ConAgra Foods' First-Quarter EPS to Be Affected by Underperformance in Consumer Business;...

ConAgra Foods' First-Quarter EPS to Be Affected by Underperformance in Consumer Business; Will Update Investors on Fiscal 2009 Outlook in Sept. 18, 2008 Earnings Release

OMAHA, Neb.--(Business Wire)--
Today ConAgra Foods, Inc. (NYSE:CAG) is announcing that
underperformance in the Consumer Foods segment will negatively impact
its fiscal 2009 first quarter diluted EPS from continuing operations.
Excluding gains and losses impacting comparability (for example
hedging losses temporarily classified as unallocated Corporate
expense, as discussed below), earnings are expected to be slightly
below the previously announced estimate of $0.26-$0.28 per diluted
share. While the company does not expect any material change in its
full year fiscal 2009 outlook, it is in the process of determining
whether the first quarter results would cause any downward revision to
the low end of the expected EPS range for the full fiscal year. The
company is still closing its books for the fiscal first quarter and
finalizing GAAP results and will provide more EPS and operating
segment details in its regularly scheduled earnings release on Sept.
18, 2008.

The first-quarter earnings softness is driven by
lower-than-planned profits for the Consumer Foods segment, which
generated high single-digit sales growth on essentially flat volume,
but incurred higher-than-planned inflation. Consumer Foods segment
operating profits will be below prior-year first-quarter amounts. Key
areas of underperformance were cooking oils, tablespreads, Banquet
frozen foods and popcorn. The company's supply chain and SG&A savings
initiatives are on track against full-year targets. Sales and profits
for the Commercial Foods segment (formerly the Food & Ingredients
segment) were in line with company expectations.

The company had planned to provide the investment community with a
business update Wednesday, Sept. 3, 2008, at the Lehman Brothers
Back-to-School Conference in Boston, Mass. Because the company is in
the process of quantifying the implications of the first quarter
Consumer Foods underperformance on the full year outlook, the company
has decided not to participate in the conference. It will provide
investors with a full fiscal 2009 update as part of the Sept. 18, 2008
first-quarter earnings release.

First-Quarter Financial Reporting: Derivative Gains & Losses
(Hedging) & New Segments

The fiscal first-quarter reported EPS, on a continuing operations
basis, will include an approximate $0.05-$0.06 net loss from the
mark-to-market impact of derivatives used to hedge input costs
(discussed below), temporarily classified as unallocated Corporate
expense and considered by the company to be an item impacting
comparability until later reclassified into results of operating
segments. Because the company has not yet finalized all items
impacting comparability in the first quarter, it cannot give full
commentary on expected first-quarter reported EPS at this time.

The company uses hedging activities to manage the risk in its
plans for the cost of various commodity inputs. Following the recent
sale of the Trading & Merchandising operations and related
organizational changes, and to improve the transparency of operating
results, the company, beginning with the first quarter of fiscal 2009,
will utilize a new methodology for reporting derivative gains and
losses. This methodology temporarily records mark-to-market gains and
losses as unallocated Corporate expense. The company later transfers
the gains or losses to segment operating profit when the underlying
commodity being hedged is expensed in cost of goods sold for the
applicable operating segment.

This methodology creates a timing difference between the initial
recognition of the derivative gain or loss in unallocated Corporate
expense and its later recognition in the operating segments; the
company will therefore treat those amounts temporarily recorded in
unallocated Corporate expense as items impacting comparability until
later reclassified into results of operating segments. The new
methodology reduces the impact of any quarterly volatility in the
market prices of derivatives used to hedge future input costs from
segment results. This is in contrast to the former methodology which
directly recorded quarterly mark-to-market gains and losses in the
segment results as a component of cost of goods sold regardless of
when the related commodity was utilized in the operations or when the
related derivative was liquidated. The company will provide an example
of the new approach with its first-quarter earnings release.

The net hedging loss for the first quarter is a result of
decreases in commodity costs for certain inputs being hedged
(primarily corn, soybean oil and natural gas). The company expects
that these losses will be largely offset during the fiscal year by
actual input costs being lower than planned, or by increased values of
derivative hedge positions. Given this context, the hedging loss
experienced in the fiscal first quarter should not change the
company's yearly fiscal 2009 EPS performance expectations.

In addition to the items described above, the company will utilize
new reporting segments this fiscal year, beginning with the fiscal
first quarter. The revised segment reporting will provide more details
on the specific business units within the Consumer Foods segment.

ConAgra Foods, Inc., (NYSE:CAG) is one of North America's leading
packaged food companies, serving grocery retailers, as well as
restaurants and other foodservice establishments. Popular ConAgra
Foods consumer brands include: Banquet, Chef Boyardee, Egg Beaters,
Healthy Choice, Hebrew National, Hunt's, Marie Callender's, Orville
Redenbacher's, PAM and many others. For more information, please visit
us at www.conagrafoods.com.

Note on Forward-looking Statements:

This release contains forward-looking statements. These statements
are based on management's current views and assumptions of future
events and financial performance and are subject to uncertainty and
changes in circumstances. The company undertakes no responsibility for
updating these statements. Readers of this release should understand
that these statements are not guarantees of performance or results.
Many factors could affect the company's actual financial results and
cause them to vary materially from the expectations contained in the
forward-looking statements. These factors include, among other things,
availability and prices of raw materials, product pricing, future
economic circumstances, industry conditions, the company's ability to
execute its operating and restructuring plans, competitive environment
and related market conditions, operating efficiencies, the ultimate
impact of the company's recalls, access to capital, actions of
governments and regulatory factors affecting the company's businesses
and other risks described in the company's reports filed with the
Securities and Exchange Commission. The company cautions readers not
to place undue reliance on any forward-looking statements included in
this release, which speak only as of the date made.

ConAgra Foods, Inc.
MEDIA
Teresa Paulsen, 402-595-5210
Vice President, Corporate Communication
or
ANALYSTS
Chris Klinefelter, 402-595-4154
Vice President, Investor Relations
www.conagrafoods.com

Copyright Business Wire 2008