operations as well as better input cost trends. We’re on a path of consistent execution and sustainable growth just as we said we’d be. Let’s get into some specifics, diluted EPS from continuing operations was $0.55 as reported and $0.52 excluding items impacting comparability, up 45% as reported and up 21% on a comparable basis. We’re pleased with EPS for the quarter and feel very positive about where we’re headed this fiscal year. In fact we’re expecting fiscal 2010 diluted EPS to now approach $1.73, ahead of…

Thank you Gary, and good morning everyone. I’m going to touch on four topics this morning. First our second quarter performance highlights, next I’ll address comparability matters, then onto cash flow, capital and balance sheet items, and finally some brief comments on our outlook. With respect to our second quarter performance as Gary noted we posted another strong quarter. We reported fully diluted earnings per share from continuing operations of $0.55 versus $0.38 in the prior year. Excluding items impacting comparability fully diluted earnings per share from continuing operations were $0.52, an increase of 21% over the prior year. Segment operating margins showed continued improvement. The operating margin improvement was led by a strong performance in the consumer foods business which increased its operating profit margin by 350 basis points over the prior year. This consumer foods performance reflects a more favorable input cost environment and strong productivity savings as well as good sales results. Let me touch on a few other operating highlights for the quarter, first as we noted the consumer foods business turned in a very good quarter. This represents the fourth consecutive quarter of year over year performance improvement. We are executing well and consistently on the fundamentals that drive sustainable, profitable growth. These fundamentals include successful innovation, better marketing and merchandising, sales execution through strong customer partnerships, and strong supply chain capabilities. And the benefit of this execution is showing up in our consistent delivery of good financial results. Inflation for our consumer foods business continues to trend favorably, slightly better than our expectations. Overall in the second quarter we had net deflation in the low single-digits, however the net deflation was driven in large part by favorability related to vegetable oil costs, a large portion of which gets passed through on our product pricing…

(Operator Instructions) Your first question comes from the line of Bryan Spillane - Bank of America/Merrill Lynch Bryan Spillane - Bank of America/Merrill Lynch: If you could talk about maybe since you’ve closed your quarter the competitive dynamics within frozen food and maybe also just more broadly within your consumer foods businesses. One of your competitors talked a bit about price competition and just competition heating up in general in frozen food, if you could just give us your perspective on what’s happened there and what you’re seeing in the market today.

I just want to make really clear right up front what’s driving the growth in the frozen foods really is about the fundamental changes that we’ve made to the business and that’s really about the innovation in the marketing. There really is not a deep discounting [renting] volume with irrational prices or unsustainable promotions. It truly is that at all and just to put some facts to it, over the last four, 12 and 52-week periods, Healthy Choice has had the highest average price per unit at retail of any directly competitive offering which means consumers keep coming back for the food. Certainly our pricing is competitive but what’s really driving our sales volume and market share is the strong consumer pull, both on the base business and on the new items.

I would say its pretty consistent with what we’re seeing in the marketplace. We haven’t seen, other than what you may have seen, if you looked at the 13 weeks, the last four week period for us was a little softer and that really talks to the timing of promotional events that we had which we in our quarter much more front loaded and that will happen. That’s why we really stayed focused on the quarter versus the four-week data, but exactly what Gary talked about.

Your next question comes from the line of David Palmer - UBS Securities

Question on your comment on non measured channels sales growth being lower than measured and you noted that you still had growth in your largest non measured chains, but do you expect the underperformance in the non measured channels to continue in future quarters and of course any detail on this would be helpful, perhaps there’s a category or two we’re you’re seeing the share loss maybe that’s related to discontinuance of certain things and really the focus here is will it continue in future quarters.

Let me take that, so in the non-measured channels the areas where we were hurt the most were as follows. One is in the convenience channel and that’s really largely driven by Slim Jim and that’s all that that was in that channel. And second is we’ve been proactive in the food service space and have actually discontinued a lot of SKUs as we prune that business to better reflect the simplicity we want to put through our supply chain and those kind of things. So I’d say in terms of continuing the last several weeks we’ve been up to about a 95% service level in C store business with Slim Jim, so that will actually get better as we go into the calendar year so we don’t foresee that becoming a problem for us. In food service we still have a little bit more work to do. So I’d say that’s probably the only thing that potentially will continue but we also see the bulk of that heavy load that we’ve done there already through the system. We have some, little bit more work to do in food service.

Broadly speaking are you expecting a very significant slowdown in volume trends over the next couple of quarters in the consumer foods area.

Absolutely not, the way our plans are built we see ourselves with growth in the back half of the year. I would caution the listeners though to remind themselves that we have 53 week last year so in terms of what will happen in Q4, they’ll be some comparability issue there, but on like to like we see growth in our consumer foods business in both unit and dollars.

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

Congratulations on the quarter, first thing I wanted to do was make sure I understand what you’re talking about on the guidance so effectively the way to look at this in comparison to last quarter’s guidance is really the number is $1.78 and then you had to take $0.05 out because you’re not going to recognize the business interruption insurance, I think I have that right. Stop me if I don’t. The second part of the same question though would simply be that next year in F11, the $0.05 will kind of “reappear” because Slim Jim will be operating back at 100% so the first fiscal quarter and the second fiscal quarter of F11 we’ll see the number come through on the operations side, is that correct.

First of all your first analysis, we would concur with. The $1.73 assumes now we’re not going to get that recovery. Just to be clear the recovery when its recorded in the first quarter of fiscal 2011 we will call that out as a comparability item when we are able to book the income but you will then also see a base business next year that is back up to more normalized levels and therefore will be lapping the essentially the divot we had in earnings this year because of not being in the marketplace.

I would say you’re essentially on target.

Great performance, the second question is just simply on marketing, I think you said marketing was up 25% for the quarter, that’s an enormous number, can you put this in perspective of what you expect the full year marketing budget to be up.

I don’t know that we want to get into specifics of exactly percentages but we will be up year over year on a comparable basis with our marketing spend for the total year.

Your next question comes from the line of Terry Bivens - JPMorgan

Congrats on another good quarter, quick question for you on SKU rationalization, you mentioned that there’s probably a little more to come in food service unless I’m reading into your comment there earlier, thinking about the consumer food side and the retail environment this period of accelerated SKU rationalization both for you and for the industry at large, what inning do you think we are in that and should we expect any more meaningful pruning.

I would tell you that the impact has really been immaterial for us because we’ve been extremely proactive, in other words, out in front of the customers push. We’ve had a program called active SKU management and that has worked extremely well for us. That has helped us from a productivity standpoint as you can imagine, longer production runs, less inventory. If you were out of stocks, simple choice for the consumer. And net net there’s some wins for us in some customers. There’s a bit of SKU rationalization in others but net net basically immaterial.

The only thing I would add on that is our SKU rat that we’ve called out is principally based upon our food service SKUs that aren’t profitable, not really driven by the customer programs you’re hearing about.

Kind of a broader industry wide question, with the outlook for input costs going to once again, pointing up, when do you think the industry will once again be able to pull the pricing levers and offset either through wholesale increases or dialing back of trade spend.

I think our pricing architecture and our analytics are so much better now on a real time basis. Andre’s team is all over it and I am confident that between our productivity and our knowledge of what we need to do at the shelf from a price gapping standpoint that we will be all over it. But we still continue to believe that inflation will be pretty tame as compared to what it was the last several years.

Your next question comes from the line of Vincent Andrews - Morgan Stanley

I guess a question on the frozen competitive environment, what exactly is baked into your guidance from a promotional spending or from a competitive expectation, what has to happen in order for that to impact your guidance.

What has to happen is a continuation of what we’ve seen so far, certainly what we’ve seen over the last 26 weeks, and that’s that we’ll be rational in terms of what we do in they marketplace. We’ll continue to lead with our marketing and our innovation that we’ve brought to bear in the category. Nothing outlandish for us to be able to deliver our algorithm.

We believe we’ve got the right competitive context built into our planning and into our merchandising plans so no change to our guidance.

So basically no step up from here is kind of what’s baked in right now.

We don’t believe that that will be the direction that we need to go.

Your next question comes from the line of Eric Katzman - Deutsche Bank Securities

Happy holidays, two questions, I guess first one on consumer, I think you said that your advertising and promotional budget was up 25 or 24% so that means that you’re running I guess at around a $450 million annual rate and that’s I guess I’m trying to understand one is, is that advertising and below the line promotion or is that advertising plus the promo between gross and net sales. Can you define that a little bit more and did promotion impact your top line this quarter one way or the other in the consumer business.

The statistics we cited were that we increased it by about $24 million which was slightly north of 25%. And its not necessarily smooth across every quarter so the number you’re citing on a full year basis, the $450 is slightly high. As far as what we’re talking about, we’re talking about things that are within the income statement, below the gross profit lines. We’re not talking about trade spending.

Yes, its not about discounting.

So if you’re running let’s say 5.5% to 6% of consumer sales annualized, that’s a pretty good level.

We believe we’re at a good level that importantly the effectiveness, the impact of the dollars, is significantly greater than it used to be from a productivity standpoint so we’re confident that we’re able to spend against the priority brands in a way that’s meaningful.

And as Gary said in his prepared remarks you also noticed that we also launched a very big campaign in our meal enhancer categories around Hunt’s in the crash kitchen tour. We had a nice programming with Ro*Tel and also with Manwich in that platform so we had a lot of new campaigns out that we launched which is really resonating with consumers and we feel good and what’s leading to our volume growth.

And then just on the commercial side, it sounds like things have gotten a bit tougher. I know the business or that division overall has done very well the last few years. You’ve kind of signaled that its going to be a bit tougher but I was kind of surprised that you mentioned I guess that there was some excess capacity in the system and that was creating price based competition and then at the same time you’re adding capacity in frozen potatoes. So how do we think about that going forward.

Let me try again and address that, first of all when you’re talking about the sweet potato plant in Delhi, we don’t really do that as adding core capacity to the industry. It really is a different product and we know that when it gets in store, its not a swap out for a French fry, it actually drives incremental total fried potato sales for an operator. So its really on top of everything else and obviously why we put it in Louisiana is to put it right next to the raw supply which is part of the hallmark of what makes Lamb Weston so efficient on the conventional potato side. The industry’s capacity tends to flow back and forth between domestic and international markets. The international markets have strengthened a bit, the domestic markets are as you know tough in the restaurant industry. And so I don’t think its, we aren’t talking about a situation where there’s dramatic over capacity at all involved. So I don’t see it as impacting the hallmark of this industry which has generally been that the capacity and its been, pretty stays in tune with demand.

One last point on that, you certainly know traffic is down in restaurants at quick serves. QSR’s are the least impacted and that’s where we have the bulk of our business.

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

Two questions, one a little bit more from an industry perspective, we’ve all seen some of the industry data points particularly around volume over the course of the last quarter and obviously the largest [inaudible] been bucking that trend as we’ve heard from the results this morning. Trying to get a sense first off what you think is leading to some of this overall industry volume weakness particularly because we’re lapping a quarter last year when the whole industry went through some pretty big inventory reductions and such and as part of that has ConAgra seen any change in its top line trends, maybe more recently that make you think, hey bucking that trend is going to be tougher going forward or not.

I believe that we are seeing things bottoming out. We still see inventory being tight at the customers clearly. And consumers as well. So people are buying more when they need it versus stocking up in a bigger way like they may be used to. But we are not seeing anything in terms of more degradation. We believe that the eating at home will continue to be a trend. And that marketing innovation and smart merchandising will continue to drive volume. So we see a continuation of basically the current environment for awhile.

I’m not sure if Gary’s left me with anything else to say on that. I think we feel very good about the plans we have for the back half of the year. Again like everybody else we are concerned about the overall the consumers’ health and what’s going in the broader economy but we see our business in the back half of the year fairly robust. So we feel good about that.

One last point on that, value is here to stay. We believe that and we believe that our portfolio is well set from a value standpoint and at the same time we are also proving that strong marketing and good innovation can drive equity. So we believe that one-two punch will continue.

And then around value or consumer that even seems more focused today on not just value but really on price point, on opening price point, is there an example or two perhaps that you’ve taken in your portfolio where it makes sense, a price point that really has hit with the consumer and has led, a brand that may be wouldn’t have as much to go on otherwise but has made it a lot more relevant.

That last part of your question probably throws my answer into a little bit of a flux. I believe and we’ve talked about this before that our Banquet product is an opening price point in frozen, it’s a very relevant brand to a lot of our customers and obviously to consumers. So we believe that the work we’ve done there on frozen transformation and specifically the Banquet transformation has really helped that business and its become more and more relevant in this economy as value takes hold. And it does provide the consumer with a very good meal and its that magic dollar price point that we strive to hit with that product and we’ve done really well with that. And I don’t think it has anything to do with, the brand doesn’t have anything else to bring forward as well. I think that would be one brand that we would certainly highlight in our portfolio.

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

Happy holidays, I just had one question, a bit of a follow-up but I wanted to ask about your product mix in the quarter in the consumer foods business, and when you talk about brands like Hunt’s growing pretty strongly, I’m just curious how did mix perform. Would that have been a mix degradation both from a sales and profit standpoint for consumer foods.

Actually it was slightly positive for us. Our mix helped us in the quarter.

And then in terms of your FX effect on the business, I know its very small but it was a little bigger than I thought last quarter and [inaudible] this quarter, should that be positive going forward, anything meaningful to call out there on the FX side.

I don’t think there’s anything meaningful to call out there. I think it will be fairly muted.

And then on corporate expense, SG&A was up quite a bit this quarter, is that all just compensation accruals, is that how we look at it.

The lion’s share of the increase is attributable to incentives.

Your next question comes from the line of Robert Moskow – Credit Suisse Robert Moskow – Credit Suisse : I thought it was a great quarter and I guess I’m just scratching my head on why the stock isn’t up more, can you remind us about your share repurchase program. You’re generating a lot of cash this year, I can see a scenario where its strong again in fiscal 2011, can you talk a little bit about how big it is and your priorities for your cash.

Let me start with our priorities, first of all I think as we’ve commented before we are committed to a healthy dividend. As we accumulate cash I think we will continue to evaluate various investment opportunities and that would include acquisitions that fit and have strong financial returns. We’ll also look at internal growth opportunities such as the sweet potato facility and while we do not currently have a share buyback authorization we will continue to evaluate share buyback as an element of our cash utilization strategy. I think as we previously noted we are committed to a strong investment grade credit rating and will remain focused on strengthening our balance sheet and maintaining that strong liquidity in this environment. So we’re going to continue to evaluate share buyback as an option. Robert Moskow – Credit Suisse : I think that you’re probably going to get this question from some other investors in the months ahead, so maybe you could give us a little bit of an insight on what are the other projects internally that you think are, that would stand out as high return projects that you think that you could invest in and then if you make acquisitions, what areas of the, what categories do you think you would want to go into.

As far as identifying individual projects, we really don’t go that level of detail. You’ve heard us talk about the sweet potato opportunity, that’s about the extent of what we’d like to discuss as far as that goes. But we do have a robust set of options and look at them rigorously. As far as giving categories that’s generally, we generally don’t comment on that level of detail. As John mentioned they’ve got to have a strategic fit and a strong financial hurdle, that’s about all we’re comfortable saying. Robert Moskow – Credit Suisse : I guess the reason I asked it that way is if people took a step back and looked at ConAgra people don’t think of it as a company that has a ton of huge reinvestment opportunities. But it does generate a lot of cash and [inaudible] cash used for share repurchase that it would be, it might help you in the eyes of investors. That’s more of a [inaudible] piece there so, thank you.

I think that we’ve got our strategic platforms, convenient meals clearly is one of them near the top as well as potatoes. We’ve invested significantly against innovation in the robust pipeline that we see clearly offers more opportunities. As we said again, the growth platform on the incrementality of sweet potato so we do believe we’ve got a pretty broad array of opportunities and we’re hopefully going to be able to take advantage of those.

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

So just a question on the outlook for sales growth in the commercial segment, I know you’ve given us guidance on operating profits in the second half, but there was a lot of volatility in the pricing growth and the volume growth last year and it really flips around between the second and third quarter of fiscal 2009, as we look out into the second half of this year, are we likely to see a slowdown in the volume growth over the second half but maybe a moderation in the price declines. Is that the right way to think about it.

I think that’s probably right. I think year over year you’re kind of looking at volume in the flattish range, maybe down a bit. But you’re right as, for example in this quarter mills represented more than $100 million of sales decline simply from the impact of wheat prices. So that impact will lessen a bit in the third quarter and will lessen a bit more in the fourth quarter. But you’ll still see shortfalls at the top line in both the third and the fourth quarter, just not quite as pronounced as what you saw in the first two quarters.

Your next question comes from the line of Eric Serotta – Consumer Edge Research Eric Serotta – Consumer Edge Research : Happy holidays, two areas of questions here, first regarding the promo spending in the quarter it looks like your price mix in the quarter was up somewhere in the range of about 1% or so, I know that you’re lapping the big price increases from last year, but in the past you’ve also talked about how you, being a little bit late on the price increases that you may be overcompensated and were course correcting as you went forward. So I guess my question is, was your trade promo materially up this quarter and what does the base or list pricing look like in rough terms before the trade promo.

So again the benefit between the 2% to 3% that you mentioned was largely driven by mix. We did not have a significant ramp up in our trade spending this quarter versus last quarter. I think that’s the bulk of your question. And our list prices, we’re discounting off of higher list prices obviously which we had taken off last year so on a percentage basis that looks a little distorted but for the most part we did not see significant trade spending increases in this particular quarter. Eric Serotta – Consumer Edge Research : And shifting gears a bit, you are in a relatively unique situation or have some unique perspectives having, relative to some of your peers, having a large or a sizable private label business in addition to your branded business, I wondering whether you could give us some perspective as to what you’re seeing in terms of the relative performance of the private label versus the branded and what the retailer response or retailer interest is in the two areas.

We’re growing well on both sides of it. In our private label business the places where we are really strategic, where we don’t have a branded presence like in our snack bars in particular, is quite strong and continues to be. But the branded side of our business is very strong as well. I would tell you overall as an industry, clearly there’s going to continue to be a place for private label particularly in this environment. But the growth overall in the private label industry has slowed at the price gaps between branded and private label have narrowed a bit and we continue to believe that the power of brands to drive retailer traffic and consumers wanting choice and innovation will continue to make that the top priority for us. Eric Serotta – Consumer Edge Research : And then in terms of your strategy of your broader strategy of having this sizable private label business, is it, could you talk about the rationale behind that. Is it base loading the plants, is it seeing the faster growth in private label versus branded over the next few years, and how do you balance that against effectively competing against yourself in some categories.

Yes, its really two sided. Offensively its places where we don’t play from a branded standpoint like the private label bars, granola bars, etc. fruit snacks. That’s the priority but the other side of it is where we defensively flank our high market share positions like a cooking spray or a whip topping, an egg beater, a Chef Boyardee, that’s where we basically use a strategy of power of two to give the branded product and the store brand.

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

I just wanted to ask you a little bit more, in the branded food business are you, do you estimate that you are holding or gaining total distribution. I’m curious about this because in the past we’ve had so much conversation about your “managed for cash” brands I wanted to get your sense for the health of the overall business and then maybe you can make a comment on the managed for cash as well.

Overall we’re seeing in all of our strategic pillars, we are seeing increases in our points of distribution and I’d say the lion’s share of that or the strength has been in our convenient meal platform both shelf stable and frozen. With respect to our specialty businesses, our specialty pillar, which is where some of the managed for cash brands that you alluded to sit and reside, we’ve actually done very well in holding our own. Given the brands that we have in that portfolio there has not been a ton of innovation there, and I would also say that those businesses have been very strong, some of the markets there are high share businesses for us and we’ve held our own. We’ve not seen ourselves lose points of distribution there. But we probably have gained the fewest in that space.

And can you give us any sense for new product activity upcoming.

Yes, we’ve got some really neat things that I’m not going to necessarily share with you right now, but I think you’ll see it on your supermarket shelves soon largely led by our convenient meal platform. We’ve got some interesting things we’re doing with snacks as well. So they’ll be in the marketplace later on in the third quarter.

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

This concludes our conference call and just as a reminder this conference call is being recorded and will be archived on the web as detailed in our new release. As always we are available for discussions. Thank you very much and Happy Holidays from ConAgra Foods.