GaryH. Rodkin – CEO AndreJ. Hawaux – CFO ChristopherW. Klinefelter – V.P. Investor Relations DeanHollis – President, Consumer Operations GregHeckman – President, Commercial Operations

DavidDriscoll - Citi Investment Research Eric Serotta - Merrill Lynch KenGoldman - Bear Stearns ChristineMcCracken - Cleveland Research RobertMoskow - Credit Suisse Eric Katzman - Deutsche Bank AndrewLazar - Lehman Brothers PabloZuanic - J.P. Morgan Jim Lane - TRI Asset Management JeffKanter – UBS

Good morning and welcome to today’s ConAgra Foods second quarter earningsconference call. (Operator Instructions) At this time I’d like to introduceyour host for today’s program Gary Rodkin, Chief Executive Officer of ConAgraFoods. Please go ahead Mr. Rodkin.

Good morning, this is Gary Rodkin and I’m here with Andre Hawaux our CFO andChris Klinefelter our V.P. of Investor Relations. I’m going to start with a fewwords about the EPS we just posted and the main drivers of the performance.After that Andre will discuss more specifics about financial matters and thenwe’ll take your questions. Dean Hollis, President of Consumer Operations andGreg Heckman, President of Commercial Operations will join us for that portionof the call. Before we get started Chris will say a few words about housekeeping matters.

Good morning. During today’s remarks we will make some forward-lookingstatements and while we’re making those statements ingood faith and our confident about our company’s direction, we donot have any guarantee about theresults we will achieve soif you would like to learn more about therisks and factors that could influence and affect our business, I will referyou to the documentswe filed with the SECwhich include cautionary language. Also we will bediscussing some non-GAAP financial measures during thecall today and thereconciliations of those measures for Regulation G compliance can befound on our website atwww.investorconagrafoods.comunder the FinancialReports and Filings link and inchoosing non-GAAP reconciliations. Now I’ll turn itback over to Gary.

Thanks Chris. We just released EPS of $0.50 for the quarter which includes$0.03 of costs from the recent pot pie recall. That’s a very strong quarterlyEPS, certainly higher than what we had originally expected. However, the sourceof the earnings growth was different from what we had originally planned. In anutshell, our Commercial operations meaning our Food and Ingredient segment andour Trading and Merchandising segment posted absolutely outstandingperformance. The comparable operating profit numbers for those segments werefar better than what we had planned. Most importantly the over delivery fromthose operations more than offset the margin pressures in our largest segment,consumer food. It is allowing us to take our full year fiscal 2008 EPSexpectations up. While there was plenty of progress in Consumer Foods for important brandsoverall the performance for that business is not where it needs to be. I am notsatisfied with it but I am satisfied with the way we are going to address it inthe back half of the year. You know from our previous comments that ourpriorities for the Consumer Food segment are to grow the bottom line throughhealthy top line performance. That involves appropriate pricing actions; volumegrowth through innovation, better marketing and more focused selling and ofcourse improving the efficiency of our product supply operations. Those are thecornerstones of our agenda for this segment, to achieve its potential. I’lltouch on all of those in my discussion of this segment’s quarterly performanceand our near term outlook. Consumer Foods posted a decent top line performance this quarter, unitvolumes and sales were up 3% on a comparable basis. A pretty solid numberespecially given some significant distractions. As most of you know, we’re veryfocused on more affective marketing and meaningful innovation. Our brandperformance this quarter shows we’re making progress. A number of priorityinvestment brands including Chef Boyardee, Egg Beaters, Healthy Choice, HebrewNational, Marie Callender’s, PAM, Reddi-wip, Slim Jim, Snack Pack and otherscontinue to post solid growth validating our assessment of their opportunity. Demand for Healthy Choice Café Steamers has been extremely strong, certainlymore than we forecast. We’re adding more capacity as we speak and with currenttrends we expect annual sales of that product line to be well north of $100million as well look into fiscal ’09 and beyond. That’s a huge success, we’revery excited about it and I congratulate our team on finding a sweet spot withconsumers in this important platform and technology. Now a few words about pricing. We did take some pricing in Q1 and even morein Q2, the obvious question is why don’twe have more benefit from pricing in Q2? Well we took pricing up just as wesaid we’d do, we also had some aggressive trade promotion spending that offsetmost of it and negatively weighed on the price mix spread. That trade promotionspending was done to protect trade commitments to customers for some heavilypromoted categories. Overall the quarter’s level of trade spend was too highbut it was done for a reason. I want to be fully transparent on this, brutallycandid; it was designed to keep customer relationships healthy in light ofcustomer service shortfalls resulting from our two recalls in the past year, aswell as changes we were making in our manufacturing network. I am confident thedynamics going forward will be different and I’ll talk more about that in amoment. Regarding mix, the fact that our Enabler brands which on average have alower price per case grew 5% while our Priority brands grew about 2.5% createsa negative sales mix. As we go forward our plans are firmly in place to beaggressive on our pricing actions and more disciplined on our trade spendingbecause what really counts is net realized price for the overall portfolio. Ournet pricing will start to improve in Q3 and will improve significantly in Q4and into fiscal ’09. Believe me, I’ve spend considerable time with ouroperating people these past few months, getting into granular detail on theirpricing actions. I’m convinced our execution will be far better than what we’veseen to date. This is part of our continuing evolution toward becoming a morefinely tuned operating company which I consider as my number one personalpriority. We’re still building muscles and we expect the evidence to be clearas we get closer to year-end. Moving on to Consumer Foods profits, the real issue is inflation. Our costof goods sold increased by almost $100 million. Let me emphasize, that’sinflation of more than 8% and while we did generate meaningful cost savings inthe range of $60 million, that’s still leaves a big gap. Another importantpoint is the production and startup inefficiencies we discussed in the firstquarter which negatively impacted us in the range of $30 million then, were nowhere near as significant this quarter nor do we believe they will be significantin the back half of the year. Those production inefficiencies stemmed fromtaking on too many transformational supply chain projects simultaneously. Wespread our resources too thinly. These same issues are relevant to our customer service metrics. We missedsome sales due to our service shortfalls. That’s also relevant to where oursales growth was only okay this quarter as opposed to very good like we saw inQ1. I think it’s important to note that our service issues were concentrated ina few key manufacturing areas rather than any issue with our overall systems orlogistics. In other words, we’re well on the way to resolution of those hiccupsand importantly there’s no systemic issue. I’ll move on to our Food and Ingredient segment. Comparable sales were updouble digits and comparable profits up more than 40%. Lamb Weston benefitedduring the quarter from continued momentum, appropriate pricing actions as wellas strong export volumes and good response to their appetizer innovations. Asusual they continued the exemplary and efficiencies in customer service. LambWeston is our single biggest brand and we certainly consider it one of our mostimportant core businesses and we look for continuing high impact results. Alsoin the Food and Ingredient segment, our milling operations are dealing withmuch higher input costs which they have largely passed on as higher pricesduring the quarter. They’re also very focused on expanding their value-addedproduct lines, like Ultra Grain and [Susta] Grain and running very efficientoperations. So I congratulate the entire Food and Ingredients team on a stellarperformance for the quarter and more broadly I’d like to recognize them as amodel of collaboration in their approach to new business and customer service opportunities.They do a great job with an outstanding product and service portfolio and astrong understanding of our customer service needs. One recent example of thisis our work with McDonald’s to develop the new McSkillet Burrito, a breakfastburrito that includes several of our ingredients; Lamb Weston potatoes, GilroyFoods controlled moisture vegetables and Spicetec seasonings. This is a majornew national breakfast item for McDonald’s, supported by a national ad campaignand this product demonstrates our ability to leverage our portfolio andreputation for strong customer service to find new avenues for growth. Our Trading and Merchandising operation posted another very, very strongquarter. Profits there were almost 4X last year’s dollar amounts. The resultsspeak for themselves. We did very well in fertilizer and agriculturalmerchandising during the quarter. Our folks have capitalized on [near] anddemand opportunities and market volatility. Energy also did well during thequarter but not quite up to last year’s levels. Given that this is a Tradingand Merchandising operation, and that each quarter presents a new set ofopportunities and a different set of positions, it’s difficult to offerpredictions for this business. Therefore we don’t plan for repeats of quarterslike these, which is why our guidance assumes more conservative levels ofprofits in the back half of the year. Our International operations showed some traction with pricing and goodresults in key categories like popcorn and canned pasta and we look forward todeveloping more momentum as time goes on. Let me switch to afew broader topics. Most of you know we arevery excited about our innovation pipeline. When I joined thecompany a little overtwo years ago, the newproduct pipeline was pretty empty. We have been very focused on building thatpipeline and making our plans for gradual introductions into themarketplace. We had around of product introductions late summer and will have another mid winter,some of which we’ll discuss atCAGNY. Another item I’d like to touch on is senior leadership. As many of you knowwho follow us closely during the quarter we had two announcements about seniorteam members. The first is Dean Hollis, currently President and COO of ConsumerFoods and International who will lead the company this summer as he searchesfor a CEO job. Dean has spent 20 years at ConAgra Foods making a hugecontribution and wants to lead a company so he has made his desires public andis beginning his search. I appreciate his openness and his commitment to asmooth transition. Dean wanted to do this in a way that minimized disruptionfor all involved, so he has agreed to help transition for six more months. Another significant senior team announcement was that [King Powel] whoheaded our IT and Product Supply Operations is leaving the company to go backto his former employer. We appreciate King’s contributions while he was here.We’ve split his job into two separate functions; one is the informationsystems, which will now be lead by [Garrett Chetay] our new Chief InformationOfficer, a very strong veteran of ConAgra Foods is going on ten years with usand has been a key leader in our very successful general ledger SAP conversionprocess. Garrett will report in to Andre Hawaux, our CFO. We’ve also promoted Greg Smith formerly Senior Vice President of ProductSupply to now run the entire Product Supply organization and report directly tome. Greg’s been with us for six years across several senior roles and developeda strong background in Consumer Products operations even before he joined us in2001. Greg has had [inaudible] responsibility for our Grocery business in thepast and has been a very valuable senior leader of the Product Supply team. Ihave full confidence in Greg and am certain we won’t miss a beat. Before I turn it over to Andre I’ll close by saying that we’ve taken ourfull year’s diluted EPS expectations up. We now expect to be slightly above$1.55 excluding the pot pie recall costs and the other items impactingcomparability which is obviously an increase from the $1.48 or so we wereoriginally planning on the same basis. The Consumer Foods progress that we’replanning for is now more concentrated in the fourth quarter and into the firstpart of ’09. That’s a little later than we thought originally and it mostly hasto do with the execution of our pricing actions. We continue to be convincedthat there are substantial earnings growth opportunities in better brandmanagement and more efficient operations and that’ll be apparent in the numbersgoing forward. While we can’t control inflation, we can control execution andthat’s exactly what we’re focused on and where I’m rolling up my sleeves andspending a significant amount of my own time to ensure we deliver our commitments.Now I’ll turn it over to Andre.

Thanks very much Gary and goodmorning everyone. I will hit on what I consider to be some importanthighlights. The main areas I will touch on are operating trends, earningsguidance and capital items. With respect to operating trends a $0.50 quarter including $0.03 of recallcosts is very strong. I congratulate our Food and Ingredients and our Tradingand Merchandising teams on their outstanding results. The operating profitperformance for those businesses was excellent. It defined our quarter andprovided us the ability to take the year up. Our Consumer Food segment also had some bright spots with important brandsand sizeable cost savings initiatives. The production inefficiencies we sawearlier in the year improved this quarter. All that is certainly good, howeverto reiterate Gary’s points, we needto be more aggressive on pricing. More aggressive price increases are plannedfor the balance of the fiscal year, most significantly in our fourth quarter. Inflationin Consumer Foods was slightly north of 8%, that’s more severe than we hadexpected when we put our 2008 plans together and while we have a robust agendaof cost savings, it cannot offset 8% inflation. That’s simply too steep a hillto climb. And while I’m on the topic of cost savings I would like to go out of my wayto say that we had $60 million of costs savings this quarter and that’s prettygood fuel. In a normal inflationary environment, that would be a net positive.This quarter was obviously different seeing as we had about $100 million ofinflation which drove our profit shortfall in that segment. Now moving on to SG&A. As you’ve heard us say before SG&A expensereduction remains an important opportunity for the company. In this context I’mnot talking about advertising and promotion but the other components ofSG&A. This quarter overall SG&A at our operating segments as well as atcorporate, trended higher on a comparable basis reflecting several factors butin no particular order they were the following. Investments and systems andprocesses as we strengthen and advance continuous quality improvementinitiative and continue to install our SAP suite of systems. Some negativeimpact on 4X derivatives we hold at corporate which is only a timing issue andwill reverse in quarters three and four. And then incentive accruals expenserelated to the Trading and Merchandising performance you saw in the quarter. OverheadSG&A expense reduction remains a key area of focus for us. It is one of mytop priorities as well as pricing and our back half will show significantdeceleration in that component of our SG&A. Moving on to earnings guidance, our current view is that EPS is excludingitems impacting comparability will be slightly above $1.55. Now given our fullyear guidance, you can get a sense of what we are expecting in the back half.Our Q1 was $0.34 excluding items impacting comparability, our Q2 was $0.53excluding items impacting comparability; that’s a subtotal of $0.87. So giventhat the full year is expected to be slightly above $1.55 on the same basis,then we’re thinking the back half altogether is something close to $0.70excluding items impacting comparability. That’s a little less than currentconsensus. As an aside, we see the third quarter as having slightly more EPSthan the fourth quarter. Building on comments I made during the Q1 call we expect our Consumer Foodsegment to show margin improvement in the back half of the fiscal year. I don’texpect margin improvement for Consumer Foods in Q3, it will likely be in Q4 andas we enter fiscal 2009. And while we expect to be at a much better run ratefor Q4, I don’t expect it to make Consumer Foods fiscal 2008 full-year profitresults ahead of or equal to last year’s normalized operating profit dollars. Another point I’d like to make is that as most of you know, we have goneinto a fair amount ofspecificity in thepast on our costsavings goals by year, by source, et cetera. I want to sayclearly and definitively that we have lots of productivity to work with, plentyof runway to advance our goals, but theworld has changeda fair amount since wearticulated those goals. We arefinding that some of what we used to think as fixed opportunities may indeed be overshadowedby variable opportunities which changeour plans for plant closures. We areseeing our top line growfaster than we thought which begs theissue of the role ofsales and mix in ouralgorithm versus therole of cost savingsand we are seeinginflation at more thantwice what we thought last year atCAGNY when we shared our goals. Because of theimpact of inflation and pricing our margin percentage we need to instead focuson dollar goals. We arevery comfortable with our longer term EPS goals but thesource of the EPS growthmay end up being different, specifically meaning thecontributions of our top line versus thecontribution of costsavings so we need toavoid specifics and granularity on costgoals that we establish under very different circumstances. Over time we know that we can narrow our margin percentage gap with our peergroup and that goal is still relevant, but inflation and pricing movements inthe market slow progress on that metric. Now moving on to the balance sheet and focusing on working capital. All workingcapital position increased significantly compared with last year. Our Tradingand Merchandising operations require working capital to pursue opportunitiesand as you can see from the quarter’s results, there have been severalprofitable opportunities for them. Combine that with the inflation-driven costincrease for many of our inventory components and you get significantly higherworking capital, some of which was funded by commercial paper in this quarter.Its normal for us to use a fair amount of working capital early in our year,typically in Q1 and Q2. That’s a function of our business mix and takingconcentrated deliveries of items like potatoes, tomatoes, wheat and garlic andstoring them after the harvest season. But our overall working capital usedthis quarter was higher than normal due to cost inflation and any opportunitiesfor our Trading and Merchandising segment. Over time working capital levelswill come down. To repeat a point I’ve made with many of you in the past, we wouldn’t let ourTrading and Merchandising group utilize the capital if they hadn’t demonstratedan excellent track record of providing strong returns on the capital put towork within strict risk controlled parameters. Our interest expense was $54million this quarter, higher than last year because of the short term debt usedto finance our working capital requirements. CapEx increased this quarter to$111 million from $66 million last year. That increase relates to our plantdeficiency and quality initiatives and some capacity expansion. Our currentthinking is that the year will now show approximately $475 million of CapExwhich is slightly higher than thought earlier driven by innovation and qualityinvestments. Our dividends were $88 million, slightly below last year’s amount due to theimpact of our share repurchase program. Our tax rate projection for the year isbetween 34% and 35%. On another note, we received authorization from our Boardto purchase another $500 million of our stock in the future. We’ll act on thatas market conditions and operating cash flow allow. Given our working capitalused this quarter, free cash flow did not allow for share repurchases. We’llupdate you on this in the customary quarterly discussions we have. Before I conclude, I’ll mention that we passed an important milestone thisquarter when we converted our General Ledger to SAP and updated to the newestversion of Order to Cash in SAP. That transition went very, very well and Ithank all of our team for their efforts. As you know from Gary’sremarks earlier, I know have responsibility for IT. I have an outstanding teamhandling it led by our new CIO, [Garrett Chetay] and I look forward todiscussing additional progress in converting SAP into our plant network whichbegins in earnest in February. With that I’ll conclude my remarks, wish you a warm holiday season. Thankyou for your interest in ConAgra Foods and now I’ll turn it over to theOperator for questions and answers.

Our first question comes from David Driscoll – Citi Investment Research David Driscoll – Citi InvestmentResearch: Thanks a lot, good morning everyone. Certainly congratulations on thequarter. Andre you made some prepared comments on cost savings and the plantclosures and I think that there’s going to be a lot of questions that we’regoing to get today on this, can we get a little further into it. Were youreally trying to tell us that you want to back away from your targeted monetarygoals for cost savings and if you’re really saying that, I don’t understand therationale for why.

Well I’ll start the answer and I think maybe get some support from Chris, Ithink what I’m trying to say is we have a long run rate on cost and a long runrate on productivity at ConAgra Foods. That’s not changing, but I think what wegot ourselves into a little bit of trouble in a different environment is thefact that we got into fixed and variable components and corporate components etcetera, et cetera, and that gives us therefore no flexibility to do what’sright. So I think we have a very long run rate. I think productivity is stillgoing to be one of our key drivers of our algorithm at ConAgra Foods but I donot want to keep getting trapped into this fixed and variable issue as we go forward. David Driscoll – Citi InvestmentResearch: If we just simplify it then from our view on the outside you do whatever itis that you think is the right answer, but can you say that the aggregatebetween fixed and variable, however it ultimately determines I don’t know thatI care, I just care that the aggregate dollar number actually turns out to besomewhere in the range of the prior expectations. Is that still true?

Morning David, I’m going to start with that. Just to echo Andre’s point, wedo have a lot of productivity to work with. You’ll remember these figures in2007 we generated about $275 million of cost savings to our cost of goods soldthrough the programs that you’ve heard us talk about. Fixed cost effortsweren’t really a big piece of that, this is really we’re talking aboutvariable, if you look at the run rate this year we’ve gotten $55 million in thefirst quarter and another $60 million in the second, that puts you at a year’srun rate of $225 million so those comparisons are what they are. Like I said,we have a lot of fuel to work with, but referencing the things that we’ve goneinto in the past, probably isn’t helpful given that circumstances have changed.

And Dave, just to pile on one last comment, we are not backing off ourcommitment that we’re going to get our margins up to the comparable peer groupaverage over time in Consumer Foods so that stays constant as well as ourcommitment to the algorithm of 8% to 10%. David Driscoll – Citi InvestmentResearch: I hope I have time for one more question, Gary I just wanted to come and askyou a question here on the [Gold Store] initiative, I notice four categoriesthat showed up on sales declines within your additional disclosure, KidCuisine, Manwich, Orville and Pemmican, can you talk to us – I’m kind ofsurprised to see really almost any category from Gold Store showing salesdeclines, what are your thoughts on what’s driving this.

Well I would tell you there are many other categories, Gold Store initiativeis doing extremely well. There are a couple of particular issues, for instanceon Manwich, that’s just pure timing issue. We do have some issues that we’redealing through on our Pemmican business but that’s not really one of ourPriority brands. I think the most important one is popcorn and there we havebeen dealing with a one consumer issue on diacetyl and I don’t want to go intoa lot of detail on that David, but what I can tell you is that we have nowremoved the diacetyl flavoring from all of our popcorn and that the packaging,the marketing and the P.R. will all commence very shortly and we’re confidentthat we’re going to gradually win back sales in this category, which isimportant to us because we’ve got a 40+ share. So I’d say net net Gold Storedoing extremely well and maybe even more importantly a number of our Prioritybrands did show consistent growth this quarter. David Driscoll – Citi InvestmentResearch:

We go now to the offices of Merrill Lynch and Eric Serotta. Eric Serotta – Merrill Lynch: Morning, I wanted to follow-up on Dave’s question a little bit, Gary youcommented that you’re not backing off on your commitment of getting to consumerpeer group operating margin over time, if I remember correctly the commitmentwas something in excess of something like 250 basis points of consumeroperating margin expansion from I think it was end of fiscal ’07 to fiscal2010, are you backing away from that commitment now saying it’s doable but itwon’t be over the same time period?

Let me start with that Eric, the 250 basis points was the commitment fromsupply chains, that was the primary ingredient to the overall operating marginexpansion which was targeted to go from where we projected ’07 at around 16 tobe 18 to 20 by the end of 2010. That’s what it would take for us to get to thepeer group margins. Now in an environment like what we’re seeing now, pricingand costs change the percentage margin structures. So we need to take some timeto see how that plays out, but to Gary’spoint, we are committed to narrowing that gap over time.

I think it’s also really important to remember this is an industry issue,the inflation that we’ve got and we will be right in there with the peer group.We will take the appropriate action just like they will.

We now go to Ken Goldman – Bear Stearns. Ken Goldman – Bear Stearns: Good morning, I’m wondering itlooks like a lot ofyour high expectations for thefourth quarter and for next year arebuilt on pricing, but I’m wondering how much elasticity you’re factoring inthere? I mean we didn’t seevolumes exactly shoot through theroof this quarter, even though your price gaps areprobably a littlewider than you want and even though trade promotion is probably higher than youwant. I’m wondering why, Gary, youwere very optimistic about theturnaround for Consumer Foods inthe fourth quarter andnext year? What beyond thepricing is giving you such high hopes?

Well first of all, on pricing, of course we always need to keep our eyesopen and watch theprice gaps and competitive movement but given thecontinued high level of inflation and somuch news and noiseabout the escalatinginput costs across almost allthe food commoditiesand materials and energy it’s avery, very different environment when we present our pricing actions. Everybody, allcompetitors are underpressure including private label sothis makes us less nervous, much less nervous about passing on some significantpricing. It’s just hard to argue with that logic. But again back to your question, we have really three basic pieces that Iwould say areimportant to bepositive about, why we think we will really start to generate some momentum. That’smuch more effective marketing; we’re already seeing theeffects of that. Innovation, and clearly we’ve demonstrated already this year acouple of examples being our Café Steamers and our Paninis and much morefocused execution across our entire operation whether that’s focused selling orin our supply chainwhere we’ll be lappingsome of the hiccupsthat we brought on ourselves by trying to dotoo much too quickly. I think when I put that alltogether, it gives mea high degree ofconfidence that we will start to seethe Consumer Foodsbusiness move inthe right directionstarting in theback half and continuing into F09. Ken Goldman – Bear Stearns: Okay and then just one more question; thecash generated by Trading and Merchandising, how doyou prioritize use of that? Is itexclusively to go back into Consumer Foods? And if so, is that more formarketing or more for R&D? I amjust wondering how you think about that?

Well, I think clearly what we’ve said inthe past, Ken, is wewill look at thehighest ROI return projects and we have those that come up through theconsumer side of thebusiness, through marketing and innovation excellence. And then I would saythat there is also, we have been finding and you can seethe results of that,we have been finding alot of opportunities to expand our Food and Ingredients business, led by one ofour True Diamond brands, and that would beLamb Weston. We would look andprioritize our investments from over delivery inthat space against thehighest ROI project that this corporation hasto bring forward. Ken Goldman - Bear Stearns: And right now, what is that?

Well, there are acouple of things. We would look atinnovation in terms ofwhat we are seeing goforward. I did sayLamb Weston as well; we’ve got some things that we aredoing both in thepotato space and then theappetizer space there. I think we willalways look at --we’ve said this before -- that share repurchase is also alens in which we take astrong look what theROI is on that.

Your next question comes from ChristineMcCracken - Cleveland Research. Christine McCracken - Cleveland Research: Relative to your plant closures and your plans for thefuture, you did have obviously some management changesrelative to supply chainover the past year. Whenwe look at yourprogress in terms ofhow that process hasproceeded here over thelast year, relative to that is itthat you had the wrongplans from thebeginning or is itjust a function that themarket has actually changedrelative to your needs for theplant? Did you have theright plans, did you maybe movetoo quickly to redo your entire supply chainand plant system or is itthat as you pull back thecovers, you actually found more opportunity with different structures? Maybejust provide a littlecolor on that?

Christine, I think that’s avery fair question and I would answer it, two basic buckets and we’ve talkedabout both before. Thefirst is we truly did take on too much atonce. We got ahead of theheadlights, ahead of our own headlights with too many significanttransformation projects on theboard simultaneously and basically found when they reached acertain point that we had spread our resources to thinly. We clearly have gone back, rescoped andrephased and re-resourced those projects and we arenow starting to make progress on each one of those. The other bigissue, unfortunately inthe space of ninemonths we had two recalls and that became amajor distraction for us. It’s tough torebuild across theorganization and I have to behonest with you, that ittakes a lot ofresources; it’s like student body left, student body right when you have gotissues like this. When we put that alltogether, I can tell you that that’s behind us and we arenow moving forward. We have got muchbetter resource plans inplace and I am very,very confident that we aregoing to start to geton the path ofproductivity that we talked about. Thesedistractions, it’s been abit tough over thepast months, but we now seea light atthe end of thetunnel. Christine McCracken - Cleveland Research: Now you have gone through amanagement changethere, you are inthe process of making acouple of additional management changes. That takes time I would assume to settle intoo; I mean, granted you aremoving some people internally. Is itthat you don’t expect any disruption from allthese management changes?Did you maybe have thewrong guys by bringing inoutside people? How doyou look at yourcurrent management base, your senior managers and areyou comfortable with thepeople you have inplace now, or should we expect more turnover?

I can tell you Christine, I amextremely comfortable and as itpertains to product supply, Greg Smith, we arevery fortunate to beable to so smoothlytransition. Greg is extremely on top ofvirtually all of theissues having been avery senior player in theproduct supply organization and we truly won’t miss abeat. Greg clearly is someone who hasdelivered outstanding results inhis last role, particularly intransportation and warehousing where inlarge part he was responsible for some of thesignificant hundreds of basis points of margin improvement that we put on theboard. So we arevery fortunate, Greg hasalready hit the groundrunning, really basically no transition time, sowe are verycomfortable there. And then across theboard, I can tell you as we reiterate again, one of thereasons I have as much confidence inour future is because of thesenior management team I’ve got.

Your next question comes from RobertMoskow – Credit Suisse. Robert Moskow – Credit Suisse: I won’t take credit for this question, because itcame from a very smartclient of mine. You areproviding your traders with more capital and therefore, you’re taking on morerisk but at thesame time, you’re also saying that you expect your trading business tonormalize. I don’t profess to understand thetrading business as well as others, but if you’re providing them with morecapital, does that mean that you’re also expecting higher returns going forwardfrom those traders? Should we expect higher returns going forward from thosetraders? Andre J. Hawaux: Eric, let meanswer that in acouple of ways. First as we have alwayssaid, we plan very conservatively. So wedon’t have a crystalball and look to replicate these terrific earnings, but themarket will dictate what happens. Second, we have extremely strong controls inplace on this business. So, we arenot rolling the diceshooting for themoon. We clearly have control mechanismsfrom a VAR, value atrisk, standpoint daily, weekly, monthly, quarterly and thecontrol mechanisms go right up through Andre, our CFO. I can tell you this is abusiness that has doneexceedingly well inthis environment, and I have got Greg Heckman right here with me, maybe hecan give a little morecolor.

Yeah, I’ll probably just put afiner point on Andre’s comment that you referred to about using additionalworking capital inthis quarter. I think André’s point was, you saw higher working capital, youalso saw the returnsfor that. Sothat is a decisionthat we can make very much inthe short-term basedon opportunity. Sothat will go into our planning. There areabsolutely higher prices across theboard which is part of it, but we also saw increased volume inthe inventory, inthe put through, inour fertilizer and inour grain areas, inour physical distribution businesses. So, that’s really what we aretalking to and we will size theworking capital as well as therisk capital to ensure we getappropriate risk adjusted returns. Andre J. Hawaux: I would just end by saying we expectattractive returns, but thecapital will vary up and down based on theopportunities. So, itreally isn’t about adesire to take on more risk, it’s adesire to earn more money for thecompany. Robert Moskow – Credit Suisse: Well, let me askyou about fertilizer. What kind ofassets do you have infertilizer merchandising? I mean, doyou have warehouses, doyou have access to ports, doyou have just excellent business connections, and you can setup trades around theworld? What doyou have?

We are one of theleading importers of liquid and dry fertilizers into North America,we are one of thelargest sourcers of basic fertilizer components. We have one of thebest wholesale distribution systems here inNorth America which is ahuge market and growing with thefood and fuel convergence, as well as what we’ve seen going on with acreagesand yields. So we have avery good distribution business, avery good position, and customer suppliers as well as people on theconsuming side that arecustomers that we’re helping connect thevalue chain forthem. Robert Moskow – Credit Suisse: Now, the UATbusiness that you guys sold several years agojust got sold again for maybe three or four times theoriginal value. Doyou think that your assets infertilizer are worth threeor four times more than they were? Andre J. Hawaux: These arevery different businesses. Remember, UATis primarily a retail,they’re in theseed business selling thetechnology there, they’re inthe chemical, andthey’re in theretail fertilizer. We have awholesale commodity fertilizer distribution business soit’s a very strongbusiness, you really can’t compare thetwo.

Your next question comes from EricKatzman - Deutsche Bank. Eric Katzman - Deutsche Bank: I think thecomments that you made and theoutlook on theconsumer business are industrywideand they are logicaland it makesense. But, theoverwhelming questions that I getactually revolve around thetrading group, somewhat of afollow up on Rob’s questioning. How do you suggest wevalue that business with theunderstanding that you arebeing cautious and logically conservative as to what goes forward> I don’t wantto point you into some of theparts analysis, but how dowe kind of capitalize thevalue that’s being created out of that business?

I don’t know that we’re ina position to craftsome type of dialog or external valuation of that business. That would bebeyond the scope ofthis discussion. But what I will sayis that, obviously that business create earnings fuel that is as Andrediscussed earlier, itis real money, it can beused for either innovation or A&P investments, itcan also be used tobuyback stock. So, that’s about theextent of the commentsI can offer on that right now. Eric Katzman - Deutsche Bank: What percentage of that business would you sayreally acts as aninternal hedge on what you use inthe other parts of thebusiness as opposed to being let’s saya little bit more on therisky side? Can you saythat?

Let me start withone and I hope I amanswering your question. When you seethe results for whatwe print externally for thesegment, those are proprietaryactivities. They may betrading the way you arethinking of it, they may bemerchandising the wayyou are thinking ofit, there may beservice revenues that we have with other providers who need help withprocurement and we can play alogistics or service role. When we are doingthings that require or that involve hedges for thecore operations, thebenefit of those activities arereflected in thesegment results themselves. Sothere is not a need totake the resultsproper from trading and merchandise and then re-segment them. But, however, before I end it, I want to saythat the intellectualcapital that we have, theexpertise to advise on that certainly is sitting inthe trade group andthey are avery valuable resource.

Your next question comes from EricSerotta - Merrill Lynch. Eric Serotta - Merrill Lynch: I want to circle back on thecomments, Gary, that you made about some strained or temporarily strained traderelationships as aresult of some of thehiccups you had earlier inthe quarter. What gives you theconfidence in your beingable to get back towhere you were before these two recalls and these other customer service issuesby the end of thisyear?

Well, I’m highly confident, one,because I’m very much on aregular basis incontact with our sales team who’s on thefront side of this with their customers as well as on customer calls mayitself. What itreally boils down to is improved service and we arealready on that path, we’ve made dramatic improvements here inthe last month or two,that’s what really counts. Can wedeliver what we have promised, and we have corrected those situations. So, I see thatreally as a temporaryblip. I think they appreciate theinnovation that we’re bringing, I think they appreciate theinsights, the GoldStore initiatives, and now it’s getting back to doing business theright way. Sothat’s really what gives us confidence and I think it’s bearing out inthe marketplace and wecan already see thathere in December. Eric Serotta - Merrill Lynch: I hate to beat a deadhorse in terms of thetrading and merchandising operations, but there does seem to bethis disconnect between thecontinued very strong results that you arehaving, your statements that you’re really not taking on significantly morerisk and yet your expectations for itto return to normalized levels of profitability over time. They just don’t seem to logically add up that if you aretaking on more risk you would expect higher returns over time. I’m just wondering whether there is anythingyou could give interms of additional disclosure as to capital employed inthat business on aquarter-to-quarter basis, some measure of risk, like value atrisk, I know it allcertainly has itsproblems associate with asimple VARcalculation. But is there any additional disclosure that you could give us that wouldhelp us measure theadditional risk or thelevel of risk that you aretaking versus thereturns you aregenerating and thereturns implied inyour future guidance?

Eric, I dounderstand that this is abit of a differentkind of business. However, I would tellyou unequivocally that we’re taking on no more risk and I know that’s hard toconceptualize, but really it’s much more about theupside with a verycontrolled downside. We are not changingour VAR limits. Those arelooked at on avery, very granular basis every single day, every single hour basically andreally we started atzero each quarter and itall depends on theinflation and thevolatility. We expect that to level offover time and we expect thetrading profits to potentially level off over time, but I think themost important thing is as hard as itis to explain, is that we plan conservatively because we don’t have acrystal ball. Sowe are just beingconservative inthat. When theupside comes we’ll take it, but we arereally very, very comfortable with thelevel of controls that we have inthat business to limit thedownside.

Your next question comes from Andrew Lazar - Lehman Brothers. Andrew Lazar - Lehman Brothers: Just a quickclarification, I want to make sure I understand thecommentary earlier on, I think from Andre, between thefixed and variable costopportunity. Was thepoint there that you’ve seen thetop line opportunities better than you had initially anticipated which impactsperhaps the number ortype of facilities that you maybe had originally thought you would close, butthere were different opportunities therefore on thevariable side?

Well, I think clearly one of thethings that was said inthat was also towards theend of my prepared statements, I mentioned that we have to evaluate first aswhat we talked about at CAGNY, how thetop line because of our strong innovation and some of thepricing and the costsavings will play out. But, the itemsaround fixed and variable had alot to do with some ofthe work that actuallyGreg Smith had done previously inhis transportation and logistics role where we aregetting a lot ofvariable savings through freight and things like that and that’s starting tolook a littledifferent and therefore we look atour footprint potentially different because of what we’ve been able to dothrough the freightside. I think that was more inline with where I was going there. Andrew Lazar - Lehman Brothers: I am curious onsome of the new itemsand getting back to theconsumer side for aminute. How hasthe incrementalitybeen for a lot ofthese new items? Because we only geta certain look atthe data that we getmonthly and we could argue how good or not that really is, but alot of that hasn’t looked great for theUS portfolio overall yet I think you’ve pointed to awhole bunch of areas within this that that had performed really well. So, is there anincrementality issue here or hasit really been justspecific businesses like you mentioned earlier Gary, popcorn that wasn’t whereyou wanted it to be,that’s kind of holding back theoverall? In otherwords, priority brand volume obviously or sales obviously decelerated from lastquarter. I am tryingto get asense if everything is going really well with new items, what caused thedeceleration?

First of all, we did growabout 3% volume and we’ve got anumber of our keypriority brands that aregrowing, brands like Healthy Choice and Marie Callender’s and PAM, Egg Beaters,and so on. Sowe’ve got a number ofbrands growing in theright direction. We dohave a significantamount of incrementality I would sayin Q2 we mightestimate somewhere in theneighborhood of $50 million and that’s really suppressed abit by our allocation on Café Steamers. That business is on fire, and againwell over forecast. We arebuilding the inventoryand about to be ableto go off of that allocation. But I would tell you that we areholding ourselves to that incrementality standard -- both margins and volumes --and I am confident inthat pipeline. I think the thingto recognize in Q2that kept the adjustedvolumes at only 3%were two big pieces:one with the popcorn Italked about and we have theplans in place togradually build that back and theother was a veryseasonal business, Swiss Miss Cocoa. We had avery warm fall. I can tell you we’vemade it allback and more already on that business inDecember.

Andrew, one point I just want to make and I apologize, but just to beclear on my comments, let’s not lose sight of thefact that this organization we’ve talked about closure of approximately ofabout 12 plants, we arestill going to close and have closed or have cited about tento be closed. Sowe are not leavingthat, we are notdeparting from that task as well, I just want to make sure people understandthat we have closed about tenplants. Andrew Lazar - Lehman Brothers: Last quick thing is, I amjust curious -- this is more industrywide I think, I might just becompletely naïve inhow this all works --but given we don’t know where input costinflation is going to go and theindustry as a whole hasbeen playing catch up with respect to pricing because I don’t think anybodythought we would bewhere we aretoday. Is there away you and theindustry can think about, why wouldn’t folks price ahead of where they thoughtthings might be inthis environment which is very volatile? If you have to bring some of that back through promotional spending and suchyou can do so, but atleast the industrywould be starting totry and get ahead of itrather than always planning catch up. I know you’ve commented itjust doesn’t work that way, but I amjust curious on your thoughts there?

Andrew, I would not saythat’s a naïve comment,it’s a very logicalquestion. I can tell you unequivocally I amnot happy with our lack of price realization inthe first half of thisyear. Solet’s make no bones about that. I have gottenvery directly involved with our consumer units inthe past few monthsand I can tell you clearly that our pricing execution will bemuch different and clearly evident to you starting inQ3 it will bemuch more aggressive, itwill be much moreforward-looking. Clearly ithas to bebased on input costs, otherwise we have avery difficult story to tell with our customers but we aregoing to do afar better job than we have inthe past, and nexttime we talk I think you will seethe numbers.

Your next question comes from Pablo Zuanic - JP Morgan. Pablo Zuanic - JP Morgan: Why are corporateexpenses up so much,year-on-year? Gary, when we talk about pricingand we look across theportfolio, just give us anidea in terms of whichtype of product types you arehaving a better timegetting pricing through? I mean what lines areyou not being able to increase pricing? Or is itreally just an issueacross the portfolio?

Let mestart on thepricing. Did you mention frozen, Pablo? Pablo Zuanic - JP Morgan: Frozen is in yourportfolio, I was trying to understand where is that you aregetting pricing and where is that it’s lagging sowe can track, I mean we want to anticipate what’s going to happen, right? So, what should we belooking at or is itreally just an issueacross the portfolio? Andre J. Hawaux: Ican tell you some categories off thetop of my head where we aregetting pricing; clearly infrozen. Now, frozen is made up of alot of different pieces but it’s clearly evident inHealthy Choice, it’s clearly evident inMarie Callender’s, we got some issues on banquet and our bulk poultry business,but Kid Cuisine as well. So, across thefrozen portfolio, it’s very evident. InEgg Beaters, it’s very clear. InPAM, it’s very clear. So, right off thetop of my head, I can tell you for certain we’ve seen thepricing there. You will seeit across more of ourbrands and categories as we getinto Q3 and it will bemuch more evident as we getinto Q4. Let me answer theSG&A question that you had, Pablo. AsI said in my preparedremarks, we made three keyareas of investments inthis quarter. Quality and supply chain,and we strongly believe that those investments will improve our service levelswhich we talked about as being critical for us and driving our top line. The other piece wassystem investments which arecritical to providing thedashboards that our operators need to drive this business, and that’s around theSAP investment. Theother one was a timingissue around a foreignexchange derivativecharge we took and that will actually turnaround inQ3 and Q4. The last piece Itold you which was around thetrading and merchandising incentives given thestrong quarter and thestrong half year that they had. So,those are thedrivers. As I said, we will seethat turn itself around inthe back half of thisyear, our growth inSG&A. Pablo Zuanic - JP Morgan: It is great thatyou have a person incharge of trading and merchandising there and great that you areanswering questions on theFD disclosure, when you report on your access [indiscernible] moves up themarket is not ready for that and itstill goes up. I mean, today, you arenot getting credit for that and perhaps with your disclosure, you willget. So, I guess my question is, justgive us a sense inthe EBIT this quarterhow much was it reallytrading, how much was itlogistical services, storage, just give us asense there. Within trading, how muchfertilizers, energy grains, whatever you can provide there would beuseful. Gary, when I look atthe scanner data andwe know that it hasits limitations, ingeneral most companies will report sales growth 1 to 3 points above this kindof data. Inthe first quarter, youguys were about 7 points above and this last quarter you were above 5 pointsabove. So, I amwondering, is ConAgra doing something better than people atWal-Mart, C-stores and other channels or is itthat you are juststarting from a very lowbase?

Sure, Pablo. I will answer thesecond one and then I amgoing to turn it overto Greg on thetrading. I would tell you that we dohave a prettysignificant opportunity that we arecapitalizing on outside of themeasured channels. Those businesschannels are doingextremely well and we believe that will continue. Greg, do you wantto take the tradingissue?

Sure. With thewidespread inflation that you’ve seen across agriculture, energy and infertilizer which kind of links between thetwo for us, I mean we saw good performance really across our entireportfolio. If you think about theabsolute price changeand the pricevolatility and theacreage increases, I mean, we saw volume increases and we seeneeds for our customers on thesupply and theconsuming side to manage their risk and that was good for theportfolio overall. We saw the biggestincrease of course inour physical businesses of grain and fertilizer and our feed ingredients. But, we also saw itin thebalance of theportfolio as well. Energy was theonly part of theportfolio that was not up year over year, but itstill had very strong results. So, itis very balanced performance across avery diversified portfolio.

Your next question comes from Jim Lane - TRI Asset Management. Jim Lane - TRI Asset Management: First, it’s clear that management hasdone a much better jobthan predecessors atcreating stability in theearning stream. Theportfolio of earning stream hasbeen much more consistent than if we looked back three or four years. But, I guess when we look atthe successes thisyear and the mix ofearnings, it’s ironic that earnings estimates arehigher than they were atthe beginning of theyear, but the stockprice is lower. I was wondering if youcould speak to maybe management’s and theboard’s urgency with regard to making hard decisions? Does perhaps thecompany need to bemuch, much larger inorder to create shareholder value given how much things have admittedly changedin themarketplace? Or perhaps is there more value creation potential if trading and merchandisingare part of anotherentity or perhaps aseparate entity?

Well, Jim, I won’t comment on that last speculation. But, what I will tell you is that there areno big acquisitionsplanned and I think that’s prudent for us atthis time clearly because you need to have avery, very solid foundation. We don’twant to do somethinguntil we clearly have our own blocking and tackling and house inorder. We have made lots of progress. Westill have a ways togo to be that reallyfinely tuned operating company. That’sreally where we are attoday. So, we arestill in theearly stages. I would also tell you that it’s clear to us we don’t want to walk away fromit. We know that we’ve got some work to dothat resides in theconsumer foods business. Those plans arein place now. We will start to seeimprovement in theback half of this year and clearly into next year. Idon’t want to disregard thecontributions that we aregetting from thetrading and merchandising group. That’sclear. Maybe even more importantly, theone that we just don’t talk about enough is this quarter our $1 billion worth of Food and Ingredientbusiness which hasperformed exceedingly well over thelast few years on aconsistent basis and inparticular our Lamb Weston business is just anabsolute rock solidoutstanding performing business, top line, bottom line, momentum, return oninvested capital. Any way you look atit -- innovation,customer service -- that is such aterrific business and that whole food ingredients portfolio hasperformed extremely well. That hasalso helped us to have that consistency of earnings. So, we’ve got two of thethree pieces working extremely well, we got theplans in place, theexecution is going to berock solid as we goforward on consumer, we’ve got alot of good things happening interms of building our foundation. Oursystems are gettingbetter with SAP, our store shelves arelooking better, we arecontinuing to make progress on allthose fronts. So, I think that’s reallywhat the story is. Jim Lane - TRI Asset Management: My question is in thecontext of thepositive and thenegative of the yearand more in light of thefact that that capital markets haven’t rewarded thecompany or the stockfor that increased stability. A follow-onquestion to what other people have asked. On thequestions regarding pricing and costs, I was wondering if you could fill us ina little more on what haschanged internally atConAgra such that there is strong creditability to thecomments regarding amore accurate pricing initiatives with regards to inflation? Because while everyone seems to bea bit behind thecurve, I do think we area bit further behind thecurve with regards to our product portfolio. So, what granularly is being done atthe company differenttoday than say wasdone six months agosuch that we are notsurprised in another sixmonths? Thank you.

Jim, you aretalking specific to pricing? Jim Lane - TRI Asset Management: Correct.

Specific to pricing, I can tell youthat one thing that’s different is our wiring is far better. These aremuscles that we’ve had to build. Welearned a bit thehard way as theinflation just roared on us. We got abit of a late start,but I can tell you clearly that we’re inthe mode now where we aregoing to makeup for that year as we getin theback half. Clearly, another piece is my direct involvement. Itis clearly on my radar screen as atop priority, and I mean, ata granular level. Ithink those two things, theawareness of theorganization, thewiring between thedifferent pieces, saybetween procurement, theoperating groups, and theselling organization, it’s just stamped on everybody’s forehead now as atop priority and theproof will be inthe pudding. As I’vesaid, we will see someevidence of that inQ3, and we will seemuch more of that inQ4.

Returning to Citi InvestmentResearch, David Driscoll. David Driscoll - Citi InvestmentResearch: Two question for you guys. Thefirst one Gary is on Banquet. Given theproblem that you had on thepot pie business there, doyou think that those negative issues with consumers on therecall, did it carryover into other aspects of that brand just noting that is thesingle largest frozen brand you have? So,I think there should beprobably a great dealof sensitivity to how that brand performs under anegative scenario like asalmonella recall?

Actually, no rub off whatsoever. Clearly, that pulled our numbers for Banquet down inthe quarter, and youcan see that inthe scanner data. But we have some excellent plans inplace on Banquet and thecore business, thecore components of thebusiness areperforming extremely well and we’ve got 100% of our distribution back on potpies already which says something about thecustomers’ thoughts about theBanquet portfolio. Everything basically is back on theshelf or will be invery short order. David Driscoll - Citi InvestmentResearch: That’s helpful. Next question, Andre,is on commodity hedging. Can you talk tous about how you’ve hedged theconsumer foods business? I want to make aguess here that says that given how fastthis rate of inflationis moving that you really didn’t have much inthe way of commodityhedges in place forthat business. Is that accurate and/orwhat’s the percentageyou have hedged for thebalance of the year? Andre J. Hawaux: David, well, I’ll saywhat I said last quarter. We don’tcomment publicly on our hedging strategy inour organization. David Driscoll - Citi InvestmentResearch: Nothing, zero comments whatsoever? Andre J. Hawaux: Correct.

Your next question comes from KenGoldman of Bear Stearns. Ken Goldman - Bear Stearns: Marketing and R&D, how doyou see that? Is itup significantly in theback half of the year? Tied to that, you mentioned that sharerepurchase is anoption right now. I amwondering really why, given that alot of investors and even yourself seem to want to increase R&D andmarketing over the longterm. Why would you not put that cashback toward those long-term investment drivers rather than give itback to shareholders right now?

Ken, I can’t promise you that you will seeincreased spending on A&P. I thinkwe are atthe right levels. What I can tell you, is itis much more effective and efficient than it’s been inthe past. We’ve taken alot of non-working dollars out. Clearly,that’s a very goodthing. Thereturn on investment mentality that we have against our marketing efforts is avery different approach for us and you also have to take alook when I talk about thelevel of investment, last year inQ4 we made huge jumps inhow much we spent on A&P, and that was because we had theopportunity to do so,some of that afforded by thetrading business. We arenot planning on that. So, thenumbers I think aregoing to be what thenumbers are. We feel very very good about themarketing efforts and even better about our innovation. Again, it’s about theeffectiveness and I can tell you, clearly, I can’t open the[inaudible] on all of theinnovations that we have got inthe pipeline. But, itis extremely robust, and itwill be up to us tointroduce them in ameasured enough way that we make sure that theexecution is perfect and flawless. Andre J. Hawaux: Your question on share repurchase, theway I’d answer that is I think we have to Gary’s point inour algorithm in theback half of the year,we have all of thethings that he hasmentioned on innovation, and effective marketing spending, our plans arealready there. So, we dobelieve that our shares where they arecurrently priced today offer us avery attractive return on investment if we were to go out and getsome. So, that’s where we areat.

We will always balance against thelong-term opportunities we have internally and we arenever going to shortchangewhen we have got strong potential internally.

Your next question comes from ChristineMcCracken - Cleveland Research. Christine McCracken - Cleveland Research: Just a quick followup on your fertilizer and ag businesses. If you look at thefertilizer markets as anexample, they are juston fire rightnow. You mentioned that inyour comments. What’s to saythat they won’t continue to outperform? I mean clearly, you have to balanceyour costs versus demand, but looking ahead atthis coming year and where commodity prices arespecifically, I mean you should have one of thebiggest crops – barring any unforeseen weather-related events -- that we seen ina longtime, particularly, probably thedemand for fertilizer given this type of commodity environment is going to bemassive. Why wouldn’t you forecast ongoing, strong performance from that group?

I would just say weabsolutely take into account not only allof the externalfactors, but as well as theinternal factors when we put that forecast together. Ithink the way you wantto think about it, you look inthe portfolio, you’vegot good diversification across ag, energy and fertilizer and we look atwhat we believe those base earnings can bewhile not counting on theopportunistic-type earnings that portfolio will allow us. SoI think that’s really how you got to think about it.

Moving back to Robert Moskow, CreditSuisse. Robert Moskow – Credit Suisse: Andre, you said that inwave one, you arealmost complete closing down plants. Ialways thought that wave two would have another round of closures of plantsbecause you guys have said that your manufacturing footprint was too big. Areyou saying anything now about wave two, hasanything changedregarding your thoughts on wave two? Andre J. Hawaux: We haven’t said, we didn’t saythat and we are notsaying anything now relative to wave two. I think one of thethings we are doing isreassessing that fixed versus variable element and I think Greg, having being inthe role inthe transportationside is now stepping into thebroader supply chainrole. We arereally reevaluating what we need to doand with innovation coming and different innovation on different platforms, Ithink it’s important for us to relook atour network and determine where we need to be. So we have notannounced anything inwave two and we don’t plan to anytime shortly.

And it’s really allabout total delivery costs. Sowe are going take alook, Greg’s charge is to look across thewhole footprint and deliver thesavings, but it’s across total delivered cost, total end cost.

Your next question comes from EricKatzman of Deutsche Bank. Eric Katzman - Deutsche Bank: Thanks for taking thefollow up. Gary,I guess at CAGNY lastyear you took thegrowth rates up on expectations longer term from 7to 9 to 8 to 10. If I amunderstanding itcorrectly, your message today is that thecompany, given theinflation environment, needs to look atdollar profits and dollar sales and dollar margin as opposed topercentages. If the tradinggroup is let’s sayat anormalized rate andyou get afew percentage points from share repo given your cash flowand balance sheet strength, does that imply that you need to geta 4% to 5% sales growth from everything else food-relatedand an equalpercentage of EBIT growth? Is that how we should think about it?

Eric, I would tell you that we arestill committed to the8% to 10% so that is mostimportant and it islikely that we will probably take our top line number up; I don’t want tocommit to an exactnumber on that. Right now we willrevisit at CAGNY, but weare on theright track.

From UBS, Jeff Kanter. JeffKanter - UBS: Greg, I would like to getyour thoughts on this. How does your team think about grain trading andmerchandizing in lightof this energy bill? Clearly investors seeit as amoney machine in adifferent world. I was wondering if youthink about this inkind of the same way,that we are ina different world andit’s not a bad worldto be infrom grain trading and merchandising?

I guess I would agree with you thatthings have definitely changedwith the convergence of food and fueland it’s changed onthe breadth and amounts of inflation that is affecting us and hence thevolatility. Sowe do think that wewill see thiscommodity cycle for awhile. We are also seeing aglobal growth which is also contributing to that. Soit’s a little bit of aperfect storm. I think that’s why you dohear all theconsumer products companies as well talking about thedepth and breadth of inflation across allof the ag, energytransportation, packaging. Itis why they are talkingabout inflation or pricing, because ittruly is a differentday. Jeff Kanter - UBS: So taking that, ifI could just build on that and ask Gary aquestion, how do youlook as everybody looks atyour consumer foods result inisolation, but your EBIT is and your cash flows arewhat your cash flows are; clearly you have flexibility to take these cash flowsfrom this new world that Greg is living into reinvest behind Consumer Food. So when you say8% inflation, I mean, that excludes this natural hedge sodo you feel like youhave flexibility that alot of other packed foods companies don’t have to reinvest behind thebusiness? How doyou kind of think about itjust from a top downperspective?

I do think about itthat way Jeff. However, given thevolatility it’s hard to pin Greg down on exactly what heis going to deliver next quarter. Sowe really have to play itby ear. I think areally good example is last year inQ4 as I talked about alittle while ago wherewe saw theopportunity. Itwas very clear and we areable to act quickly and make some very good investments inour consumer business. But we always have to remember that we aregoing to spend themoney on an ROI basis,not just because we have alot of money, we have to have good places to put that money, but clearly we dobelieve that with theoccasional upsize provided by trading that we dohave some opportunities to reinvest inthe other parts of ourbusiness.

That concludes ourquestion-and-answer session. Mr.Klinefelter, I’ll hand theconference back to you for final remarks or closing comments.

Just as a reminder,this conference is being recorded and will bearchived on the web asdetailed in our newsrelease. As always, we areavailable for discussion. We thank youvery much for your interest inour company and Happy Holidays.