Good day, ladies and gentlemen, and welcome to the first quarter 2008 earningsconference call. (Operator Instructions) I would now like to introduce yourhost for today’s conference, Mr. Leonard Griehs, Vice President of InvestorRelations. Sir, you may begin.

Thank you. Good morning and welcome to Campbell Soup Companyfirst quarter fiscal 2008 conference call. On our call this morning, AnthonyDiSilvestro, Vice President and Controller, will open by discussing results for the first quarter. Bob Schiffner,Senior Vice President and Chief Financial Officer, will also offer someremarks. A question-and-answer session will follow. Doug Conant, President and ChiefExecutive Officer, will join us for this portion of the call. Earlier this morning, our results were published along witha supplemental schedule for the quarter. Both of these items are also postednow on our website, www.campbellsoupcompany.com. The replay of our call will beavailable approximately two hours after it is completed through midnight,November 23rd. The replay number is 1-888-266-2081, or 1-703-925-2533 and theaccess code is 1152446. The call will also be broadcast over the Internet. You maylisten by logging on to our website and clicking on the webcast banner. As amatter of policy, our conference calls are open to all interested investors andmembers of the media. Our discussion will contain forward-looking statements thatreflect the company’s current expectations about its future plans andperformance. These forward-looking statements rely on a number of assumptionsand estimates that could be inaccurate, and which are subject to risks anduncertainties. These include statements concerning the impact of marketinginvestments and strategies, share repurchase, pricing, new productintroductions and innovation, cost-savings initiatives, quality improvements,and portfolio strategies, including divestitures, impact on sales, earnings andmargins and other factors described in the company’s most recent 10-K asupdated from time to time by the company in subsequent filings with theSecurities and Exchange Commission. Our actual results could vary materially from thoseanticipated or expressed in any forward-looking statement made by the company.Our discussion includes certain non-GAAP measures as defined by SEC rules. Wehave provided a reconciliation of those measures to the most directlycomparable measures, which is available on our investor website and it’s alsoattached to the earnings release. Now, to discuss our first quarter results, AnthonyDiSilvestro.

Good morning. First, let’s look at our consolidated resultsfor the quarter. Sales grew 7% to $2.298 billion. Sales growth breaks down asfollows; volume and mix added 4%, price and sales allowances added 1%;increased promotional spending deducted 1%; currency added 3%. Gross margin decreasedto 41.5% from 42.6% in the prior year. The decline is primarily due to costinflation and higher promotional spending, which were only partially offset byproductivity gains and higher selling prices. Marketing and selling expenses increased by $32 million to$348 million, primarily due to higher advertising expenses, currency, andhigher selling expenses, principally at Godiva. Administrative expense increased by $17 million to $152million, primarily due to higher compensation and benefit costs, includingthose related to the company’s North American business realignment and due tocurrency. Earnings before interest and taxes were $431 millioncompared to $438 million a year ago, a decrease of 2%. Net interest expense was$42 million, up from $41 million a year ago primarily due to higher net debtlevels. The tax rate was 30.6% versus 32.2% reported in the firstquarter a year ago. The lower tax rate for the quarter was primarily driven bya tax rate reduction in Germany. For the year, we project our full-year taxrate to be approximately 32%. Earnings from continuing operations for the quarter were$270 million versus $269 million in the year ago quarter. Earnings per sharefrom continuing operations were $0.70 compared to $0.66 in the year agoquarter, an increase of 6%, reflecting a lower average number of diluted sharesoutstanding due to our share repurchase program. Earnings from discontinued operations in the prior year’sfirst quarter were $22 million, representing the gain on the sale of our U.K.and Ireland businesses. Now I’ll discuss operating highlights by reporting segment. U.S. soup, sauces and beverages; sales of $1.097 billionwere up 4% from $1.052 billion in the year-ago quarter. The…

Thanks, Anthony and good morning, everyone. Our results thisquarter were mixed. We were very satisfied with the overall performance of ourbaking and snacking business, as we were able to deliver strong top lineperformance in both Arnott’s and Pepperidge Farm and hold our gross margin inthis segment, despite strong cost inflationary pressures. Our international soups, sauces, and beverages business alsoperformed well, aided by a weaker dollar and strong volume growth in the majormarkets of Canada, Australia, Belgium, France and Mexico. And our U.S. beveragebusiness remains on fire, delivering top line growth of 30%, as well as strongdouble-digit bottom line growth. Also noteworthy this quarter is the kick-off of our singleserve beverage distribution agreement with Coke, which is off to a solid startand meeting our expectations. Our U.S. soup business had a tough first quarter with netsales declining 1%. Our performance was impacted by difficult comparisons withlast year’s strong first quarter, as well as by the extremely warm weather weexperienced this fall. Given the stronger-than-expected cost inflationaryenvironment, we also did not have sufficient carry-in pricing to preservemargins. However, as we enter the key consumption periods of our soup season,we still believe that we have the products and programs to rebound in thebalance of the year. Consequently, we are maintaining our 2008 EPS fromcontinuing operations guidance at 5% to 7% growth from the 2007 adjusted baseof $1.95. In closing, I would also like to acknowledge that costinflation has become a more challenging issue than we had originallyanticipated. We clearly share this issue with other food companies in ourcompetitive set. Given the commodity cost environment and escalating oilcosts, we now expect cost inflation to fall within the range of 6% to 7% thisfiscal year, above our 5% planning assumption. Given this higher cost pressure,we are currently reevaluating our pricing strategies for the fiscal year andprobably will need to take a more aggressive stance in this area going forward. Now, I’ll turn it back to Len for our question-and-answersession.

You can begin the question-and-answer session, please.

(Operator Instructions) Your first question comes fromAlexia Howard from Sanford Bernstein.

A question on the margin outlook for the rest of the yearand how quickly we might expect that to start to come through. Clearly -- I wasfrankly quite surprised to see the pricing for the company overall be fairlyflat on a net basis for the whole company this time around, given that mostother companies are taking things up. What we’ve heard from some of thecompanies is that contact [tracks] with retailers at promotional price pointssometimes delay or create a time lag before you can actually take pricing up.Can you talk to me a little bit about how quickly we might expect to see thecombination of better pricing and productivity improvements come through tostart to help that out?

Well, as far as productivity is concerned, we should seefairly constant productivity improvements through the year. I think from apricing standpoint, it’s fair to say that that impact will probably be more ofa second half impact as opposed to a first half impact. So sitting here today,I would tell you that we still expect to hold margins on the year. I think itwould be highly unlikely at this point to expect better margins and we shouldstart seeing that improvement more toward the second half of the year.

Okay. Thank you very much.

Our next question comes from Eric Katzman from DeutscheBank.

Good morning, everybody. I guess first to follow up on that,on Alexia’s line of thinking, so basically now you’re -- with higher pricinghopefully in the second half, assuming private label and General Mills follow,you would assume that sales growth and EBIT growth are roughly the same?

Roughly the same -- our forecast is roughly the same, yes.

Okay, and then you get some benefit from the share repo andmaybe some debt pay down, or something like that, to create the leverage?

More from share repo.

Okay, and then I guess is it mostly -- in terms of theinflation, is it mostly a function of fuel that’s changed the outlook, Bob?

Well, I think we’re looking at higher wheat prices. I thinkto some extent, both dairy and our oils have also increased in pricing as well,but clearly diesel fuel is a big element.

Okay, and then last question and I’ll pass it on, or maybemore of a comment, I’m a little bit surprised that you chose to highlightweather. I mean, I really think it’s kind of a double-edged sword. On the onehand, maybe it was a factor but to the extent that you are calling that outversus what you said in the past, Doug, that I’m never going to highlight this,now it makes me say all right, well, if it’s cold, then you better really do wellas opposed to kind of blaming it when it’s warm. Can you just go through that alittle bit? And I guess to the extent that you can talk about the category, howhas weather impacted the category overall, as opposed to you maybe losing shareor something like that?

Eric, I would have been disappointed if you hadn’t raisedthat issue, so thank you. As you know, we’ve been doing this now for going onseven years, 28 quarters, and have not highlighted weather as a significantissue. And I still don’t believe it will be a significant issue for the year. Every year, we have had warmer quarters, colder quarters,and overall we’ve been able to deliver our sales forecast as a result of thatand ultimately our earnings forecast. So what we chose to do was highlight thefact that in this fall, this autumn, the weather clearly had an impact on ourfall plans but I do not believe it will have an impact on our full year plans. I am very comfortable with our forecast, which basicallywe’re standing by our original forecast, which said we would grow sales as acompany 3% to 4%, and you know if we are going to do that as a company, we needto do that in soup. We’re very comfortable with our forecast for the year. I will say we got off to a slow start and affected byweather more so than we have observed in the last 28 quarters since I’ve beendoing this, but it will not be an excuse for the year. Eric, I wish there was a perfect one-for-one correlationhere but quite frankly, when the weather is warm, significantly warmer, we dosee a slight dampening in sales. When we see it go from being cold to colder,we don’t see the same kind of lift, that’s because it’s cold enough already tohave soup and if it’s a little colder, it really doesn’t drive soup consumptionthat much more. The one other thing I would say about our U.S. soup businessis we are reporting that we are down a little less than 1%, but I feel verygood about the way our soup business is positioned. We were down a little lessthan 1% versus a record high 10% growth last year and this first quarter inU.S. soup is the second-best first quarter we’ve had in at least 10 years, andit’s $100 million above where it was only three short years ago. So we’velifted the whole performance level of our soup portfolio to a new level. Wedidn’t grow as much as we had hoped for and I would say we just lost a littleof the edge due to the weather and I think we’ll get it back over the balanceof the year. I feel very good about the way we’re positioned but we haveour work cut out for us. We have to do better and we know what we need to doand we’ll do it and we’ll lead the category to a higher performance level. I do think, although we won’t comment on any specificconsumption or share information, you have seen and the customers have seenthat this category was slow over the last three months and we expect that topick up and in fact, we’re already starting to see that in November. So that’s it from here.

Eric, let me just embellish on a little bit of what Dougsaid. We’ve done a lot of empirical analysis here around the impact of theweather and basically, what we have seen over time is that weather patternswill impact the flow of volumes within a soup season. When you look over manysoup seasons, weather doesn’t play hardly any factor at all but within the soupseason, it will in fact have an impact on moving volume around. So again, thisis what we’ve always said, is that you have to evaluate us throughout a fullseason as opposed to one quarter and I think that’s the point we were trying tomake relative to weather.

That’s helpful and I think that’s a fair point. Are youseeing any recent lift in condensed because of consumer pressure out there, interms of disposable income stress or let’s say recession type movements?

Our experience with condensed in the fullness of time hasbeen that when there is economic pressure on consumers, condensed is a goodvalue offering and it should hold up reasonably well. But as you’ll recall, wehad 25 straight years of a declining condensed business and we’re in year fourof growing it again. It will be interesting to see how it responds in thissituation but we’re optimistic about it.

Okay. I’ll pass it on. Thank you.

Just to build on the condensed piece, we have said thataspirationally over the last three years, we’ve grown condensed soup sales atabout a 4% clip and we said aspirationally that’s what we would like to do. The way we do the math on that is basically condensed soupsales should grow with population, which is around 1% to 2% and hopefully weexpect to do a little better. We think we can stay in that model of growing withpopulation this year and hopefully do a little better.

Thank you.

Our next question comes from Terry Bivens from Bear Stearns.

Good morning, everyone. Two quick things; you know, Doug,traditionally I guess there have been times in the past when you haven’t donethis, but usually pricing comes kind of near the end of soup season. Is thereany risk to trying to get it a little bit earlier?

Terry, it’s not really very practical because you have your-- you have all your programming laid out with your customers already throughthe rest of the soup season and in all likelihood, it’s going to be -- it wouldbe difficult, if not impossible, to move that around. So it is what it is.

Terry, we really aren’t projecting any kind of thing onpricing at this point. I think what we’ve said is we would -- we’re going tohave to revisit but we’re not making any forecast around pricing or we’re goingto do it or anything like that.

Okay, I thought I heard a hint there, but okay. And just oneother quick thing; why the need to be so promotional in the quarter? That onesurprised me a bit.

We had set up our plans independent of what turned out to bea very warm autumn, and we intend to fully compete. As you’ll note, ourmarketing spend was up significantly. If we had wanted to hit the consensusnumber, we could have cut it a little bit but we intend to compete fully andsignificantly. We’re in it for the long haul. We thought it was appropriatethis year to compete and manage our price gaps tightly with private label andthe branded manufacturers, and so we did.

Thank you.

Our next question comes from David Palmer from UBS.

A quick question, just to lead off; your consumers, do youthink they are pushing back a bit on your higher priced items in a tougheconomic environment? The reason I ask this, and this might be out there, yourmicrowaveable platform, clearly higher priced and then you have your FullyLoaded lineup and that was clearly priced at a higher level. Is perhaps FullyLoaded not doing quite as well as you thought it might be because of that pricepoint? Or separately, that microwaveable lineup, is that because of perhapsretailer and progressive brand introductions in the microwaveable bowls? Orperhaps, do you think there might be something broader going on with theconsumer trading down?

No. Just a couple of points; one, the microwaveable platformis the most pronounced reason for that slowness in the first quarter ispromotional timing and we expect it to be strong for the year. The other observation I would make on our higher priceditems, they still offer great value relative to other simple meals. And we knowthat particularly with Chunky, we know that we are interacting more with otherfood alternatives than soup. And actually, we do track our performance relativeto other simple meals and we do know we’re outperforming that category and mostof them are higher priced than soup. So we like our price value propositionrelative to simple meals and we like our price value proposition relative toall the alternatives out there as we go into the year. The microwave piece is more timing than anything else.

You also said in your release, and I think in your remarks,that low sodium is performing well. Could you give us an idea of what thatmeans to you?

Well, we continue to, on all the new items, we continued totrack very healthy repeat rates and that collection of SKUs continues to grownicely above the average of the line. And even though the competitive fray hasgotten a little more intense, we are also now adding the lower sodium version,the healthy request versions to our microwave line and they’ll be flowing inthis quarter and getting into next year, I mean later this year. So we’ve added I think 17 new sodium items on top of thelast year’s launch. Last year’s launch is growing at an above average rate andwith the 17 on top of it, including taking it into microwave, we think we’regoing to have another very solid year.

And lastly, on Godiva, you expect that to close by the endof the calendar year, and you’ll be using the cash proceeds, if indeed this iswhat happens, for share repurchase?

It’d be premature to comment.

Yeah, we’re not going to comment on that.

Okay. Thank you very much.

Our next question comes from Robert Moskow from CreditSuisse.

Thank you. Doug and Bob, could you tell me how much -- whatkind of increase in consumer marketing do you think that you’ll do this year,just on the advertising levels? You’ve said that you didn’t want to cut thefirst quarter, so you want to stay strong. Can you give us a range?

Well, we have a plan to have solid growth in consumerA&C, advertising and consumer promotion for the year but quite frankly, wedon’t give out forecasts for that. But we are currently contemplating having asolid increase.

Okay, and then spending in Russia and China, I noticed thatprofits are actually up in your international soup business, Bob had said toexpect some dilution from that spending the next couple of years. Was thereheavy dilution to profit growth in international from Russia and China?

Bob, why don’t you take that?

We in fact did have higher spending in the emerging marketsthis quarter versus last quarter. It’s up approximately $3 million, so we wouldexpect to have higher losses or more expenses, depending on how you look at itover the full year as well. So again, emerging markets will be a dilutiveinfluence on us in fiscal ’08.

The consumer spending -- both markets we now have productsin market at retail. Consumer spending is in full -- on full display in ourChina lead market and just rolling into our Russian market. So you’ll see thespending in these lead markets start to go up in the second quarter.

Okay, one more thing; have you seen anything from yourretailers, maybe specifically convenience store operators, on their concernsabout taking a lot of inventory in with pricing going up, with inflationarypressures and the lending squeeze? I’ve got to imagine the answer is no sinceyour beverage business is so strong and that’s got to be convenience storerelated.

Well, actually we are just getting started with theconvenience store piece with Coca-Cola Enterprise and Coca-Cola North America.The bulk of our growth in this first quarter was out of our grocery business,but the -- we don’t see any -- we’re not unusually highly developed in theconvenience channel. It’s an average development index for us and we don’t seeany issues there right now.

Thank you.

Our next question comes from Jonathan Feeney from WachoviaSecurities.

Good morning. Thank you. Bob, you gave us the next salesnumber for the U.S. soup business specifically. Could you give us a sense ofwhat volumes in pricing were in just that U.S. soup franchise as a whole?

We don’t break it down that far, Jon.

Then maybe at 30% growth, it seems like beverages are huge-- obviously a huge area of strength and just getting started. Maybe somereason to believe that might accelerate. Is there a meaningful gross margininflation or deflation that we’re seeing from that business right now and maybein the future?

It’s above average.

It’s above average gross margin?

Yes, it is.

For the company?

For the company.

Okay. Wow. And just, and correct me if I’m wrong, the lowertax rate had looks like something like a $0.02 positive impact in it, but Ithink the tax rate guidance used to be 32 to 33, so by cutting off that highend, you kind of -- do you think you might have -- you would have pulled $0.02out of guidance had you not gotten that tax benefit? Or did you do someopportunistic sort of investing with that little bit?

Well, the German tax rate reduction had about a $0.016 impacton EPS and frankly, our guidance was 32% to 33%. We are now pulling it down tomore -- closer to 32% for the full year and so expect to see higher tax ratesfor the last three quarters. So I don’t think it’s going to offer us atremendous amount of financial flexibility relative to our plans going forward.

If I could just ask one for Doug; you called out in therelease the eating varieties of condensed soup as a disappointment. I wouldassume the increased promotional activity has mainly been aimed atready-to-serve. Is this maybe a cannibalization you’re seeing? Is that the waythis business works?

No, actually I think what happened, we called out a fewareas where we felt we should do better. We called out convenient, microwaveand convenience. That was more of a promotional timing issue and condensedeating, in my opinion, was softened a little bit by the weather impact and Ithink you’re going to -- we’ll see, but I’m confident we’re going to see astronger performance the next three quarters.

It looks like the weather’s helping you today. Thank you.

Our next question comes from Eric Serotta from MerrillLynch.

Good morning. I’m wondering whether you guys could go intothe category dynamics in RTS cans a little bit more. If we take out thepromotional timing impact in the microwave bowls and convenience platforms, itstill seems that your RTS performance was a little disappointing, especiallyconsidering the very strong performance that Mills has spoken about lately onProgresso in terms of both share gains and retail sales increases. Could youtalk about your performance there in a little bit more detail? And as a follow-on to that, could you talk about the overalltrade inventories in soups, not just RTS but condensed and RTS?

The first quarter does not a year make, and the key quartersare the second and third quarters, and we like our outlook for ready-to-servefor the year. We did -- it’s difficult to tease out meaningful comparisons whenyou have -- we had a record quarter a year ago and so we had just anoutstanding first quarter performance a year ago, and then we’ll lapping that withsome unusual weather that’s affected the way we are planning and promoting, andwe also changed some promotional timing around our microwaveable platformrelative to our canned platform. And we on top of it launched a new line,Chunky Fully Loaded. So you have a lot of moving parts here. What I would say isthat, and I can’t get into the ins and outs of that, but what I will say is ifwe are expecting 3% to 4% growth in our soup business, we would expect thatkind of growth from our ready to serve business and I think we’rewell-positioned for the year to deliver that.

Okay, and then trade inventories, a quick follow-up for Bob--

Eric, I would say that in fact, we are not seeing any majordeviations from our expectations relative to trade inventories.

Okay, and Bob, just to follow-up, two quick items here; inthe past, you’ve spoken about $150 million to $180 million as sort of a bogeyfor ongoing productivity each year. Given the increased pressures on thecommodities side this year and maybe a little bit higher promotional spending,do you think you need to hit a higher number than that?

Well, the more we can generate, the better, that’s for sure.And we are working very diligently at trying to get as much costs reduced as wecan. But I think this year we’ll be very happy to stay within that range.Hopefully, as we look out past fiscal year ’08, we can generate a higher level.But I think for this year, we’re pretty satisfied that’ll probably fall withinthe range that you’ve identified.

We have the SAP implementation, which we’re ramping up thisyear. It gives us visibility into ways to ramp up our productivity in 2009 and beyond,but given that we are still rolling that out this year, it’s just not going togive us the kind of lift that we think it will give us in ’09 and ’10.

And then finally, and I’ll pass it on, just to follow-up onAlexia’s question -- I think it was Alexia’s -- on the pattern of marginimprovement throughout the year. Without talking about the timing orpossibility of pricing in particular, I seem to remember that you made commentsthat the margin should improve in the second half relative to what theperformance that we’re seeing in the first half. At the same time, you are, given the seasonality of yourbusiness, about 68%, 69% of your earnings are typically generated in the firsthalf. Could you just maybe help reconcile how improved margins in the secondhalf will counterweight the margin pressure that we see in the first half toget you flat for the year?

Well, Eric, clearly you can do the math. Obviously I don’tdisagree with the fact that our profits are weighted more to the front halfthan they are the back half, although I’m not so sure that I ultimately agreewith the numbers that in fact you are using. But again, I mean, it’s obviouslya mathematical issue. We expect -- if we expect to hold margin for the fullyear, we’re going to drive higher margins in the second half relative to thefirst half and the weights I think will not be as dramatic as you have justcommunicated. So that’s how we get there.

Okay. Thanks a lot. I’ll pass it on.

Our next question comes from Christine McCracken fromCleveland Research. If you have your phone on mute, can you un-mute your phone,please?

I just wanted to follow-up on an earlier question on youreating state volumes. You mentioned I think in the fourth quarter that youactually had a big increase. I’m just wondering if you thought it was possiblethat you had any pantry loading that could have maybe affected first quarter.

No, Christine, we don’t really -- the customers don’t takeinventory in any meaningful quantity going into the summer, so no, that was notan issue at all.

Christine, I can add to that; we do get now panel informationon pantry loading for our consumers and frankly, the pantries look if anythingslightly below where they are historically at this point. So pantry loading asit relates to the consumer is not an issue.

Good to hear. And then, just on the commodity cost outlook,it seems like the bulk of the delta is in where you’ve seen the changesessentially are affecting your baking and snacks segment. I’m wondering, whenyou look at what you can do to offset that in terms of pricing versus takingweight out, it seems like you have a little more flexibility relative to thesoup. So I’m just wondering one, if you expect the commodity cost pressure toreally hit that segment, and then secondly, are you considering all of youralternatives in terms of offsetting that cost increase?

The answer is yes, we are looking at everything possible. Wedo expect cost inflation to be much more aggressive in our baking and snackingbusiness starting in the second quarter. We were pretty much hedged throughoutmost of the first quarter, so that’s going to be a challenging segment for us goingforward and so we are looking at doing a number of things there to offset thatimpact of cost inflation.

I’ll leave it there. Thanks.

Our next question comes from David Driscoll from Citigroup.

Great. Thanks a lot. Good morning, everyone. Bob, youmentioned wheat as the number one commodity cost increase. However, marginswere hurt the worst in soup, sauces and beverages. Can you just tell me whatcosts hurt that particular line? Because that seems to be the area that weshould be focused on.

Well, when I’ve talked about those commodities that weexpect to hurt the most, I’m giving you kind of an annualized view of that.Obviously this quarter we have not been hit as hard in the baking and snackingbusiness as we will be going forward. In fact, when we do look at the soup business,it’s safe to say that in fact we do get impacted somewhat by wheat. We do haveflour that is an ingredient to thicken some of the soups. Dairy has hurt uswith our cream soups. We do also have some oil that is [a component] into oursoups as well. Those are the items that in fact are driving the soupinflation.

The other piece that I wanted to follow up on was the lastconference call in early September, wheat prices were actually higher than theyare today on nearby futures. You mention that you’ve raised your commodity costexpectations for the full year. Can you help me understand what appears to be alittle bit of a differential between those comments? I would actually haveexpected you to say that versus where wheat prices were when you did your lastconference call, is slightly better.

Well, I think again timing plays a very important role interms of when you expect those prices to hit and where you’re covered and whereyou’re uncovered. You could look at spot prices in September and frankly, thoseare not very meaningful in terms of how they ultimately will hit our P&Lgoing forward. So I’ll just leave it at that.

It’s more of a coverage issue than what you see in themarket, David.

Okay, but my question is that from what I can tell, a coupleof months ago when you did your call, you had a 5% commodity inflationexpectation. You knew what the coverage was. The wheat prices haven’t worsened-- certainly they are bad but they haven’t worsened, and it looks to me likethere’s a big delta, a big increase in commodity costs inflation expectations,and I would assume that the only reason why your plan would change is if thespot market change related to that uncovered stuff. So I’ll chat with you guys,I’ll call you offline on this one. There’s something I’m missing here. Thankyou.

David, let me just comment; I think the one piece you aremissing is in fact the run-up on diesel. Also in fact the run-up on dairyprices as well, so again it’s hard just to look at spot prices and say hey,this is the impact because as Doug just mentioned, it’s really the areas wherewe are covered and uncovered and frankly the longer term prices as opposed tocurrent spot prices. So I’m looking forward to your phone call.

Great. Thank you.

Our next question comes from Mitch Pinheiro from JanneyMontgomery Scott.

Good morning, everybody. A couple of things, and most of myquestions were asked, in the microwaveable soup thing, just a clarification --you said it’s more timing related. Is that just promotional timing? Is thatwhat you said?

Well, promotional and advertising and how we’re managing theportfolio of opportunities we have quarter to quarter. So obviously we think itwill be stronger in the last three quarters than it was in the first, withouttipping our hand on any one specific thing.

Okay, was the percentage -- I guess I should ask; what isthe percentage that you give of microwave and your convenience platform outsideyour grocery and mass channel? Is that a -- did that have weakness as well oras it really a grocery and mass issue?

We don’t break out the channels but what I would say is thatthe convenience channel has got a lot of upside for us. We are not thatwell-developed there, so -- yet.

Okay, last question is were there any growing pains in thequarter related to V8? You were sort of tapped out on capacity. Was there anymeaningful costs there associated with that?

No.

Okay. All right. Thank you very much.

Our next question comes from Edgar Roesch from Banc ofAmerica.

Good morning. So just on the baking and snacking, I justwant to understand a little bit more because your press release mentioned thatPepperidge Farm saw costs that offset the sales increases in describing I guesswhat sounds like flat profitability. So first of all, a lot of that is freshbakery. I would have thought the pricing would be relatively easy to come by inoffsetting costs there. And then, your outlook is for the margins in that segment toimprove as we go throughout the year, is that right?

No, we didn’t say that, Ed. We just said that in fact ourmargins were basically flat for the quarter, our gross margins.

Okay, in the Pepperidge Farm business -- or in the bakingand snacking in total.

In the baking and snacking segment, that’s correct.

Okay. And didn’t you mention in the release though thatPepperidge Farm, it sounded like you were getting pinched on your marginsbecause of cost increases. Is that right?

Pepperidge Farm had solid top line growth for the quarter,relatively flattish when you look at operating profit and that’s due to morethan anything higher marketing and some cost inflation, but not nearly as muchas we expect going forward.

Okay, that’s very helpful color. Thank you. And then onelast question for you; the gold label select, I’m seeing it more in some ofyour marketing messages. You are highlighting it with your ready-to-serveportfolio. Can you just give us an update on how that initiative is going?Thanks.

The aseptic soup initiative is going well globally and itcontinues to be solid in France, Australia, Canada, particularly doing well inCanada. And we see a very slow build here in the U.S., as we expected. It’ amajor change in terms of packaging format for consumers. Repeat continues to bevery good. The challenge for us is to find the best way to market thatproposition within the context of our full portfolio. We’re very comfortablewe’ll find our way there. It continues to be highly differentiated with greatrepeat and we just have to find the right way to take it to a higher level, butit’s fully satisfactory for now.

Thanks, and do you have the same number SKUs this year, prettymuch flavors and varieties that you had last year?

We added one or two. We added Southwest Corn Chowder and oneother, so it’s a slightly bigger line.

I’ll be sure to try those. Thanks.

Our next question comes from Andrew Lazar from LehmanBrothers.

Good morning. I know Doug, on the fourth quarter call, youhad highlighted retailer inventories looked very good, very comfortable andlean heading into the fall. So I’m trying to get a sense of, with I guess thefiscal first quarter being to some extent a lot more about sell-in to theretailer and getting them all set for the fall season, was there any shift inwhat you might call market share or mine share at the retail level in thequarter, or on the shelf that we haven’t seen play out yet in any marketplacedata?

Andrew, I’m sorry. I’m not sure exactly what you mean.

If the first quarter, and maybe this is not the way you lookat it, but if the first quarter is more about selling into the retailer andmaking sure you’ve got the proper levels of inventory and product there and onthe shelf for when the weather gets cold, and your inventories coming into thisfirst quarter were in very good shape and very lean, was it more just the itemsyou discussed, weather and year-ago comps, rather than any shifting of let’ssay any space allocation on the retailer shelf or retailers, were they justless willing to take on typical levels of seasonal inventory because of thewarmer weather, or what have you?

I believe that’s probably the single biggest difference. Wehave a pretty effective and efficient inventory management process with ourcustomers and we didn’t see the kind of order patterns that we would haveexpected to see in a normal fall, so we also expect those to obviously come inthe second quarter instead of the first.

I know that a couple of quarters ago, you had talked aboutcondensed growth and some of the possibilities going forward, and some of thismight frankly have been more aspirational in nature on your part, but I thinkyou talked about being able perhaps to continue similar levels of growth on condensedthat you’ve seen over the past couple of years, 3%, 4% levels. And today youtalked about still being able to grow it, which is obviously admirable forcondensed, which was not the case years ago. But I’m just getting a sense --has anything changed that perhaps has maybe dampened your outlook a bit oncondensed possibilities, or is it just those were more aspirational in naturewhen you made those comments?

Well, I think we have to find the right balance betweenreality and aspiration. And starting slow in the first quarter makes it hard toimagine delivering at the high end of our 4% level that we had delivered thelast three years. But we do still expect to grow it in this year and expect itto be very competitive. We have great programming, we have continued progress withour IQ shelving system and we see another solid year but we’ve clearly got offto a slow start. That’s all that’s reflected in that comment.

Thank you.

How many more questions in queue?

We have two more questions, sir.

Okay, we’ll take those and then we’re going to stop.

Our next question comes from Vincent Andrews from MorganStanley.

Thank you. Good morning, everyone. Just looking at theweather issue from another angle, in the past you guys have stated that thenumber one reason that people don’t buy soup in warmer weather is that they arenot thinking about it, and that goes towards your marketing or communicationmessage to consumers. And in the fourth quarter you talked about reviewing someof your counter-seasonal advertising. So I just was wondering if you couldupdate us on what you think happened in the quarter from a marketingperspective. Is there something you want to do differently or something youshould be doing better? Where are we in terms of that?

You’re talking the fourth quarter or the first quarter orjust --

I’m sorry, just -- I really meant more the first quarter butmaybe just take us through the fourth quarter and the first quarter and whatyou are willing to tell us on a go-forward basis.

Well, the key here is that we still -- the number one reasonpeople don’t consume soup is they don’t think about it and there’s clearindication to us when it’s warmer out, they think about it less than when it’scolder out. And then we try and layer in our marketing activity to optimallykind of work with weather and find the right balance that lifts the category. What we found is that advertising in consumer alone areinsufficient to drive change the awareness levels with consumers. And we dohave to work -- we have to acknowledge that at times in a quarter or in a monthor two, weather patterns can affect volume, although we don’t see any impactover a full soup season. We also have to recognize that we learned in thiscounter-seasonal advertising is we can increase our marketing spend but we haveto make sure we are executing well at retail so that when the consumer comesin, we are winning the war at retail as well as the war in terms of share ofvoice. So we have some fine-tuning to do to get fully integratedmarketing plans that win the share of voice battle in terms of advertising, andalso when at the point of purchase. And we didn’t execute that particularlywell in the fourth quarter.

Would you say the same about the first quarter then?

Well, the first quarter, fundamentally I believe it was moreweather related than anything else and we expect our marketing programming tolift us up in the second quarter substantially.

Okay, that’s very helpful. Thank you very much.

All right, last question.

Our last question comes from Pablo Zuanic from J.P. Morgan.

Good morning, everyone. Just briefly, my main concern is onthe top line front. I mean, we could make the argument that pricing down 2% insoups is pretty bad, right, and that the last time we saw that was in October2004. That [inaudible] with gross margins is not just cost, it’s a promotionaleffort. I’m wondering, despite all the innovation that has been successfuluntil now, you are still having to be promotional. That’s a comment more than aquestion. I guess my question is --

Pablo, I would just mention that the reason we said that isbecause last year our soup was up 10% in the first quarter, so I think that’simportant to understand. We did have significant growth last year in that firstquarter.

Okay, that’s fair but I don’t think, despite a comp, whywould you need to promote, but anyway the argument really is here when I lookat segmentation in the market and I see Chunky Fully Loaded and stilladvertising with the NFL, I think that’s nice and obviously a it’s a segmentthat you’ve captured well. But what about other segments? And I see GeneralMills targeting obviously the female market with a light soup platform. Iwonder how easy or difficult it will be for you to copy that, or to promotewhat you may already have in the portfolio. And then I look at the ethnic section of the supermarkets,all these cap soups and chicken noodles that are different probably from theone that you sell and I don’t see Campbell targeting that segment. Here you are trying to sell soup in China and Russia, but Iwonder what are you really doing to target your segments here in the U.S.,which are not small? I’m just wondering -- again, aseptic, off to a slow start,you’ve said that; reduced sodium has its own cloud, let’s see how that goes,but what’s next? I mean, Chunky Fully Loaded to me is more of the same for theNFL crowd, but what else? There are other segments out there that Campbellcould be targeting. Can you comment on that?

I will comment fully on that at CAGNY, Pablo. We’ve alreadyreleased our programming for this fiscal year. We feel as if we are doing quitea lot with quite a lot of segments between kids with condensed, adult maleswith eating, premium quality soup with both our stock pot initiatives as wellas our aseptic initiatives, and certainly competing with the other brandedentries in lighter ready-to-serve soups. General Mills is doing a great job and I think they are tobe commended for that. We can do better and we will do better, and we will havemore to say in terms of our plans going forward and targeting as we go into thenext soup season, but we are very satisfied with the portfolio of opportunitieswe have here in front of us. And I must say, just as a small nugget of, in terms ofRussia and China, the markets we compete in in the world today account for awhopping 6% of all soup consumption in the world. Russia and China aloneaccount for 50% -- eight times that of all the markets that we compete in todayand that is a big opportunity that this company needs to address and we will.And that’s where the big opportunity is -- not to say there aren’t wonderfulniche opportunities in our own back yard and good for you to call us on it andwe should do better against them.

And just to follow up, if I may, and thanks for that answer;in terms of the rollout of the [inaudible] at Wal-Mart, I hear that you aredoing that now but I had expected to see a better number on the condensed soupside, maybe it’s comp, but how is that going and how quickly should we expectto see [inaudible] throughout the Wal-Mart network?

We don’t comment on any specific customers. We are -- whatwe have seen with the rollout with all customers is it is difficult to get thatimplementation in in the fall during the soup season. They tend to not resetshelves then, so some customers will cut in and make the change more abruptlybut I don’t think you should expect to see any, with any customer, anysignificant change overnight as we go through the soup season.

Thank you.

Okay, that will conclude our call then.

Ladies and gentlemen, thank you for participating in today’sconference. This concludes our program for today. You may all disconnect andhave a wonderful day. Thank you.