0001104659-04-022554.txt : 20040805 0001104659-04-022554.hdr.sgml : 20040805 20040805120251 ACCESSION NUMBER: 0001104659-04-022554 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 18 CONFORMED PERIOD OF REPORT: 20040530 FILED AS OF DATE: 20040805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONAGRA FOODS INC /DE/ CENTRAL INDEX KEY: 0000023217 STANDARD INDUSTRIAL CLASSIFICATION: FOOD & KINDRED PRODUCTS [2000] IRS NUMBER: 470248710 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07275 FILM NUMBER: 04953909 BUSINESS ADDRESS: STREET 1: ONE CONAGRA DR CITY: OMAHA STATE: NE ZIP: 68102 BUSINESS PHONE: 4025954000 MAIL ADDRESS: STREET 1: ONE CONAGRA DRIVE CITY: OMAHA STATE: NE ZIP: 68102 FORMER COMPANY: FORMER CONFORMED NAME: CONAGRA INC /DE/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: NEBRASKA CONSOLIDATED MILLS CO DATE OF NAME CHANGE: 19721201 10-K 1 a04-7990_110k.htm 10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended May 30, 2004

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-7275

CONAGRA FOODS, INC.

(Exact name of registrant, as specified in its charter)

A Delaware Corporation		47-0248710
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One ConAgra Drive Omaha, Nebraska		68102-5001
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (402) 595-4000

Securities registered pursuant to section 12(b) of the Act:

Title of each class		Name of each exchange on which registered

Common Stock, $5.00 par value		New York Stock Exchange

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ý No o

The aggregate market value of the voting common stock of ConAgra Foods, Inc. held by non-affiliates on November 23, 2003 was approximately $12.93 billion based upon the closing sale price on the New York Stock Exchange.

At July 26, 2004, 518,176,351 common shares were outstanding.

Documents incorporated by reference are listed on page 1.

Documents Incorporated by Reference

Portions of the Registrant’s Annual Report to Stockholders for the fiscal year ended May 30, 2004 (the “2004 Annual Report to Stockholders”) are incorporated into Part I, Item 1; Part II, Items 5, 6, 7, 7A and 8; and Part IV, Item 15.

Portions of the Registrant’s definitive Proxy Statement filed for Registrant’s 2004 Annual Meeting of Stockholders (the “2004 Proxy Statement”) are incorporated into Part III, Items 10, 11, 12, 13 and 14.

PART I

ITEM 1. BUSINESS

a) General Development of Business

ConAgra Foods, Inc. (“ConAgra Foods” or the “company”) is a leading packaged food company serving a wide variety of food customers. Over time, the company, which was first incorporated in 1919, has grown through acquisitions, operations and internal brand and product development. The company’s more significant acquisitions have included Beatrice Company in 1990, Golden Valley Microwave Foods in 1992 and International Home Foods in 2001. In recent years, ConAgra Foods has been pursuing an acquisition and divestiture strategy to shift its focus toward its core branded and value-added food products.

Over the past few years, the company has strategically repositioned its portfolio to focus on higher-margin, branded and value added businesses because that mix is expected to better serve consumers, customers, and shareholders over the long run. Executing that strategy has involved acquiring branded operations and divesting commodity-related businesses. The acquisitions included the fiscal 2001 purchase of International Home Foods and its Chef Boyardee, Gulden’s, Libby’s, PAM, and Louis Kemp brands. These divestitures included the company’s chicken business, its U.S. and Canadian crop inputs businesses (“UAP North America”), a Spanish feed business, a controlling interest in its fresh beef and pork business (“fresh beef and pork divestiture”), its canned seafood operations, and its processed cheese operations. Subsequent to fiscal year end 2004, the company disposed of its Portuguese poultry business. The company is actively marketing the remaining international portion of its crop inputs business (“UAP International”) and plans to dispose of this operation during fiscal 2005.

b) Financial Information about Reporting Segments

For fiscal 2004, the company’s operations are classified into three reporting segments: Retail Products, Foodservice Products and Food Ingredients. The company historically aggregated its retail and foodservice operations within a Packaged Foods reporting segment. As a result of the strategic portfolio changes discussed above and management realignments in fiscal 2004, the company now reports its retail and foodservice operations as two separate reporting segments: Retail Products and Foodservice Products. For fiscal 2003 and 2002, the company’s operations also include a Meat Processing reporting segment which reflects results associated with the company’s fresh beef and pork operations prior to the company selling a controlling interest in the operations during fiscal 2003. The contributions of each reporting segment to net sales and operating profit, and the identifiable assets attributable to each reporting segment are set forth in note 19 “Business Segments and Related Information” on pages 88 through 90 of the company’s 2004 Annual Report to Stockholders and are incorporated herein by reference.

c) Narrative Description of Business

The company competes throughout the food industry and focuses on adding value for customers who sell into the retail food, foodservice and ingredients channels.

ConAgra Foods reporting segments are described below. The ConAgra Foods companies and locations, including distribution facilities, within each reporting segment, are described in Item 2.

Retail Products

The Retail Products reporting segment includes branded foods in the shelf-stable, frozen and refrigerated temperature classes which are sold in various retail channels.

Shelf-stable products include tomato products, cooking oils, popcorn, soup, puddings, meat snacks, canned beans, canned pasta, canned chili, cocoa mixes and peanut butter for retail and deli customers. Shelf-stable major brands include Hunt’s, Healthy Choice, Chef Boyardee, Wesson, Orville Redenbacher’s, PAM, Slim Jim, ACT II,

Peter Pan, Van Camp’s, Gulden’s, Beanee Weenee, Manwich, Hunt’s Snack Pack, Swiss Miss, Knott’s Berry Farm, La Choy, Gebhardt, DAVID, Wolf Brand, Pemmican, Penrose and Andy Capp’s.

Frozen food products include dinners, pizzas, turkeys, entrees, snacks, desserts, ice cream, potato products, hand-held dough-based products and seafood for retail and deli customers. Frozen food major brands include Healthy Choice, Golden Cuisine, Banquet, Marie Callender’s, Butterball, Kid Cuisine, MaMa Rosa’s, Rosarita, Morton, Patio, La Choy, Artel and Wolfgang Puck.

Refrigerated food products include hot dogs, bacon, ham, sausages, cold cuts, turkey products, ethnic foods, kosher products, meat alternative products (e.g., soy-based hot dogs and patties), tablespreads, egg alternatives and dessert toppings for retail and deli customers. Refrigerated food major brands include Armour, Butterball, Cook’s, Decker, Eckrich, Healthy Choice, Louis Kemp, Ready Crisp, Hebrew National, Brown ‘N Serve, Lightlife, National Deli, Parkay, Blue Bonnet, Fleischmann’s, Egg Beaters and Reddi-wip.

Foodservice Products

The Foodservice Products reporting segment includes branded and customized food products, including meals, entrees, prepared potatoes, meats, seafood, sauces, and a variety of custom-manufactured culinary products packaged for sale to restaurants and other foodservice establishments.

Major brands include Armour, Butterball, County Line, Cook’s, Decker, Longmont, Eckrich, Margherita, Texas BBQ, Signature, Hebrew National, Parkay, Blue Bonnet, Fleischmann’s, Egg Beaters, Reddi-wip, Angela Mia, Hunt’s, Healthy Choice, Chef Boyardee, Banquet, Gilardi’s, Lamb Weston, Holly Ridge, Fernando’s, Rosarita, The Max, Singleton, Wesson, PAM, Peter Pan, Van Camp’s, Gulden’s, J. Hungerford Smith, Manwich, Hunt’s Snack Pack, Swiss Miss, Knott’s Berry Farm, La Choy, Gebhardt and Wolf Brand.

Food Ingredients

The Food Ingredients segment includes certain branded and commodity food ingredients, including milled grain ingredients, seasonings, blends and flavorings, which are sold to food processors, as well as certain commodity sourcing and merchandising operations.

Unconsolidated Equity Investments

The company has a number of unconsolidated equity investments. The more significant equity investments are involved in fresh beef and pork processing, barley malting, and potato production. The company’s fresh beef and pork joint equity investment was established in fiscal 2003 when the company sold a controlling interest in its fresh beef and pork operations.

Discontinued Operations

During fiscal 2004, the company completed the divestitures of its chicken business, its U.S. and Canadian crop inputs businesses and its Spanish feed business. Subsequent to fiscal year end 2004, the company disposed of its Portuguese poultry business. The company is actively marketing UAP International and plans to dispose of these operations during fiscal 2005. Accordingly, the company now reflects the results of operations for each of these businesses as discontinued operations for all periods presented.

General

The following comments pertain to each of the company’s reporting segments.

ConAgra Foods is a food company that operates in many different areas of the food industry, with a significant focus on the sale of branded and value-added consumer products. ConAgra Foods uses many different raw materials, the bulk of which are commodities. The prices paid for raw materials used in the products of ConAgra Foods generally reflect factors such as weather, commodity market fluctuations, currency fluctuations and the effects of governmental

agricultural programs. Although the prices of raw materials can be expected to fluctuate as a result of these factors, the company believes such raw materials to be in adequate supply and generally available from numerous sources. The company uses hedging techniques to minimize the impact of price fluctuations in its principal raw materials. However, it does not fully hedge against changes in commodity prices and these strategies may not fully protect the company or its subsidiaries from increases in specific raw material costs.

The company experiences intense competition for sales of its principal products in its major markets. The company’s products compete with widely advertised, well-known, branded products, as well as private label and customized products. The company has major competitors in each of its reporting segments.

Quality control processes at principal manufacturing locations emphasize applied research and technical services directed at product improvement and quality control. In addition, the company conducts research activities related to the development of new products.

Many of ConAgra Foods’ facilities and products are subject to various laws and regulations administered by the United States Department of Agriculture, the Federal Food and Drug Administration and other federal, state, local and foreign governmental agencies relating to the quality of products, sanitation, safety and environmental control. The company believes that it complies with such laws and regulations in all material respects, and that continued compliance with such regulations will not have a material effect upon capital expenditures, earnings or the competitive position of the company.

At May 30, 2004, ConAgra Foods and its subsidiaries had approximately 39,000 employees, primarily in the United States.

d) Foreign Operations

Foreign operations information is set forth in note 19 “Business Segments and Related Information” on pages 88 through 90 of the company’s 2004 Annual Report to Stockholders and is incorporated herein by reference.

e) Available Information

The company makes available, free of charge through its Internet website at http://www.conagrafoods.com, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission.

Risk Factors

The following factors could affect the company’s operating results and should be considered in evaluating the company.

The company must identify changing consumer preferences and develop and offer food products to meet their preferences.

Consumer preferences evolve over time and the success of the company’s food products depends on the company’s ability to identify the tastes and dietary habits of consumers and to offer products that appeal to their preferences. The company introduces new products and improved products in all of its business segments from time to time and incurs significant development and marketing costs. If the company’s products fail to meet consumer preference, then the company’s strategy to grow sales and profits with new products will be less successful.

If the company does not achieve the appropriate cost structure in the highly competitive food industry, its profitability could decrease.

The company’s success depends in part on its ability to achieve the appropriate cost structure and be efficient

in the highly competitive food industry. The company is currently implementing profit-enhancing initiatives that impact its marketing, sales, operations and information systems functions. These initiatives include: elimination of duplicative costs and overhead; consolidation of selected plants and support functions; efforts to streamline and improve the company’s ability to do business with its customers, distributors and brokers; and realignment of business organizations. If the company does not continue to manage costs and achieve additional efficiencies, its competitiveness and its profitability could decrease.

Increased competition may result in reduced sales for the company.

The food industry is highly competitive, and increased competition can reduce sales for the company.

The consolidation of the company’s retail customers has resulted in large sophisticated customers with increased buying power.

The company’s retail customers, such as supermarkets and warehouse clubs, have consolidated in recent years and consolidation is expected to continue. These consolidations have produced large, sophisticated customers with increased buying power who are more capable of resisting price increases and operating with reduced inventories. These customers may also in the future use more of their shelf space, currently used for company products, for their private label products. If the larger size of these customers results in additional negotiating strength or less shelf space for company products, the company’s profitability could decline.

The company may be subject to product liability claims and product recalls, which could negatively impact its profitability.

The company sells food products for human consumption, which involves risks such as product contamination or spoilage, product tampering and other adulteration of food products. The company may be subject to liability if the consumption of any of its products causes injury, illness or death. In addition, the company will voluntarily recall products in the event of contamination or damage. In the past, the company has issued recalls and has from time to time been involved in lawsuits relating to its food products. A significant product liability judgment or a widespread product recall may negatively impact the company’s profitability for a period of time depending on product availability, competitive reaction and consumer attitudes. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that company products caused illness or injury could adversely affect the company’s reputation with existing and potential customers and its corporate and brand image.

Commodity price increases will increase operating costs and may reduce profits.

The company uses many different commodities including wheat, corn, oats, soybeans, beef, pork, poultry and energy. Commodities are subject to price volatility caused by commodity market fluctuations, supply and demand, currency fluctuations, and changes in governmental agricultural programs. Commodity price increases will result in increases in raw material costs and operating costs. The company may not be able to increase its product prices to offset these increased costs; and increasing prices may result in reduced sales volume and profitability. The company has many years’ experience in hedging against commodity price increases; however, hedging practices reduce but do not eliminate the risk of increased operating costs from commodity price increases. For example, higher commodity prices in fiscal 2004, which were not fully offset by higher selling prices, negatively affected the company’s operating profit.

If the company fails to comply with the many laws applicable to its business, it may incur significant fines and penalties.

The company’s facilities and products are subject to many laws and regulations administered by the United States Department of Agriculture, the Federal Food and Drug Administration, and other federal, state, local, and foreign governmental agencies relating to the processing, packaging, storage, distribution, advertising, labeling, quality, and safety of food products. The company’s failure to comply with applicable laws and regulations could subject it to administrative penalties and injunctive relief, civil remedies, including fines, injunctions and recalls of its products. The company’s operations are also subject to extensive and increasingly stringent regulations administered by the Environmental Protection Agency, which pertain to the discharge of materials into the environment and the handling and

disposition of wastes. Failure to comply with these regulations can have serious consequences, including civil and administrative penalties and negative publicity.

ITEM 2. PROPERTIES

The company’s headquarters are located in Omaha, Nebraska. In addition, certain shared service centers are located in Omaha, Nebraska, including a product development facility, customer service center, financial service center and information technology center. The general offices and location of principal operations are set forth in the following list of ConAgra Foods’ locations.

The company maintains a number of stand-alone distribution facilities. In addition, there is warehouse space available at substantially all of its manufacturing facilities.

Utilization of manufacturing capacity varies by manufacturing plant based upon the type of products assigned and the level of demand for those products. In general, ConAgra Foods operates most of its manufacturing facilities in excess of 70% of available capacity, as measured by standard industry utilization calculation practices. These practices range from a base of 40 hours per week to 120 hours per week depending upon the nature of the manufacturing location.

The company owns most of the manufacturing facilities. However, a limited number of plants and parcels of land with the related manufacturing equipment are leased. Substantially all of ConAgra Foods’ transportation equipment and forward-positioned distribution centers containing finished goods are leased.

RETAIL PRODUCTS REPORTING SEGMENT

Domestic general offices in Omaha, Nebraska, Lincoln, Nebraska, Irvine, California, Lakeville, Minnesota, Edina, Minnesota, Downers Grove, Illinois and Jericho, New York. International general offices in Toronto, Canada, Mexico City, Mexico and San Juan, Puerto Rico.

Sixty-one manufacturing facilities in Arkansas, Ohio, Iowa, Missouri, Pennsylvania, Tennessee, Wisconsin, California, Georgia, Illinois, North Carolina, Minnesota, New Jersey, Indiana, Michigan, Nebraska, Maryland, Massachusetts and Kentucky. Five international manufacturing facilities in Canada, Mexico and the United Kingdom.

FOODSERVICE PRODUCTS REPORTING SEGMENT

General offices in Omaha, Nebraska, Eagle, Idaho, Tri-Cities, Washington, Tampa, Florida and Santa Fe Springs, California.

Twenty-six domestic manufacturing facilities in Idaho, Oregon, Washington, North Carolina, Minnesota (50% owned), Illinois, Indiana, California, Alabama, Texas, Colorado, Tennessee and Florida. Three international manufacturing facilities in The Netherlands (50% owned).

FOOD INGREDIENTS REPORTING SEGMENT

Domestic general, marketing and merchandising offices in Omaha, Nebraska and Savannah, Georgia. International general and marketing offices in Canada, Mexico, Italy, China, Brazil, United Kingdom, Switzerland and Australia.

Domestic production facilities in Illinois, Oklahoma, California, Ohio, Colorado, Alabama, Nebraska, Minnesota, Pennsylvania, South Dakota, Georgia, Texas, Florida, New Jersey, Utah, New Mexico, Nevada, Oregon and Iowa. International production facility in Chile.

ITEM 3. LEGAL PROCEEDINGS

In fiscal 1991, ConAgra Foods acquired Beatrice Company (“Beatrice”). As a result of the acquisition and the significant pre-acquisition contingencies of the Beatrice businesses and its former subsidiaries, the consolidated post-acquisition financial statements of the company reflect significant liabilities associated with the estimated resolution of these contingencies. These include various litigation and environmental proceedings related to businesses divested by Beatrice prior to its acquisition by the company. The environmental proceedings include litigation and administrative proceedings involving Beatrice’s status as a potentially responsible party at 39 Superfund, proposed Superfund or state-equivalent sites; these sites involve locations previously owned or operated by predecessors of Beatrice that used or produced petroleum, pesticides, fertilizers, dyes, inks, solvents, PCBs, acids, lead, sulfur, tannery wastes, and / or other contaminants. Beatrice has paid or is in the process of paying its liability share at 34 of these sites. Reserves for these matters have been established based on the company’s best estimate of its undiscounted remediation liabilities, which estimates include evaluation of investigatory studies, extent of required cleanup, the known volumetric contribution of Beatrice and other potentially responsible parties and its experience in remediating sites. The reserves for Beatrice environmental matters totaled $115.2 million as of May 30, 2004, and $121.2 million as of May 25, 2003, a majority of which relates to the Superfund and state equivalent sites referenced above. Expenditures for these matters are expected to occur over a period of 5 to 20 years.

On June 22, 2001, the company filed an amended annual report on Form 10-K for the fiscal year ended May 28, 2000. The filing included restated financial information for fiscal years 1997, 1998, 1999 and 2000. The restatement, due to accounting and conduct matters at United Agri Products, Inc. (“UAP”), a former subsidiary, was based upon an investigation undertaken by the company and the Audit Committee of its Board of Directors. The restatement was principally related to revenue recognition for deferred delivery sales and vendor rebates, advance vendor rebates, and bad debt reserves. The Securities and Exchange Commission (“SEC”) issued a formal order of nonpublic investigation dated September 28, 2001. The company is cooperating with the SEC investigation, which relates to the UAP matters described above, as well as other aspects of the company’s financial statements, including the level and application of certain of the company’s reserves.

The company is currently conducting discussions with the SEC Staff regarding a possible settlement of these matters. Based on discussions to date, the company established a $25 million reserve in fiscal 2004 in connection with matters related to this investigation. Due to the nature of the ongoing discussions, the company cannot predict whether the discussions will result in a settlement and is unable to determine the ultimate cost the company may incur in order to resolve this matter. Any final resolution could result in charges greater than the amount currently estimated and recognized in the company’s financial statements.

On August 10, 2001, a purported class action lawsuit, Gebhardt v. ConAgra Foods, Inc., et. al. Case No. 810CV427, was filed in United States District Court for Nebraska against the company and certain of its executive officers alleging violations of the federal securities laws in connection with the events resulting in the company’s restatement of its financial statements. The complaint seeks a declaration that the action is maintainable as a class action and that the plaintiff is a proper class representative, unspecified compensatory damages, reasonable attorneys’ fees and any other relief deemed proper by the court. On July 23, 2002, the federal district court granted the defendants’ motion to dismiss the lawsuit and entered judgment in favor of the company and the executive officers. On June 30, 2003, the Eighth Circuit Court of Appeals reversed the dismissal. The defendants thereafter renewed their motion to dismiss in the district court on the issues not previously addressed by the district court in its prior dismissal of the lawsuit. On December 10, 2003, the district court denied the defendants’ motion to dismiss on these other issues. The company believes the lawsuit is without merit and plans to vigorously defend the action.

On September 26, 2001, a shareholder derivative action was filed, purportedly on behalf of the company, by plaintiffs Anthony F. Rolfes and Sandra S. Rolfes in the Court of Chancery for the State of Delaware in New Castle County, Case No. 19130NC. The complaint alleges that the defendants, directors of the company during the relevant times, breached fiduciary duties in connection with events resulting in the company’s restatement of its financial statements. The action seeks, inter alia, recovery to the company, which is named as a nominal defendant in the action, of damages allegedly sustained by the company and a direction to the defendants to establish programs to prevent wrongful and illegal practices. On October 9, 2001, a second shareholder derivative action was filed, purportedly on behalf of the company, by plaintiff Harbor Finance Partners in the United States District Court for the District of Nebraska, Case No. 401CV3255. The complaint contains allegations and seeks relief similar to the Delaware derivative action. The directors named as defendants in these actions intend to vigorously defend the

allegations and believe the actions are without merit.

The company is a party to a number of other lawsuits and claims arising out of the operation of its businesses. After taking into account liabilities recorded for all of the foregoing matters, management believes the ultimate resolution of such matters should not have a material adverse effect on the company’s financial condition, results of operations or liquidity.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT AS OF AUGUST 1, 2004

Name	Title & Capacity	Age	Year Assumed Present Office

Bruce C. Rohde	Chairman, Chief Executive Officer and President	55	1998
Dwight J. Goslee	Executive Vice President, Strategic Development	54	2004
Owen C. Johnson	Executive Vice President, Organization and Administration and Corporate Secretary	58	2004
Michael A. Fernandez	Senior Vice President, Corporate Affairs and Chief Communications Officer	47	2003
John F. Gehring	Senior Vice President and Corporate Controller	43	2004
Scott E. Messel	Senior Vice President, Treasurer and Assistant Secretary	45	2004
Peter M. Perez	Senior Vice President, Human Resources	50	2003
Patricia Verduin	Senior Vice President and Director, Office of Product Quality and Development	44	2002
Michael D. Walter	Senior Vice President, Economic and Commercial Affairs	55	2000
Anita L. Wheeler	President, ConAgra Foods Foundation	58	2004
Christopher W. Klinefelter	Vice President, Investor Relations	37	2000

The foregoing executive officers have held the specified positions with ConAgra Foods for the past five years, except as follows:

Dwight J. Goslee joined ConAgra Foods in 1985, and from 1997 through 2000 was Senior Vice President, Mergers and Acquisitions. He was named Executive Vice President, Operations Control and Development in March 2001, and to his current position in May 2004.

Owen C. Johnson joined ConAgra Foods as Senior Vice President, Human Resources and Administration in June 1998, was named Executive Vice President in 2001, and Executive Vice President, Organization and Administration and Corporate Secretary in May 2004.

Michael A. Fernandez was Vice President of Public Relations with US West from 1996 to 2000, and Senior Vice President Public Affairs with Cigna Corporation from 2000 to 2003. He joined ConAgra Foods in his current position in September 2003.

John F. Gehring joined ConAgra Foods in 2002 as Vice President of Internal Audit and became Senior Vice President in 2003. In July 2004, Mr. Gehring was named to his current position. Prior to ConAgra Foods, he was a partner at Ernst and Young from 1997 to 2001.

Scott E. Messel was Vice President and Treasurer of Lennox International from 1999 to 2001. He joined ConAgra Foods in 2001 as Vice President and Treasurer, and in July 2004 was named to his current position.

Peter M. Perez was Senior Vice President Human Resources of Pepsi Bottling from 1995 to 2000, Chief

Human Resources Officer for Alliant Foodservice in 2001, and Senior Vice President Human Resources of W.W. Granger from 2001 to 2003. He joined ConAgra Foods in his current position in December 2003.

Dr. Patricia Verduin was named to her current position in February 2002. Prior to that she was Senior Vice President Research and Development, ConAgra Foods Grocery Products Group from 2000 to 2002, and Vice President Manufacturing at International Home Products from 1999 to 2000.

Michael D. Walter joined ConAgra Foods in 1989 as President of ConAgra Specialty Grain Products. He was named Senior Vice President, Trading and Procurement in October 1996, Senior Vice President Commodity Procurement and Economic Strategy in February 2000, and to his current position in May 2004.

Anita L. Wheeler was Director of Staffing of Allied Signal from 1996 to 1998. She joined ConAgra Foods in 1999 as Vice President, Executive Staffing and Development, became Vice President, Leadership Development and Planning in 2002 and was named to her current position in May 2004.

Christopher W. Klinefelter held various positions, including Assistant Vice President, Corporate Development of Brown-Forman from 1996 to 2000. He joined ConAgra Foods in January 2000 as Vice President, Investor Relations.

OTHER SIGNIFICANT EMPLOYEES OF THE REGISTRANT AS OF AUGUST 1, 2004

Name	Title & Capacity	Age	Year Assumed Present Office

Kevin P. Adams	Senior Vice President, Enterprise System Implementation	37	2003
J. Chris Adderton	Vice President, Customer Service	52	2002
Rick D. Blasgen	Senior Vice President, Integrated Logistics	45	2003
William G. Caskey	President, ConAgra Foodservice Sales	54	2003
Gregory A. Heckman	President and Chief Operating Officer, ConAgra Food Ingredients Group	42	2003
Douglas A. Knudsen	President, Retail Sales Development	50	2003
Allan B. Lutz	President and Chief Operating Officer, ConAgra Foods – Foodservice Company	47	2003
Dennis F. O’Brien	President and Chief Operating Officer, ConAgra Foods Retail Products Company	46	2004
Kevin W. Tourangeau	Senior Vice President, Manufacturing Effectiveness	52	1999

Kevin P. Adams joined ConAgra Foods in 2000 as Vice President Channelized Business Practice, became Senior Vice President Finance Operations Retail Products Company in 2002, and was named to his current position in November 2003. He was Vice President, Operations Finance and Business Practice with International Home Foods (acquired by ConAgra Foods) from 1997 to 2000.

J. Chris Adderton joined the company as Vice President Retail Sales Frozen Foods Group in 2001, and was named to his current position in July 2002. Prior to joining ConAgra Foods, he was President Western Division Marketing Specialists from 2000 to 2001, Vice President Advantage Sales and Marketing from 1999 to 2000, and President Source One Sales and Marketing from 1998 to 1999.

Rick D. Blasgen joined the company in his current position in August 2003. Prior to that, Mr. Blasgen was Vice President Supply Chain for Kraft from 2002 to 2003, and was Vice President Supply Chain as his last assignment with Nabisco where he was employed from 1983 to 2002.

William G. Caskey joined the company in 1998 as Vice President Sales, Foodservice, and was named to his current position in June 2003. Prior to joining the company, Mr. Caskey was President of Manufacturing at Rykoff – Sexton.

Gregory A. Heckman joined the company in 1984 and served as President and Chief Operating Officer, ConAgra Trade Group, from 1998 to 2001 and as President and Chief Operating Officer, ConAgra Agricultural Products Company in 2002. He was named to his current position in early 2003.

Douglas A. Knudsen was named to his current position in 2003. Prior to that, Mr. Knudsen was President, Retail Sales, from 2001 to 2003, and was President of Grocery Product Sales from 1995 to 2001.

Allan B. Lutz was named to his current position upon joining the company in June 2003. Prior to that, Mr. Lutz was President, Foodservice Division of Nestle from 1997 to 2003.

Dennis F. O’Brien was named to his current position in March 2004. Previously he was President, Store Brands from 2000 to 2001, Executive Vice President and General Manager, Grocery Products from July 2001 to December 2001, and President and Chief Operating Officer Grocery Products from January 2002 to March 2004. Prior to joining the company, Mr. O’Brien was Senior Vice President, Marketing and Product Development for Armstrong Industries from 1996 to 2000.

Kevin W. Tourangeau joined ConAgra Foods in his current position in March 1999. Previously he was with Randol Management Consultants, which he founded in 1998, where he worked with major corporations, including ConAgra Foods, to improve operations and profitability.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ConAgra Foods common stock is listed on the New York Stock Exchange where it trades under the ticker symbol: CAG. At the end of fiscal 2004, 520.9 million shares of common stock were outstanding, including 1.1 million shares held in the company’s Employee Equity Fund. There were approximately 33,000 shareholders of record, 25,000 holders via ConAgra Foods’ 401(k) plan for employees and more than 271,000 “street-name” beneficial holders whose shares are held in names other than their own. During fiscal 2004, 467.6 million shares were traded, a daily average of approximately 1.8 million shares.

Quarterly sales price and dividend information is incorporated herein by reference to note 20 “Quarterly Results (Unaudited)” on page 90 of the company’s 2004 Annual Report to Stockholders.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

On December 4, 2003, the company announced a share repurchase program of up to $1 billion, authorized by the company’s Board of Directors. During the fourth quarter of fiscal 2004, the company purchased 7.0 million shares at a cost of $200 million under this program. From the inception of the program through May 30, 2004, the company has purchased 15.3 million shares at a cost of $419 million.

The following table presents the total number of shares purchased during the fourth quarter of fiscal 2004, the average price paid per share, the number of shares that were purchased as part of a publicly announced repurchase program, and the approximate dollar value of the maximum number of shares that may yet be purchased under the $1 billion dollar program:

Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program ⁽²⁾	Approximate Dollar Value of Shares that may yet be Purchased under the Program ⁽²⁾

February 23 through March 21, 2004	81,413	$	27.32	—	$	781,600,000

March 22 through April 18, 2004	2,659,624	$	27.98	2,487,500	$	712,000,000

April 19 through May 30, 2004	4,542,777	$	29.17	4,478,800	$	581,400,000

Total Fiscal 2004 Fourth Quarter	7,283,814	$	28.71	6,966,300	$	581,400,000

⁽¹⁾ In addition to shares purchased as part of a publicly announced program, amounts include shares delivered to the company to pay the exercise price under stock options or to satisfy tax withholding obligations upon the exercise of stock options or vesting of restricted shares.

⁽²⁾ Pursuant to the share repurchase plan announced on December 4, 2003 of up to $1 billion. This program has no expiration date.

ITEM 6. SELECTED FINANCIAL DATA

Incorporated herein by reference to “Selected Financial Data” on page 50 of the company’s 2004 Annual Report to Stockholders.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Incorporated herein by reference to “Management’s Discussion & Analysis” on pages 51 through 65 of the company’s 2004 Annual Report to Stockholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Incorporated herein by reference to the subsection “Market Risk” in “Management’s Discussion & Analysis” on pages 64 through 65 of the company’s 2004 Annual Report to Stockholders.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following consolidated financial statements of ConAgra Foods and Subsidiaries and Report of Independent Registered Public Accounting Firm set forth on pages 66 through 91 of the company’s 2004 Annual Report to Stockholders are incorporated herein by reference:

Consolidated Statements of Earnings—Years ended May 30, 2004, May 25, 2003 and May 26, 2002

Consolidated Statements of Comprehensive Income—Years ended May 30, 2004, May 25, 2003 and May 26, 2002

Consolidated Balance Sheets—May 30, 2004 and May 25, 2003

Consolidated Statements of Common Stockholders’ Equity—Years ended May 30, 2004, May 25, 2003 and May 26, 2002

Consolidated Statements of Cash Flows—Years ended May 30, 2004, May 25, 2003 and May 26, 2002

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

The company carried out an evaluation under the supervision and with the participation of the company’s management, including the company’s Chief Executive Officer and Chief Financial Officer (or the person performing the functions of the Chief Financial Officer), of the effectiveness of the design and operation of the company’s disclosure controls and procedures pursuant to the Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer (or the person performing the functions of the Chief Financial Officer) concluded that, as of the end of the period covered by this report, the company’s disclosure controls and procedures provide reasonable assurance that such disclosure controls and procedures are effective in timely providing them with material information relating to the company (including its consolidated subsidiaries) required to be included in the company’s periodic Securities and Exchange Commission filings. There were no significant changes in the company’s internal controls over financial reporting during the fourth fiscal quarter of the

period covered by this report that have materially affected, or are reasonably likely to materially affect, such internal controls.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Incorporated herein by reference to “Board of Directors and Election,” “Section 16(a) Beneficial Ownership Reporting Compliance” and the first paragraph of “Audit Committee” in the company’s 2004 Proxy Statement. Information concerning Executive Officers of the company is included in Part I above.

The company has adopted a Code of Ethics for Senior Corporate Officers that applies to the Chief Executive Officer, Chief Financial Officer, Executive Vice President, Strategic Development, and Controller. This Code and the company’s Corporate Governance Principles, Code of Conduct, and charters for each committee of the Board of Directors, are posted on the company’s website at http://www.conagrafoods.com.

ITEM 11. EXECUTIVE COMPENSATION

Incorporated herein by reference to (i) ”Executive Compensation” through “Benefit Plans, Retirement Programs and Employment Agreements” in the company’s 2004 Proxy Statement, and (ii) information on director compensation in “Director Compensation and Transactions” in the company’s 2004 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Incorporated herein by reference to “Voting Securities Owned by Certain Beneficial Owners,” “Voting Securities Owned by Executive Officers and Directors” and “Equity Compensation Plan Information” of the company’s 2004 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated herein by reference to (i) “Director Compensation and Transactions” in the company’s 2004 Proxy Statement, and (ii) the last three paragraphs of “Benefit Plans, Retirement Programs and Employment Agreements” in the company’s 2004 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Incorporated herein by reference to “Ratification of Appointment of Independent Auditors” in the company’s 2004 Proxy Statement.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

a) List of documents filed as part of this report:

1. Financial Statements

All financial statements of the company as set forth under Item 8 of this report on Form 10-K.

2. Financial Statement Schedules

Schedule Number	Description	Page Number

S-II	Valuation and Qualifying Accounts	18

All other schedules are omitted because they are not applicable, or not required, or because the required information is included in the consolidated financial statements, notes thereto.

3. Exhibits

All exhibits as set forth on the Exhibit Index, which is incorporated herein by reference.

b) Reports on Form 8-K

The company filed a report on Form 8-K on March 25, 2004 furnishing the announcement of earnings for the third quarter ended February 22, 2004.

The company filed a report on Form 8-K on May 10, 2004 announcing that its Board of Directors approved an amendment to the Rights Agreement, dated July 12, 1996, between ConAgra Foods and Wells Fargo Bank, National Association, effectively terminating the Rights Agreement.

The company filed a report on Form 8-K on July 1, 2004 furnishing the announcement of earnings for the fourth quarter and fiscal year ended May 30, 2004.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ConAgra Foods, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 5^th day of August, 2004.

	ConAgra Foods, Inc.


	/s/ BRUCE C. ROHDE
	Bruce C. Rohde
	Chairman, Chief Executive Officer and President


	/s/ DWIGHT J. GOSLEE
	Dwight J. Goslee
	Executive Vice President, Strategic Development
	(Person performing the functions of the Chief Financial Officer)


	/s/ JOHN F. GEHRING
	John F. Gehring
	Senior Vice President and Corporate Controller

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 5th day of August, 2004.

Bruce C. Rohde^*		Director
David H. Batchelder^*		Director
Mogens C. Bay^*		Director
Howard G. Buffett^*		Director
Stephen G. Butler^*		Director
John T. Chain, Jr.^*		Director
Steven F. Goldstone^*		Director
Alice B. Hayes^*		Director
W.G. Jurgensen^*		Director
Robert A. Krane^*		Director
Mark H. Rauenhorst^*		Director
Carl E. Reichardt^*		Director
Ronald W. Roskens^*		Director
Kenneth E. Stinson^*		Director

^* Bruce C. Rohde, by signing his name hereto, signs this annual report on behalf of each person indicated. A Power-of-Attorney authorizing Bruce C. Rohde to sign this annual report on Form 10-K on behalf of each of the indicated Directors of ConAgra Foods, Inc. has been filed herein as Exhibit 24.

	By:
		/s/ BRUCE C. ROHDE
		Bruce C. Rohde
		Attorney-In-Fact

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

ConAgra Foods, Inc.

Omaha, Nebraska

We have audited the consolidated financial statements of ConAgra Foods, Inc. and subsidiaries as of May 30, 2004 and May 25, 2003, and for each of the three fiscal years in the period ended May 30, 2004, and have issued our report thereon dated July 26, 2004 (which report expresses an unqualified opinion and includes an explanatory paragraph relating to change in methods of accounting for variable interest entities and asset retirement obligations in 2004, goodwill and other intangible assets in 2003 and derivative instruments and other hedging activities in 2002); such consolidated financial statements and report are included in your 2004 Annual Report to Stockholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of ConAgra Foods, Inc. and subsidiaries, listed in Item 15. This consolidated financial statement schedule is the responsibility of the company’s management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Omaha, Nebraska
July 26, 2004

Schedule II

CONAGRA FOODS, INC. AND SUBSIDIARIES

Valuation and Qualifying Accounts

For the Fiscal Years ended May 30, 2004, May 25, 2003 and May 26, 2002

(in millions)

		Additions (Deductions)
Description	Balance at Beginning of Period	Charged to Costs and Expenses	Other	Deductions from Reserves	Balance at Close of Period

Year ended May 30, 2004 Allowance for doubtful receivables	$ 33.1	10.8	(1.7)⁽²⁾	15.7⁽¹⁾	$ 26.5
Year ended May 25, 2003 Allowance for doubtful receivables	$ 43.0	7.6	(0.8)⁽²⁾	16.7⁽¹⁾	$ 33.1
Year ended May 26, 2002 Allowance for doubtful receivables	$ 47.5	11.5	2.1⁽²⁾	18.1⁽¹⁾	$ 43.0

⁽¹⁾ Bad debts charged off, less recoveries.

⁽²⁾ Primarily reserve accounts of acquired businesses less reserve accounts of divested businesses and foreign currency translation adjustments.

EXHIBIT INDEX

Number	Description	Page No.

3.1	ConAgra Foods’ Certificate of Incorporation, as amended, incorporated herein by reference to Exhibit 3.1 of ConAgra Foods’ quarterly report on Form 10-Q for the quarter ended August 27, 2000
3.2	ConAgra Foods’ Bylaws, as amended, incorporated herein by reference to Exhibit 3.1 of ConAgra Foods’ quarterly report on Form 10-Q for the quarter ended February 24, 2002
4.1	Form of documents establishing Series B Preferred Securities of ConAgra Capital, L.C., incorporated herein by reference to Exhibit 4.8 and Exhibit 4.14 of ConAgra Foods’ registration on Form S-3 (033 56973)
4.2	Amendment to Rights Agreement, dated as of May 7, 2004, terminating the Rights Agreement, incorporated herein by reference to Exhibit 4.1 of ConAgra Foods’ current report on Form 8-K dated May 7, 2004.
10.1	Form of Agreement between ConAgra Foods and its executives incorporated herein by reference to Exhibit 10.1 of ConAgra Foods’ annual report on Form 10-K for the fiscal year ended May 25, 2003
10.2	ConAgra Foods’ Employee Flexible Bonus Payment Plan incorporated herein by reference to Exhibit 10.2 of ConAgra Foods’ annual report on Form 10-K for the fiscal year ended May 26, 2002
10.3	ConAgra Foods Non-Qualified CRISP Plan........................................................................................................	21
10.4	ConAgra Foods Non-Qualified Pension Plan, and First Amendment thereto......................................................	24
10.5	ConAgra Foods Supplemental Pension and CRISP Plan for Change of Control.................................................	30
10.6	ConAgra Foods Incentives and Deferred Compensation Change of Control Plan...............................................	34
10.7	ConAgra Foods 1990 Stock Plan, and amendments thereto incorporated herein by reference to Exhibit 10.10 of ConAgra Foods’ annual report on Form 10-K for the fiscal year ended May 28, 2000
10.8	ConAgra Foods 1995 Stock Plan incorporated herein by reference to Exhibit 10.11 of ConAgra Foods’ annual report on Form 10-K for the fiscal year ended May 28, 2000
10.9	ConAgra Foods 2000 Stock Plan incorporated herein by reference to Exhibit 10.1 of ConAgra Foods’ quarterly report on Form 10-Q for the quarter ended August 27, 2000
10.10	Amendment dated May 2, 2002 to ConAgra Foods Stock Plans and other Plans incorporated herein by reference to Exhibit 10.10 of ConAgra Foods’ annual report on Form 10-K for the fiscal year ended May 26, 2002
10.11	ConAgra Foods Amendment No. 1 to the 2000 Stock Plan.................................................................................	37
10.12	ConAgra Foods Directors’ Unfunded Deferred Compensation Plan incorporated herein by reference to Exhibit 10.10 of ConAgra Foods’ annual report on Form 10-K for the fiscal year ended May 27, 2001
10.13	ConAgra Foods Employee Equity Fund Trust Agreement, with Stock Purchase Agreement and Revolving Promissory Note executed in connection therewith incorporated herein by reference to Exhibit 10.12 of ConAgra Foods’ annual report on Form 10-K for the fiscal year ended May 26, 2002
10.14	Employment Agreement and amendments thereto between ConAgra Foods and Bruce C. Rohde incorporated herein by reference to Exhibit 10.13 of ConAgra Foods’ annual report on Form 10-K for the fiscal year ended May 26, 2002
10.15	Agreement between ConAgra Foods and James P. O’Donnell............................................................................	38
10.16	Agreement between ConAgra Foods and Kenneth W. Gerhardt..........................................................................	44
10.17	ConAgra Foods 1999 Executive Incentive Plan...................................................................................................	48
10.18	ConAgra Foods 2004 Executive Incentive Plan...................................................................................................	50
12	Statement regarding computation of ratio of earnings to fixed charges...............................................................	52
13	Pages 50 through 91of ConAgra Foods, Inc.’s Annual Report to Stockholders for the fiscal year ended May 30, 2004........................................................................................................................................................	53
21	Subsidiaries of ConAgra Foods............................................................................................................................	95
23	Consent of Deloitte & Touche LLP......................................................................................................................	97
24	Powers of Attorney...............................................................................................................................................	98
31.1	Section 302 Certificate..........................................................................................................................................	111
31.2	Section 302 Certificate..........................................................................................................................................	112
32.1	Section 906 Certificates........................................................................................................................................	113

Pursuant to Item 601(b)(4) of Regulation S-K, certain instruments with respect to ConAgra Foods’ long-term

debt are not filed with this Form 10-K. ConAgra Foods will furnish a copy of any such long-term debt agreement to the Securities and Exchange Commission upon request.

Except for those portions of ConAgra Foods, Inc.’s Annual Report to Stockholders for its fiscal year ended May 30, 2004 (such portions filed hereto as Exhibit 13) specifically incorporated by reference in the report on Form 10-K, such annual report is furnished solely for the information of the Securities and Exchange Commission and is not to be deemed “filed” as part of this filing.

Items 10.1 through 10.18 are management contracts or compensatory plans filed as exhibits pursuant to Item 14(c) of Form 10-K.

EX-10.3 2 a04-7990_1ex10d3.htm EX-10.3

Exhibit 10.3

CONAGRA

NONQUALIFIED CRISP PLAN

1. Purpose. ConAgra has previously adopted the ConAgra Retirement Income Savings Plan (“Qualified CRISP”). The Qualified CRISP is qualified under Code Section 401(a). Regardless of a qualified plan’s benefit formula, the Code imposes restrictions upon the benefits that may be provided under plans qualified under Code Section 401(a), such as limitations under Code Sections 401(a)(17), 401(k), 402(g) and 415 (“Code Restrictions”). These Code Restrictions limit the amount of retirement benefits that may be provided certain ConAgra executives under the Qualified CRISP. This Plan is intended to make up the employer-provided benefits (on an after-tax basis) not available under the Qualified CRISP benefit formula because of the Code Restrictions.

Since the contributions and earnings under this Plan are not tax-deferred as are the contributions under the Qualified CRISP, the benefits under this Plan will be tax-effected to reflect this difference, so that the after-tax benefits under this Plan make up on an after-tax basis the benefits not available under the Qualified CRISP because of the Code Restrictions. However, ConAgra recognizes that the tax effect to each Participant is unique, and therefore, the benefits cannot be tax-effected to certainty, but must be approximated.

2. Definitions. The following definitions shall apply to the Plan:

2.1 “Code” means the Internal Revenue Code of 1986, as amended.

2.2 “Committee” means the ConAgra Employee Benefits Committee or any successor thereto. The Committee shall be the “named fiduciary” as described in ERISA Section 402(a)(2).

2.3 “Compensation Committee” means the Compensation Committee of the Board of Directors of ConAgra.

2.4 “ConAgra” means ConAgra, Inc., a Delaware corporation.

2.5 “ConAgra Controlled Group” means the controlled group of corporations as described in Code Section 414(b), which includes ConAgra.

2.6 “Effective Date” of this Plan means January 1, 1988.

2.7 “Employee” shall have the same meaning as set forth in the Qualified CRISP.

2.8 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

2.9 “Participant” means an Employee who has satisfied the eligibility requirements set forth in Section 3 of the Plan and who has not received his total benefits under the Plan.

2.10 “Plan” means this plan which shall be called the ConAgra Nonqualified CRISP Plan.

2.11 “Plan Year” means the calendar year.

2.12 “Total and Permanent Disability” shall have the same meaning as set forth in the Qualified CRISP.

2.13 “Trustee” means the entity or individual selected by the Committee to be trustee of the trust. The Committee shall select the Trustee and ConAgra shall enter into a Trust Agreement with the Trustee.

2.14 “Year of Service” shall have the same meaning as set forth in the Qualified CRISP.

Exhibit 10.3

3. Eligibility and Participation. Each Employee who meets the following requirements shall participate in this Plan:

(a) The Employee participates in the Qualified CRISP;

(b) The Employee has completed One Year of Service;

(d) The Compensation Committee has selected the Employee to participate in the Plan.

The Employee shall become a Participant in this Plan as of the first day that he has met each of the above four requirements, or such other date as selected by the Compensation Committee. Each Participant shall continue to participate in this Plan until all the benefits payable to the Participant under this Plan have been paid.

4. Benefits.

4.1 General Benefit and Funding. Provided the Participant had made the maximum employee contribution allowed him under the Qualified CRISP, each Plan Year ConAgra shall make a contribution to each Participant’s Account equal to the excess of (a) over (b) where,

(a) equals the employer contribution that would have been made to the Qualified CRISP for the Participant had there not been any Code Restrictions and assuming the Participant had made the maximum employee contribution allowed under the Qualified CRISP (ignoring the Code Restrictions), and

(b) equals the employer contribution actually made to the Qualified CRISP for the Participant.

The maximum employee contributions assumed in (a) above is computed ignoring the Code Restrictions, but not the percentage limits on employee contributions set forth in the Qualified CRISP and not the percentages imposed because of the mathematical test under Code Section 401(k)(3)(A).

The Plan is also intended to provide a tax gross-up to reflect that this is an after-tax plan, whereas the Qualified CRISP is a before-tax plan. The intent is to provide the Participant with a combined after-tax benefit from this Plan and the Qualified CRISP that approximates the benefit the Participant would receive had there not been any Code Restrictions.

4.2 Tax Gross-Up. In addition to other contributions hereunder, ConAgra shall make a tax gross-up payment to each Participant each Plan Year to approximate his additional Federal and state income tax on account of the Plan. The Committee shall determine the amount of the payment and the Committee’s determination shall be final, conclusive and binding on, the Participant, the Trustee and ConAgra. In making the determination, the Committee may make any assumptions it deems appropriate, including, but not limited to, the Participant’s Federal and state income tax rates and the earnings of the Participant’s Account. The Committee may, but is not required to, assume that the same Federal and/or state income tax rate applies to all Participants. Also, at the Committee’s discretion, all Participants may be treated differently or the same, as long as the Committee has a reasonable basis for such different treatment. It is expressly understood that the payment contemplated by this Paragraph 4.2 is an approximation and will not necessarily be the taxes that result from the Plan to an individual Participant. The Committee, in its discretion, may make a portion or all of this payment to the Participant’s Account, rather than the Participant.

5. Participants’ Accounts. A separate account shall be established for each Participant in the Plan (“Participant’s Account”). Each Participant Account shall share in the earnings and losses of the trust in proportion to the value of the account on the first day of the valuation period. Each Participant’s Account shall be valued as often as determined appropriate by the Committee, but at least once per Plan Year. A Participant’s Account shall not be forfeitable for any reason.

Exhibit 10.3

6. Payment of Benefits. The benefits payable under this Plan shall be payable upon the same event that causes the payment of benefits under the Qualified CRISP. The form of benefits hereunder shall be the same form as the form of benefit payments provided under the Qualified CRISP with the same elections to the Participant (and his spouse) as provided under the Qualified CRISP. The amount of benefits shall be based upon the balance in the Participant’s Account with payment of benefits from the Participant’s Account payable until the Participant’s Account has a zero balance.

7. Administration. This Plan shall be administered by the Committee. The Committee shall make all determinations with regard to the Plan, subject to the provisions of the Plan and any determinations that are designated to be made by the Compensation Committee. The Committee shall have the authority, subject to the provisions of the Plan, to establish, adopt or revise rules and regulations as it deems necessary or advisable for the administration of the Plan. Claims procedures and claims review procedures required by ERISA shall be developed by the Committee. To the extent not inconsistent with the provisions of the Plan, all determinations of the Committee shall be final, conclusive and binding upon all the parties. Any determination or decision that only affects a member of the Committee who is a Participant shall be made by the Compensation Committee.

8. Beneficiary Designation. Designation of a beneficiary under the Plan shall be in the same form and with the same restrictions as under the Qualified CRISP.

9. Nonalienation of Benefits. No benefit payable under this Plan shall be subject, at any time and in any manner, to alienation, sale, transfer, assignment, pledge or encumbrance of any kind.

10. Amendment and Termination. ConAgra, by action of its Board of Directors, may amend or terminate this Plan at any time, provided, however, this Plan shall not be amended or terminated to eliminate or reduce any Participant’s Account balance of the Participants therein at the time of the amendment or termination or to reduce the vesting of a Participant.

11. Applicable Law. This Plan and all rights hereunder shall be governed by and construed according to the laws of the State of Nebraska.

This Plan has been adopted effective January 1, 1988.

EX-10.4 3 a04-7990_1ex10d4.htm EX-10.4

Exhibit 10.4

CONAGRA

NONQUALIFIED PENSION PLAN

1. Purpose. ConAgra has previously adopted the Restatement of the ConAgra Pension Plan for Salaried Employees (“Qualified Pension Plan”). The Qualified Pension Plan is qualified under Code Section 401(a). Regardless of a qualified plan’s benefit formula, the Code imposes restrictions upon the benefits that may be provided under plans qualified under Code Section 401(a), such as limitations under Code Sections 401(a)(17), 402(g) and 415 (“Code Restrictions”). These Code Restrictions limit the amount of retirement benefits that may be provided certain ConAgra executives under the Qualified Pension Plan. This Plan is intended to make up the benefits (on an after-tax basis) not available under the Qualified Pension Plan benefit formula because of the Code Restrictions.

Since the contributions and earnings under this Plan are not tax-deferred as are the contributions under the Qualified Pension Plan, the benefits under this Plan will be tax-effected to reflect this difference, so that the benefits under this Plan make up on an after-tax basis the benefits not available under the Qualified Pension Plan formula because of the Code Restrictions. However, ConAgra recognizes that the tax effect to each Participant is unique, and therefore, the benefits cannot be tax-effected to certainty, but must be approximated.

2. Definitions. The following definitions shall apply to the Plan:

2.1 “Business Combination or Acquisition” means (i) any merger or consolidation of ConAgra with or into any other corporation, (ii) the sale or lease of all or any substantial part of the assets of ConAgra to any Other Entity, and (iii) a tender offer or other series of stock purchases which result in any Other Entity becoming the beneficial owner of more than 50% of ConAgra’s outstanding voting securities.

2.2 “Code” means the Internal Revenue Code of 1986, as amended.

2.3 “Committee” means the ConAgra Employee Benefits Committee or any successor thereto. The Committee shall be the “named fiduciary” as described in ERISA Section 402(a)(2).

2.4 “Compensation Committee” means the Compensation Committee of the Board of Directors of ConAgra.

2.5 “ConAgra” means ConAgra, Inc., a Delaware corporation.

2.6 “ConAgra Controlled Group” means the controlled group of corporations as described in Code Section 414(b), which includes ConAgra.

2.7 “Effective Date” of this Plan means January 1, 1988.

2.8 “Employee” shall have the same meaning as set forth in the Qualified Pension Plan.

2.9 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

2.10 “Other Entity” means any corporation, person or other entity and any other entity with which it or its affiliates or associates has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of the stock of ConAgra or which is an affiliate or associate of such entity, together with the successors and assigns of such persons.

2.11 “Participant” means an Employee who has satisfied the eligibility requirements set forth in Section 3 of the Plan and who has not received his total benefits under the Plan.

Exhibit 10.4

2.12 “Past Service Cost” means the aggregate cost of providing the benefits which relate to service of the Participant prior to establishment of the Plan and prior to the Employee becoming a Participant hereunder.

2.13 “Plan” means this plan which shall be called the ConAgra Nonqualified Pension Plan.

2.14 “Plan Year” means the calendar year.

2.15 “Total and Permanent Disability” shall have the same meaning as set forth in the Qualified Pension Plan.

2.16 “Trustee” means the entity or individual selected by the Committee to be trustee of the trust. The Committee shall select the Trustee and ConAgra shall enter into a Trust Agreement with the Trustee.

2.17 “Year of Service” shall have the same meaning as set forth in the Qualified Pension Plan.

3. Eligibility and Participation. Each Employee who meets the following requirements shall participate in this Plan:

(a) The Employee participates in the Qualified Pension Plan;

(b) The Employee has completed One Year of Service; and

(d) The Compensation Committee has selected the Employee to participate in the Plan.

4. Benefits.

4.1 Benefit Objectives. The objective of the Plan is to provide each Participant with a benefit, assuming the Participant’s vesting schedule as described in Paragraph 4.5, which equals the excess of (a) over (b) where,

(a) equals the value of the after-tax Qualified Pension Plan benefits the Participant would have received had there not been any Code Restrictions, and

(b) equals the value of the after-tax Qualified Pension Plan benefits the Participant is expected to receive.

No benefit shall be earned under this Plan for periods of employment after the Participant has attained age 65. The Plan is also intended to provide a tax gross-up to reflect that this is an after-tax plan, whereas the Qualified Pension Plan is a before-tax plan. The intent is to provide the Participant with a combined after-tax benefit from this Plan and the Qualified Pension Plan that approximates the benefit the Participant would receive had there not been any Code Restrictions.

4.2 General Funding. ConAgra shall fund each Participant’s Account sufficiently to meet the benefit objectives set forth in Paragraph 4.1. At a minimum, each Plan Year, ConAgra shall contribute to each Participant’s Account an amount equal to the sum of (a) and (b) below, where

(a) equals the actuarially determined lump sum value of benefits that were not earned by the Participant under the Qualified Pension Plan because of Code Restrictions, and

Exhibit 10.4

(b) equals an amortization (over the Participant’s remaining years until age 65) of the Participant’s Past Service Cost.

Subject to the preceding, the Committee, in its sole and absolute discretion, shall determine the amount of funding for each Participant each Plan Year with the assistance of an actuarial firm selected by the Committee. The Committee shall select reasonable actuarial assumptions (in the aggregate) to use to make the calculations.

4.3 Tax Gross-Up. In addition to other contributions hereunder, ConAgra shall make a tax gross-up payment to each Participant each Plan Year to approximate his additional Federal and state income tax on account of the Plan. The Committee shall determine the amount of the payment and the Committee’s determination shall be final, conclusive and binding on, the Participant, the Trustee and ConAgra. In making the determination, the Committee may make any assumptions it deems appropriate, including, but not limited to, the Participant’s Federal and state income tax rates and the earnings of the Participant’s Account. The Committee may, but is not required to, assume that the same Federal and/or state income tax rate applies to all Participants. Also, at the Committee’s discretion, all Participants may be treated differently or the same, as long as the Committee has a reasonable basis for such different treatment. It is expressly understood that the payment contemplated by this Paragraph 4.3 is an approximation and will not necessarily be the taxes that result from the Plan to an individual Participant. The Committee, in its discretion, may make a portion or all of this payment to the Participant’s Account, rather than the Participant.

4.4 Business Combination or Acquisition. Notwithstanding any other provisions of the Plan, upon a Business Combination or Acquisition, any amounts necessary to immediately fund the benefits vested hereunder pursuant to the Participant’s vesting schedule under Paragraph 4.5 shall be immediately funded, unless 75% or more of the living ConAgra Directors (who were Directors of ConAgra on the date 1 year prior to the vote) vote not to have this Paragraph 4.4 apply. Such amounts include all amounts for past service of the Participant, all amounts for future service of the Participant that are vested under the applicable schedule described in Paragraph 4.5 assuming the Participant will be employed by ConAgra until age 65 and a tax gross-up payment to the Participant (or the Participant’s Account) to reflect the Federal and state income tax effects to the Participant of the funding under this Paragraph 4.4. Notwithstanding Section 12 of the Plan, this Paragraph 4.4 may not be amended after the date of a Business Combination or Acquisition unless such Business Combination or Acquisition has received prior approval of 75% or more of the ConAgra Directors who were Directors of ConAgra on the date 1 year prior to such approval.

4.5 Vesting. There shall be three vesting schedules for the Plan. The Compensation Committee shall determine which vesting schedule applies to a Participant at the time the Employee is selected to participate in the Plan. The Compensation Committee may change the vesting schedule that applies to a Participant, but in no event may a Participant whose vesting schedule is Schedule C be changed to Schedule B or A, nor may a Participant whose vesting schedule is Schedule B be changed to Schedule A. Under Schedule A, a Participant is always 100% vested in his interest in the Plan that is earned for his past service, but the Participant benefits related to future service are forfeited upon his termination of employment with ConAgra. Under Schedule B, a Participant is 100% vested in his interest in the Plan that is earned for his past service and that would be earned for the 5 Plan Years following his entry into the Plan even if the Participant terminates his employment prior to the end of such 5 years. Under Schedule C, a Participant is 100% vested in his interest in the Plan that is earned for his past service and that would be earned for all future years of service up to age 65. In all events, a Participant shall be 100% vested in his interest in the Plan earned in the year he terminates employment.

4.6 Funding Upon Death or Disability of Participant. If a Participant dies, or becomes Totally and Permanently Disabled, prior to age 65 while employed by ConAgra, no additional funding shall be made with regard to potential future service of the Participant. However, upon such death, or Total and Permanent Disability, funding and related tax gross-up shall be made as soon as possible to adequately fund the Participant’s death or disability benefit. The Participant’s benefit upon such death or Total and Permanent

Exhibit 10.4

Disability shall be the benefit that can be provided based upon the assets in his Participant’s Account.

4.7 Funding Upon Early Retirement. A Participant may elect early retirement under this Plan in the same manner and to the same extent as provided in the Qualified Pension Plan. If a Participant properly elects such early retirement, immediate funding and related tax gross-up will be made to adequately fund the Participant’s early retirement benefit.

4.8 Funding Upon Termination of Employment. Upon termination of employment prior to age 65 (other than early retirement under Paragraph 4.7 or death or disability under Paragraph 4.6) funding and related tax gross-up shall be made as soon as possible to adequately fund the Participant’s termination benefit. If the Participant’s vesting schedule is Schedule B or Schedule C any future years funding shall be made in the applicable year (with appropriate loss adjustments), subject to acceleration of funding under Paragraph 4.4.

6. Participant Reports. Within 30 days after execution of this document, each Participant will be provided a calculation which sets forth the Participant’s vested benefit under the Plan as of that date including any vested benefit for future years of service by the Participant. Thereafter, within 90 days after each Plan Year end, each Participant shall receive a calculation which sets forth the Participant’s vested benefits under the Plan as of the preceding December 31, including any vested benefits for future years of service by the Participant.

7. Payment of Benefits. The benefits payable under this Plan shall be payable upon the same event that causes the payment of benefits under the Qualified Pension Plan. The form of benefits hereunder shall be the same form as the form of benefit payments provided under the Qualified Pension Plan with the same elections to the Participant (and his spouse) as provided under the Qualified Pension Plan. The amount of benefits shall be based upon the balance in the Participant’s Account with payment of benefits from the Participant’s Account payable until the Participant’s Account has a zero balance.

The Trust shall purchase an annuity to fund any payment of benefits that are to be paid in an annuity form.

8. Loss Adjustment. If the earnings and losses of a Participant’s Account do not equal or exceed the earnings rate assumption used to compute funding under Paragraph 4.2, ConAgra shall contribute a sufficient additional amount so that such earnings and losses equal such earnings rate assumption. This additional funding shall be made at such date or dates as determined in the sole and absolute discretion of the Committee, but no later than the earlier of the date necessary to make the benefit payments contemplated by Paragraph 4.2 or the date of funding pursuant to Paragraph 4.4. The intent of this Paragraph 8 is for ConAgra to incur the investment risk inherent in this defined contribution plan, rather than the Participant. To the extent any other provision of this Plan is inconsistent or contrary to this Paragraph 8, this Paragraph 8 shall control.

9. Administration. This Plan shall be administered by the Committee. The Committee shall make all determinations with regard to the Plan, subject to the provisions of the Plan and any determinations that are designated to be made by the Compensation Committee. The Committee shall have the authority, subject to the provisions of the Plan, to establish, adopt or revise rules and regulations as it deems necessary or advisable for the administration of the Plan. Claims procedures and claims review procedures required by ERISA shall be developed by the Committee. To the extent not inconsistent with the provisions of the Plan, all determinations of the Committee shall be final, conclusive and binding upon all the parties. Any determination or decision that only affects a member of the Committee who is a Participant shall be made by the Compensation Committee.

Exhibit 10.4

10. Beneficiary Designation. Designation of a beneficiary under the Plan shall be in the same form and with the same restrictions as under the Qualified Pension Plan.

11. Nonalienation of Benefits. No benefit payable under this Plan shall be subject, at any time and in any manner, to alienation, sale, transfer, assignment, pledge or encumbrance of any kind.

12. Amendment and Termination. ConAgra, by action of its Board of Directors, may amend or terminate this Plan at any time, provided, however, no such action shall eliminate ConAgra’s obligation to provide the benefits intended to be provided by this Plan for both past and future service of Employees who are Participants in the Plan at the time of such action and this Plan shall not be amended or terminated to eliminate or reduce any benefits that a Participant shall receive. The Plan may only be amended to reduce benefits of Employees who are not Participants at the time of amendment and the Plan may only be terminated with regard to Employees who are not Participants at the time of such termination.

13. Applicable Law. This Plan and all rights hereunder shall be governed by and construed according to the laws of the State of Nebraska.

This Plan has been adopted effective January 1, 1988.

FIRST AMENDMENT TO THE

CONAGRA NONQUALIFIED PENSION PLAN

(Effective May 11, 1989)

Effective upon ConAgra Board of Director approval of this amendment, the ConAgra Nonqualified Pension Plan shall be amended as follows:

ARTICLE I

Paragraph 2.1 of the Plan shall be amended to read, as follows:

“2.1 “Change of Control” shall mean:

(i) The acquisition (other than from ConAgra) by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”), (excluding, for this purpose, ConAgra or its subsidiaries, or any employee benefit plan of ConAgra or its subsidiaries which acquires beneficial ownership of voting securities of ConAgra) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either the then outstanding shares of common stock or the combined voting power of ConAgra’s then outstanding voting securities entitled to vote generally in the election of directors; or

(ii) Individuals who, as of the date hereof, constitute the Board (as of the date hereof the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by ConAgra’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be, for purposes of this Agreement, considered as through such person were a member of the Incumbent Board; or

(iii) Approval by the stockholders of ConAgra of a reorganization, merger, consolidation, in each case, with respect to which persons who were the stockholders of ConAgra immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company’s then outstanding voting securities, or a liquidation or dissolution of ConAgra or of the sale of all or substantially all of the assets of ConAgra.”

Exhibit 10.4

ARTICLE II

Paragraph 2.10 of the Plan is hereby deleted and the paragraphs thereafter shall be appropriately renumbered.

ARTICLE III

Paragraph 4.4 shall be amended to read, as follows:

“4.4 Change of Control. Notwithstanding any other provisions of the Plan, upon a Change of Control, any amounts necessary to immediately fund the benefits vested hereunder pursuant to the Participants’ vesting schedule under Paragraph 4.5 shall be immediately funded. Such amounts include all amounts for past service of the Participant, all amounts for future service of the Participant that are vested under the applicable schedule described in Paragraph 4.5 assuming the Participant will be employed by ConAgra until age 65 and a tax gross-up payment to the Participant (or the Participant’s account) to reflect the Federal and state income tax effects to the Participant of the funding under this Paragraph 4.4. Notwithstanding Paragraph 12 of the Plan, this Paragraph 4.4 may not be amended after the date of a Change of Control.”

ARTICLE IV

In all other respects the Plan is hereby confirmed.

EX-10.5 4 a04-7990_1ex10d5.htm EX-10.5

Exhibit 10.5

CONAGRA

SUPPLEMENTAL PENSION AND CRISP PLAN

FOR CHANGE OF CONTROL

1. Name and Purpose.

Name. The name of the plan shall be the ConAgra Supplemental Pension and CRISP Plan for Change of Control (“Plan”).

1.2 Purpose. The Board of Directors of ConAgra has determined that the interests of ConAgra stockholders will best be served by assuring certain employees of adequate retirement benefits in the event of termination of employment or sale of an IOC after a Change of Control of ConAgra. This Plan is intended to promote stability among employees in order to serve the best interests of ConAgra stockholders. Under this Plan, supplemental pension and CRISP benefits will be provided to certain, eligible employees in the event of the employee’s termination or sale of an IOC, prior to age 65, after a Change of Control.

2. Definitions.

The terms used herein shall have the following meanings unless a different meaning is clearly required by the context:

2.1 “Additional Years of Service” means the additional Years of Service the Eligible Employee would receive if his employment with ConAgra was not terminated (or if the IOC sale described in Paragraph 4 did not occur) prior to his attaining age 65.

2.2 “Board” means the Board of Directors of ConAgra.

2.3 “Change of Control” means:

2.4 “Committee” means the Compensation Committee of the Board.

Exhibit 10.5

2.5 “Code” means the Internal Revenue Code of 1986, as amended.

2.6 “ConAgra” means ConAgra, Inc., a Delaware Corporation, or any successor thereto.

2.7 “ConAgra Controlled Group” shall mean the controlled group of corporations as defined in Code section 414, which includes ConAgra.

2.8 “CRISP” means the ConAgra Retirement Income Savings Plan, or any successor thereto.

2.9 “Effective Date” of this Plan means January 1, 1989.

2.10 “Eligible Employee” means any of the following employees who have attained age 50 with at least 10 Years of Service at the time of a Change of Control:

A. A ConAgra salaried, corporate employee. A corporate employee is an employee who is employed in a corporate administration department.

B. A salaried, non-plant IOC Employee.

Notwithstanding the preceding, Eligible Employee shall exclude the following:

1. Any ConAgra employee who is a party to a conditional employment agreement with ConAgra. “Conditional employment agreement” refers to those agreements between ConAgra and certain of its executives, previously or hereafter executed, providing certain benefits if another entity acquires control of ConAgra, generally in the form of those agreements incorporated at Exhibit 10.5 to ConAgra’s Form 10-K for the fiscal year ended May 29, 1988.

2. Any employee who is not eligible to participate in the Qualified Pension Plan and CRISP.

2.11 “IOC” means an Independent Operating Company of ConAgra. “IOC Employee” means an employee of an IOC. However, ConAgra recognizes that not all IOCs are separate corporations and an IOC Employee may legally be employed by ConAgra or a member of the ConAgra Controlled Group.

2.12 “Qualified Pension Plan” means the ConAgra, Inc. Pension Plan for Salaried Employees or the ConAgra, Inc. Pension Plan for Hourly Rate Production Employees, or any defined benefit retirement plan of ConAgra or a member of the ConAgra Controlled Group, that qualifies under section 401(a) of the Internal Revenue Code of 1986, as amended, whichever applies to the Eligible Employee. If the Eligible Employee participates in more than one such plan, benefits under each plan shall be combined for purposes of this Plan.

2.13 “Years of Service” shall have the same meaning as set forth in CRISP.

3. Effect of a Change of Control. In the event of involuntary termination of an Eligible Employee’s employment by a member of the ConAgra Controlled Group after a Change of Control, the Eligible Employee shall receive the supplemental pension and CRISP benefit and the supplemental CRISP benefit described herein. An Eligible Employee shall also receive a supplemental pension and CRISP benefit hereunder if the Employee voluntarily terminates his employment with the ConAgra Controlled Group after a Change of Control following a reduction in the Eligible Employee’s compensation (including fringe benefits) or a substantial change in the location of the Eligible Employee’s job without the Eligible Employee’s written consent. Substantial change in location means any location change in excess of 35 miles from the location of the Eligible Employee’s job at the time of the Change of Control. Regardless of any other provisions of the Plan, no supplemental pension or CRISP benefit shall be paid if the Eligible Employee’s employment with ConAgra terminates after the Eligible Employee attains age 65.

Exhibit 10.5

4. Disposition of an IOC Following a Change of Control. An Eligible Employee who is an IOC Employee shall receive a supplemental pension and CRISP benefit hereunder if (i) all of the stock or substantially all of the assets of the IOC of such Eligible Employee, prior to such Eligible Employee attaining age 65 or terminating employment as described in Paragraph 3, are sold or otherwise disposed of following a Change of Control and (ii) the Eligible Employee’s employment is subsequently terminated as described in Paragraph 3. For purposes of this paragraph, termination of employment shall not include termination upon the sale or disposition unless the purchaser does not offer employment to the Eligible Employee under similar terms and conditions applicable to the Eligible Employee immediately preceding the sale or disposition. Such a disposition includes the sale of one or more members of the ConAgra Controlled Group which consist of all or a substantial portion of the IOC. Substantial or substantially all means greater than 50%.

5. Amount of Supplemental Pension Benefit. The supplemental pension benefit shall be equal to the result of subtracting the benefit the Eligible Employee will receive under the Qualified Pension Plan from the pension benefit the Eligible Employee would obtain under the Qualified Pension Plan if the Eligible Employee remained in the employ of ConAgra until the Eligible Employee attained age 65. The Eligible Employee’s compensation for purposes of computing the supplemental pension benefit (and for purposes of Paragraph 6, below) shall be the greater of the Eligible Employee’s compensation for the calendar year preceding his termination or the Eligible Employee’s compensation for the calendar year preceding the Change of Control. The supplemental pension benefit is to be computed assuming the Eligible Employee is to receive an unreduced normal retirement pension benefit payable beginning at the later of the date the Eligible Employee attains age 60 or the date of the Eligible Employee’s termination of employment, or disposition of the IOC, as described in Paragraphs 3 and 4. If the Eligible Employee begins to receive his supplemental pension benefit at a time other than as described in the preceding sentence, an actuarial adjustment shall be made to reflect such.

6. Amount of Supplemental CRISP Benefit. The supplemental CRISP benefit shall be equal to the amount computed, as follows:

A. The Additional Years of Service of the Eligible Employee is multiplied by the Eligible Employee’s compensation (as described in Paragraph 5).

B. The result in A, immediately above, is multiplied by 2%.

C. The result in B, immediately above, is present valued to the date of the Eligible Employee’s termination of employment, or disposition of the IOC, by the ConAgra Controlled Group (as described in Paragraphs 3 and 4). The discount factor for such present value shall be the discount factor used by the Qualified Pension Plan at the time of such termination of employment. The present value shall be computed based on the assumption that the result in B, immediately above, is paid ratably (and monthly) over the Additional Years of Service of the Eligible Employee.

D. The present value amount determined pursuant to C, immediately above, shall be funded pursuant to Paragraph 8, below.

7. Actuarial Assumptions and Form of Benefit. The actuarial assumptions and methods used by this Plan shall be the same as those used by the Qualified Pension Plan, for the preceding fiscal year. The timing of payment and the form of benefit under this Plan shall be the same as elected by the Eligible Employee under the Qualified Pension Plan for the supplemental pension benefit and the same as elected by the Eligible Employee under CRISP for the supplemental CRISP benefit; provided, however, the Committee must approve the Eligible Employee’s form of benefit elected with respect to this Plan.

8. Funding. The supplemental pension and CRISP benefits payable under this Plan shall be unfunded until a voluntary or involuntary termination or a disposition of an IOC (as described in Paragraphs 3 and 4, above) following a Change of Control. Within 60 days following such a termination or disposition, the

Exhibit 10.5

supplemental pension and CRISP benefits shall be funded, in one lump sum payment, through a trust in the form attached hereto and incorporated by reference. The transferred amount for the supplemental CRISP benefit shall be held in a separate account and separately invested by the trustee. The amount accumulated in such account shall be the sole source of payment of the supplemental CRISP benefit, and shall be the amount of the supplemental CRISP benefit hereunder. ConAgra shall make up any supplemental pension benefit payments the Eligible Employee does not receive under the trust, e.g., if the funds in the trust are insufficient to make the payments due to insufficient earnings in the trust. A separate trust shall be established for each Eligible Employee who is entitled to a supplemental pension or CRISP benefit. The trustee of such trust shall be a national or state chartered bank. If funding of the trust is not made within the sixty day period described in this Paragraph 8, the Eligible Employee’s supplemental pension and CRISP benefits shall then be equal to 150% multiplied by the amount of supplemental pension and CRISP benefits described in Paragraphs 5 and 6, above; provided, however, this increase in benefits is not intended to remove ConAgra’s obligation to fund the trust. The supplemental pension and CRISP benefits shall not be paid from the assets of the Qualified Pension Plan or CRISP.

9. Notice to Employees. The Vice President of Human Resources of ConAgra shall notify the Eligible Employees of the provisions of this Plan. Any employee receiving written notice of the Plan from such Vice President shall automatically be an Eligible Employee.

10. Administration. This Plan shall be administered by the Committee. A majority vote of the Committee at a meeting at which a quorum is present, or acts reduced to, or approved in writing by, a majority of the members of the Committee, shall be the valid acts of the Committee for purposes of this Plan.

11. Attorneys’ Fees, Etc. If an Eligible Employee successfully brings a lawsuit to enforce his rights hereunder, ConAgra shall reimburse the Eligible Employee for any attorneys’ fees and expenses incurred by the Eligible Employee with respect to such lawsuit.

12. Amendment. This Plan may be amended from time to time by the Board; provided, however, no amendment shall be effective subsequent to the announcement of an event that could result in a Change of Control with respect to a person who is an Eligible Employee on the date of such announcement.

13. Termination. This Plan may be terminated by the Board; provided, however, the Plan may not be terminated after an announcement of an event that could result in a Change of Control with respect to a person who is an Eligible Employee on the date of such announcement.

EX-10.6 5 a04-7990_1ex10d6.htm EX-10.6

Exhibit 10.6

CONAGRA INCENTIVES AND DEFERRED COMPENSATION

CHANGE OF CONTROL PLAN

1. Name and Purpose.

1.1 Name. The name of the plan shall be the ConAgra Incentives and Deferred Compensation Change of Control Plan (“Plan”).

1.2 Purpose. ConAgra has adopted, established and/or entered into various long term and short-term incentive, bonus and deferred compensation agreements, programs and plans. Additionally, certain of such arrangements provide that all or a portion of the payments and benefits under such arrangements shall be deferred, vested over future periods and/or paid in ConAgra stock (restricted or unrestricted). The Board of Directors of ConAgra has determined that the interests of ConAgra stockholders will best be served by assuring employees that their incentive, bonus and deferred compensation payments will remain intact during any event that could result in a change of control of ConAgra. This Plan is intended to promote stability among employees in order to serve the best interests of ConAgra stockholders. Under this Plan, payments, benefits and deferred compensation under the incentive, bonus, deferred compensation and similar type arrangements shall be protected in the event of change of control of ConAgra.

2. Definitions.

The terms used herein shall have the following meanings unless a different meaning is clearly required by the context:

2.1 “Board” means the Board of Directors of ConAgra.

2.2 “Change of Control” means:

2.3 “Committee” means the Compensation Committee of the Board.

2.4 “ConAgra” means ConAgra, Inc., a Delaware Corporation, or any successor thereto.

Exhibit 10.6

2.5 “ConAgra Controlled Group” means the controlled group of corporations as described in I.R.C. Section 414(b), which includes ConAgra.

2.6 “Covered Plans” means all incentive, bonus, deferred compensation and similar type arrangements currently or subsequently approved by the Committee or pursuant to authority delegated by the Committee.

2.7 “Effective Date” of this Plan means January 1, 1989.

2.8 “Fiscal Year” means ConAgra’s fiscal year. If a Fiscal Year is referred to with respect to a Covered Plan that has a year different than ConAgra’s fiscal year, in this instance Fiscal Year shall mean that applicable year.

2.9 “Nondiscretionary Plan” means a Covered Plan under which the award, the incentive, or the payment for a particular year is not subject to the discretion of a member of the ConAgra Controlled Group, i.e., the award or payment is computed by a formula. A “Discretionary Plan” means any Covered Plan that is not a Nondiscretionary Plan.

2.10 “Participant” means a person participating in a Covered Plan.

3. Effect of a Change of Control.

In the event of a Change of Control, the following shall apply, regardless of any provision of the Covered Plans:

A. All payments, awards and benefits under the Covered Plans shall be immediately nonforfeitable by the Participants. This shall include, but not be limited to, any payment, award or benefit that is deferred and any payment, award or benefit that is payable in ConAgra stock.

B. Any Participant terminated after a Change of Control, but prior to the date the Participant would otherwise be eligible (if the provisions of this Plan did not apply) to receive an award, payment or benefit under a Covered Plan shall receive a pro rata award. The pro rata award shall be based upon the number of days the Participant was employed by a member of the ConAgra Controlled Group during the applicable Fiscal Year.

C. The method of, and the factors used in, computing the awards, benefits and payments under each Covered Plan may not be changed prior to the Fiscal Year after the Change of Control. Also, any interest cost or overhead charges that relate directly or indirectly to the Change of Control shall be ignored for computing the awards, benefits and payments under each Covered Plan.

The following is a list of example items that may not be changed with respect to the Covered Plans. The list is not intended to be all inclusive, but is merely set forth for exemplary purposes.

(1) Accounting methods and procedures.

(2) Performance objectives, guidelines and formulae (individual or group).

(3) Capital charges.

(4) Allocation and formulae methods.

(5) Participants and eligibility.

(6) Payment provisions, e.g., timing of payment and form of payment, except for the funding provisions of Paragraph 4, below.

(7) Methods, procedures and formulae for computing bonus pools.

(8) Sale, disposition or transfer of all, or a significant portion, of the assets utilized in achieving the original objectives of a Covered Plan.

If any changes are made to a Covered Plan before the Fiscal Year following the Change of Control, each

Exhibit 10.6

Participant in a (1) Nondiscretionary Plan shall receive an award, benefit or payment equal to the maximum award, benefit or payment available under the applicable Covered Plan; and (2) Discretionary Plan shall receive an award, benefit or payment for the Fiscal Year of the Change of Control which is no less than the dollar amount of the highest annual award, benefit or payment the Participant received for any of the preceding three Fiscal Years.

D. No Covered Plan may be terminated prior to the Fiscal Year following the Change of Control.

4. Funding. The awards, benefits and payments contemplated under the Covered Plans shall be funded only in accordance with the provisions of the applicable Covered Plan until a Change of Control. Upon a Change of Control, the awards, benefits and payments that are deferred according to the applicable Covered Plan shall be funded, in one lump sum payment, through a trust. The transfer shall be made within 60 days following the later of the date of the Change of Control or the date the award, benefit or payment is computed under the normal administration of the applicable Covered Plan. If the deferral under the applicable Covered Plan is to be made in ConAgra stock, the appropriate number of shares of ConAgra stock shall be transferred to the trust. ConAgra shall make up any award, benefit or payment the Participant does not receive under the trust, e.g., if the funds in the trust are insufficient to make the payments due to insufficient earnings in the trust. A separate trust shall be established for each Participant who is entitled to a deferred award, benefit or payment. The trustee of such trust shall be a national or state chartered bank. If funding of the trust is not made within the sixty day period described in this Paragraph 4, the Participant’s deferred award, benefit or payment shall then be equal to 150% multiplied by the amount of the deferred award, benefit or payment the Participant would otherwise receive; provided, however, this increase is not intended to remove ConAgra’s obligation to fund the trust.

5. Notice of Employees. The Vice President of Human Resources of ConAgra shall notify the Participants of the provisions of this Plan.

6. Administration. This Plan shall be administered by the Committee. A majority vote of the Committee at a meeting at which a quorum is present, or acts reduced to, or approved in writing by, a majority of the members of the Committee, shall be the valid acts of the Committee for purposes of this Plan.

7. Qualified Plans. The Plan shall neither apply to, nor have any effect on, a ConAgra plan intended to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended.

8. Amendment. This Plan may be amended from time to time by the Board; provided, however, no amendment shall be effective prior to the beginning of the Fiscal Year following the date the action is taken to amend this Plan.

9. Termination. This Plan may be terminated by the Board; provided, however, the Plan may not be terminated prior to the beginning of the Fiscal Year following the date the action is taken to terminate this Plan.

EX-10.11 6 a04-7990_1ex10d11.htm EX-10.11

Exhibit 10.11

AMENDMENT NO. 1 TO THE

CONAGRA 2000 STOCK PLAN

Effective May 6, 2004, Section 5.2 of the ConAgra 2000 Stock Plan is amended and restated in its entirety to read as follows:

“5.2 Cancelled, Terminated, Forfeited or Surrendered Awards. Any shares of Stock subject to an Award which for any reason are cancelled, terminated or otherwise settled without the issuance of any Stock shall again be available for Awards under the Plan. In the event that any Award is exercised through the delivery of Stock or in the event that withholding tax liabilities arising from such Award are satisfied by the withholding of Stock by the Company, the number of shares available for Awards under the Plan shall be increased by the number of shares so surrendered or withheld. Notwithstanding the immediately preceding sentence, the number of shares available for Awards under the Plan shall not be increased by the number of any previously issued shares surrendered in connection with the exercise of an Award or in connection with the tax withholding for an Award, more than ten years after the date of the most recent shareholder approval of the Plan.”

EX-10.15 7 a04-7990_1ex10d15.htm EX-10.15

Exhibit 10.15

AGREEMENT AND RELEASE

This Agreement (hereinafter “Agreement”) is made effective the 30^th day of April, 2004 (hereinafter “Effective Date”) by and between James P. O’Donnell (hereinafter “Employee”) and ConAgra Foods Inc. (hereinafter “ConAgra”). ConAgra and Employee are also referred to jointly as “The Parties”.

RECITALS

a. In accordance with the terms of this Agreement, Employee is resigning from his current duties as CFO/Corporate Secretary effective April 30, 2004.

b. ConAgra, in light of Employee’s years and level of service, wishes to provide employment and compensation as described in this Agreement.

c. Employee is available to perform other duties and wishes to structure his remaining employment with ConAgra so as to qualify for certain benefits in lieu of separation or severance payments.

d. The Parties wish to set forth their Agreement with respect to Employee’s resignation from his current duties as CFO/Corporate Secretary.

NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, the Parties agree as follows:

1. Resignation from Current Employment. Employee confirms his resignation as CFO/Corporate Secretary as of April 30, 2004, and in order to facilitate an orderly transition of some of Employee’s other duties, he will continue in his Executive Vice President position and will receive his current compensation and benefits through May 28, 2004. Between the Effective Date and May 28, 2004, Employee will assist in the transition of his other duties including any subsidiary officer and director positions. After May 28, 2004, Employee shall be available for other duties as set forth in this Agreement.

2. Compensation/Commitments.

a. Employee’s current compensation and benefit package will continue through the end of ConAgra’s current fiscal year (2004) and include the fiscal year (2004) bonus.

b. During ConAgra’s 2005 and 2006 fiscal years, Employee shall receive, as compensation, his present base salary. Payment shall be made in accordance with the Company’s normal payroll practices. In addition, Employee shall be entitled to the benefits set forth in this Section 2, including the medical and dental benefits set forth in subparagraph (e) below and the vesting benefits set forth in subparagraph (f) below. Except as set forth in this Section 2 or as otherwise required by applicable law, Employee shall not be entitled to any other fringe benefits.

c. During ConAgra’s 2007 and 2008 fiscal years, Employee shall receive, as compensation, a salary of four thousand dollars ($4,000.00) per month. Payment shall be made in accordance with the Company’s normal payroll practices. In addition, Employee shall be entitled to the benefits set forth in this Section 2, including the medical and dental benefits set forth in subparagraph (e) below and the vesting benefits set forth in subparagraph (f) below. Except as set forth in this Section 2 or as otherwise required by applicable law, Employee shall not be entitled to any other fringe benefits.

Exhibit 10.15

d. Employee shall report to ConAgra’s Chief Executive Officer, or his designee, and shall provide advisory services concerning banking and lender relationships, insurance, rating agencies, commodity risk management, capital markets, and such other services and advice as might be reasonably requested.

e. Throughout his remaining employment, Employee shall be eligible to continue his current medical and dental coverage at his current level of coverage for Employee and his dependents at active employee premium rates. At the completion of his employment, Employee shall be eligible to continue benefits under the provisions of COBRA.

f. During the period of Employee’s remaining employment, through June 1, 2008, consistent with the: (i) ConAgra 1995 Stock Plan, 2000 Stock Plan and the Stock Option Agreements with the Employee; (ii) ConAgra Long-Term Senior Management Incentive Plan (LTSMIP); (iii) ConAgra Corporate Management Incentive Plan (MIP); and (iv) ConAgra Foods, Inc. Pension Plan for Salaried Employees and Supplemental Retirement Plan (Pension Plan), he shall continue to vest with respect to stock options, restricted shares, LTSMIP and pension. All unvested LTSMIP shares outstanding will vest at that time.

g. Employee will be reimbursed for reasonable expenses incurred during the performance of services under this Agreement.

h. During the employment period covered by this Agreement, ConAgra will maintain Director and Officer insurance coverage for Employee consistent with that provided to all other then-current ConAgra directors and officers.

i. Full indemnity for Employee will, as permitted by law, continue to be afforded to Employee for and in consideration with Employee’s entire employment period with ConAgra.

3. Obligations. In consideration of the benefits provided to Employee by ConAgra, as set forth in this Agreement, and in addition to the duties described above, during his employment, and for no further compensation for a reasonable period thereafter not to exceed two years, Employee agrees to be reasonably available to ConAgra and will:

a. Personally provide reasonable assistance and cooperation in providing or obtaining information for ConAgra, and its representatives, concerning any ConAgra related matter about which Employee is knowledgeable.

b. Personally provide to ConAgra, or its representatives, reasonable assistance and cooperation in activities related to the prosecution or defense of any pending or future lawsuits, claims, allegations or inquiries involving ConAgra, or any of its affiliates.

c. Promptly notify the ConAgra if Employee receives any request from anyone other than ConAgra for any information regarding or related to ConAgra.

d. Refrain from engaging in any conduct, or making comments, or statements, the purpose or effect of which is to harm the reputation, good will, or commercial interests of ConAgra, or any of its affiliates. Employee is not, however, precluded from reporting to or cooperating with any governmental agencies, including the Securities and Exchange Commission (“SEC”) in its investigation of ConAgra Foods, Inc. and/or United Agri Products.

e. Refrain from providing any information related to any claim or potential litigation against ConAgra, or its affiliates to any non-ConAgra representatives, without either ConAgra’s written permission or being required to provide information pursuant to legal process. Employee is not, however, precluded from reporting to or cooperating with any governmental agencies,

Exhibit 10.15

including the Securities and Exchange Commission (“SEC”) in its investigation of ConAgra Foods, Inc. and/or United Agri Products.

f. If required by law to provide sworn testimony on ConAgra or affiliate-related matters, Employee will consult with and have ConAgra-designated legal counsel present for such testimony. ConAgra will be responsible for the costs of such designated counsel and Employee will bear no cost for same. Employee will confine his testimony to items about which he has actual knowledge rather than speculation, unless otherwise directed by legal process.

g. From and after June 1, 2010, to the extent Employee’s assistance and cooperation are reasonably required by ConAgra in connection with any matter, including but not limited to those matters described in this Section 3, Employee will be compensated at a rate of $100 per hour.

h. Employee will be reimbursed for all out-of-pocket expenses incurred in the performance of his obligation under this Section 3, subject to applicable ConAgra business expense policies and procedures.

4. Release and Covenant Not to Sue.

a. In consideration of the terms of this Agreement, Employee hereby knowingly, voluntarily and unconditionally releases, acquits, and forever discharges ConAgra, its successors and related entities, including but not limited to all past and present respective owners, officers, directors, management, supervisors, agents, employees, attorneys, and all related persons or entities (collectively referred to as “Parties Released”) from any and all “Claims” (as specifically defined below) of any type whatsoever, arising on or prior to the effective date of this Agreement, including but not limited to, all Claims arising out of or related to Employee’s employment or separation from employment.

b. For the purpose of this Agreement, “Claims” means all of the rights which Employee has now, or at any time had or claimed to have, which were known or unknown, which were or could have been asserted, of any type whatsoever, involving or related to the Parties Released, including, but not limited to, Claims for breach of contract, whether express or implied, wrongful termination based on public policy or other noncontractual allegations, claims arising out of the Americans With Disabilities Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, Title VII of the 1964 Civil Rights Act, the 1991 Civil Rights Act, Rehabilitation Act, the Family and Medical Leave Act, 42 U.S.C. § 1981 and 1983, State fair employment practices law, State wage payment and collection laws, or alleged violations of any other federal, state or local laws, regulations or ordinances, and any and all other common law, tort, constitutional, public policy or contract-related claims including, but not limited to, all claims of discrimination based on disability, gender, race, color, national origin, religion, age, retaliation, veteran’s status or any other protected status created by state or federal statute, regulation or decision based on participation in or support of any Claim described above, or for offering any testimony or participating in any legal proceeding, whether formal or informal, for opposing any corporate policies or practices of any types, or other Claims for unlawful employment compensation, or personnel practices, or other related practices or conduct.

c. At the completion of the four (4) year period of employment set out above, Employee agrees to sign a separate Agreement with language as set forth in this subsection for the express purpose of releasing ConAgra from any claims which might arise from the Effective Date to the date of the completion of his employment.

d. This Release is mutual, and ConAgra hereby releases Employee from all claims and to the same extent as described in this Section 4.

Exhibit 10.15

5. No Disparaging Remarks. Employee hereby covenants that he shall not, directly or indirectly, make or solicit or encourage others to make or solicit any disparaging remarks concerning ConAgra, or any of its products, services, businesses or activities. ConAgra hereby covenants that its officers, directors and members of senior management (while in the employ of ConAgra) shall not, directly or indirectly, make or solicit or encourage or authorize others to make or solicit any disparaging remarks concerning Employee. The Parties acknowledge and agree that the restrictions of this provision shall not apply to statements made under oath or otherwise compelled by law.

6. Representations and Warranties. The Parties represent, warrant, agree and shall be estopped to deny each of the following:

a. That they have received independent legal advice from their counsel with respect to the advisability of executing this Agreement, including the above releases with respect to the “Claims”, as described above;

b. That they understand their right to or have had a reasonable opportunity to review and consider this Agreement and that they have read and understood the terms of the Agreement;

c. That Employee has consulted independent legal counsel prior to executing this Agreement;

d. That in executing this Agreement, Employee is not relying upon any statement, representation or promise of ConAgra, its agents, representatives or counsel other than as expressly set forth in this Agreement;

e. That the Employee is the sole owner of all Claims that are being released in this Agreement, and has never assigned any of said Claims to any other party; and

f. That the party signing on behalf of ConAgra is fully authorized to sign on its behalf.

7. Amendment. This Agreement may be modified only by written agreement of all of the Parties.

8. Execution in Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which shall constitute one Agreement to be effective on the date first written above.

9. Governing Law. This Agreement is made and entered into in the State of Nebraska and shall in all respects be construed, interpreted, enforced and governed under and by the laws of the State of Nebraska.

10. Severability. Should any part, term, condition or provision of this Agreement be declared or determined by any court to be illegal or unenforceable, the validity of remaining parts, terms, conditions, or provisions shall not be affected thereby and said illegal, invalid or unenforceable part, term, condition or provision shall be deemed not to be a part of this Agreement. The obligations set forth in this Agreement are independent of one another, in that a breach of any one provision or a waiver of any one provision does not extinguish or waive any duties or rights set forth in any other provision of this Agreement.

11. Integrated Agreement. This Agreement and all documents specifically referenced herein represent the entire understanding between the Parties with respect to the matters referred to in this Agreement. No other representations, covenants, undertakings, or prior or contemporaneous Agreements, oral or written, regarding such matters which are not specifically contained and/or incorporated in this Agreement shall be

Exhibit 10.15

deemed, in any way to exist or bind any of the Parties. Each of the Parties acknowledges that they have not been induced to enter into this Agreement and has not executed this Agreement in reliance upon any promises, representations, warranties or statements except as specifically set forth in this Agreement. THE PARTIES ACKNOWLEDGE THAT THIS AGREEMENT IS INTENDED TO BE AND IS AN INTEGRATED AGREEMENT.

12. Interpretation. This Agreement has been jointly negotiated and drafted by the Parties, both of whom have had the opportunity to be represented or have been represented by counsel. The rule that ambiguities should be construed against the party drafting this Agreement shall therefore not apply. The language of this Agreement shall be construed as a whole according to its fair meaning and in accordance with its purposes and without regard to who may have drafted any particular provision. The section titles throughout this Agreement are for convenience only and shall not be referred to in the interpretation of this Agreement.

13. Consideration-Waiver of Claims.

a. Employee has read and understands this Agreement, has sought legal counsel and has considered the right to refuse to enter into the Agreement.

b. Employee does not waive any rights or claims which may arise after the date of this Agreement.

c. Employee acknowledges the adequacy and sufficiency of the consideration received in exchange for the waivers of rights and Claims described herein.

14. Confidentiality. Employee agrees that (a) this Agreement, and (b) all the terms and conditions of this Agreement, shall be deemed confidential and shall not be disclosed or commented upon to third parties by him or his family members except (i) to accountants, tax preparers, and attorneys as necessary to obtain advice (ii) as may be required by court order, (iii) as necessary to enforce this Agreement in court, (iv) as necessary in response to official government inquiry, or (v) as agreed by the Parties in writing. In the event of any disclosure to accountants, tax preparers, and attorneys such accountants, tax preparers, and attorneys will be specifically informed by Employee of this confidentiality provision and shall be bound by the terms of this confidentiality provision. Any breach of this provision by any such accountants, tax preparers, or attorneys shall be deemed a breach by the party engaging the accountant, tax preparer or attorney. The Parties may not state, or disclose anything further in any way or manner regarding (a) this Agreement, including its existence, and (b) any terms contained herein, unless required by law or court order.

15. Confidential Information. As an employee of ConAgra, Employee agrees that ConAgra has developed and continues to develop and use commercially valuable confidential and/or proprietary technical and non-technical information which is vital to the success of ConAgra’s business, and furthermore, that ConAgra utilizes confidential information, trade secrets and proprietary customer information in promoting and selling its products and services. For purposes of this Agreement, Employee acknowledges that “Confidential Information” means: marketing plans, ConAgra’s commodity market positions, grain trades and strategy, budgets; long-range plans; customer information; sales data; personnel information; privileged information; or other information used by or concerning ConAgra, where such information is not publicly available, or has been treated as confidential. Employee agrees that from this time forward he will not, either directly or indirectly, disclose, or use for the benefit of any person, firm, corporation or other business organization or yourself, any “Confidential Information” related to ConAgra or its affiliates.

16. Noncompetition Restrictions. In order to further protect Company and its affiliates against disclosure of such trade secrets and confidential information referred to in Sections 13 and 14 of this Agreement, and against the unfair loss of employees, customers or customers’ good will, Employee shall not, from the date hereto through June 1, 2008 (other than in connection with his performance hereunder)

Exhibit 10.15

associate in any capacity, whether as a promoter, owner, officers, director, employee, partner, lessee, lessor, lender, agent, consultant, broker, commissioned salesman or otherwise, in any business which competes with Employer or its subsidiaries. In the event of a breach of this Paragraph, all payments set forth in Paragraph 2 shall cease.

Employee understands that he may take up to twenty-one (21) days to decide whether to accept this agreement. If Employee does accept, he understands that he has seven (7) more days (Revocation Period) to change his mind and so advise ConAgra, in writing. Employee may also consult with his personal attorney before signing.

EMPLOYEE ACKNOWLEDGES THAT HE HAS READ THIS CONFIDENTIAL AGREEMENT AND MUTUAL RELEASE, THAT HE FULLY KNOWS, UNDERSTANDS AND APPRECIATES ITS CONTENTS, HAS BEEN FULLY ADVISED BY COUNSEL, AND THAT HE EXECUTES THE SAME AND MAKES THE SETTLEMENT PROVIDED FOR HEREIN VOLUNTARILY AND OF HIS OWN FREE WILL.

IN WITNESS WHEREOF, this Agreement is deemed executed and effective as of April 30, 2004.

James P. O’Donnell		ConAgra Foods, Inc.
	/s/James P. O’Donnell		By:	/s/ Owen C. Johnson
			Title:		Executive Vice President, Organization and Administration
			Printed Name: Owen C. Johnson


SUBSCRIBED AND SWORN to before me on this 30th day of July, 2004.

/s/ Brenda L. Frederick
Notary Public

My commission expires: March 5, 2008

EX-10.16 8 a04-7990_1ex10d16.htm EX-10.16

Exhibit 10.16

July 22, 2004

Mr. Kenneth W. Gerhardt

ConAgra Foods, Inc.

One ConAgra Drive

Omaha, NE 68102

Dear Ken:

As you know, we are doing a search for your successor as Chief Information Officer. We have not yet found a suitable candidate. Consequently, several functions related to software security, portal development and systems development would not have a leader if you fully transition out of the job as planned on August 1, 2004. We have therefore discussed some changes to the retirement arrangements described in the April 2, 2004 letter agreement as amended. This letter is intended to set out our understandings and supercedes the prior letter agreements.

Your status as an executive officer of ConAgra Foods ceased as of May 30, 2004. You have continued to provide full-time services through August 1, 2004 at your fiscal 2004 compensation and you received short-term and long-term incentive payouts in July 2004.

For the period August 1, 2004 through July 31, 2006, we will extend your employment and base salary at its present rate of $15,384.62 per payday in accordance with our standard pay practices. You will be eligible for normal welfare and retirement benefits according to our plans. You will have the duties and obligations described in this Agreement. You will be entitled to the benefits described in this Agreement, but would not participate in short-term or long-term incentive programs.

For the period from August 1, 2006 through July 31, 2008, you would be retained on the payroll as an employee and receive $1,000 per month ($461.51 per pay day) for your total cash compensation and continued eligibility for normal welfare and retirement benefits according to our plans. You would have the duties and obligations described in this Agreement and be entitled to the benefits described in this Agreement. To the extent you are requested to perform significant consulting services, any additional compensation would be agreed to between us, but would be expected to approximate a daily rate of $1,500. You would not participate in short or long term incentive programs.

Exhibit 10.16

Effective August 1, 2004, you will report to ConAgra’s Chief Executive Officer or his designee. You will be available to perform such duties related to information technology as are reasonably assigned to you with the title of Special Assignments Executive. As we discussed, our goal is to provide continuity of management to the various Information Technology functions during this transition period.

Throughout your remaining employment, you shall be eligible to continue your current medical and dental coverage at your current level of coverage for you and your dependents at active employee premium rates. At the completion of your employment, you shall be eligible to continue benefits under the provisions of COBRA or post retirement medical program eligibility if that is elected.

During the period of your remaining employment, through July 31, 2008, consistent with the: (i) ConAgra 1995 Stock Plan, 2000 Stock Plan and the Stock Option Agreements with the Employee (ii) ConAgra Long-Term Senior Management Incentive Plan (LTSMIP) and (iii) ConAgra Foods, Inc. Pension Plan for Salaried Employees and Supplemental Retirement Plan (Pension Plan), you shall continue to vest with respect to stock options, restricted shares, LTSMIP, restricted units and pension. During the period August 1, 2006 through July 31, 2008, you will not be subject to the 75% stock retention rule.

During the employment period covered by this Agreement, ConAgra Foods will (i) reimburse you for reasonable expenses incurred in the performance of your services, (ii) maintain Director and Officer insurance coverage for you consistent with that provided to other ConAgra Foods’ directors and officers, and (iii) provide you with full indemnification as permitted by law.

Obligations. In consideration of the benefits provided to you by ConAgra, as set forth in this Agreement, and in addition to the duties described above, during your employment, and for no further compensation for a reasonable period thereafter not to exceed two years, you agree to be reasonably available to ConAgra and will:

Personally provide reasonable assistance and cooperation in providing or obtaining information for ConAgra, and its representatives, concerning any ConAgra related matter about which you are knowledgeable.

Personally provide to ConAgra, or its representatives, reasonable assistance and cooperation in activities related to the prosecution or defense of any pending or future lawsuits, claims, allegations or inquiries involving ConAgra, or any of its affiliates.

Promptly notify the ConAgra if you receive any request from anyone other than ConAgra for any information regarding or related to ConAgra.

Refrain from engaging in any conduct, or making comments, or statements, the purpose or effect of which is to harm the reputation, good will, or commercial interests of ConAgra, or any of its affiliates.

Refrain from providing any information related to any claim or potential litigation against ConAgra, or its affiliates to any non-ConAgra representatives, without either ConAgra’s written permission or being required to provide information pursuant to legal process.

Release and Covenant Not to Sue. In consideration of the terms of this Agreement, you hereby knowingly, voluntarily and unconditionally release, acquit, and forever discharge ConAgra, its successors and related entities, including but not limited to all past and present respective owners, officers, directors, management, supervisors, agents, employees, attorneys, and all related persons or entities (collectively referred to as “Parties Released”) from any and all “Claims” (as specifically defined below) of any type whatsoever, arising on or prior to the effective date of this Agreement, including but not limited to, all Claims arising out of or related to your employment or separation from employment.

Exhibit 10.16

For the purpose of this Agreement, “Claims” means all of the rights which you have now, or at any time had or claimed to have, which were known or unknown, which were or could have been asserted, of any type whatsoever, involving or related to the Parties Released, including, but not limited to, Claims for breach of contract, whether express or implied, wrongful termination based on public policy or other noncontractual allegations, claims arising out of the Americans With Disabilities Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, Title VII of the 1964 Civil Rights Act, the 1991 Civil Rights Act, Rehabilitation Act, the Family and Medical Leave Act, 42 U.S.C. § 1981 and 1983, State fair employment practices law, State wage payment and collection laws, or alleged violations of any other federal, state or local laws, regulations or ordinances, and any and all other common law, tort, constitutional, public policy or contract-related claims including, but not limited to, all claims of discrimination based on disability, gender, race, color, national origin, religion, age, retaliation, veteran’s status or any other protected status created by state or federal statute, regulation or decision based on participation in or support of any Claim described above, or for offering any testimony or participating in any legal proceeding, whether formal or informal, for opposing any corporate policies or practices of any types, or other Claims for unlawful employment compensation, or personnel practices, or other related practices or conduct.

At the completion of the four (4) year period of employment set out above, you agree to sign a separate Agreement with language as set forth in this subsection for the express purpose of releasing ConAgra from any claims which might arise from the Effective Date to the date of the completion of his employment.

This Release is mutual, and ConAgra hereby releases you from all claims and to the same extent as described in this Release and Covenant Not to Sue section.

No Disparaging Remarks. You hereby covenants that you shall not, directly or indirectly, make or solicit or encourage others to make or solicit any disparaging remarks concerning ConAgra, or any of its products, services, businesses or activities. ConAgra hereby covenants that its officers, directors and members of senior management (while in the employ of ConAgra) shall not, directly or indirectly, make or solicit or encourage or authorize others to make or solicit any disparaging remarks concerning you. The Parties acknowledge and agree that the restrictions of this provision shall not apply to statements made under oath or otherwise compelled by law.

Amendment. This Agreement may be modified only by written agreement.

Governing Law. This Agreement is made and entered into in the State of Nebraska and shall in all respects be construed, interpreted, enforced and governed under and by the laws of the State of Nebraska.

Confidentiality. You agree that (a) this Agreement, and (b) all the terms and conditions of this Agreement, shall be deemed confidential and shall not be disclosed or commented upon to third parties by you or your family members except (i) to accountants, tax preparers, and attorneys as necessary to obtain advice (ii) as may be required by court order, (iii) as necessary to enforce this Agreement in court, (iv) as necessary in response to official government inquiry, or (v) as agreed by us in writing.

Confidential Information. As an employee of ConAgra, you agree that ConAgra has developed and continues to develop and use commercially valuable confidential and/or proprietary technical and non-technical information which is vital to the success of ConAgra’s business, and furthermore, that ConAgra utilizes confidential information, trade secrets and proprietary customer information in promoting and selling its products and services. For purposes of this Agreement, you acknowledge that “Confidential Information” means: marketing plans, ConAgra’s commodity market positions, grain trades and strategy, budgets; long-range plans; customer information; sales data; personnel information; privileged information; or other information used by or concerning ConAgra, where such information is not publicly available, or has been treated as confidential. You agree that from this time forward you will not, either directly or indirectly, disclose, or use for the benefit of any person, firm, corporation or other business organization or yourself, any “Confidential Information” related to ConAgra or its affiliates.

Exhibit 10.16

Noncompetition Restrictions. In order to further protect Company and its affiliates against disclosure of proprietary and confidential information referred to in the Confidentiality section this Agreement, and against the unfair loss of employees, customers or customers’ good will, you shall not, from the date hereto through August 1, 2008 (other than in connection with your performance hereunder) associate in any capacity, whether as a promoter, owner, officer, director, employee, partner, lessee, lessor, lender, agent, consultant, broker, commissioned salesman or otherwise, in any business which competes with ConAgra Foods or its subsidiaries. In the event of a breach of this Paragraph, all payments set forth in this Agreement shall cease.

You understand that you may take up to twenty-one (21) days to decide whether to accept this agreement. If you do accept, you understand that you have seven (7) more days (Revocation Period) to change your mind and so advise ConAgra, in writing. You may also consult with your personal attorney before signing.

	Yours very truly,


		/s/ Owen C. Johnson

	Owen C. Johnson
	Executive Vice President,
	Organization
	and Administration

ACCEPTED AND AGREED TO
THIS 23rd DAY OF JULY, 2004

/s/ Kenneth W. Gerhardt
Kenneth W. Gerhardt

EX-10.17 9 a04-7990_1ex10d17.htm EX-10.17

Exhibit 10.17

CONAGRA, INC

EXECUTIVE INCENTIVE PLAN (1999)

1. Purpose. The principal purpose of the ConAgra Executive Incentive Plan (the “Plan”) is to provide incentives to executive officers and other senior management officers of ConAgra (“ConAgra”) who have significant responsibility for the success and growth of ConAgra and to assist ConAgra in attracting, motivating and retaining executive officers on a competitive basis.

2. Administration of the Plan. The Plan shall be administered by the Human Resources Committee of the Board of Directors (the “Committee”). The Committee shall have the sole discretion to interpret the Plan; approve a pre-established objective performance measure or measures annually; certify the level to which each performance measure was attained prior to any payment under the Plan; approve the amount of awards made under the Plan; and determine who shall receive any payment under the Plan.

The Committee shall have full power and authority to administer and interpret the Plan and to adopt such rules, regulations and guidelines for the administration of the Plan and for the conduct of its business as the Committee deems necessary or advisable. The Committee’s interpretations of the Plan, and all actions taken and determinations made by the Committee pursuant to the powers vested in it hereunder, shall be conclusive and binding on all parties concerned, including ConAgra, its stockholders and any person receiving an award under the Plan.

3. Eligibility. Executive officers and other senior management officers of ConAgra shall be eligible to receive awards under the Plan. Such participants include the Chief Executive Officer, the members of the Office of the President, other executive and senior management officers and any persons performing similar duties in the future. The Committee shall designate the executive officers and other senior management officers who will participate in the Plan each year.

4. Awards. The Committee shall establish annual and/or long-term incentive award targets for participants. If an individual becomes an executive officer or senior management officer during the year, such individual may be granted eligibility for an incentive award for that year upon such individual assuming such position; provided, if such person is a covered employee under Section 162(m) of the Internal Revenue Code, the eligibility of such person shall be conditioned on compliance with Section 162(m) for tax deductibility of the award.

The Committee shall also establish annual and/or long-term performance targets which must be achieved in order for an award to be earned under the Plan. Such targets shall be based on earnings, earnings per share, growth in earnings per share, achievement of annual operating profit plans, return on equity performance, or similar financial performance measures as may be determined by the Committee. The specific performance targets for each participant shall be established in writing by the Committee within ninety days after the commencement of the fiscal year (or within such other time period as may be required by Section 162(m) of the Internal Revenue Code) to which the performance target relates. The performance target shall be established in such a manner than a third party having knowledge of the relevant facts could determine whether the performance goal has been met.

Awards shall be payable following the completion of each fiscal year upon certification by the Committee that ConAgra achieved the specified performance target established for the participant. Awards may be paid in cash or securities. Notwithstanding the attainment by ConAgra of the specified performance targets, the Committee has the discretion, for each participant, to reduce some or all of an award that would otherwise be paid. However, in no event may a participant receive an award under the Plan in any fiscal year of more than .1% of ConAgra’s market capitalization (stock price multiplied by number of shares outstanding) as of the first day of the fiscal year.

5. Miscellaneous Provisions. ConAgra shall have the right to deduct from all awards hereunder paid in cash

Exhibit 10.17

any federal, state, local or foreign taxes required by law to be withheld with respect to such awards. Neither the Plan nor any action taken hereunder shall be construed as giving any employee any right to be retained in the employ of ConAgra. The costs and expenses of administering the Plan shall be borne by ConAgra and shall not be charged to any award or to any executive officer receiving an award.

6. Effective Date, Amendments and Termination. The Plan shall become effective on July 9, 1999, subject to approval by the stockholders of ConAgra at the 1999 Annual Meeting of Stockholders. The Committee may at any time terminate or from time to time amend the Plan in whole or in part, but no such action shall adversely affect any rights or obligations with respect to any awards theretofore made under the Plan. However, unless the stockholders of ConAgra shall have first approved thereof, no amendment of the Plan shall be effective which would increase the maximum amount which can be paid to any one participant under the Plan in any fiscal year, which would change the performance goals permissible under this Plan for payment of awards, or which would modify the requirement as to eligibility for participation in the Plan.

EX-10.18 10 a04-7990_1ex10d18.htm EX-10.18

Exhibit 10.18

CONAGRA FOODS, INC.

EXECUTIVE INCENTIVE PLAN (2004)

1. Purpose. The principal purpose of the ConAgra Foods Executive Incentive Plan (the “Plan”) is to provide incentives to executive officers and other senior management officers of ConAgra Foods, Inc. (“ConAgra Foods”) who have significant responsibility for the success and growth of ConAgra Foods and to assist ConAgra Foods in attracting, motivating and retaining executive officers on a competitive basis.

The Committee shall have full power and authority to administer and interpret the Plan and to adopt such rules, regulations and guidelines for the administration of the Plan and for the conduct of its business as the Committee deems necessary or advisable. The Committee’s interpretations of the Plan, and all actions taken and determinations made by the Committee pursuant to the powers vested in it hereunder, shall be conclusive and binding on all parties concerned, including ConAgra Foods, its stockholders and any person receiving an award under the Plan.

3. Eligibility. Executive officers and other senior management officers of ConAgra Foods shall be eligible to receive awards under the Plan. Such participants include the Chief Executive Officer, other executive officers and senior management officers and any persons performing similar duties in the future. The Committee shall designate the executive officers and other senior management officers who will participate in the Plan each year.

The Committee shall also establish annual and/or long-term performance targets which must be achieved in order for an award to be earned under the Plan. Such targets shall be based on earnings, earnings per share, growth in earnings per share, achievement of annual operating profit plans, return on equity performance, return on capital, sales growth, or similar financial performance measures as may be determined by the Committee. The specific performance targets for each participant shall be established in writing by the Committee within ninety days after the commencement of the fiscal year (or within such other time period as may be required by Section 162(m) of the Internal Revenue Code) to which the performance target relates. The performance target shall be established in such a manner that a third party having knowledge of the relevant facts could determine whether the performance goal has been met.

Awards shall be payable following the completion of each fiscal year upon certification by the Committee that ConAgra Foods achieved the specified performance target established for the participant. Awards may be paid in cash or securities. Grants or awards of stock options or stock appreciation rights shall be based on a stock price that is not less than current fair market value. Notwithstanding the attainment by ConAgra Foods of the specified performance targets, the

Exhibit 10.18

Committee has the discretion, for each participant, to reduce some or all of an award that would otherwise be paid. However, in no event may a participant receive aggregate compensation under the Plan in any fiscal year of more than .1% of ConAgra Foods’ market capitalization (stock price multiplied by number of shares outstanding) as of the first day of the fiscal year.

5. Miscellaneous Provisions. ConAgra Foods shall have the right to deduct from all awards hereunder any federal, state, local or foreign taxes required by law to be withheld with respect to such awards. Neither the Plan nor any action taken hereunder shall be construed as giving any employee any right to be retained in the employ of ConAgra Foods. The costs and expenses of administering the Plan shall be borne by ConAgra Foods and shall not be charged to any award or to any executive officer receiving an award.

6. Amendments and Termination. The Committee may at any time terminate or from time to time amend the Plan in whole or in part, but no such action shall adversely affect any rights or obligations with respect to any awards theretofore made under the Plan. However, unless the stockholders of ConAgra Foods shall have first approved thereof, no amendment of the Plan shall be effective which would increase the maximum amount which can be paid to any one participant under the Plan in any fiscal year, which would change the performance goals permissible under this Plan for payment of awards, or which would modify the requirement as to eligibility for participation in the Plan.

EX-12. 11 a04-7990_1ex12d.htm EX-12.

Exhibit 12

CONAGRA FOODS, INC. AND SUBSIDIARIES

Computation of Ratios of Earnings to Fixed Charges

(Dollars in millions)

	2004			2003			2002			2001			2000

Earnings:
Income from continuing operations before income taxes and cumulative effect of changes in accounting	$	1,151.3		$	1,222.6		$	1,222.6		$	1,078.2		$	542.7
Equity method investment earnings	43.5			37.1			27.7			21.1			18.6
	1,107.8			1,185.5			1,194.9			1,057.1			524.1
Add/(deduct):
Fixed charges	399.0			417.4			540.3			597.8			479.5
Distributed income of equity investees	24.4			16.7			16.4			18.6			10.6
Capitalized interest	(4.4		)	(3.9		)	(6.0		)	(5.1		)	(5.1		)
Preferred distributions of subsidiary	(3.5		)	(8.8		)	(25.1		)	(42.4		)	(43.0		)
Earnings available for fixed charges (a)	$	1,523.3		$	1,606.9		$	1,720.5		$	1,626.0		$	966.1

Fixed Charges:
Interest expense	$	324.5		$	328.4		$	417.2		$	455.6		$	327.7
Capitalized interest	4.4			3.9			6.0			5.1			5.1
Interest in cost of goods sold	13.4			15.3			20.8			35.0			32.0
Preferred distributions of subsidiary	3.5			8.8			25.1			42.4			43.0
One third of rental expense ⁽¹⁾	53.2			61.0			71.2			59.7			71.7
Total fixed charges (b)	$	399.0		$	417.4		$	540.3		$	597.8		$	479.5

Ratio of earnings to fixed charges (a/b)	3.8			3.8			3.2			2.7			2.0

⁽¹⁾ Considered to be representative of interest factor in rental expense.

EX-13. 12 a04-7990_1ex13d.htm EX-13.

Exhibit 13

Selected Financial Data

FOR THE FISCAL YEARS ENDED MAY	2004		2003¹		2002		2001²		2000³
Dollars in millions, except per share amounts

Net sales⁴	$	14,522.1	$	16,939.1	$	22,335.5	$	21,867.5	$	20,842.5
Income from continuing operations before cumulative effect of changes in accounting⁴	$	796.0	$	807.0	$	762.4	$	672.1	$	339.7
Net income	$	879.8	$	774.8	$	783.0	$	638.6	$	382.3
Basic earnings per share:
Income from continuing operations before cumulative effect of changes in accounting⁴	$	1.51	$	1.53	$	1.45	$	1.31	$	0.71
Net income	$	1.67	$	1.47	$	1.48	$	1.24	$	0.80
Diluted earnings per share:
Income from continuing operations before cumulative effect of changes in accounting⁴	$	1.50	$	1.52	$	1.44	$	1.31	$	0.71
Net income	$	1.66	$	1.46	$	1.47	$	1.24	$	0.80
Cash dividends declared per share of common stock	$	1.0275	$	0.9775	$	0.9300	$	0.8785	$	0.7890

At Year End
Total assets	$	14,230.1	$	15,071.4	$	15,570.9	$	16,480.8	$	12,196.6
Senior long-term debt (noncurrent)^4,5	$	4,878.4	$	4,632.2	$	4,973.7	$	3,340.9	$	1,797.5
Subordinated long-term debt (noncurrent)	$	402.3	$	763.0	$	752.1	$	750.0	$	750.0
Preferred securities of subsidiary company⁵	$	—	$	175.0	$	175.0	$	525.0	$	525.0

¹ 2003 amounts reflect the fresh beef and pork divestiture (see note 2 to the consolidated financial statements).

² 2001 amounts reflect the acquisition of International Home Foods (“IHF”).

³ 2000 amounts include restructuring plan related pre-tax charges of $621.4 million ($557.5 million reflected in continuing operations and $63.9 million reflected in discontinued operations).

⁴ Amounts exclude the impact of discontinued operations of the Agricultural Products segment, the chicken business and the feed businesses in Spain and poultry business in Portugal.

⁵ 2004 amounts reflect the adoption of FIN No. 46R which resulted in increasing long-term debt by $419 million, increasing other noncurrent liabilities by $25 million, increasing property, plant and equipment by $221 million, increasing other assets by $46 million and decreasing preferred securities of subsidiary company by $175 million. The subsidiary preferred securities remain outstanding and are now classified as debt.

50 ConAgra Foods 2004 Annual Report

Management’s Discussion and Analysis

The following discussion and analysis is intended to provide a summary of significant factors relevant to the company’s financial performance and condition. The discussion should be read together with the company’s financial statements and related notes beginning on page 66.

EXECUTIVE OVERVIEW

ConAgra Foods is one of North America’s largest packaged food companies, serving grocery retailers, restaurants and other foodservice establishments, as well as food processors. Popular ConAgra Foods consumer brands include: ACT II, Armour, Banquet, Blue Bonnet, Brown ‘N Serve, Butterball, Chef Boyardee, Cook’s, Crunch ‘n Munch, DAVID, Decker, Eckrich, Egg Beaters, Fleischmann’s, Gulden’s, Healthy Choice, Hebrew National, Hunt’s, Kid Cuisine, Knott’s Berry Farm, La Choy, Lamb Weston, Libby’s, Lightlife, Louis Kemp, Lunch Makers, MaMa Rosa’s, Manwich, Marie Callender’s, Orville Redenbacher’s, PAM, Parkay, Pemmican, Peter Pan, Reddi-wip, Rosarita, Ro*Tel, Slim Jim, Snack Pack, Swiss Miss, Van Camp’s, Wesson, Wolf and many others.

Diluted earnings per share were $1.66 in fiscal 2004, compared with $1.46 in fiscal 2003. The earnings performance reflects progress with the company’s strategic portfolio reshaping program and key operating initiatives.

Over the past few years, the company has strategically repositioned its portfolio to focus on higher-margin, branded and value-added businesses because that business mix is expected to better serve consumers, customers and shareholders over the long run. Executing that strategy has involved acquiring branded operations and divesting commodity-related businesses. The company is also implementing initiatives to improve the operating performance of its core business segments through more effective sales, marketing and supply chain functions.

Divestitures

During fiscal 2004, the company divested its chicken business, the U.S. and Canadian crop inputs businesses of United Agri Products (“UAP North America”) and its Spanish feed business. These divestitures, combined with prior year divestitures of the company’s fresh beef and pork, canned seafood and cheese operations substantially complete a multi-year program aimed at divesting the company’s significant non-core businesses in order to strategically reshape the company and focus the company’s capital on branded, value-added foods.

Selected fiscal 2004 divestiture information is summarized below:

	PROCEEDS
($ in millions) DIVESTED OPERATION	CASH		COMMON STOCK		PREFERRED STOCK		TOTAL
Chicken Business	$	301	$	246	$	—	$	547
UAP North America	503		—		60		563
Spanish Feed Business	83		—		—		83
Total	$	887	$	246	$	60	$	1,193

As part of the chicken business divestiture, the company received 25.4 million shares of Class A common stock of Pilgrim’s Pride Corporation valued at $246 million at the time of the transaction, with a total carrying value of $392 million at the end of fiscal 2004 (see “Liquidity and Capital Resources”). The actual gains realized from the sale of the Pilgrim’s Pride shares will be subject to various risks, including timing of the sales and related fluctuations in market price.

The final sales price of the chicken business was subject to a purchase price adjustment based on determination of the final net assets sold, which occurred in the first quarter of fiscal 2005. As part of settling the final purchase price adjustment, the company paid $34 million to Pilgrim’s Pride. The company made adequate provisions for this final settlement in the fiscal 2004 financial statements.

As part of the UAP North America divestiture, the company received $60 million of preferred securities from the buyer, Apollo Management, L.P. (“Apollo”). The fair value of these securities was determined to equal the face value as of the transaction date. Apollo later repurchased $26 million of the preferred securities for cash. The remaining preferred securities may be redeemed by Apollo early, but in no case later than December 2012.

The final sales price of UAP North America was subject to a purchase price adjustment based on determination of the final net assets sold, which occurred in the first quarter of fiscal 2005. As part of settling the final purchase price adjustment, the company received $60 million from Apollo.

As of the end of fiscal 2004, each of the businesses in the above table is reported as discontinued operations within the company’s consolidated financial statements for all periods presented. Also included in discontinued operations are the remaining businesses of the company’s Agricultural Products segment (“UAP International”) and the Portuguese poultry operations. The Portuguese poultry operation was divested at the beginning of the first quarter of fiscal 2005. The company continues to actively market the UAP International operations and believes they will be divested during fiscal 2005.

ConAgra Foods 2004 Annual Report 51

Management’s Discussion and Analysis (continued)

Sales and Marketing Initiatives

To strengthen brand equities and better allocate marketing investments, the company is implementing standardized, fact-based marketing methods to better assess brand opportunities and evaluate marketing programs.

To better serve customers and capitalize on growth opportunities, the company consolidated its retail sales force and established a team-based approach for customers. Customers are now served by dedicated ConAgra Foods teams representing the entire portfolio of ConAgra Foods products. This approach improves customer service and provides the company with product bundling opportunities. In addition, the company substantially reduced the role of brokers during the year.

The company believes these initiatives are beginning to favorably influence brand performance as sales of the company’s top thirty consumer brands increased by 5% in fiscal 2004, including an estimated benefit of 2% from one additional week in fiscal 2004.

The company also believes that continued focus on these sales and marketing initiatives, in combination with other operational initiatives related to improving customer service, will have a positive effect on sales growth and margin improvement over the next several years.

Operational Initiatives

The company has several operational initiatives underway to improve customer service and profit margins.

Logistics: To improve customer service and supply chain efficiency, the company is retooling its logistics network. The company is transitioning from a network of hundreds of shipping locations across America to a network defined by fourteen geographically optimized mixing centers comprised of seven ambient temperature-state facilities and seven temperature-controlled facilities that will support all Retail and Foodservice operations. A mixing center is a large facility where multiple brands and products of a similar temperature-state (shelf-stable, refrigerated or frozen) are consolidated and shipped out together. As of the end of fiscal 2004, the company had completed and commissioned seven ambient state-of-the-art temperature centers and three state-of-the-art temperature-controlled centers. The remaining centers will be completed during calendar 2005. Management believes this new logistics network will improve customer service, lower operating costs and lower working capital requirements.

Information Systems: To link the information flow among key operating functions such as manufacturing, marketing, sales and logistics, the company is implementing strategic technology initiatives (using SAP software) known as project Nucleus. Management believes that project Nucleus will, in combination with other initiatives, be a key contributor to profitable future growth.

Research and Development: To share research and development ideas more effectively, the company brought together technical expertise and food analytics testing capabilities into common locations known as Centers of Excellence. The Centers of Excellence are designed to improve the company’s ability to create, modify and improve products and provide customer solutions.

Operational Efficiency Initiatives: During fiscal 2004, the company implemented certain operational efficiency initiatives. These initiatives are intended to improve the company’s cost structure, margins and competitive position through the elimination of duplicative costs and overhead, consolidation of selected plants and support functions and realignment of businesses. Costs associated with the implementation of such initiatives are being recognized as incurred and are expected to continue into fiscal 2005. During fiscal 2004, the company recognized charges associated with these initiatives of approximately $62 million. The company anticipates additional charges of approximately $28 million will be recognized during fiscal 2005. The company believes it will generate benefits to its cost structure, as well as synergies related to other sales and customer service initiatives, in fiscal 2005 and beyond which will more than offset these costs.

Share Repurchase Program

As a result of the company’s favorable cash position resulting primarily from divestitures and cash flows generated from operations, in fiscal 2004 the company initiated a share repurchase program with authority to purchase up to $1 billion. As of the end of fiscal 2004, the company had repurchased approximately 15 million common shares at a total cost of $419 million. Management currently believes this program to be an appropriate use of the available cash and plans to continue the share repurchase program during fiscal 2005.

Additional Items Affecting Comparability

Certain other significant items affect the year-over-year comparability of the company’s results of operations, as described below:

• The company’s fiscal 2004 results include fifty-three weeks of operations, while fiscal 2003 results include fifty-two weeks of operations. The estimated impact of the extra week in fiscal 2004 is additional net sales of approximately $289 million and additional operating profit of approximately $41 million.

• The results of discontinued operations reflect income of $97 million in fiscal 2004 and a loss of $36 million in fiscal 2003.

52 ConAgra Foods 2004 Annual Report

Management’s Discussion and Analysis (continued)

• Fiscal 2003 results include net sales of approximately $3.1 billion and operating profit of $149 million related to the businesses divested during fiscal 2003, including the fresh beef and pork, canned seafood and processed cheese operations.

• In fiscal 2004, the company recognized $100 million of tax benefits related to the realization of certain capital loss carryforwards and foreign tax credits.

Opportunities and Challenges

The company believes that its sales, marketing and operating initiatives will favorably influence future profits, profit margins and returns on capital.

The company is facing increased costs for many of its significant raw materials, packaging and energy inputs. When appropriate, the company uses long-term purchase contracts, futures and options to reduce the volatility of these costs. The company has also recently implemented sales price increases for certain products and will continue to evaluate further price increases based on raw material cost trends, expected impact on sales volumes and other factors.

Changing consumer preferences may impact sales of certain of the company’s products. The company offers a variety of food products which appeal to a range of consumer preferences and utilizes innovation and marketing programs to develop products that fit with changing consumer trends. As part of these programs, the company introduces new products and product extensions. Products introduced in fiscal 2004 included: Life Choice, Banquet Crock-Pot Classics, Healthy Choice Frozen Desserts and many others.

Consolidation of many of the company’s customers continues to result in increased buying power, negotiating strength and complex service requirements for those customers. This trend, which is expected to continue, may negatively impact gross margins, particularly in the Retail Products segment. In order to effectively respond to this customer consolidation, during fiscal 2004 the company consolidated its sales force to more efficiently service its customers and to appropriately leverage the company’s scale. In fiscal 2003, the company’s retail customer service centers were consolidated into one specialized facility to service all retail channel customers. The company continues to streamline its distribution network in order to reduce costs and increase its responsiveness to customer needs.

SEGMENT REVIEW

The company’s operations are organized into three reporting segments: Retail Products, Foodservice Products and Food Ingredients. The company historically aggregated its retail and foodservice operations within the company’s Packaged Foods reporting segment. As a result of the recent strategic portfolio changes and management realignment in fiscal 2004, the company now reports its retail and foodservice operations as two separate reporting segments. The Retail Products reporting segment includes branded foods which are sold in various retail channels and includes frozen, refrigerated and shelf-stable temperature classes. The Foodservice Products reporting segment includes branded and customized food products, including meals, entrees, prepared potatoes, meats, seafood, sauces and a variety of custom-manufactured culinary products packaged for sale to restaurants and other foodservice establishments. The Food Ingredients reporting segment includes both branded and commodity food ingredients, including milled grain ingredients, seasonings, blends and flavorings, which are sold to food processors, as well as certain commodity sourcing and merchandising operations.

2004 vs. 2003

Net Sales

($ in millions) REPORTING SEGMENT	FISCAL 2004 NET SALES		FISCAL 2003 NET SALES		% INCREASE/ (DECREASE)
Retail Products	$	8,434	$	8,668	(3	)%
Foodservice Products	3,714		3,598		3	%
Food Ingredients	2,374		2,204		8	%
Meat Processing	—		2,469		(100	)%
Total	$	14,522	$	16,939	(14	)%

Overall company net sales declined $2.4 billion to $14.5 billion, primarily reflecting the impact of the fresh beef and pork divestiture in fiscal 2003 and the sale of the canned seafood and processed cheese-related operations in the fourth quarter of fiscal 2003. Prior year sales included approximately $3.1 billion from the divested businesses, while current year sales included none. These decreases were partially offset by the $289 million estimated impact on net sales of one additional week included in the results of operations for fiscal 2004. The company believes that its sales and marketing initiatives (discussed in the “Executive Overview”) have begun to favorably influence brand performance.

Retail Products net sales declined $234 million for the year to $8.4 billion. Included in results for fiscal 2003 were net sales of $493 million from the canned seafood business, which was divested in fiscal 2003. This decrease was partially offset by the estimated impact of one additional week included in the results of operations for fiscal 2004, an increase to net sales of approximately $165 million. Sales of the company’s key branded products showed mixed results, as sales of some of the company’s most significant brands including Banquet, Chef Boyardee, Wesson, Slim Jim, PAM, Egg Beaters and Reddi-wip grew on a comparable fifty-two week basis. Major brands

ConAgra Foods 2004 Annual Report 53

Management’s Discussion and Analysis (continued)

posting sales declines for the year included Healthy Choice, Butterball, Armour, ACT II and Orville Redenbacher’s. In addition to the sales and marketing initiatives previously discussed, new products and product extensions in the frozen meals and entrees category, such as Banquet Crock-Pot Classics and Life Choice, positively impacted the Retail Products segment net sales for the year. Weak sales volume in popcorn products, driven by intense competition in the category and consumer trends, negatively impacted the segment’s performance.

Net sales in the Foodservice Products segment were $3.7 billion, an increase of $116 million. Included in results for fiscal 2003 were net sales of $93 million from divested businesses. The estimated impact of the inclusion of one additional week of net sales in fiscal 2004 was an increase of approximately $70 million. Sales of specialty potato products and shelf-stable and specialty meats within the culinary product line achieved increased sales volumes during fiscal 2004. Improved unit pricing within the specialty potato and specialty meats products also contributed to increased net sales.

Food Ingredients net sales increased $170 million to $2.4 billion. The increase in sales was primarily driven by the pass-through of increases in commodity raw material costs, favorable results from commodity (including energy) merchandising and approximately $55 million related to the additional week in fiscal 2004.

Due to the fresh beef and pork divestiture, the Meat Processing segment includes no sales for fiscal 2004. Net sales in fiscal 2003 were $2.5 billion.

Gross Profit

(Net sales less cost of goods sold)

($ in millions) REPORTING SEGMENT	FISCAL 2004 GROSS PROFIT		FISCAL 2003 GROSS PROFIT		% INCREASE/ (DECREASE)
Retail Products	$	2,278	$	2,455	(7	)%
Foodservice Products	570		540		6	%
Food Ingredients	348		291		20	%
Meat Processing	—		83		(100	)%
Total	$	3,196	$	3,369	(5	)%

The company’s gross profit for fiscal 2004 was $3.2 billion, a decrease of $173 million, or 5%, from the prior year. The decrease reflects $168 million of gross profit in fiscal 2003 related to businesses the company no longer owns, $34 million of costs incurred in fiscal 2004 to implement the company’s operational efficiency initiatives and higher input costs, which were not fully offset by higher selling prices, offset by an estimated $60 million of gross profit related to the additional week in fiscal 2004.

Retail Products gross profit for fiscal 2004 was $2.3 billion, a decrease of $177 million from fiscal 2003. Included in the prior year gross profit was $75 million from the divested canned seafood operations. Costs of implementing the company’s operational efficiency initiatives reduced gross profit by $20 million. The estimated impact of the inclusion of one extra week in the current fiscal year was an increase in gross profit of approximately $42 million. Additionally, the segment’s gross profit decreased due to a less favorable product mix, increased input costs, which were not fully offset by increased selling prices, primarily in refrigerated meat products and an extremely competitive environment for popcorn products.

Foodservice Products gross profit for fiscal 2004 was $570 million, an increase of $30 million over the prior fiscal year. Included in the prior year gross profit was $10 million from businesses divested in that year and a charge of approximately $24 million resulting from the reduction of the values of certain refrigerated foodservice meat inventory. Costs of implementing the company’s operational efficiency initiatives reduced gross profit by $13 million. The estimated impact of the inclusion of one extra week in the current fiscal year was an increase of approximately $11 million.

The Food Ingredients segment generated gross profit of $348 million in fiscal 2004, an increase of $57 million over the prior fiscal year. The estimated impact of the inclusion of one extra week in the current fiscal year was an increase of approximately $7 million. Also favorably impacting fiscal 2004 gross profit was improved performance from certain value-added food ingredient businesses, which included a $22 million lower-of-cost or market adjustment to inventory in fiscal 2003 and better results for commodity merchandising operations due to market volatility.

Gross profit in the Meat Processing segment was $83 million in fiscal 2003.

REPORTING SEGMENT	FISCAL 2004 GROSS MARGIN		FISCAL 2003 GROSS MARGIN
Retail Products	27	%	28	%
Foodservice Products	15	%	15	%
Food Ingredients	15	%	13	%
Meat Processing	—		3	%
Total	22	%	20	%

The company’s gross margin (gross profit as a percentage of net sales) for fiscal 2004 increased two percentage points as compared to fiscal 2003, which reflects the company’s divestitures of low margin operations and improvement in value-added food ingredient products, offset by the impact of higher input costs, which were not fully offset by selling price increases, principally in the Retail Products segment.

54 ConAgra Foods 2004 Annual Report

Management’s Discussion and Analysis (continued)

Selling, General and Administrative Expenses, includes General Corporate Expense (“SG&A”)

SG&A expenses decreased $96 million, or 5%, to $1.8 billion for fiscal 2004. Prior year SG&A expenses included approximately $10 million from divested businesses and $38 million of transaction costs related to the fresh beef and pork divestiture. Costs of implementing the company’s operational efficiency initiatives increased SG&A expenses by $27 million in fiscal 2004. The estimated impact of the inclusion of one extra week in fiscal 2004 was an increase of approximately $34 million. The results for fiscal 2004 include $25 million of litigation expense related to a former choline chloride joint venture with E.I. du Pont Nemours and Co. that was sold in 1997. In addition, in fiscal 2004 the company established a $25 million reserve in connection with matters related to an SEC investigation (see “Other” discussion within MD&A). These items were partially offset by a gain of $21 million recognized upon the sale of the company’s cost-method investment in a venture. Lower selling costs, marketing-related costs and various other legal and insurance costs resulted in a favorable comparison with fiscal 2003.

Operating Profit

(Earnings before general corporate expense, interest expense, equity method investment earnings and income taxes)

($ in millions) REPORTING SEGMENT	FISCAL 2004 OPERATING PROFIT		FISCAL 2003 OPERATING PROFIT		% INCREASE/ (DECREASE)
Retail Products	$	1,207	$	1,298	(7	)%
Foodservice Products	321		345		(7	)%
Food Ingredients	197		125		58	%
Meat Processing	—		99		(100	)%

Retail Products operating profit decreased $91 million for the fiscal year to $1.2 billion. Included in prior year operating profit was $43 million from the divested canned seafood operations. Costs of implementing the company’s operational efficiency initiatives decreased operating profit by $25 million. The estimated impact of the inclusion of one extra week in fiscal 2004 was an increase of $28 million. The remaining decline in operating profit is reflective of reduced gross profit, due to increased input costs, which were not fully offset by increased selling prices, primarily in refrigerated meat products, an extremely competitive environment in popcorn products and a less favorable mix of products.

Foodservice Products operating profit declined $24 million to $321 million. Included in fiscal 2003 operating profit was $6 million from businesses divested in that year. Costs of implementing the company’s operational efficiency initiatives decreased operating profit by $29 million. The estimated impact of the inclusion of one extra week in fiscal 2004 was an increase of $7 million. Increased gross profits were largely offset by significantly higher SG&A expenses related to information systems implementation costs.

Food Ingredients operating profit increased $72 million to $197 million, primarily reflecting improved gross profits, as discussed above. Costs of implementing the company’s operational efficiency initiatives decreased operating profit by $8 million. The estimated impact of the inclusion of one extra week in fiscal 2004 was an increase of $7 million.

The Meat Processing segment generated operating profit of $99 million in fiscal 2003.

Interest Expense, Net

In fiscal 2004, net interest expense was $275 million, unchanged from the prior fiscal year. During fiscal 2004, the company closed out all $2.5 billion of its interest rate swap agreements. Of the $2.5 billion interest rate swaps closed out in fiscal 2004, $2.0 billion of the interest rate swaps had been used to effectively convert certain of the company’s fixed rate debt into floating rate debt. The remaining $500 million portion of the company’s interest rate swaps was used to hedge certain of the company’s forecasted interest payments on floating rate debt for the period from 2005 through 2011. For financial statement and tax purposes, the proceeds received upon termination of the interest rate swap agreements will be recognized over the term of the debt instruments originally hedged. The company’s net interest expense will continue to be favorably impacted by the interest rate swap agreements in fiscal 2005, but to a lesser extent than in fiscal 2004. Due to the decreased effect of the interest rate swaps and lower interest income, the company expects net interest expense to increase by approximately $40 million in fiscal 2005.

Equity Method Investment Earnings

Equity method investment earnings increased to $44 million in fiscal 2004 from $37 million in fiscal 2003. The increase was primarily due to a full year of results of the company’s minority ownership in the fresh beef and pork joint venture established following the company’s fresh beef and pork divestiture in September 2002. Income from the company’s other equity method investments, which includes barley malting, potato processing and grain merchandising, did not substantially change from their fiscal 2003 amounts.

Income (Loss) from Discontinued Operations

Income from discontinued operations was $97 million, net of tax, in fiscal 2004. In fiscal 2003, the company recognized a net-of-tax loss from discontinued operations of $36 million. The year-over-year change primarily resulted from:

ConAgra Foods 2004 Annual Report 55

Management’s Discussion and Analysis (continued)

• a fiscal 2003 pre-tax charge of approximately $112 million related to lowering asset values in connection with the then pending chicken business sale,

• net pre-tax income of $51 million recognized on the sales of the chicken business, UAP North America and the Spanish feed business in fiscal 2004,

• fiscal 2004 pre-tax impairment charges of $27 million recognized to write-down the long-lived assets of the UAP International and Portuguese poultry operations to net realizable value, and

• significantly improved gross margins at the chicken business and UAP North America during the six-month period of fiscal 2004 prior to the divestitures, relative to those generated in fiscal 2003, due to industry-wide improvements in the markets for their products.

The company’s UAP North America operations had a fiscal year end of February, while the company’s consolidated year end is May. Historically, the results of UAP North America have been reflected in the company’s consolidated results on a three-month “lag” (e.g., UAP North America’s results for June through August are included in the company’s consolidated results for the period September through November). Due to the disposition of UAP North America on November 23, 2003, UAP North America’s results for the three months ending November 23, 2003, a net-of-tax loss of approximately $23.8 million, was recorded directly to retained earnings. If this business had not been divested, this net-of-tax loss would have been recognized in the company’s fiscal 2004 consolidated statement of earnings. The comparable amount recorded in income (loss) from discontinued operations for the three-month period ended November 24, 2002 was a loss of $19.6 million.

Income Taxes and Net Income

The effective tax rate was 31% for fiscal 2004, below the 34% effective tax rate in fiscal 2003. During fiscal 2003, the company generated capital loss carryforwards as a result of the fresh beef and pork divestiture. As of May 25, 2003, the company had provided a valuation allowance for the entire amount of the related deferred tax asset based on management’s assessment that the company would not be able to utilize these carryforwards in future periods. During fiscal 2004, the company reduced its valuation allowance associated with these capital loss carryforwards when, as a result of capital gains generated from the company’s termination of interest rate swap agreements and the disposition of UAP North America during fiscal 2004, management determined that the company would be able to realize the benefit of the deferred tax assets. The company also reduced the valuation allowance related to certain foreign tax credits generated in prior years, as the benefit of these foreign tax credits will be realized due to the sale of the Spanish feed business.

Net income was $880 million, or $1.66 per diluted share in fiscal 2004, compared to $775 million, or $1.46 per diluted share, in fiscal 2003.

Other

On June 22, 2001, the company filed an amended annual report on Form 10-K for the fiscal year ended May 28, 2000. The filing included restated financial information for fiscal years 1997, 1998, 1999 and 2000. The restatement, due to accounting and conduct matters at United Agri Products, Inc. (“UAP”), a former subsidiary, was based upon an investigation undertaken by the company and the Audit Committee of its Board of Directors. The restatement was principally related to revenue recognition for deferred delivery sales and vendor rebates, advance vendor rebates and bad debt reserves. The Securities and Exchange Commission (“SEC”) issued a formal order of nonpublic investigation dated September 28, 2001. The company is cooperating with the SEC investigation, which relates to the UAP matters described above, as well as other aspects of the company’s financial statements, including the level and application of certain of the company’s reserves.

2003 vs. 2002

Net Sales

($ in millions) REPORTING SEGMENT	FISCAL 2003 NET SALES		FISCAL 2002 NET SALES		% INCREASE/ (DECREASE)
Retail Products	$	8,668	$	8,719	(1	)%
Foodservice Products	3,598		3,779		(5	)%
Food Ingredients	2,204		2,105		5	%
Meat Processing	2,469		7,733		(68	)%
Total	$	16,939	$	22,336	(24	)%

Overall company sales declined $5.4 billion, or 24%, to $16.9 billion, primarily reflecting the impact of the fiscal 2003 fresh beef and pork divestiture. Fiscal 2002 sales included approximately $7.7 billion from the divested fresh beef and pork operations, while fiscal 2003 sales included approximately $2.5 billion.

56 ConAgra Foods 2004 Annual Report

Management’s Discussion and Analysis (continued)

Retail Products sales were $8.7 billion in fiscal 2003, a decline of $51 million, or less than 1%, for the year, reflecting lower sales of branded processed meat products due to lower selling prices and the divestiture of the canned seafood operations. These combined factors more than offset sales growth for several key retail brands.

Net sales for the company’s retail consumer branded business showed a variety of results, as sales of some of the company’s most significant brands including Banquet, Healthy Choice, ACT II, Orville Redenbacher’s, Marie Callender’s, Hebrew National, PAM and Reddi-wip grew. Major brands posting sales declines for the year included Hunt’s, Armour, Chef Boyardee and Butterball. New products and product extensions in the popcorn, frozen meals and entrees, whipped toppings, shelf-stable meals, meat snacks and egg alternative categories positively impacted the Retail Products segment sales for the year, as did theme-oriented selling programs which focused on holiday, summer grilling and sporting events. The company continued to increase its investment in advertising and promotion to fuel profitable future sales growth. The company believes the brand sales increases cited above reflected a number of factors, including new product success, product quality improvements and increased marketing spending in fiscal 2003 and previous periods, while the brand sales declines cited above reflected a number of factors, including an extremely competitive environment.

Foodservice Products net sales declined $181 million, or 5%, for fiscal 2003 to $3.6 million reflecting weaker results for french fries, frozen seafood, specialty meats and Mexican foods. This partly reflected soft conditions in the overall economy. The company believes that soft economic conditions negatively impacted business travel as well as consumer spending at many types of restaurants. In addition, the Foodservice Products results also reflected competitive challenges facing some of the company’s major traditional quick-service restaurant customers, which appeared to be losing customers to casual restaurants and other venues.

Food Ingredients net sales increased $99 million, or 5%, to $2.2 billion in fiscal 2003. Sales within the segment are largely determined by input costs, which can fluctuate significantly. Sales for basic ingredients, which reflect gross profit for commodity merchandising, increased, reflecting improved margins for certain commodities, such as grain, as well as favorable results associated with the segment’s energy merchandising. Sales of milled ingredients—flour, corn and oats, increased overall, reflecting higher selling prices, resulting from higher input costs. Sales for the other specialty ingredients operations (flavorings and seasonings) were flat compared to fiscal 2002.

For fiscal 2003, net sales in the Meat Processing segment declined 68% to $2.5 billion. As cited above, the fresh beef and pork divestiture occurred in the second quarter of fiscal 2003. Accordingly, in fiscal 2003 the segment results include only 115 days of activity as compared to a full fiscal year in the prior year. Net sales in fiscal 2003 for the fresh beef and pork business were below those of the prior year comparable period due to fluctuating market prices and difficult market conditions.

Gross Profit

($ in millions) REPORTING SEGMENT	FISCAL 2003 GROSS PROFIT		FISCAL 2002 GROSS PROFIT		% INCREASE/ (DECREASE)
Retail Products	$	2,455	$	2,353	4	%
Foodservice Products	540		575		(6	)%
Food Ingredients	291		347		(16	)%
Meat Processing	83		286		(71	)%
Total	$	3,369	$	3,561	(5	)%

The company’s gross profit was $3.4 billion for fiscal 2003, compared to $3.6 billion in fiscal 2002. The decline is primarily reflective of the fresh beef and pork divestiture in the second quarter of fiscal 2003.

REPORTING SEGMENT	FISCAL 2003 GROSS MARGIN		FISCAL 2002 GROSS MARGIN
Retail Products	28	%	27	%
Foodservice Products	15	%	15	%
Food Ingredients	13	%	16	%
Meat Processing	3	%	4	%
Total	20	%	16	%

Gross margin (gross profit as a percent of net sales) improved to 20% from 16% in fiscal 2002, largely due to the fresh beef and pork divestiture, as that business had comparatively low margins. To a lesser degree, the company’s manufacturing efficiency initiatives and improvement in product mix also boosted gross margins. The Retail Products segment experienced increased sales of high-margin items, such as snacks and frozen dinners, and decreased sales for comparatively low-margin items, such as canned seafood and cheese. Also, lower input costs for processed meats favorably impacted cost of goods sold and, therefore, gross margin.

ConAgra Foods 2004 Annual Report 57

Management’s Discussion and Analysis (continued)

Selling, General and Administrative Expenses, includes General Corporate Expense

SG&A expenses decreased $63 million, or 3%, to $1.9 billion for fiscal 2003. Fiscal 2002 SG&A expenses included approximately $100 million from the divested fresh beef and pork operations, while fiscal 2003 SG&A expenses included approximately $33 million. SG&A expenses were favorably impacted by $136 million, due to the adoption of Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets, as the company was no longer required to amortize goodwill and intangible assets with indefinite lives beginning in the first quarter of fiscal 2003. While 2003 SG&A expenses were reduced by the adoption of SFAS No. 142 and the fresh beef and pork divestiture, these were partially offset by several SG&A expenses which increased in fiscal 2003. Specifically, during fiscal 2003 the company incurred incremental advertising and promotion (approximately $56 million), fresh beef and pork divestiture closing costs (approximately $40 million) and increased employment-related costs (approximately $65 million). The increased employment-related costs primarily relate to increased pension and postretirement costs resulting from the company reducing the discount rate used to measure the present value of its obligations as well as reducing the assumed rate of return on plan assets. SG&A expenses were 11% of sales during fiscal 2003, as compared to 9% of sales during fiscal 2002. This 2% increase was primarily a result of the fresh beef and pork divestiture reducing net sales without a proportionate reduction in SG&A expenses, as SG&A expenses in the fresh beef and pork businesses were historically a low percentage of net sales.

Operating Profit

(Earnings before general corporate expense, goodwill amortization, interest expense, equity method investment earnings and income taxes)

($ in millions) REPORTING SEGMENT	FISCAL 2003 OPERATING PROFIT		FISCAL 2002 OPERATING PROFIT		% INCREASE/ (DECREASE)
Retail Products	$	1,298	$	1,226	6	%
Foodservice Products	345		364		(5	)%
Food Ingredients	125		189		(34	)%
Meat Processing	99		188		(47	)%

Retail Products operating profit grew $72 million, or 6%, for fiscal 2003 to reach $1.3 billion, reflecting successful cost management initiatives and improved product mix. Cost management initiatives include Project Nucleus, as well as supply chain (procurement, manufacturing, shipping and warehousing) and selling and administrative expenses. Included in the supply chain initiative, the Retail Products segment is an SKU (stock keeping unit) reduction program, designed to discontinue the manufacture of certain unprofitable or marginally profitable items in order to boost overall efficiency and margins. Profit growth efforts included overall brand-building programs to better connect with consumers and improve consumer appreciation of the company’s products. Profit improvement initiatives also included focusing on the company’s higher-margin items as part of a plan to improve product mix.

While margins for many major retail-oriented products grew, including shelf-stable grocery and refrigerated prepared foods, the most significant segment profit improvement occurred in the company’s frozen foods business. In that business, the company believes that improved product quality and effective expense control contributed significantly to the profit improvement.

Overall operating profit for the Foodservice Products segment declined $19 million to $345 million for fiscal 2003, reflecting a continuing difficult environment, believed by the company to be the result of a weak economy and factors negatively affecting certain major quick-service restaurant customers. In addition, the company reduced the values of certain refrigerated foodservice meat inventory items during the year, which resulted in a pre-tax charge of approximately $24 million.

Food Ingredients operating profit declined $64 million, or 34%, to $125 million. While profits for the basic ingredients businesses grew due primarily to more favorable results in the company’s energy merchandising operations, profits for milled ingredients declined due to increased input costs and profits for specialty ingredients declined due, in part, to increased competition in the garlic market. During fiscal 2003, the company also reduced the value of certain garlic inventory by $22 million, as lower-cost Chinese garlic created competitive pressure.

Meat Processing operating profit decreased 47% to $99 million due to the fresh beef and pork divestiture during the year, which removed those operating profits from the segment’s earnings base. In addition, the company settled an insurance claim relating to a beef plant fire that occurred in 2001 and realized approximately $50 million of segment operating profit. The insurance proceeds represented a recovery for the loss of facilities, inventory and related items.

58 ConAgra Foods 2004 Annual Report

Management’s Discussion and Analysis (continued)

Interest Expense, Net

For fiscal 2003, net interest expense was $275 million, 30% below fiscal 2002 amounts, primarily due to lower interest rates, increased interest income and reduced outstanding debt amounts. Through the use of interest rate swaps to effectively convert fixed-rate debt to floating-rate debt, the company benefited from lower interest rates as compared to fiscal 2002. The increased interest income resulted from the company holding debt securities issued by the fresh beef and pork joint venture in which the company holds a minority interest. Also contributing to the reduced fiscal 2003 interest expense was the company’s reduction of $222 million of debt with cash proceeds generated by divestitures completed during the year.

Equity Method Investment Earnings

Equity method investment earnings increased to $37 million in fiscal 2003 from $28 million in fiscal 2002. The increase was primarily due to the company’s minority ownership in the fresh beef and pork joint venture established following the company’s fresh beef and pork divestiture during fiscal 2003. Income from the company’s other equity method investments, which include barley malting, potato production and grain merchandising, did not substantially change from fiscal 2002 amounts.

Income (Loss) from Discontinued Operations

In fiscal 2003, the company recognized a net of tax loss from discontinued operations of $36 million, versus income from discontinued operations of $23 million in fiscal 2002. The year-over-year decline reflects a fiscal 2003 pre-tax charge of approximately $112 million ($69 million after-tax) related to lowering asset values in connection with the pending chicken business sale. Fiscal 2003 was also negatively impacted by a weaker performance from the chicken business. For most of fiscal 2003, the chicken markets were very difficult and fresh chicken prices remained low. The company believes those prices were partly due to large supplies of chicken and other proteins, a situation made worse by weak exports of chicken to Russia due to that country’s policy changes regarding imports. This weakness in the chicken business was partially offset by significantly improved results at UAP North America, due to better customer and product mix, lower bad debt expense and reduced administrative and other operating costs as a result of cost management initiatives.

Income Taxes and Net Income

The effective tax rate of 34% for fiscal 2003 was below the 38% effective tax rate in fiscal 2002 largely due to ceasing amortization of goodwill and other intangible assets as a result of the adoption of SFAS No. 142 and the favorable tax impact of the canned seafood divestiture. Net income was $775 million, or $1.46 per diluted share, compared to $783 million, or $1.47 per diluted share, in fiscal 2002.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity and Capital

The company’s primary financing objective is to maintain a conservative balance sheet that provides the flexibility to pursue its growth objectives. The company has historically used short-term debt and its accounts receivable securitization program to finance increases in its trade working capital (accounts receivable plus inventory, less accounts payable, accrued expenses and advances on sales) needs and a combination of equity and long-term debt to finance both its base trade working capital needs and its noncurrent assets.

Commercial paper borrowings (usually less than 30 days maturity) are reflected in the company’s consolidated balance sheets within notes payable. The company maintains back-up bank lines of credit at least equal to outstanding commercial paper borrowings. The company has never used these back-up lines of credit. The company is in compliance with the credit agreements’ financial covenants. Management believes the company will maintain its current debt credit rating for the foreseeable future, thus allowing the company’s continued issuance of commercial paper. If the company were unable to access the short-term commercial paper market, the company would use its bank revolving credit facility to provide liquidity.

The company has in place a $1.05 billion revolving credit facility (expiring in May 2007) with major domestic and international banks. The interest rates for the revolving credit facilities are generally .30 to .35 percentage points higher than the interest rates for commercial paper. The company had availability of $400 million under its accounts receivable securitization program at fiscal year end 2004. Under this program, accounts receivable are sold without recourse at a discount, and this cost is included in selling, general and administrative expenses. Because these accounts receivable are sold without recourse to unrelated third parties, accounts receivable balances sold are excluded from the company’s consolidated financial statements. As of the end of fiscal 2004, the company had no outstanding accounts receivable sold, while accounts receivable sold totaled $556 million (including amounts from discontinued operations) as of the end of fiscal 2003.

ConAgra Foods 2004 Annual Report 59

Management’s Discussion and Analysis (continued)

The company’s overall level of interest-bearing debt totaled $5.7 billion at the end of fiscal 2004, compared to $5.9 billion as of the end of fiscal 2003. During fiscal 2004, the company repaid $515 million of debt. This was largely offset by the increase in long-term debt resulting from the company’s adoption of FASB Interpretation (“FIN”) No. 46R, Consolidation of Variable Interest Entities, which required the consolidation of certain variable interest entities from which the company leases buildings and transportation equipment. This also required the deconsolidation of ConAgra Capital L.C., an indirectly controlled subsidiary of the company which had previously issued mandatorily redeemable preferred securities and entered into loan agreements with the company having similar terms as the preferred securities. The adoption of FIN No. 46R resulted in the addition of $419 million of long-term debt and $25 million of minority interest and the reduction of $175 million of preferred securities of subsidiary company to the company’s balance sheet. As of the end of both fiscal 2004 and 2003, the company’s senior debt ratings were BBB+ (Fitch), Baa1 (Moody’s) and BBB+ (Standard & Poor’s), all investment grade ratings.

The company also has a shelf registration under which it could issue from time to time up to $4 billion in debt securities.

Over the last two fiscal years, the company has divested its major commodity operations, such as fresh beef and pork, cheese processing, canned seafood, chicken processing and agricultural chemical distribution. The company received debt and equity interests as part of the proceeds for certain of those businesses. The company expects to sell or otherwise monetize those items in the future, subject to contractual conditions. As of fiscal year end 2004, the company has the following investments and other interests related to these transactions:

• approximately $315 million of net assets of the cattle feeding venture,

• approximately $150 million of subordinated notes receivable plus accrued interest from the fresh beef and pork venture,

• approximately $150 million of equity interest in the fresh beef and pork venture,

• approximately $34 million of UAP preferred securities, and

• approximately 25.4 million shares of Pilgrim’s Pride Corporation (valued at $246 million at the time of the transaction with a total carrying value of $392 million at the end of fiscal 2004).

The Pilgrim’s Pride Corporation shares are contractually restricted such that the company cannot sell any portion of the shares for one year from the date of the chicken business divestiture and can sell no more than 8.47 million shares in any twelve-month period, unless such restrictions are waived by Pilgrim’s Pride. As of fiscal year end 2004, 8.47 million shares are classified as “available for sale” as these shares may be sold by the company within twelve months. The available-for-sale shares are stated at fair value based on quoted market prices with unrealized gains of $146 million included in accumulated other comprehensive income, net of tax. The remaining 16.93 million shares are accounted for at cost.

Cash Flows

In fiscal 2004, the company used $40 million of cash, which was the net impact of $750 million generated from operations, $716 million generated from investing activities, $1.3 billion used in financing activities and $181 million used in the company’s discontinued operations.

Cash generated from operating activities of continuing operations totaled $750 million for fiscal 2004 as compared to $916 million generated in fiscal 2003. The decreased cash flow was primarily due to a decrease of $470 million in amounts sold under the accounts receivable securitization program, partially offset by the fiscal 2003 contributions to the company’s pension plans of $233 million. Cash flow from operating activities is one of the company’s primary sources of liquidity.

Cash generated from investing activities totaled $716 million for fiscal 2004, versus cash generated from investing activities of $599 million in fiscal 2003. Investing activities for fiscal 2004 consisted primarily of proceeds of approximately $1.0 billion from the divestitures of the chicken business, UAP North America and the Spanish feed business, partially offset by capital expenditures of $352 million.

Cash used in financing activities totaled $1.3 billion in fiscal 2004, as compared to cash used of $699 million in fiscal 2003. During fiscal 2004, the company repaid debt of $515 million, paid dividends of $537 million and repurchased 15.3 million shares of its outstanding common stock for $419 million. During fiscal 2003, the company repaid debt of $222 million and paid dividends of $509 million.

The company estimates its capital expenditures in fiscal 2005 will be approximately $475 million, reflecting increased investment in information systems and the logistics network. Management believes that existing cash balances, cash flows from operations, existing credit facilities and access to capital markets will provide sufficient liquidity to meet its working capital needs, planned capital expenditures, additional share repurchases and payment of anticipated quarterly dividends.

60 ConAgra Foods 2004 Annual Report

Management’s Discussion and Analysis (continued)

OFF-BALANCE SHEET ARRANGEMENTS

The company uses off-balance sheet arrangements (e.g., operating leases) where the economics and sound business principles warrant their use. The company periodically enters into guarantees and other similar arrangements as part of transactions in the ordinary course of business. These are described further in “Obligations and Commitments” below.

The company has used off-balance sheet arrangements in connection with the securitization and sale of trade receivables generated in the ordinary course of business. As of May 30, 2004, the company had agreements to sell interests in pools of receivables in an amount not to exceed $400 million at any one time. As of the end of fiscal 2004, the company had no outstanding accounts receivable sold, whereas accounts receivable sold totaled $556 million as of the end of fiscal 2003.

As a result of adopting FIN No. 46R, the company has consolidated the assets and liabilities of several entities from which it leases property, plant and equipment. The company has also deconsolidated ConAgra Capital, L.C., an indirectly controlled subsidiary of the company. Due to the adoption of FIN No. 46R, the company recorded an increase to property, plant and equipment of $221 million, an increase to long-term debt of $419 million, an increase to other assets of $46 million, an increase to other noncurrent liabilities of $25 million and a decrease in preferred securities of subsidiary company of $175 million. The company has no other material obligations arising out of variable interests with unconsolidated entities.

OBLIGATIONS AND COMMITMENTS

As part of its ongoing operations, the company enters into arrangements that obligate the company to make future payments under contracts such as lease agreements, debt agreements and unconditional purchase obligations (i.e., obligations to transfer funds in the future for fixed or minimum quantities of goods or services at fixed or minimum prices, such as “take-or-pay” contracts). The unconditional purchase obligation arrangements are entered into by the company in its normal course of business in order to ensure adequate levels of sourced product are available to the company. Of these items, capital lease and debt obligations, which total $5.7 billion, are currently recognized as liabilities in the company’s consolidated balance sheet. Operating lease obligations and unconditional purchase obligations, which total $884 million, are not recognized as liabilities in the company’s consolidated balance sheet, in accordance with generally accepted accounting principles. Payments in excess of debt service requirements to be made to variable interest entities, which have been consolidated under the requirements of FIN No. 46R, are included in operating lease obligations.

A summary of the company’s contractual obligations at the end of fiscal 2004 is as follows (including obligations of discontinued operations):

(in millions)	PAYMENTS DUE BY PERIOD
CONTRACTUAL			LESS THAN						AFTER
OBLIGATIONS	TOTAL		1 YEAR		2-3 YEARS		4-5 YEARS		5 YEARS
Long-Term Debt	$	5,671.9	$	382.4	$	1,235.5	$	36.5	$	4,017.5
Lease Obligations	560.0		90.4		146.7		137.9		185.0
Purchase Obligations	323.8		125.0		102.9		48.7		47.2
Total	$	6,555.7	$	597.8	$	1,485.1	$	223.1	$	4,249.7

The company’s total obligations of approximately $6.6 billion reflect a decrease of approximately $439 million from the company’s 2003 fiscal year end. The decrease was primarily a result of the repayment of certain long-term debt during fiscal 2004, partially offset by the addition of $419 million of debt associated with the adoption of FIN No. 46R.

As part of its ongoing operations, the company also enters into arrangements that obligate the company to make future cash payments only upon the occurrence of a future event (e.g., guarantee debt or lease payments of a third party should the third party be unable to perform). In accordance with generally accepted accounting principles, the following commercial commitments are not recognized as liabilities in the company’s consolidated balance sheet. A summary of the company’s commitments, including commitments associated with equity method investments, as of the end of fiscal 2004, is as follows (including obligations of discontinued operations):

(in millions)	AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
OTHER COMMERCIAL			LESS THAN						AFTER
COMMITMENTS	TOTAL		1 YEAR		2-3 YEARS		4-5 YEARS		5 YEARS
Guarantees	$	68.7	$	7.9	$	15.2	$	20.0	$	25.6
Other Commitments	6.2		2.2		4.0		—		—
Total	$	74.9	$	10.1	$	19.2	$	20.0	$	25.6

The company’s total commitments of approximately $75 million include approximately $46 million in guarantees and other commitments the company has made on behalf of the company’s fresh beef and pork joint venture.

As part of the fresh beef and pork transaction, the company assigned a hog purchase contract to the new joint venture and the venture has indemnified the company for all liabilities under the contract. The company has guaranteed the performance of the fresh beef and pork joint venture with respect to the hog purchase contract. The hog purchase contract requires the fresh beef and pork joint venture to purchase a minimum of approximately 1.2 million hogs annually through 2014.

ConAgra Foods 2004 Annual Report 61

Management’s Discussion and Analysis (continued)

The contract stipulates minimum price commitments, based in part on market prices and in certain circumstances, also includes price adjustments based on certain inputs.

TRADING ACTIVITIES

The company accounts for certain contracts (e.g., “physical” commodity purchase/sale contracts and derivative contracts) at fair value. The company considers a portion of these contracts to be its “trading” activities; specifically, those contracts that do not qualify for hedge accounting under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and its related amendment, SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities (collectively “SFAS No. 133”). The table below summarizes the changes in trading assets and liabilities for fiscal 2004:

(in millions)
Net asset outstanding as of May 25, 2003, at fair value	$	37.4
Contracts settled during the period¹	12.8
Changes in fair value of contracts outstanding as of May 30, 2004²	(23.6		)
Changes attributable to changes in valuation techniques and assumptions	—
Net asset outstanding as of May 30, 2004, at fair value	$	26.6

¹ Includes contracts outstanding at May 25, 2003 and contracts entered into and settled during fiscal 2004.

² Includes option premiums paid and received.

The following table represents the fair value and scheduled maturity dates of contracts outstanding as of May 30, 2004:

	FAIR VALUE OF CONTRACTS AS OF MAY 30, 2004 NET ASSET / (LIABILITY)
(in millions) SOURCE OF FAIR VALUE	MATURITY LESS THAN 1 YEAR			MATURITY 1–3 YEARS			TOTAL FAIR VALUE
Prices actively quoted (i.e., exchange-traded contracts)	$	29.0		$	1.0		$	30.0
Prices provided by other external sources (i.e., non-exchange- traded contracts)	(3.2		)	(0.2		)	(3.4		)
Prices based on other valuation models (i.e., non-exchange-traded contracts)	—			—			—
Total fair value	$	25.8		$	0.8		$	26.6

In order to minimize the risk of loss associated with non-exchange-traded transactions with counterparties, the company utilizes established credit limits and performs ongoing counterparty credit evaluations.

The above tables exclude commodity-based contracts entered into in the normal course of business, including “physical” contracts to buy or sell commodities at agreed-upon fixed prices, as well as derivative contracts (e.g., futures and options) used primarily to hedge an existing asset or liability (e.g., inventory) or an anticipated transaction (e.g., purchase of inventory). The use of such contracts is not considered by the company to be “trading” activities as these contracts are considered either normal purchase and sale contracts or hedging contracts.

CRITICAL ACCOUNTING ESTIMATES

The process of preparing financial statements requires the use of estimates on the part of management. The estimates used by management are based on the company’s historical experiences combined with management’s understanding of current facts and circumstances. Certain of the company’s accounting estimates are considered critical as they are both important to the portrayal of the company’s financial condition and results and require significant or complex judgment on the part of management. The following is a summary of certain accounting estimates considered critical by management of the company.

The company’s Audit Committee has reviewed the development, selection and disclosure of the critical accounting estimates.

Marketing Costs—The company incurs certain costs to promote its products through marketing programs which include advertising, retailer incentives and consumer incentives. The company expenses each of these types of marketing costs in accordance with applicable authoritative accounting literature. The judgment required in determining when marketing costs are incurred can be significant. For volume-based incentives provided to retailers, management must continually assess the likelihood of the retailer achieving the specified targets. Similarly, for consumer coupons, management must estimate the level at which coupons will be redeemed by consumers in the future. Estimates made by management in accounting for marketing costs are based primarily on the company’s historical experience with marketing programs with consideration given to current circumstances and industry trends. As these factors change, management’s estimates could change and the company could recognize different amounts of marketing costs over different periods of time.

62 ConAgra Foods 2004 Annual Report

Management’s Discussion and Analysis (continued)

Income Taxes—The company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. The company recognizes current tax liabilities and assets based on an estimate of taxes payable or refundable in the current year for each of the jurisdictions in which the company transacts business. As part of the determination of its current tax liability, management exercises considerable judgment in evaluating positions taken by the company in its tax returns. The company has established reserves for probable tax exposures. These reserves, included in current tax liabilities, represent the company’s estimate of amounts expected to be paid, which the company adjusts over time as more information regarding tax audits becomes available.

The company also recognizes deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences (e.g., book depreciation versus tax depreciation, tax loss carryforwards, etc.). If appropriate, the company recognizes valuation allowances to reduce such deferred tax assets to amounts that are more likely than not to be ultimately realized.

The calculation of current and deferred tax assets (including valuation allowances) and liabilities requires management to apply significant judgment related to the application of complex tax laws, changes in tax laws or related interpretations, uncertainties related to the outcomes of tax audits and changes in the company’s operations or other facts and circumstances. Further, management must continually monitor changes in these factors. Changes in such factors may result in changes to management estimates and could require the company to adjust its tax assets and liabilities and record additional income tax expense or benefits.

Environmental Liabilities—Environmental liabilities are accrued when it is probable that obligations have been incurred and the associated amounts can be reasonably estimated. Management works with independent third-party specialists in order to effectively assess the company’s environmental liabilities. Management estimates the company’s environmental liabilities based on evaluation of investigatory studies, extent of required cleanup, the known volumetric contribution of the company and other potentially responsible parties and its experience in remediating sites. Environmental liability estimates may be affected by changing governmental or other external determinations of what constitutes an environmental liability or an acceptable level of cleanup. Management’s estimate as to its potential liability is independent of any potential recovery of insurance proceeds or indemnification arrangements. Insurance companies and other indemnitors are notified of any potential claims and periodically updated as to the general status of known claims. The company does not discount its environmental liabilities as the timing of the anticipated cash payments is not fixed or readily determinable. To the extent that there are changes in the evaluation factors identified above, management’s estimate of environmental liabilities may also change.

Employment-Related Benefits—The company incurs certain employment-related expenses associated with pensions, postretirement health care benefits and workers’ compensation. In order to measure the expense associated with these employment-related benefits, management must make a variety of estimates including discount rates used to measure the present value of certain liabilities, assumed rates of return on assets set aside to fund these expenses, compensation increases, employee turnover rates, anticipated mortality rates, anticipated health care costs and employee accidents incurred but not yet reported to the company. The estimates used by management are based on the company’s historical experience as well as current facts and circumstances. The company uses third-party specialists to assist management in appropriately measuring the expense associated with these employment-related benefits. Different estimates used by management could result in the company recognizing different amounts of expense over different periods of time.

Impairment of Long-Lived Assets (including property, plant and equipment), Goodwill and Identifiable Intangible Assets—In accordance with applicable accounting literature, the company reduces the carrying amounts of long-lived assets, goodwill and identifiable intangible assets to their fair values when the fair value of such assets is determined to be less than their carrying amounts (i.e., assets are deemed to be impaired). Fair value is typically estimated using a discounted cash flow analysis, which requires the company to estimate the future cash flows anticipated to be generated by the particular asset(s) being tested for impairment as well as select a discount rate to measure the present value of the anticipated cash flows. When determining future cash flow estimates, the company considers historical results adjusted to reflect current and anticipated operating conditions. Estimating future cash flows requires significant judgment by the company in such areas as future economic conditions, industry-specific conditions, product pricing and necessary capital expenditures. The use of different assumptions or estimates for future cash flows could produce different impairment amounts (or none at all) for long-lived assets, goodwill and identifiable intangible assets.

ConAgra Foods 2004 Annual Report 63

Management’s Discussion and Analysis (continued)

RELATED PARTY TRANSACTIONS

ConAgra Foods enters into many lease agreements for land, buildings and equipment at competitive market rates, and some of the lease arrangements are with Opus Corporation or its affiliates. A director of ConAgra Foods is a beneficial owner, officer and director of Opus Corporation. The agreements relate to the leasing of land and buildings for ConAgra Foods. ConAgra Foods occupies the buildings pursuant to long-term leases with Opus Corporation and its affiliates, some of which contain various termination rights and purchase options. Leases effective in fiscal 2004 required annual lease payments by ConAgra Foods of $21 million. As a result of adopting FIN No. 46R, the company has consolidated certain of the Opus affiliates from which it leases property, plant and equipment. These leases were previously accounted for as operating leases. Opus Corporation or its affiliates were paid $41 million for construction work during fiscal 2004 on properties leased by ConAgra Foods from third parties. Opus Corporation had revenues in excess of $1 billion in 2003.

MARKET RISK

The principal market risks affecting the company are exposures to price fluctuations of commodity and energy inputs, interest rates and foreign currencies. These fluctuations impact raw material costs of all reporting segments, as well as the company’s trading activities.

Commodities—The company purchases commodity inputs such as wheat, corn, oats, soybean meal, soybean oil, meat, dairy products, sugar, energy and packaging materials, to be used in its operations. These commodities are subject to price fluctuations that may create gross margin risk. The company enters into commodity hedges to manage this price risk using physical forward contracts or derivative instruments. ConAgra Foods has policies governing the hedging instrument its businesses may use. These policies include limiting the dollar risk exposure for each of its businesses. The company also monitors the amount of associated counter-party credit risk for all non-exchange-traded transactions. In addition, the company purchases and sells certain commodities, such as wheat, corn, soybeans, soybean meal, soybean oil, oats and energy, in its trading operations. The company’s trading activities are limited in terms of maximum dollar exposure, as measured by a dollar-at-risk methodology and monitored to ensure compliance.

The following table presents one measure of market risk exposure using sensitivity analysis. Sensitivity analysis is the measurement of potential loss of fair value resulting from a hypothetical change of 10% in market prices. Actual changes in market prices may differ from hypothetical changes. In practice, as markets move, the company actively manages its risk and adjusts hedging strategies as appropriate. Fair value was determined using quoted market prices and was based on the company’s net derivative position by commodity at each quarter-end during the fiscal year. The market risk exposure analysis excludes the underlying commodity positions that are being hedged. The commodities hedged have a high inverse correlation to price changes of the derivative commodity instrument.

Effect of 10% Change in Market Prices:

(in millions)	2004		2003
Processing Activities
Grains/Food
High	$	18.3	$	38.2
Low	2.1		25.2
Average	11.3		32.8
Meats
High	1.0		17.1
Low	—		0.1
Average	0.6		5.9
Energy
High	9.7		14.3
Low	—		8.7
Average	3.9		11.8
Trading Activities
Grains
High	35.7		21.7
Low	21.0		9.9
Average	28.9		16.2
Meats
High	3.0		6.2
Low	1.5		2.1
Average	2.2		4.1
Energy
High	7.5		13.4
Low	—		—
Average	1.9		6.6

Interest Rates—The company primarily uses interest rate swaps to manage the effect of interest rate changes on a portion of its existing debt and forecasted debt balances. The company enters into such interest rate swaps to take advantage of historically low short-term rates, while continuing to maintain long-term financing. As of May 25, 2003, the fair value of the interest rate swap agreements recognized in prepaid

64 ConAgra Foods 2004 Annual Report

Management’s Discussion and Analysis (continued)

expenses and other current assets was approximately $220 million, while the fair value of interest rate swap agreements recognized in other accrued liabilities was approximately $52 million. All of the company’s interest rate swaps were liquidated in the second quarter of fiscal 2004 (see note 17 to the consolidated financial statements).

As of May 30, 2004 and May 25, 2003, the fair value of the company’s fixed rate debt was estimated at $6.2 billion and $6.3 billion, respectively, based on current market rates primarily provided by outside investment advisors. As of May 30, 2004 and May 25, 2003, a one percentage point increase in interest rates would decrease the fair value of the company’s fixed rate debt by approximately $336 million and $428 million, respectively, while a one percentage point decrease in interest rates would increase the fair value of the company’s fixed rate debt by approximately $387 million and $490 million, respectively. With respect to floating rate debt, a one percentage point change in interest rates would have impacted net interest expense by approximately $1 million and $11 million in fiscal 2004 and 2003, respectively.

Foreign Operations—In order to reduce exposures related to changes in foreign currency exchange rates, the company may enter into forward exchange or option contracts for transactions denominated in a currency other than the functional currency for certain of its processing and trading operations. This activity primarily relates to hedging against foreign currency risk in purchasing inventory, capital equipment, sales of finished goods and future settlement of foreign denominated assets and liabilities.

The following table presents one measure of market risk exposure using sensitivity analysis for the company’s processing and trading operations. Sensitivity analysis is the measurement of potential loss of fair value resulting from a hypothetical change of 10% in exchange rates. Actual changes in exchange rates may differ from hypothetical changes. Fair value was determined using quoted exchange rates and was based on the company’s net foreign currency position at each quarter-end during the fiscal year. The market risk exposure analysis excludes the underlying foreign denominated transactions that are being hedged. The currencies hedged have a high inverse correlation to exchange rate changes of the foreign currency derivative instrument.

Effect of 10% Change in Exchange Rates:

(in millions)	2004		2003
Processing Businesses
High	$	16.1	$	26.8
Low	10.2		8.8
Average	13.8		18.1

Trading Businesses
High	$	13.2	$	3.4
Low	3.8		0.6
Average	8.7		1.5

FORWARD-LOOKING STATEMENTS

This report, including Management’s Discussion & Analysis, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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. Readers of this report 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, future economic circumstances, industry conditions, company performance and financial results, availability and prices of raw materials, product pricing, competitive environment and related market conditions, operating efficiencies, 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 report which speak only as of the date of this report.

ConAgra Foods 2004 Annual Report 65

CONSOLIDATED STATEMENTS OF EARNINGS

ConAgra Foods, Inc. and Subsidiaries

	FOR THE FISCAL YEARS ENDED MAY
Dollars in millions except per share amounts	2004			2003			2002
Net sales	$	14,522.1		$	16,939.1		$	22,335.5
Costs and expenses:
Cost of goods sold	11,326.1			13,569.9			18,775.0
Selling, general and administrative expenses	1,813.3			1,909.0			1,972.0
Interest expense, net	274.9			274.7			393.6
	13,414.3			15,753.6			21,140.6
Equity method investment earnings	43.5			37.1			27.7
Income from continuing operations before income taxes and cumulative effect of changes in accounting	1,151.3			1,222.6			1,222.6
Income tax expense	355.3			415.6			460.2
Income from continuing operations before cumulative effect of changes in accounting	796.0			807.0			762.4
Income (loss) from discontinued operations, net of tax	96.9			(36.1		)	22.6
Cumulative effect of changes in accounting, net of tax	(13.1		)	3.9			(2.0		)
Net income	$	879.8		$	774.8		$	783.0
Earnings per share – basic
Income from continuing operations before cumulative effect of changes in accounting	$	1.51		$	1.53		$	1.45
Income (loss) from discontinued operations	0.18			(0.07		)	0.03
Cumulative effect of changes in accounting	(0.02		)	0.01			—
Net income	$	1.67		$	1.47		$	1.48
Earnings per share – diluted
Income from continuing operations before cumulative effect of changes in accounting	$	1.50		$	1.52		$	1.44
Income (loss) from discontinued operations	0.18			(0.07		)	0.03
Cumulative effect of changes in accounting	(0.02		)	0.01			—
Net income	$	1.66		$	1.46		$	1.47

The accompanying notes are an integral part of the consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

ConAgra Foods, Inc. and Subsidiaries

	FOR THE FISCAL YEARS ENDED MAY
Dollars in millions	2004		2003			2002
Net income	$	879.8	$	774.8		$	783.0
Other comprehensive income (loss), net of tax (except for currency translation adjustment):
Cumulative effect of change in accounting	—		—			(24.6		)
Net derivative adjustment	31.5		(2.1		)	5.1
Unrealized gain on available-for-sale securities	90.5		—			—
Currency translation adjustment	44.6		60.1			3.0
Minimum pension liability	12.7		(64.9		)	(15.3		)
Comprehensive income	$	1,059.1	$	767.9		$	751.2

The accompanying notes are an integral part of the consolidated financial statements.

66 ConAgra Foods 2004 Annual Report

CONSOLIDATED BALANCE SHEETS

ConAgra Foods, Inc. and Subsidiaries

Dollars in millions	MAY 30, 2004			MAY 25, 2003
Assets
Current assets
Cash and cash equivalents	$	588.7		$	628.6
Divestiture proceeds receivable	60.3			—
Receivables, less allowance for doubtful accounts of $26.5 and $33.1	1,324.1			800.9
Inventories	2,625.6			2,455.6
Prepaid expenses and other current assets	410.6			669.3
Current assets of discontinued operations	135.6			1,505.2
Total current assets	5,144.9			6,059.6
Property, plant and equipment
Land and land improvements	161.3			165.0
Buildings, machinery and equipment	4,456.2			4,196.4
Furniture, fixtures, office equipment and other	691.2			582.7
Construction in progress	324.0			167.8
	5,632.7			5,111.9
Less accumulated depreciation	(2,752.7		)	(2,433.6		)
Property, plant and equipment, net	2,880.0			2,678.3
Goodwill	3,798.8			3,807.2
Brands, trademarks and other intangibles, net	826.9			824.3
Other assets	1,569.5			1,144.4
Noncurrent assets of discontinued operations	10.0			557.6
	$	14,230.1		$	15,071.4

Liabilities and Stockholders’ Equity
Current liabilities
Notes payable	$	30.6		$	1.6
Current installments of long-term debt	382.4			508.7
Accounts payable	940.8			788.1
Advances on sales	178.4			112.0
Accrued payroll	272.0			273.2
Other accrued liabilities	1,076.9			1,123.4
Current liabilities of discontinued operations	120.5			996.4
Total current liabilities	3,001.6			3,803.4
Senior long-term debt, excluding current installments	4,878.4			4,632.2
Subordinated debt	402.3			763.0
Preferred securities of subsidiary company	—			175.0
Other noncurrent liabilities	1,108.3			1,058.7
Noncurrent liabilities of discontinued operations	—			17.4
Total liabilities	9,390.6			10,449.7
Commitments and contingencies (notes 15 and 16)
Common stockholders’ equity
Common stock of $5 par value, authorized 1,200,000,000 shares; issued 565,842,299 and 565,617,169	2,829.2			2,828.1
Additional paid-in capital	741.3			725.7
Retained earnings	2,394.4			2,080.5
Accumulated other comprehensive income (loss)	19.9			(159.4		)
Less treasury stock, at cost, common shares 44,647,495 and 28,851,930	(1,123.8		)	(686.4		)
	4,861.0			4,788.5
Less unearned restricted stock and value of 1,062,793 and 7,428,088 common shares held in Employee Equity Fund	(21.5		)	(166.8		)
Total common stockholders’ equity	4,839.5			4,621.7
	$	14,230.1		$	15,071.4

The accompanying notes are an integral part of the consolidated financial statements.

ConAgra Foods 2004 Annual Report 67

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS’ EQUITY

ConAgra Foods, Inc. and Subsidiaries

	FOR THE FISCAL YEARS ENDED MAY
Columnar amounts in millions	COMMON SHARES	COMMON STOCK		ADDITIONAL PAID-IN CAPITAL			RETAINED EARNINGS			ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)			TREASURY STOCK			EEF STOCK AND OTHER			TOTAL
Balance at May 27, 2001	565.3	$	2,826.7	$	682.5		$	1,534.8		$	(120.7	)	$	(672.9	)	$	(267.2	)	$	3,983.2
Stock option and incentive plans	0.2	0.8		26.7			0.3						(3.9		)	46.1			70.0
Fair market valuation of EEF shares				28.0												(28.0		)	—
Currency translation adjustment										3.0									3.0
Cumulative effect of change in accounting										(24.6		)							(24.6		)
Net derivative adjustment										5.1									5.1
Minimum pension liability										(15.3		)							(15.3		)
Retirement of subsidiary preferred securities							(6.7		)										(6.7		)
Dividends declared on common stock; $0.930 per share							(489.5		)										(489.5		)
Net income							783.0												783.0
Balance at May 26, 2002	565.5	2,827.5		737.2			1,821.9			(152.5		)	(676.8		)	(249.1		)	4,308.2
Stock option and incentive plans	0.1	0.6		26.7									(9.6		)	44.1			61.8
Fair market valuation of EEF shares				(38.2		)										38.2			—
Currency translation adjustment										60.1									60.1
Net derivative adjustment										(2.1		)							(2.1		)
Minimum pension liability										(64.9		)							(64.9		)
Dividends declared on common stock; $0.978 per share							(516.2		)										(516.2		)
Net income							774.8												774.8
Balance at May 25, 2003	565.6	2,828.1		725.7			2,080.5			(159.4		)	(686.4		)	(166.8		)	4,621.7
Stock option and incentive plans	0.2	1.1		64.0									(18.8		)	96.9			143.2
Fair market valuation of EEF shares				(48.4		)										48.4			—
Currency translation adjustment										44.6									44.6
Repurchase of common shares													(418.6		)				(418.6		)
Loss recognized directly in retained earnings (see note 2)							(23.8		)										(23.8		)
Unrealized gain on securities										90.5									90.5
Net derivative adjustment										31.5									31.5
Minimum pension liability										12.7									12.7
Dividends declared on common stock; $1.028 per share							(542.1		)										(542.1		)
Net income							879.8												879.8
Balance at May 30, 2004	565.8	$	2,829.2	$	741.3		$	2,394.4		$	19.9		$	(1,123.8	)	$	(21.5	)	$	4,839.5

The accompanying notes are an integral part of the consolidated financial statements.

68 ConAgra Foods 2004 Annual Report

CONSOLIDATED STATEMENTS OF CASH FLOWS

ConAgra Foods, Inc. and Subsidiaries

	FOR THE FISCAL YEARS ENDED MAY
Dollars in millions	2004			2003			2002
Cash flows from operating activities:
Net income	$	879.8		$	774.8		$	783.0
Income (loss) from discontinued operations	96.9			(36.1		)	22.6
Income from continuing operations	782.9			810.9			760.4
Adjustments to reconcile income from continuing operations to net cash flows from operating activities:
Depreciation and amortization	352.3			374.9			536.6
(Gain)/loss on sale of fixed assets and investments	(42.2		)	34.0			1.7
Changes in amounts sold under the accounts receivable securitization, net	(470.0		)	(135.5		)	(53.1		)
Cumulative effect of changes in accounting	13.1			(3.9		)	2.0
Other items (includes pension and other postretirement benefits)	(16.3		)	(73.8		)	(14.3		)
Change in operating assets and liabilities before effects of business acquisitions and dispositions:
Accounts receivable	(83.3		)	44.7			73.6
Inventory	(173.5		)	(176.2		)	499.1
Prepaid expenses and other current assets	212.9			60.6			(111.6		)
Accounts payable	220.6			(162.7		)	84.2
Accrued liabilities	(46.4		)	142.8			59.2
Net cash flows from operating activities	750.1			915.8			1,837.8
Cash flows from investing activities:
Additions to property, plant and equipment	(352.1		)	(375.8		)	(454.0		)
Payment for business acquisitions	—			—			(110.0		)
Sale of businesses and property, plant and equipment	1,025.6			826.0			17.5
Notes receivable and other items	42.9			149.2			31.4
Net cash flows from investing activities	716.4			599.4			(515.1		)
Cash flows from financing activities:
Net short-term borrowings	29.0			(0.7		)	(2,631.0		)
Proceeds from issuance of long-term debt	—			—			1,997.5
Repayment of long-term debt	(515.0		)	(222.0		)	(300.4		)
Repurchase of ConAgra Foods common shares	(418.6		)	—			—
Redemption of preferred securities of subsidiary	—			—			(350.0		)
Cash dividends paid	(536.7		)	(509.2		)	(482.9		)
Proceeds from exercise of employee stock options	118.0			32.0			79.6
Other items	(2.2		)	1.4			(30.7		)
Net cash flows from financing activities	(1,325.5		)	(698.5		)	(1,717.9		)
Net cash from discontinued operations	(180.9		)	(346.0		)	355.0
Net change in cash and cash equivalents	(39.9		)	470.7			(40.2		)
Cash and cash equivalents at beginning of period	628.6			157.9			198.1
Cash and cash equivalents at end of period	$	588.7		$	628.6		$	157.9

The accompanying notes are an integral part of the consolidated financial statements.

ConAgra Foods 2004 Annual Report 69

Notes to Consolidated Financial Statements

Fiscal years ended May 30, 2004, May 25, 2003 and May 26, 2002

Columnar Amounts in Millions Except Per Share Amounts

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year—The fiscal year of ConAgra Foods, Inc. (“ConAgra Foods” or the “company”) ends the last Sunday in May. The fiscal years for the consolidated financial statements presented consist of a 53-week period for fiscal year 2004 and 52-week periods for fiscal years 2003 and 2002.

Basis of Consolidation—The consolidated financial statements include the accounts of ConAgra Foods and all majority-owned subsidiaries. In addition, the accounts of all variable interest entities in which the company is determined to be the primary beneficiary are included in the company’s consolidated financial statements from the date such determination is made. All significant intercompany investments, accounts and transactions have been eliminated.

Investments in Unconsolidated Subsidiaries—The investments in and the operating results of 50%-or-less-owned entities not required to be consolidated are included in the financial statements on the basis of the equity method of accounting or the cost method of accounting, depending on specific facts and circumstances.

Inventories—The company principally uses the lower of cost (determined using the first-in, first-out method) or market for valuing inventories not hedged. Grain, flour and major feed ingredient inventories are hedged to the extent practicable and are principally stated at market, including adjustment to market of open contracts for purchases and sales.

Property, Plant and Equipment—Property, plant and equipment are carried at cost. Depreciation has been calculated using primarily the straight-line method over the estimated useful lives of the respective classes of assets as follows:

Land Improvements		1 – 40 years
Buildings		15 – 40 years
Machinery and equipment		3 – 20 years
Furniture, fixtures, office equipment and other		5 – 15 years

The company reviews property, plant and equipment for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Recoverability of an asset “held-for-use” is determined by comparing the carrying amount of the asset to the undiscounted net cash flows expected to be generated from the use of the asset. If the carrying amount is greater than the undiscounted net cash flows expected to be generated by the asset, the asset’s carrying amount is reduced to its fair value. An asset “held-for-sale” is reported at the lower of the carrying amount or fair value less cost to sell.

Goodwill and Other Identifiable Intangible Assets—Goodwill and other identifiable intangible assets with indefinite lives (e.g., brands or trademarks) are not amortized and are tested annually for impairment of value. Impairment occurs when the fair value of the asset is less than its carrying amount. If impaired, the asset’s carrying amount is reduced to its fair value. The company’s annual impairment testing is performed during the fourth quarter using a discounted cash flow methodology.

Identifiable intangible assets with definite lives (e.g., licensing arrangements with contractual lives or customer lists) are amortized over their estimated useful lives and tested for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may be impaired. Impairment occurs when the fair value of the asset is less than its carrying amount. If impaired, the asset is written down to its fair value.

Derivative Instruments—The company uses derivatives (e.g., futures and options) for the purpose of hedging exposure to changes in commodity prices, interest rates and foreign currency exchange rates. The fair value of each derivative is recognized in the balance sheet within current assets or current liabilities. For derivatives that do not qualify for hedge accounting, changes in the fair value of the derivatives are recognized immediately in the statement of earnings. For derivatives designated as a hedge of an existing asset or liability (e.g., inventory), both the derivative and hedged item are recognized at fair value within the balance sheet with the changes in both of these fair values being recognized immediately in the statement of earnings. For derivatives designated as a hedge of an anticipated transaction (e.g., future purchase of inventory), changes in the fair value of the derivatives are deferred in the balance sheet within accumulated other comprehensive income to the extent the hedge is effective in mitigating the exposure to the related anticipated transaction. Any ineffectiveness associated with the hedge is recognized immediately in the statement of earnings. Amounts deferred within accumulated other comprehensive income are recognized in the statement of earnings in the same period during which the hedged transaction affects earnings (e.g., when hedged inventory is sold).

Fair Values of Financial Instruments—Unless otherwise specified, the company believes the carrying value of financial instruments approximates their fair value.

Asset Retirement Obligations and Environmental Liabilities—The company records liabilities for the costs the company is legally obligated to incur in order to retire a long-lived asset at some point in the future. The fair values of these obligations are recorded as liabilities on a discounted basis, and the cost associated with these liabilities is capitalized as part of the carrying amount of the related assets. Over time, the liability

70 ConAgra Foods 2004 Annual Report

Notes to Consolidated Financial Statements (continued)

will increase, reflecting the accretion of the obligation from its present value to the amount the company will pay to extinguish the liability and the capitalized asset retirement costs will be depreciated over the useful lives of the related assets.

Environmental liabilities are accrued when it is probable that obligations have been incurred and the associated amounts can be reasonably estimated. Such liabilities are adjusted as new information develops or circumstances change. The company does not discount its environmental liabilities as the timing of the anticipated cash payments is not fixed or readily determinable.

Employment-Related Benefits—Employment-related benefits associated with pensions, postretirement health care benefits and workers’ compensation are expensed as such benefits are earned by applicable employees. The recognition of expense is impacted by estimates made by management, such as discount rates used to value certain liabilities, future health costs and employee accidents incurred but not yet reported. The company uses third-party specialists to assist management in appropriately measuring the expense associated with employment-related benefits.

Revenue Recognition—Revenue is recognized when title and risk of loss are transferred to customers upon delivery based on terms of sale. Revenue is recognized as the net amount to be received after deducting estimated amounts for discounts, trade allowances and product returns.

Net Sales — Gross profits earned from commodity trading activities, which are included in net sales, total $166.6 million, $194.9 million and $161.4 million for fiscal 2004, 2003 and 2002, respectively.

Sales and cost of goods sold, if reported on a gross basis for these activities, would be increased by $14.0 billion, $14.3 billion and $10.5 billion for fiscal 2004, 2003 and 2002, respectively.

Marketing Costs—The company incurs various types of marketing costs in order to promote its products, including retailer incentives and consumer incentives. The company expenses each of these types of marketing costs as incurred. In addition, the company incurs advertising costs, which are expensed in the year incurred.

Stock-Based Compensation—The company has stockholder approved stock option plans which provide for granting of options to employees for purchase of common stock at prices equal to the fair value at the time of grant. The company accounts for its employee stock option plans in accordance with Accounting Principles Board Opinion (“APB”) No. 25, Accounting for Stock Issued to Employees. Accordingly, no stock-based compensation expense is reflected in net income for stock options granted, as options granted under these plans have an exercise price equal to the market value of the underlying common stock on the date of grant. The company issues stock under various stock-based compensation arrangements approved by stockholders, including restricted stock, phantom stock and stock issued in lieu of cash bonuses. The value of restricted and phantom stock, equal to fair value at the time of grant, is amortized as compensation expense over the vesting period. Stock issued in lieu of cash bonuses is recognized as compensation expense as earned. In addition, the company grants restricted share equivalents. The restricted share equivalents are credited with appreciation or depreciation in the company’s stock during the restriction period and will be settled in cash when the restriction period ends. The company amortizes the expense associated with the restricted share equivalents over the period of restriction.

The following table illustrates the required pro forma effect on net income and earnings per share assuming the company had followed the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation, for all outstanding and unvested stock options and other stock-based compensation for the years ended May 30, 2004, May 25, 2003 and May 26, 2002.

	2004			2003			2002
Net income, as reported	$	879.8		$	774.8		$	783.0
Add: Stock-based employee compensation included in reported net income, net of related tax effects	13.5			11.3			10.7
Deduct: Total stock-based employee compensation expense determined under fair value based method, net of related tax effects	(31.8		)	(31.5		)	(28.3		)
Pro forma net income	$	861.5		$	754.6		$	765.4

Earnings per share:
Basic earnings per share — as reported	$	1.67		$	1.47		$	1.48
Basic earnings per share — pro forma	$	1.63		$	1.43		$	1.44

Diluted earnings per share — as reported	$	1.66		$	1.46		$	1.47
Diluted earnings per share — pro forma	$	1.63		$	1.43		$	1.44

The fair value of each option was estimated on the date of grant using a Black-Scholes option-pricing model with the
following weighted average assumptions used:

	2004		2003		2002
Dividend yield	4.0	%	3.9	%	3.9	%
Expected volatility	27.9	%	30.0	%	29.0	%
Risk-free interest rate	3.08	%	4.30	%	4.52	%
Expected life of stock option	6 years		6 years		6 years

ConAgra Foods 2004 Annual Report 71

Notes to Consolidated Financial Statements (continued)

The weighted average fair value per option was $4.22, $5.88 and $5.08 for options granted during fiscal 2004, 2003 and 2002, respectively.

Comprehensive Income—Comprehensive income includes net income, currency translation adjustments, certain derivative-related activity, changes in the value of the company’s available-for-sale investments and changes in the minimum pension liability. The company deems its foreign investments to be permanent in nature and does not provide for taxes on currency translation adjustments arising from converting the investment in a foreign currency to U.S. dollars. The company reclassified $7.1 million and $7.2 million of foreign currency translation losses to net income due to the disposal of foreign subsidiaries in fiscal 2004 and 2003, respectively. There were no reclassification adjustments to other comprehensive income in fiscal 2002.

The following is a rollforward of the balances in accumulated other comprehensive income, net of tax (except for currency translation adjustment):

	CURRENCY TRANSLATION ADJUSTMENT			NET DERIVATIVE ADJUSTMENT			UNREALIZED GAINS ON SECURITIES		MINIMUM PENSION LIABILITY			ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
Balance at May 27, 2001	$	(120.7	)	$	—		$	—	$	—		$	(120.7	)
Current-period change	3.0			(21.4		)	—		(13.4		)	(31.8		)
Balance at May 26, 2002	(117.7		)	(21.4		)	—		(13.4		)	(152.5		)
Current-period change	60.1			(2.1		)	—		(64.9		)	(6.9		)
Balance at May 25, 2003	(57.6		)	(23.5		)	—		(78.3		)	(159.4		)
Current-period change	44.6			31.5			90.5		12.7			179.3
Balance at May 30, 2004	$	(13.0	)	$	8.0		$	90.5	$	(65.6	)	$	19.9

The following details the income tax expense (benefit) on components of other comprehensive income (loss):

	2004		2003			2002
Cumulative effect of change in accounting	$	—	$	—		$	(15.1	)
Net derivative adjustment	19.3		(1.3		)	3.1
Unrealized gains on available-for-sale securities	55.4		—			—
Minimum pension liability	7.8		(39.8		)	(9.4		)

Use of Estimates—Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect reported amounts of assets, liabilities, revenues and expenses as reflected in the financial statements. Actual results could differ from these estimates.

Reclassifications—On May 26, 2004, the company completed the sale of its animal feed business located in Spain and Portugal (“Spanish feed business”). The company completed the sale of a related poultry business in Portugal (“Portuguese poultry business”) in June 2004. Accordingly, the company removed the results of these businesses from the Food Ingredients reporting segment and now reflects the results of these businesses as discontinued operations for all periods presented.

On November 23, 2003, the company completed the sales of its chicken business and U.S. and Canadian crop inputs business (“UAP North America”). The company is in the process of disposing of the remaining businesses of its

72 ConAgra Foods 2004 Annual Report

Notes to Consolidated Financial Statements (continued)

Agricultural Products segment (“UAP International”). The company removed the chicken business results from the Meat Processing reporting segment and now reflects the chicken business results and the results of the entire Agricultural Products segment as discontinued operations for all periods presented.

On September 19, 2002 (during the company’s fiscal 2003 second quarter), the company sold a controlling interest in its fresh beef and pork operations to a joint venture led by outside investors. As a result of this transaction, the company reports its share of the earnings associated with its minority ownership of the joint venture as equity method investment earnings. The results of the fresh beef and pork operations prior to the transaction continue to be reported in the Meat Processing reporting segment.

Certain other reclassifications have been made to prior year amounts to conform to current year classifications.

Accounting Changes—Effective in the fourth quarter of fiscal 2004, the company adopted SFAS No. 132 (revised 2003), Employers’ Disclosures about Pensions and Other Postretirement Benefits. The revisions to SFAS No. 132 are intended to improve financial statement disclosures for defined benefit plans. In particular, the standard requires that companies provide more details about their plan assets, benefit obligations, cash flows, benefit costs and other relevant quantitative and qualitative information. Refer to note 18 for further discussion of the company’s pension and other postretirement benefits obligations.

Effective in the fourth quarter of fiscal 2004, the company adopted FASB Staff Position (FSP) No. 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act). The Act, which was signed into law in December 2003, introduces a prescription drug benefit under Medicare (Medicare Part D), as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a prescription drug benefit that is at least actuarially equivalent to Medicare Part D. FSP No. 106-2 requires an employer to initially account for any subsidy received under the Act as an actuarial experience gain to the accumulated postretirement benefit obligation (APBO), which will be amortized over future service periods. Future subsidies will reduce service cost each year. Application of FSP No. 106-2 resulted in a reduction of the company’s selling, general and administrative expenses of $2.1 million in the fourth quarter of fiscal 2004 (see note 18).

Effective February 22, 2004, the company adopted FASB Interpretation (“FIN”) No. 46, Consolidation of Variable Interest Entities, as revised December 2003 (“FIN No. 46R”). A variable interest entity (“VIE”) is an entity whose equity investors do not have a controlling financial interest or do not have sufficient equity at risk to permit the entity to finance its own activities without additional subordinated financial support from other parties. FIN No. 46R provides that VIEs shall be consolidated by the entity deemed to be the primary beneficiary of the VIE. The primary beneficiary is the entity which has a variable interest that will absorb a majority of the VIE’s expected losses, expected residual returns, or both.

As a result of adopting FIN No. 46R, the company has consolidated several entities from which it leases property, plant and equipment. Certain of these entities are trusts formed to hold transportation equipment which the company leases. These leases were previously accounted for as operating leases. Consolidation of these entities resulted in a cumulative effect of change in accounting that reduced net income by $1.4 million (net of taxes of $0.9 million). The company also recorded $106.3 million in senior long-term debt and $104.1 million in property, plant and equipment, net.

The company has also consolidated entities from which it leases various office buildings. The lessors of these buildings are various partnerships (the “partnerships”), the beneficial owners of which are Opus Corporation or its affiliates (“Opus”). A member of the company’s board of directors is a beneficial owner, officer and director of Opus. The company has determined that it is the primary beneficiary of the partnerships. As a result of consolidating these entities, the company recorded $91.4 million in senior long-term debt, $116.6 million in property, plant and equipment, net and $25.2 million of minority interest in consolidated entities included in other noncurrent liabilities. Financing costs related to these office buildings were previously included in selling, general and administrative expenses. Effective with the adoption of FIN No. 46R, these financing costs are included in interest expense, net.

ConAgra Foods 2004 Annual Report 73

Notes to Consolidated Financial Statements (continued)

The company was also required to deconsolidate ConAgra Capital, L.C. (“ConAgra Capital”), an indirectly controlled subsidiary of the company. This entity had previously issued mandatorily redeemable preferred securities and entered into loan agreements with the company having similar terms as the preferred securities. Under the requirements of FIN No. 46R, the holders of the preferred securities are considered the primary beneficiaries of the entity. Accordingly, the company is no longer permitted to consolidate the entity. The effect of deconsolidating ConAgra Capital, is to reflect the amount of the loan between the company and ConAgra Capital, $221 million, as a component of senior long-term debt and the amount of the company’s investment in ConAgra Capital, $46 million, as a component of other assets. The net expense associated with these securities is included in interest expense, net. Prior to deconsolidation, the company reflected the securities held by third parties, in the amount of $175 million, within preferred securities of subsidiary company.

The company did not restate any previously issued financial statements. If FIN No. 46R would have been in effect during the first three quarters of fiscal 2004 and fiscal years 2003 and 2002, net income for those periods would not have been materially different from that which was previously reported.

The company adopted SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, effective August 25, 2003. SFAS No. 150 establishes standards for classification and measurement in the balance sheets for certain financial instruments which possess characteristics of both a liability and equity. The adoption of SFAS No. 150 resulted in the classification of distributions on the securities of ConAgra Capital of approximately $2.2 million as interest expense for each of the second and third quarters of fiscal 2004. These distributions are included in selling, general and administrative expenses in the company’s condensed consolidated statements of earnings in all prior periods presented.

Effective May 26, 2003, the company adopted SFAS No. 143, Accounting for Asset Retirement Obligations, which requires the company to recognize the fair value of a liability associated with the cost the company is legally obligated to incur in order to retire an asset at some point in the future. The associated asset retirement costs are capitalized as part of the carrying amount of the associated long-lived asset. Over time, the liability will increase, reflecting the accretion of the obligation from its present value to the amount the company will pay to extinguish the liability, and the capitalized asset retirement costs will be depreciated over the useful life of the related asset. Application of this new accounting standard resulted in a cumulative effect of a change in accounting that decreased net income by $11.7 million (net of taxes of $7.2 million), or $0.02 per diluted share in fiscal 2004. This also resulted in the company recognizing an asset retirement obligation of $22.4 million in other noncurrent liabilities and increasing property, plant and equipment, net by $3.5 million. The majority of the company’s asset retirement obligations relate to various contractual obligations for restoration of leased assets at the end of lease terms. There have been no significant changes in the company’s asset retirement obligations during fiscal 2004.

If SFAS No. 143 would have been in effect in fiscal years 2003 and 2002, net income for those periods would not have been materially different from that which was previously reported.

The company adopted SFAS No. 142, Goodwill and Other Intangible Assets, at the beginning of fiscal 2003. The company’s adoption of SFAS No. 142 resulted in a cumulative effect of an accounting change that increased net income by $3.9 million, or $0.01 per diluted share for the fiscal year ended May 25, 2003. Amortization of goodwill and other identifiable intangible assets with indefinite lives was discontinued as of the adoption date.

74 ConAgra Foods 2004 Annual Report

Notes to Consolidated Financial Statements (continued)

The company’s fiscal 2002 results of operations do not reflect the provisions of SFAS No. 142. Had the company adopted SFAS No. 142 as of the beginning of fiscal 2002, the net income and basic and diluted earnings per share would have been the adjusted amounts indicated below:

YEAR ENDED MAY 26, 2002
Reported net income	$	783.0
Add goodwill amortization, net of tax	97.7
Add brand/trademark amortization, net of tax	21.3
Adjusted net income	$	902.0

Earnings per share — basic:
Reported net income	$	1.48
Add goodwill amortization, net of tax	0.18
Add brand/trademark amortization, net of tax	0.04
Adjusted net income	$	1.70

Earnings per share — diluted:
Reported net income	$	1.47
Add goodwill amortization, net of tax	0.18
Add brand/trademark amortization, net of tax	0.04
Adjusted net income	$	1.69

In fiscal 2002, the company adopted SFAS No. 133, Accounting for Derivative Financial Instruments and Hedging Activities, and its related amendment, SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities (collectively “SFAS No. 133”). The adoption of SFAS No. 133 resulted in a cumulative effect of an accounting change that reduced net income by $2.0 million, and decreased accumulated other comprehensive income by $24.6 million, net of tax, in fiscal 2002. Other than such cumulative effect, the effect of the change on income before cumulative effect of changes in accounting for fiscal 2002 was not material.

2. DISCONTINUED OPERATIONS AND DIVESTITURES

Chicken Business Divestiture

On November 23, 2003, the company completed the sale of its chicken business to Pilgrim’s Pride Corporation (the “chicken business divestiture”). The company has removed the results of operations, cash flows, assets and liabilities of the chicken business from the Meat Processing reporting segment and reflected the financial information as discontinued operations for all periods presented.

The company received $301 million of cash and 25.4 million shares of Pilgrim’s Pride Class A common stock valued at $246.1 million at the date of the transaction for the chicken business. The common stock received is contractually restricted, such that the company cannot sell any portion of the shares for a period of one year from the date of the chicken business divestiture. After one year, up to 8.47 million shares may be sold. The remaining shares can be sold in future periods, but no more than 8.47 million shares may be sold in any twelve-month period. With the consent of Pilgrim’s Pride Corporation, these trading restrictions may be waived. The fair value of the Pilgrim’s Pride Class A common stock was based on an independent valuation as of the date of the transaction and was reflective of the common stock’s trading restrictions. The common stock investment is included in the company’s balance sheet within other assets. As of May 30, 2004, 8.47 million shares are classified as available-for-sale, as these shares may be sold by the company within twelve months. The available-for-sale shares are stated at fair value based on quoted market prices with unrealized gains of $145.9 million included in accumulated other comprehensive income, net of applicable taxes. The remaining 16.93 million shares are accounted for at cost (based on the valuation performed on the transaction date).

During the fourth quarter of fiscal 2003, the company recognized an impairment charge of $69.4 million (net of an income tax benefit of $42.6 million) to reduce the carrying amount of the chicken business’ goodwill to zero and to reflect a reduction in the carrying values of long-lived assets of the chicken business to their fair value, less cost to sell. The final sales price of the chicken business was subject to a purchase price adjustment based on determination of the final net assets sold, which occurred in the first quarter of fiscal 2005. As part of settling the final purchase price adjustment, the company paid $34 million to Pilgrim’s Pride. The company has recognized a loss of $11.7 million for this final settlement in fiscal 2004.

ConAgra Foods 2004 Annual Report 75

Notes to Consolidated Financial Statements (continued)

UAP North America Divestiture

On November 23, 2003, the company completed the sale of UAP North America to Apollo Management, L.P. (“Apollo”). The company is actively marketing the remaining businesses of its Agricultural Products segment (“UAP International”) and believes such businesses will be disposed of during fiscal 2005. Accordingly, the company now reflects the results of the entire Agricultural Products segment as discontinued operations for all periods presented.

The company initially received $503 million of cash, $60 million of Series A redeemable preferred stock of UAP Holdings (the “UAP Preferred Securities”) and $61 million in the form of a receivable from Apollo. As of the end of fiscal 2004, the company’s consolidated balance sheet included a $60.3 million receivable. The company collected this balance subsequent to year end.

The UAP Preferred Securities contain a payment-in-kind dividend of 8% for the first five years, 9% for year six and 10% for years seven through nine. In January 2004, Apollo repurchased $26.1 million of the preferred securities for cash. The remaining UAP Preferred Securities must be redeemed by December 2012. The preferred securities may be redeemed earlier at UAP Holding’s option, at the company’s option in the event of a change of control, and are required to be redeemed upon Apollo’s sale of its UAP Holdings’ common stock. Any redemption would be subject to the terms of UAP Holdings’ current material financing agreements. Based on an independent valuation, the fair value of the UAP Preferred Securities was estimated to approximate their face value. The UAP Preferred Securities investment is included in the company’s balance sheet within other assets.

As a result of the UAP North America divestiture, the company recognized during fiscal 2004 a loss on disposition of businesses of $14.6 million and $43.8 million of income resulting from rebates UAP North America received from its suppliers subsequent to the divestiture date that relate to pre-divestiture operations. These amounts are included in the company’s results from discontinued operations.

During the second quarter of fiscal 2004, the company wrote-down certain long-lived assets of UAP International by $9.7 million in order to reflect the value of these assets at their fair value, in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

Spanish Feed and Portuguese Divestiture

On May 26, 2004, the company completed the sale of its Spanish feed business to the Carlyle Group for cash proceeds of $82.6 million, resulting in a gain from disposal of businesses of $33.6 million. The company completed the sale of the Portuguese poultry business in the first quarter of fiscal 2005. Accordingly, the company removed the results of these businesses from the Food Ingredients reporting segment and now reflects the results of these businesses as discontinued operations for all periods presented. During the fourth quarter of fiscal 2004, the company wrote-down certain assets of the Portuguese poultry business by $17.2 million in order to reflect these assets at their fair value.

76 ConAgra Foods 2004 Annual Report

Notes to Consolidated Financial Statements (continued)

Summary results of operations of the Agricultural Products segment, the chicken business and the Spanish feed and Portuguese poultry businesses included within discontinued operations are as follows:

	2004			2003			2002
Net sales	$	3,656.6		$	5,260.6		$	5,605.8
Long-lived asset impairment charge	(26.9		)	(112.0		)	—
Income from operations of discontinued operations before income taxes	140.7			53.8			39.1
Net gain from disposal of businesses	51.1			—			—
Income (loss) before income taxes	164.9			(58.2		)	39.1
Income tax (expense) benefit	(68.0		)	22.1			(16.5		)
Income (loss) from discontinued operations, net of tax	$	96.9		$	(36.1	)	$	22.6

The assets and liabilities of the Agricultural Products segment, the chicken business, the Spanish feed and Portuguese poultry businesses as of May 30, 2004 and May 25, 2003 are as follows:

	2004		2003
Receivables, less allowances for doubtful accounts	$	81.6	$	280.8
Inventories	48.4		1,028.7
Prepaid expenses and other current assets	5.6		195.7
Current assets of discontinued operations	$	135.6	$	1,505.2
Property, plant and equipment, net	$	8.7	$	504.6
Goodwill and other intangibles	—		38.4
Other assets	1.3		14.6
Noncurrent assets of discontinued operations	$	10.0	$	557.6
Notes payable	$	23.2	$	25.3
Accounts payable	82.2		551.0
Other accrued liabilities and advances on sales	15.1		420.1
Current liabilities of discontinued operations	$	120.5	$	996.4
Long-term debt	$	—	$	17.0
Other noncurrent liabilities	—		0.4
Noncurrent liabilities of discontinued operations	$	—	$	17.4

Fresh Beef & Pork Divestiture

On September 19, 2002, the company completed a transaction in which it sold a controlling interest in its fresh beef and pork operations to a joint venture led by Hicks, Muse, Tate & Furst Incorporated (the “fresh beef and pork divestiture”). Outside investors own 55% of the joint venture and the company owns the remaining 45%.

The fresh beef operations sold to the joint venture include a beef processing business as well as a cattle feeding business. The purchase price associated with the cattle feeding business was financed entirely by the company with cattle feeding-related notes receivable. Total cattle feeding-related notes receivable were approximately $315 million as of May 30, 2004, comprised of the joint venture’s borrowings under a $350 million secured line of credit and a $30 million 8% secured promissory note issued by the joint venture. The cattle feeding-related notes receivable, which are collateralized by the cattle, feedlots and other assets of the cattle feeding business, mature in September 2004.

As part of the fresh beef and pork divestiture, the company purchased $150 million of 12.5% senior subordinated notes issued by a subsidiary of the joint venture, which effectively reduced the amount of cash received. The company sold $120 million of these notes in March 2003 and sold the remaining $30 million of notes during the second quarter of fiscal 2004. The company’s statement of earnings was not materially impacted by the sale of the notes.

Due to the purchase price of the cattle feeding business being entirely financed by the company, the legal divestiture of the cattle feeding operation has not been recognized as a divestiture for accounting purposes. In accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) Topic 5E, Accounting for Divestiture of a Subsidiary or Other Business Operation, the company has aggregated the assets and liabilities associated with the cattle feeding operation on its balance sheet (after elimination of the joint venture’s cattle feeding notes payable against the company’s cattle feeding notes receivable). The cattle feeding operation aggregate assets of $349.1 million and $390.4 million at May 30, 2004 and May 25, 2003, respectively, are presented in the company’s balance sheet within other assets, while its aggregate liabilities have been aggregated and are presented within other noncurrent liabilities. This accounting treatment will be continued by the company until circumstances have changed sufficiently that it becomes appropriate to recognize the transaction as a divestiture for accounting purposes.

In the fourth quarter of fiscal 2003, the company sold its canned seafood operations for approximately $180 million. These operations had annual sales of approximately $500 million.

ConAgra Foods 2004 Annual Report 77

Notes to Consolidated Financial Statements (continued)

3. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

Goodwill by reporting segment is as follows:

	2004		2003
Retail Products	$	3,479.1	$	3,477.9
Foodservice Products	285.1		288.7
Food Ingredients	34.6		40.6
Total	$	3,798.8	$	3,807.2

As a result of the fresh beef and pork divestiture (see note 2), goodwill associated with the fresh beef and pork operations (and included in the Meat Processing reporting segment) was reduced by $66.1 million in fiscal 2003.

Other identifiable intangible assets are as follows:

	2004				2003
	GROSS CARRYING AMOUNT		ACCUMULATED AMORTIZATION		GROSS CARRYING AMOUNT		ACCUMULATED AMORTIZATION
Non-amortizing intangible assets	$	798.1	$	—	$	791.6	$	—
Amortizing intangible assets	38.7		9.9		38.8		6.1
Total	$	836.8	$	9.9	$	830.4	$	6.1

Non-amortizing intangible assets are primarily composed of the company’s brands/trademarks. Amortizing intangible assets, carrying a weighted average life of approximately 14 years, are principally composed of licensing arrangements and customer lists. For fiscal years 2004, 2003 and 2002, the company recognized $3.8 million, $4.1 million and $37.0 million, respectively, of amortization expense. Based on amortizing assets recognized in the company’s balance sheet as of May 30, 2004, amortization expense is estimated to be approximately $2 million for each of the next five years.

As a result of the fresh beef and pork divestiture and the canned seafood divestiture (see note 2), non-amortizing intangible assets were reduced by $51.9 million and amortizing intangible assets were reduced by $5.1 million in fiscal 2003.

4. EARNINGS PER SHARE

Basic earnings per share is calculated on the basis of weighted average outstanding common shares. Diluted earnings per share is computed on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, restricted stock awards and other dilutive securities.

The following table reconciles the income and average share amounts used to compute both basic and diluted earnings per share:

	2004			2003			2002
Net Income:
Income from continuing operations before cumulative effect of changes in accounting	$	796.0		$	807.0		$	762.4
Income (loss) from discontinued operations	96.9			(36.1		)	22.6
Cumulative effect of changes in accounting	(13.1		)	3.9			(2.0		)
Net income	879.8			774.8			783.0
Redemption of subsidiary preferred securities, net of tax	—			—			(6.7		)
Income available to common shareholders	$	879.8		$	774.8		$	776.3
Weighted Average Shares Outstanding:
Basic weighted average shares outstanding	527.2			528.6			525.8
Add: Dilutive effect of stock options, restricted stock awards and other dilutive securities	3.5			2.1			2.2
Diluted weighted average shares outstanding	530.7			530.7			528.0

At the end of fiscal years 2004, 2003 and 2002, there were 12.2 million, 15.4 million and 7.4 million stock options outstanding, respectively, that were excluded from the computation of shares contingently issuable upon exercise of the stock options because exercise prices exceeded the annual average market value of common stock.

78 ConAgra Foods 2004 Annual Report

Notes to Consolidated Financial Statements (continued)

5. RECEIVABLES SECURITIZATION

At fiscal year end 2004, the company had agreements to sell interests in pools of receivables, in an amount not to exceed $400 million at any one time. Participation interests in new receivables may be sold as collections reduce previously sold participation interests. The participation interests are sold at a discount that is included in selling, general and administrative expenses in the consolidated statements of earnings. During fiscal 2004, the company sold interests in net new receivables approximating $620 million and used $1.09 billion of net additional collections to reduce the facilities from $470 million at fiscal year end 2003 to $0 at fiscal year end 2004.

6. OPERATIONAL EFFICIENCY INITIATIVES

As part of efforts to improve the company’s cost structure, margins and competitive position, the company implemented a series of initiatives to better align and utilize the company’s collective resources during fiscal 2004. The specific initiatives include:

• elimination of duplicative costs and overhead,

• consolidation of selected manufacturing plants and support functions,

• efforts to streamline and improve the company’s ability to do business with company customers, distributors and brokers, and

• realignment of business organizations.

As a result of the above initiatives, the company is recognizing expenses associated with employee termination, accelerated depreciation on fixed assets, equipment/employee relocation, asset impairment and other related activities.

Detail of the company’s fiscal 2004 expenses is as follows:

	RETAIL PRODUCTS				FOODSERVICE PRODUCTS				FOOD INGREDIENTS				CONSOLIDATED
	COGS		SG&A		COGS		SG&A		COGS		SG&A		COGS		SG&A
Employee Termination	$	4.4	$	5.6	$	0.5	$	9.5	$	0.9	$	2.5	$	5.8	$	17.6
Accelerated Depreciation	15.0		—		3.8		—		—		—		18.8		—
Equipment/Employee Relocation	0.4		—		1.0		3.0		—		—		1.4		3.0
Asset Impairment	—		—		—		—		—		3.0		—		3.0
Other	—		0.1		7.3		3.7		1.1		—		8.4		3.8
Total	$	19.8	$	5.7	$	12.6	$	16.2	$	2.0	$	5.5	$	34.4	$	27.4

The total fiscal 2004 employee termination expense of $23.4 million includes $16.0 million paid during fiscal 2004 and accrued expenses of $7.4 million.

During fiscal 2005, the company anticipates it will incur additional expenses associated with its cost saving initiatives of approximately $28 million.

7. INVENTORIES

The major classes of inventories are as follows:

	2004		2003
Raw materials and packaging	$	1,157.0	$	884.4
Work in progress	75.0		91.6
Finished goods	1,201.5		1,220.7
Supplies and other	192.1		258.9
	$	2,625.6	$	2,455.6

8. CREDIT FACILITIES AND BORROWINGS

At May 30, 2004, the company had credit lines from banks that totaled approximately $1.36 billion, including $1.05 billion of long-term revolving credit facilities maturing in May 2007 and short-term loan facilities approximating $314 million. Borrowings under the revolver agreements bear interest at or below prime rate and may be prepaid without penalty.

The company finances its short-term liquidity needs with bank borrowings, commercial paper borrowings and bankers’ acceptances. The average consolidated short-term borrowings outstanding under these facilities were $121.1 million and $572.0 million for fiscal years 2004 and 2003, respectively. The highest period-end, short-term indebtedness during fiscal 2004 and 2003 was $295.0 million and $899.5 million, respectively, for short-term borrowings. The weighted average interest rate was 2.33% and 1.75% for fiscal 2004 and 2003, respectively.

ConAgra Foods 2004 Annual Report 79

Notes to Consolidated Financial Statements (continued)

9. SENIOR LONG-TERM DEBT, SUBORDINATED DEBT AND LOAN AGREEMENTS

	2004			2003
Senior Debt
8.25% senior debt due September 2030	$	300.0		$	300.0
7.0% senior debt due October 2028	400.0			400.0
6.7% senior debt due August 2027 (redeemable at option of holders in 2009)	300.0			300.0
7.125% senior debt due October 2026 (redeemable at option of holders in 2006)	400.0			400.0
7.875% senior debt due September 2010	750.0			750.0
9.875% senior debt due November 2005	100.0			100.0
7.5% senior debt due September 2005	600.0			600.0
9.87% to 9.95% senior notes due in various amounts through 2009	25.2			28.0
8.1% to 9.0% publicly issued medium-term notes due in various amounts through 2004	12.0			12.0
Floating rate senior debt	—			500.0
6.0% senior debt due September 2006	500.0			500.0
6.75% senior debt due September 2011	1,000.0			1,000.0
1.65% to 9.28% Industrial Development Revenue Bonds (collateralized by plant and equipment) due on various dates through 2019	13.5			13.0
5.55% to 10.07% lease financing obligations due on various dates through 2024	194.7			—
Notes securing preferred securities of a subsidiary company due June 2043	221.5			—
Miscellaneous unsecured	50.7			57.4
Total face value senior debt	4,867.6			4,960.4
Subordinated Debt
9.75% subordinated debt due March 2021	400.0			400.0
7.4% subordinated debt due September 2004	300.0			300.0
7.375% subordinated debt due February 2005	50.0			50.0
Total face value subordinated debt	750.0			750.0
Total debt face value	5,617.6			5,710.4
Unamortized discounts/premiums	(10.3		)	(11.7		)
Hedged debt adjustment to fair value	55.8			205.2
Less current portion	(382.4		)	(508.7		)
Total long-term debt	$	5,280.7		$	5,395.2

Included in the above amount are notes securing preferred securities of a subsidiary company. Prior to fiscal 2004, the company did not classify these securities as long-term debt; however, in conjunction with the company’s adoption of FIN No. 46R, the company now classifies these securities as long-term debt.

The securities were issued at a price of $25 per share and are non-voting (except in certain limited circumstances). These securities are fully and unconditionally guaranteed (as provided in the guarantee documents) by ConAgra Foods and, in certain limited circumstances, are exchangeable for debt securities of ConAgra Foods. ConAgra Capital (with ConAgra Foods’ consent) may redeem these securitites, in whole or in part, at $25 per security plus accumulated and unpaid distributions to the date fixed for redemption.

The aggregate minimum principal maturities of the long-term debt for each of the five fiscal years following May 30, 2004, are as follows:

2005	$	382.4
2006	717.3
2007	518.2
2008	17.3
2009	19.2

The most restrictive note agreements (the revolving credit facilities and certain privately placed long-term debt) require the company to repay the debt if consolidated funded debt exceeds 65% of consolidated capital base or if fixed charges coverage is less than 1.75 to 1.0, as such terms are defined in applicable agreements. As of the end of fiscal 2004, the company’s consolidated funded debt was approximately 53% of its consolidated capital base and the fixed charges ratio was approximately 3.8 to 1.0.

Net interest expense consists of:

	2004			2003			2002
Long-term debt	$	335.1		$	328.4		$	356.4
Short-term debt	7.2			19.2			87.5
Interest income	(49.6		)	(53.7		)	(23.5		)
Interest included in cost of goods sold	(13.4		)	(15.3		)	(20.8		)
Interest capitalized	(4.4		)	(3.9		)	(6.0		)
	$	274.9		$	274.7		$	393.6

As noted in the above table, interest expense incurred to finance hedged inventories has been charged to cost of goods sold.

Net interest paid was $281.1 million, $289.6 million and $379.1 million in fiscal 2004, 2003 and 2002, respectively.

The carrying amount of long-term debt (including current installments) was $5.7 billion and $5.9 billion as of May 30, 2004 and May 25, 2003, respectively. Based on current market rates provided primarily by outside investment bankers, the fair value of this debt at May 30, 2004 and May 25 2003, was estimated at $6.2 billion and $6.8 billion, respectively.

80 ConAgra Foods 2004 Annual Report

Notes to Consolidated Financial Statements (continued)

10. OTHER NONCURRENT LIABILITIES

Other noncurrent liabilities consist of:

	2004			2003
Legal and environmental liabilities primarily associated with the company’s acquisition of Beatrice Company (see note 16)	$	132.2		$	130.0
Postretirement health care and pensions	578.9			600.8
Deferred taxes	342.7			284.3
Liabilities of divested cattle feeding operations (see note 2)	34.8			59.7
Other	97.1			53.1
	1,185.7			1,127.9
Less current portion	(77.4		)	(69.2		)
	$	1,108.3		$	1,058.7

11. CAPITAL STOCK

The company has authorized shares of preferred stock as follows:

Class B—$50 par value; 150,000 shares

Class C—$100 par value; 250,000 shares

Class D—without par value; 1,100,000 shares

Class E—without par value; 16,550,000 shares

There were no preferred shares issued or outstanding as of May 30, 2004.

On December 4, 2003, the company announced a share repurchase program of up to $1 billion. During fiscal 2004, the company repurchased approximately 15.3 million shares at a total cost of $418.6 million.

12. EMPLOYEE EQUITY FUND

In fiscal 1993, the company established a $700 million Employee Equity Fund (“EEF”), a grantor trust, to pre-fund future stock-related obligations of the company’s compensation and benefit plans. The EEF supports employee plans that use ConAgra Foods common stock.

For financial reporting purposes the EEF is consolidated with ConAgra Foods. The fair value of the shares held by the EEF is shown as a reduction to common stockholders’ equity in the company’s consolidated balance sheets. All dividends and interest transactions between the EEF and ConAgra Foods are eliminated. Differences between cost and fair value of shares held and/or released are included in consolidated additional paid-in capital.

Following is a summary of shares held by the EEF:

	2004		2003
Shares held (in millions)	1.1		7.4

Cost—per share	$	14.55	$	14.55
Cost—total (in millions)	$	15.5	$	108.0

Fair value—per share	$	28.12	$	23.01
Fair value—total (in millions)	$	29.9	$	170.7

13. STOCK PLANS

Stock option plans approved by the stockholders provide for granting of options to employees for purchase of common stock at prices equal to fair value at the time of grant. Options become exercisable under various vesting schedules (typically three to five years) and generally expire 10 years after the date of grant.

A summary of the outstanding and exercisable stock options during the three years ended May 30, 2004 is presented below:

	2004				2003				2002
(Shares in millions)	SHARES		WEIGHTED AVERAGE EXERCISE PRICE		SHARES		WEIGHTED AVERAGE EXERCISE PRICE		SHARES		WEIGHTED AVERAGE EXERCISE PRICE
Outstanding at beginning of year	35.2		$	23.76	31.9		$	22.97	28.8		$	22.80
Granted	3.7		$	21.90	7.5		$	25.58	7.3		$	22.04
Exercised	(5.8	)	$	20.47	(2.3	)	$	17.71	(2.3	)	$	16.23
Forfeited/Expired	(4.3	)	$	25.19	(1.9	)	$	24.82	(1.9	)	$	24.63
Outstanding at end of year	28.8		$	23.98	35.2		$	23.76	31.9		$	22.97
Options exercisable at end of year	18.9		$	24.46	21.1		$	23.83	20.3		$	23.49

The following table summarizes information about stock options outstanding as of May 30, 2004:

					OPTIONS OUTSTANDING				OPTIONS EXERCISABLE
(Shares in millions) RANGE OF EXERCISE PRICES					NUMBER OUTSTANDING	WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE	WEIGHTED AVERAGE EXERCISE PRICE		NUMBER EXERCISABLE	WEIGHTED AVERAGE EXERCISE PRICE
$	4.87	–	$	20.75	3.9	4.5	$	19.21	3.5	$	19.12
$	20.76	–	$	22.00	9.8	7.7	$	21.63	4.3	$	21.70
$	22.01	–	$	25.36	6.4	5.7	$	24.33	4.6	$	24.02
$	25.37	–	$	28.31	6.2	6.6	$	26.69	4.1	$	27.08
$	28.32	–	$	36.81	2.5	3.7	$	33.35	2.4	$	33.48
$	4.87	–	$	36.81	28.8	6.2	$	23.98	18.9	$	24.46

ConAgra Foods 2004 Annual Report 81

In accordance with stockholder-approved plans, the company grants stock under various stock-based compensation arrangements including restricted stock, phantom stock and stock issued in lieu of cash bonuses. Under each arrangement, stock is issued without direct cost to the employee. In addition, the company grants restricted share equivalents. The restricted share equivalents are credited with appreciation or depreciation in the company’s stock during the restriction period and will be settled in cash when the restriction period ends. During fiscal 2004, 2003 and 2002, the company granted shares and share equivalents totaling 2.1 million, 1.1 million and 0.6 million, respectively, with a weighted average grant date value of $23.95, $25.15 and $20.94, respectively, under these arrangements. The compensation expense for the company’s stock-based awards totaled $21.8 million, $18.2 million and $17.2 million for fiscal 2004, 2003 and 2002, respectively. At May 30, 2004, the amount of deferred stock-based compensation granted, but to be recognized over future periods, was estimated to be $52.9 million.

At May 30, 2004, approximately 15.3 million shares were reserved for granting additional options and restricted, phantom or bonus stock awards.

14. PRE-TAX INCOME AND INCOME TAXES

Income from continuing operations before income taxes and cumulative effect of changes in accounting consisted of the following:

	2004		2003		2002
United States	$	1,089.8	$	1,121.1	$	1,109.3
Foreign	61.5		101.5		113.3
	$	1,151.3	$	1,222.6	$	1,222.6

The provision for income taxes includes the following:

	2004		2003		2002
Current
Federal	$	121.4	$	149.8	$	242.3
State	45.2		29.8		29.3
Foreign	32.5		49.2		43.6
	199.1		228.8		315.2
Deferred
Federal	143.9		169.0		131.9
State	12.3		17.8		13.1
	156.2		186.8		145.0
	$	355.3	$	415.6	$	460.2

Income taxes computed by applying statutory rates to income from continuing operations before income taxes are reconciled to the provision for income taxes set forth in the consolidated statements of earnings as follows:

	2004			2003			2002
Computed U.S. federal income taxes	$	403.0		$	413.0		$	418.5
State income taxes, net of U.S. federal tax benefit	37.4			34.9			27.6
Nondeductible amortization of goodwill and other intangibles	—			—			27.8
Export and jobs tax credits	(14.4		)	(16.2		)	(16.0		)
Divestitures of businesses	20.7			(162.4		)	—
Change in valuation allowance	(100.1		)	144.9			—
Other	8.7			1.4			2.3
	$	355.3		$	415.6		$	460.2

Income taxes paid were $315.8 million, $249.0 million and $310.4 million in fiscal 2004, 2003 and 2002, respectively.

The tax effect of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consists of the following:

	2004					2003
	ASSETS			LIABILITIES		ASSETS			LIABILITIES
Depreciation and amortization	$	—		$	551.4	$	—		$	632.7
Pension and other postretirement benefits	183.5			—		209.0			—
Other noncurrent liabilities that will give rise to future tax deductions	151.8			—		190.1			—
Accrued expenses	83.2			—		89.6			—
Restructuring/impairment charges	6.7			—		60.2			—
Impairment charge on chicken business	—			—		42.6			—
Unrealized appreciation on investments	—			55.5		—			—
Capital loss carryforwards	71.4			—		84.6			—
Foreign tax credit carryforwards	60.3			—		60.3			—
Other	33.3			45.9		104.7			62.3
	590.2			652.8		841.1			695.0
Less: Valuation allowance	(44.8		)	—		(144.9		)	—
Net deferred taxes	$	545.4		$	652.8	$	696.2		$	695.0

82 ConAgra Foods 2004 Annual Report

Notes to Consolidated Financial Statements (continued)

A valuation allowance is provided when it is more likely than not that some or all of a deferred tax asset will not be realized. During fiscal 2003, the company generated capital loss carryforwards as a result of the fresh beef and pork divestiture. As of May 25, 2003, the company had provided a valuation allowance for the entire amount of the related deferred tax asset. During fiscal 2004, the company reduced its valuation allowance associated with these capital loss carryforwards when it was determined that sufficient capital gains would be generated to enable the company to realize the benefit of the deferred tax asset. This determination was based principally on the generation of capital gains from the company’s termination of interest rate swap agreements and the disposition of UAP North America during fiscal 2004. The company also reduced the valuation allowance related to certain foreign tax credits generated in prior years, as the benefit of these foreign tax credits will be realized due to the sale of the Spanish feed business.

Also, in September 2003, the company reached an agreement with the Internal Revenue Service (“IRS”) with respect to the IRS’s examination of the company’s tax returns for fiscal years 1996 through 1999. As a result of the favorable resolution of these matters, the company reduced income tax expense and the related provision for income taxes payable by $17 million during fiscal 2004. The IRS has closed examinations of the company’s tax returns through fiscal 1999. Certain tax authorities have proposed adjustments for later years, some of which are being contested by the company. The company believes that it has made adequate provisions for income taxes payable.

15. COMMITMENTS

The company leases certain facilities and transportation equipment under agreements that expire at various dates. Rent expense under all operating leases for continuing operations was $183.9 million, $207.9 million and $226.5 million in fiscal 2004, 2003 and 2002, respectively. Rent expense under operating leases for discontinued operations was $36.4 million, $72.4 million and $80.8 million in fiscal 2004, 2003 and 2002, respectively.

A summary of noncancelable operating lease commitments for fiscal years following May 30, 2004, is as follows:

2005	$	90.0
2006	79.3
2007	66.9
2008	85.5
2009	52.2
Later years	185.0
	$	558.9

The company had performance bonds and other commitments and guarantees (primarily guarantees of leases entered into by certain of its equity method investees) outstanding at May 30, 2004, aggregating to $74.9 million.

ConAgra Foods enters into many lease agreements for land, buildings and equipment at competitive market rates, and some of the lease arrangements are with Opus Corporation or its affiliates. A director of ConAgra Foods is a beneficial owner, officer and director of Opus Corporation. The agreements relate to the leasing of land and buildings for ConAgra Foods. ConAgra Foods occupies the buildings pursuant to long-term leases with Opus Corporation and its affiliates, some of which contain various termination rights and purchase options. Leases effective in fiscal 2004 required annual lease payments by ConAgra Foods of $21 million. As a result of adopting FIN No. 46R, the company has consolidated certain of the Opus affiliates from which it leases property, plant and equipment. These leases were previously accounted for as operating leases. Opus Corporation or its affiliates was paid $41 million for construction work during fiscal 2004 on properties leased by ConAgra Foods from third parties. Opus Corporation had revenues in excess of $1 billion in 2003.

16. CONTINGENCIES

In fiscal 1991, the company acquired Beatrice Company (“Beatrice”). As a result of the acquisition and the significant pre-acquisition contingencies of the Beatrice businesses and its former subsidiaries, the consolidated post-acquisition financial statements of the company reflect significant liabilities associated with the estimated resolution of these contingencies. These include various litigation and environmental proceedings related to businesses divested by Beatrice prior to its acquisition by the company. The environmental proceedings include litigation and administrative proceedings involving Beatrice’s status as a potentially responsible party at 39 Superfund, proposed Superfund or state-equivalent sites; these sites involve locations previously owned or operated by predecessors of Beatrice that used or produced petroleum, pesticides, fertilizers, dyes, inks, solvents, PCBs, acids, lead, sulfur, tannery wastes and/or other contaminants. Beatrice has paid or is in the process of paying its liability share at 34 of these sites. Reserves for these matters have been established based on the company’s best estimate of its undiscounted remediation liabilities, which estimates include evaluation of investigatory studies, extent of required cleanup, the known volumetric contribution of Beatrice and other potentially responsible parties and its experience in remediating sites. The reserves for Beatrice environmental matters totaled $115.2 million as of May 30, 2004 and $121.2 million as of May 25, 2003, a majority of which relates to the Superfund and state equivalent sites referenced above. Expenditures for these matters are expected to occur over a period of 5 to 20 years.

ConAgra Foods 2004 Annual Report 83

Notes to Consolidated Financial Statements (continued)

In certain limited situations, the company will guarantee an obligation of an unconsolidated entity. Currently, the company guarantees certain obligations primarily associated with leases entered into by several of its equity method investees. Under these arrangements, the company is obligated to perform under these leases (i.e., make the lease payments) should the equity method investees be unable to perform. Most of these guarantees resulted from the company’s fresh beef and pork divestiture. The leases have terms not exceeding 12 years and the maximum amount of future payments the company has guaranteed is approximately $55.3 million. The company has also assigned a hog purchase contract to the beef and pork joint venture, and the venture has indemnified the company for all liabilities under the contract. The company has guaranteed the performance of the fresh beef and pork joint venture with respect to the hog purchase contract. The hog purchase contract requires the fresh beef and pork joint venture to purchase a minimum of approximately 1.2 million hogs annually through 2014. The contract stipulates minimum price commitments, based in part on market prices and, in certain circumstances, also includes price adjustments based on certain inputs. The company does not have a liability established in its balance sheet for these arrangements as the company has determined that performance under the guarantees is not probable.

The results for fiscal 2004 include litigation expense related to a choline chloride joint venture with E.I. du Pont Nemours and Co. (“DuPont”) that was sold in 1997. Subsequent to the sale, civil antitrust lawsuits against DuPont, the company and the venture were filed in various federal and state courts. In connection with the settlement of certain of these cases and the remaining civil actions, the company recorded a $25 million pre-tax charge against earnings in fiscal 2004 as an additional reserve for these matters. The litigation expenses are recorded in selling, general and administrative expenses.

On June 22, 2001, the company filed an amended annual report on Form 10-K for the fiscal year ended May 28, 2000. The filing included restated financial information for fiscal years 1997, 1998, 1999 and 2000. The restatement, due to accounting and conduct matters at United Agri Products, Inc. (“UAP”), a former subsidiary, was based upon an investigation undertaken by the company and the Audit Committee of its Board of Directors. The restatement was principally related to revenue recognition for deferred delivery sales and vendor rebates, advance vendor rebates and bad debt reserves. The Securities and Exchange Commission (“SEC”) issued a formal order of nonpublic investigation dated September 28, 2001. The company is cooperating with the SEC investigation, which relates to the UAP matters described above, as well as other aspects of the company’s financial statements, including the level and application of certain of the company’s reserves.

The company is a party to a number of lawsuits and claims arising out of the operation of its businesses. After taking into account liabilities recorded for all of the foregoing matters, management believes the ultimate resolution of such matters should not have a material adverse effect on the company’s financial condition, results of operations or liquidity.

17. DERIVATIVE FINANCIAL INSTRUMENTS

The company is exposed to market risks, such as changes in commodity prices, foreign currency exchange rates and interest rates. To manage volatility associated with these exposures, the company may enter into various derivative transactions (e.g., futures and options) pursuant to established company policies.

Commodity Price Management—The company is subject to raw material price fluctuations caused by supply conditions, weather, economic conditions and other factors. Generally, the company utilizes commodity futures and options contracts to reduce the volatility of commodity input prices on items such as vegetable oils, dairy, grains and energy.

Foreign Currency Management—In order to reduce exposures related to changes in foreign currency exchange rates, the company may enter into forward exchange or option contracts for transactions denominated in a currency other than the applicable functional currency. This includes, but is not limited to, hedging against foreign currency risk in purchasing inventory and capital equipment, sales of finished goods and future settlement of foreign-denominated assets and liabilities.

Hedges of anticipated foreign currency-denominated transactions are designated as cash flow hedges. The gains and losses associated with these hedges are deferred in accumulated other comprehensive income until the forecasted transaction impacts earnings. Forward exchange and option contracts are also used to hedge firm commitment transactions denominated

84 ConAgra Foods 2004 Annual Report

Notes to Consolidated Financial Statements (continued)

in a currency other than the applicable functional currency. The firm commitments and foreign currency hedges are both recognized at fair value within prepaid expenses and other current assets or other accrued liabilities. Gains and losses associated with firm commitment and foreign currency hedges are recognized within net sales, cost of goods sold or selling, general and administrative expenses, depending on the nature of the transaction. Foreign currency derivatives that the company has elected not to account for under hedge accounting are recorded immediately in earnings within sales, cost of goods sold or selling, general and administrative expenses, depending on the nature of the transaction.

Interest Rate Management—In order to reduce exposures related to changes in interest rates, the company may use derivative instruments, including interest rate swaps. During fiscal 2004, the company closed out all $2.5 billion of its interest rate swap agreements in order to lock-in existing favorable interest rates. These interest rate swap agreements were previously put in place as a strategy to hedge interest costs associated with long-term debt. For financial statement and tax purposes, the proceeds received upon termination of the interest rate swap agreements will be recognized over the term of the debt instruments originally hedged. Consequently, the company’s interest expense, primarily in fiscal 2005, will continue to reflect the locked-in interest rates.

Of the $2.5 billion interest rate swaps closed out in fiscal 2004, $2 billion of the interest rate swaps had been used to effectively convert certain of the company’s fixed rate debt into floating rate debt. These interest rate swaps were accounted for as fair value hedges and resulted in no recognition of ineffectiveness in the statement of earnings as the interest rate swaps’ provisions matched the applicable provisions of the hedged debt. The remaining $500 million portion of the company’s interest rate swaps was used to hedge certain of the company’s forecasted interest payments on floating rate debt for the period from 2005 through 2011. These interest rate swaps were accounted for as cash flow hedges with gains and losses deferred in accumulated other comprehensive income, to the extent the hedge was effective.

The fair value of derivative assets is recognized within prepaid expenses and other current assets, while the fair value of derivative liabilities is recognized within other accrued liabilities. As of May 30, 2004 and May 25, 2003, the fair value of derivatives recognized within prepaid expenses and other current assets was $103.3 million and $325.5 million, respectively, while the amount recognized within other accrued liabilities was $10.3 million and $84.5 million, respectively. As of May 30, 2004 and May 25, 2003, the fair value of derivatives recognized in current assets of discontinued operations was $0 and $2.3 million, respectively.

For fiscal 2004, 2003 and 2002, the ineffectiveness associated with derivatives designated as cash flow and fair value hedges from continuing operations was a gain of $4.1 million, a loss of $1.6 million and a loss of $6.4 million, respectively. Hedge ineffectiveness is recognized within net sales, cost of goods sold or interest expense, depending on the nature of the hedge. The company does not exclude any component of the hedging instrument’s gain or loss when assessing effectiveness.

Generally, the company hedges a portion of its anticipated consumption of commodity inputs for periods up to 12 months. The company may enter into longer-term hedges on particular commodities if deemed appropriate. As of May 30, 2004, the company had hedged certain portions of its anticipated consumption of commodity inputs through June 2005.

As of May 30, 2004 and May 25, 2003, the net deferred gain or loss recognized in accumulated other comprehensive income was an $8.0 million gain and a $23.5 million loss, net of tax, respectively. The company anticipates a gain of $13.1 million, net of tax, will be transferred out of accumulated other comprehensive income and recognized within earnings over the next 12 months. The company anticipates a loss of $5.1 million, net of tax, will be transferred out of accumulated other comprehensive income and recognized within earnings subsequent to the next 12 months.

For fiscal 2004, the company did not discontinue any fair value hedges, but recognized a $4.2 million net-of-tax gain within discontinued operations related to discontinued cash flow hedges that were no longer probable of occurring as a result of the chicken business divestiture. For fiscal 2003, the company recognized a total of $5.1 million gain within sales and cost of goods sold and a $3.2 million loss within selling, general and administrative expenses related to discontinued cash flow hedges that were no longer probable of occurring primarily as a result of the fresh beef and pork divestiture. A $9.6 million gain and a $3.7 million loss, net of tax, were transferred from accumulated other comprehensive income into income from continuing operations in fiscal 2004 and fiscal 2003, respectively. For fiscal 2004 and fiscal 2003, respectively, a $0.2 million loss and $4.0 million gain, net of tax, were transferred from accumulated other comprehensive income into income (loss) from discontinued operations.

ConAgra Foods 2004 Annual Report 85

Notes to Consolidated Financial Statements (continued)

18. PENSION AND POSTRETIREMENT BENEFITS

The company and its subsidiaries have defined benefit retirement plans (“plans”) for eligible salaried and hourly employees. Benefits are based on years of credited service and average compensation or stated amounts for each year of service. The company uses February 28 as its measurement date for its plans. The company also sponsors postretirement plans which provide certain medical and dental benefits (“other benefits”) to qualifying U.S. employees.

The changes in benefit obligations and plan assets at February 28, 2004 and 2003 were as follows:

	PENSION BENEFITS						OTHER BENEFITS
	2004			2003			2004			2003
Change in Benefit Obligation
Benefit obligation at beginning of year	$	1,900.0		$	1,709.1		$	514.3		$	381.9
Service cost	61.7			62.1			3.8			3.1
Interest cost	119.7			120.6			31.9			26.5
Plan participants’ contributions	—			0.1			4.6			3.7
Amendments	10.0			(8.9		)	0.4			(6.9		)
Actuarial loss	134.4			114.5			26.1			152.7
Dispositions	(12.8		)	—			(2.0		)	—
Other	0.6			0.1			(2.6		)	—
Benefits paid	(102.4		)	(97.6		)	(48.8		)	(46.7		)
Benefit obligation at end of year	$	2,111.2		$	1,900.0		$	527.7		$	514.3
Change in Plan Assets
Fair value of plan assets at beginning of year	$	1,540.9		$	1,534.9		$	4.4		$	4.7
Actual return on plan assets	396.5			(112.1		)	3.0			0.6
Dispositions	(7.8		)	—			—			—
Employer contributions	65.8			233.2			43.4			42.1
Plan participants’ contributions	—			0.1			4.6			3.7
Investment and administrative expenses	(18.4		)	(17.7		)	—			—
Other	0.4			0.1			—			—
Benefits paid	(102.4		)	(97.6		)	(48.8		)	(46.7		)
Fair value of plan assets at end of year	$	1,875.0		$	1,540.9		$	6.6		$	4.4

The funded status and amounts recognized in the company’s consolidated balance sheets at May 30, 2004 and May 25, 2003 were:

	PENSION BENEFITS						OTHER BENEFITS
	2004			2003			2004			2003
Funded Status	$	(236.2	)	$	(359.1	)	$	(521.1	)	$	(509.9	)
Unrecognized actuarial (gain) loss	160.0			287.3			136.1			119.7
Unrecognized prior service cost	15.7			13.0			(3.9		)	(5.1		)
Unrecognized transition amount	(0.4		)	(0.6		)	—			—
Fourth quarter employer contribution	1.4			3.0			—			—
Accrued benefit cost	$	(59.5	)	$	(56.4	)	$	(388.9	)	$	(395.3	)
Amounts Recognized in Consolidated Balance Sheets
Prepaid benefit cost	$	—		$	4.9		$	—		$	—
Accrued benefit cost	(190.0		)	(205.5		)	(388.9		)	(395.3		)
Intangible asset	20.2			16.3			—			—
Accumulated other comprehensive loss	110.3			127.9			—			—
Net amount recognized	$	(59.5	)	$	(56.4	)	$	(388.9	)	$	(395.3	)
Weighted-Average Actuarial Assumptions Used to Determine Benefit Obligations At February 28
Discount rate	6.00		%	6.50		%	6.00		%	6.50		%
Long-term rate of compensation increase	4.50		%	4.50		%	N/A			N/A

The accumulated benefit obligation for all defined benefit pension plans was $2.02 billion and $1.74 billion at February 28, 2004 and 2003, respectively.

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets at February 28, 2004 and 2003, respectively, were:

	2004		2003
Projected benefit obligation	$	610.7	$	610.9
Accumulated benefit obligation	601.9		606.9
Fair value of plan assets	440.6		399.1

86 ConAgra Foods 2004 Annual Report

Notes to Consolidated Financial Statements (continued)

Components of pension benefit and other postretirement benefit costs are:

	PENSION BENEFITS									OTHER BENEFITS
	2004			2003			2002			2004			2003			2002
Service cost	$	61.7		$	62.1		$	59.6		$	3.8		$	3.1		$	3.0
Interest cost	119.7			120.6			115.1			31.9			26.5			25.2
Expected return on plan assets	(127.1		)	(113.1		)	(136.0		)	(0.6		)	(0.6		)	(0.6			)
Amortization of prior service costs	2.3			3.6			4.3			(0.8		)	(0.7		)	—
Amortization of transition asset	(0.2		)	(0.4		)	(2.8		)	—			—			—
Medicare Reform Act	—			—			—			(2.1		)	—			—
Recognized net actuarial (gain) loss	5.3			2.5			(3.9		)	4.5			(0.1		)	(4.0			)
Curtailment (gain) loss	5.0			1.2			0.2			(2.8		)	(1.1		)	0.3
Benefit cost—company plans	66.7			76.5			36.5			33.9			27.1			23.9
Pension benefit cost—multi-employer plans	9.0			7.9			7.3			—			—			—
Total benefit cost	$	75.7		$	84.4		$	43.8		$	33.9		$	27.1		$	23.9
Weighted-Average Actuarial Assumptions Used to Determine Net Expense
Discount rate	6.50		%	7.25		%	7.50		%	6.50		%	7.25		%	7.50		%
Long-term rate of return on plan assets	7.75		%	7.75		%	9.25		%	13.7		%	13.7		%	13.7		%
Long-term rate of compensation increase	4.50		%	5.50		%	5.50		%	N/A			N/A			N/A

The company amortizes prior service costs and amortizable gains and losses in equal annual amounts over the average expected future period of vested service. For plans with no active participants, average life expectancy is used instead of average expected useful service.

To develop the expected long-term rate of return on plan assets assumption for the pension plan, the company considers the current level of expected returns on risk-free investments (primarily government bonds), the historical level of risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class is then weighted based on the target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio.

Included in the company’s postretirement plan assets are guaranteed investment contracts (“GICs”) entered into in 1981 that provide guaranteed double-digit returns.

The increase (decrease) in the minimum pension liability included in other comprehensive income was $(17.6) million and $103.2 million for the fiscal years ended May 30, 2004 and May 25, 2003, respectively.

The company’s pension plan weighted-average asset allocations and the company’s target asset allocations at February 28, 2004 and 2003, by asset category are as follows:

	2004		2003		TARGET ALLOCATION
Equity Securities	60	%	54	%	50–	80	%
Debt Securities	25	%	26	%	20–	30	%
Real Estate	5	%	7	%	0–	8	%
Other	10	%	13	%	0–	20	%
Total	100	%	100	%

The company’s investment strategy reflects the expectation that equity securities will outperform debt securities over the long term. Assets are invested in a prudent manner to maintain the security of funds while maximizing returns within the company’s Investment Policy guidelines. The strategy is implemented utilizing indexed and actively managed assets from the categories listed.

The investment goals are to provide a total return that, over the long term, increases the ratio of plan assets to liabilities subject to an acceptable level of risk. This is accomplished through diversification of assets in accordance with the Investment Policy guidelines. Investment risk is mitigated by periodic rebalancing between asset classes as necessitated by changes in market conditions within the Investment Policy guidelines.

Equity securities include common stock of the company in the amounts of $134.1 million (7.2% of total pension plan assets) and $113.9 million (7.4% of total pension plan assets) at February 28, 2004 and 2003, respectively. The company’s Investment Policy limits the investment in common stock of the company to 10% of the fair value of plan assets.

ConAgra Foods 2004 Annual Report 87

Notes to Consolidated Financial Statements (continued)

Assumed health care cost trend rates have a significant effect on the benefit obligation of the postretirement plans.

Assumed Health Care Cost Trend Rates at February 28	2004		2003
Initial health care cost trend rate	10.0	%	11.0	%
Ultimate health care cost trend rate	5.0	%	4.8	%
Year that the rate reaches the ultimate trend rate	2011		2012

A one percentage point change in assumed health care cost rates would have the following effect:

	ONE PERCENT INCREASE		ONE PERCENT DECREASE
Effect on total service and interest cost	$	4.0	$	(3.3	)
Effect on postretirement benefit obligation	50.4		(42.5		)

The company currently anticipates making no contributions to the pension plans in fiscal year 2005. This estimate is based on current tax laws, plan asset performance and liability assumptions, which are subject to change. The company anticipates making contributions of $42.3 million to the postretirement plan in fiscal 2005.

The Medicare Prescription Drug, Improvements and Modernization Act of 2003 resulted in a reduction of the accumulated postretirement benefit obligation of $51.6 million in fiscal 2004.

Certain employees of the company are covered under defined contribution plans. The expense related to these plans was $31.6 million, $37.2 million and $33.2 million in fiscal 2004, 2003 and 2002, respectively.

19. BUSINESS SEGMENTS AND RELATED INFORMATION

The company’s operations are organized into three reporting segments: Retail Products, Foodservice Products and Food Ingredients. The company historically aggregated its retail and foodservice operations within the company’s Packaged Foods reporting segment. As a result of the recent strategic portfolio changes and management realignment in fiscal 2004, the company now reports its retail and foodservice operations as two separate reporting segments. The Retail Products reporting segment includes branded foods which are sold in various retail channels and include frozen, refrigerated and shelf-stable temperature classes. The Foodservice Products reporting segment includes branded and customized food products, including meals, entrees, prepared potatoes, meats, seafood, sauces and a variety of custom-manufactured culinary products packaged for sale to restaurants and other foodservice establishments. The Food Ingredients reporting segment includes both branded and commodity food ingredients, including milled grain ingredients, seasonings, blends and flavorings, which are sold to food processors, as well as certain commodity sourcing and merchandising operations.

On June 9, 2003, the company announced an agreement to sell its chicken business to Pilgrim’s Pride Corporation. As such, beginning in the fourth quarter of fiscal 2003, the company began to classify all operations associated with its chicken processing business within discontinued operations. Historically, these operations were included in the company’s Meat Processing reporting segment.

As a result of the fiscal 2004 UAP North America divestiture and the anticipated divestiture of UAP International, the company reclassified all activity previously reflected in the Agricultural Products reporting segment into discontinued operations for all periods presented. As such, the company no longer has an Agricultural Products reporting segment.

On September 19, 2002 (during the company’s second quarter of fiscal 2003), the company sold a controlling interest in its fresh beef and pork operations to a joint venture led by outside investors. As a result, the Meat Processing reporting segment information included beef and pork operating activity for fiscal 2003, but no activity for fiscal 2004. Fiscal 2003 activity includes the settlement of an insurance claim related to a fire at a beef plant previously owned by the company in Garden City, Kansas. The insurance proceeds represented a recovery for the loss of facilities, inventory and related items. As a result of the settlement, the company recognized approximately $50 million in increased operating profit within the Meat Processing reporting segment for fiscal 2003.

Intersegment sales have been recorded at amounts approximating market. Operating profit for each segment is based on net sales less all identifiable operating expenses. General corporate expense, net interest expense, equity method investment earnings and income taxes have been excluded from segment operations.

During fiscal 2004, the company divested a minority share in a venture, receiving approximately $31.4 million. The company recognized a gain of approximately $21.2 million upon the divestiture, which is recognized as a reduction of corporate expenses.

88 ConAgra Foods 2004 Annual Report

Notes to Consolidated Financial Statements (continued)

	2004			2003			2002
Sales to unaffiliated customers
Retail Products	$	8,434.1		$	8,668.1		$	8,718.6
Foodservice Products	3,714.4			3,597.9			3,778.9
Food Ingredients	2,373.6			2,204.4			2,104.6
Meat Processing	—			2,468.7			7,733.4
Total	$	14,522.1		$	16,939.1		$	22,335.5
Intersegment sales
Retail Products	$	27.8		$	35.8		$	25.0
Foodservice Products	91.9			38.1			46.9
Food Ingredients	332.8			560.9			611.9
Meat Processing	—			184.7			656.8
	452.5			819.5			1,340.6
Intersegment elimination	(452.5		)	(819.5		)	(1,340.6		)
Total	$	—		$	—		$	—
Net sales
Retail Products	$	8,461.9		$	8,703.9		$	8,743.6
Foodservice Products	3,806.3			3,636.0			3,825.8
Food Ingredients	2,706.4			2,765.3			2,716.5
Meat Processing	—			2,653.4			8,390.2
Intersegment elimination	(452.5		)	(819.5		)	(1,340.6		)
Total	$	14,522.1		$	16,939.1		$	22,335.5
Operating profit
Retail Products	$	1,206.8		$	1,298.0		$	1,226.3
Foodservice Products	321.4			344.5			364.3
Food Ingredients	196.6			125.1			188.8
Meat Processing	—			99.4			187.8
Total operating profit	1,724.8			1,867.0			1,967.2
General corporate expenses	342.1			406.8			272.7
Goodwill amortization	—			—			106.0
Interest expense, net	274.9			274.7			393.6
Equity method investment earnings	43.5			37.1			27.7
Income tax expense	355.3			415.6			460.2
Income from continuing operations before cumulative effect of changes in accounting	796.0			807.0			762.4
Income (loss) from discontinued operations, net of tax	96.9			(36.1		)	22.6
Cumulative effect of changes in accounting	(13.1		)	3.9			(2.0		)
Net income	$	879.8		$	774.8		$	783.0
Identifiable assets
Retail Products	$	7,485.2		$	7,084.0		$	7,562.0
Foodservice Products	1,712.6			1,668.6			1,623.8
Food Ingredients	2,193.5			1,947.5			1,815.0
Meat Processing	—			386.7			1,481.9
Corporate	2,693.2			1,921.8			841.3
Discontinued operations	145.6			2,062.8			2,246.9
Total	$	14,230.1		$	15,071.4		$	15,570.9
Additions to property, plant and equipment
Retail Products	$	228.7		$	263.1		$	291.5
Foodservice Products	51.9			48.1			59.9
Food Ingredients	36.6			31.5			18.6
Meat Processing	—			7.9			56.5
Corporate	34.9			25.2			27.5
Total	$	352.1		$	375.8		$	454.0
Depreciation and amortization
Retail Products	$	213.2		$	203.6		$	313.3
Foodservice Products	60.4			66.4			72.7
Food Ingredients	44.9			52.6			50.5
Meat Processing	—			21.6			68.3
Corporate	33.8			30.7			31.8
Total	$	352.3		$	374.9		$	536.6

ConAgra Foods 2004 Annual Report 89

Notes to Consolidated Financial Statements (continued)

The operations of the company are principally in the United States. Operations outside the United States are worldwide with no single foreign country or geographic region being significant to the consolidated operations. Foreign net sales were $1.3 billion, $1.5 billion and $2.4 billion in fiscal 2004, 2003 and 2002, respectively. Net sales are attributed to countries based on location of customer. The company’s long-lived assets located outside of the United States are not significant.

20. QUARTERLY FINANCIAL DATA (UNAUDITED)

	2004										2003
(in millions, except per share amounts)	FIRST QUARTER			SECOND QUARTER		THIRD QUARTER			FOURTH QUARTER		FIRST QUARTER		SECOND QUARTER		THIRD QUARTER			FOURTH QUARTER
Net sales¹	$	3,229.4		$	3,804.8	$	3,525.5		$	3,962.4	$	5,381.3	$	4,384.8	$	3,547.7		$	3,625.3
Gross profit¹	684.2			896.3		797.1			818.4		832.6		911.6		831.6			793.4
Income before cumulative effect of changes in accounting	206.6			270.1		204.7			211.5		223.7		235.8		161.0			150.4
Income from continuing operations	167.3			237.9		191.8			199.0		186.6		206.0		198.6			215.8
Income (loss) from discontinued operations	39.3			32.2		12.9			12.5		37.1		29.8		(37.6		)	(65.4		)
Cumulative effect of change in accounting principle	(11.7		)	—		(1.4		)	—		3.9		—		—			—
Net income	$	194.9		$	270.1	$	203.3		$	211.5	$	227.6	$	235.8	$	161.0		$	150.4
Earnings per share²:
Basic earnings per share
Income from continuing operations	$	0.32		$	0.45	$	0.36		$	0.38	$	0.35	$	0.39	$	0.37		$	0.41
Income (loss) from discontinued operations	0.07			0.06		0.02			0.02		0.07		0.06		(0.07		)	(0.12		)
Cumulative effect of change in accounting principle	(0.02		)	—		—			—		0.01		—		—			—
Net income	$	0.37		$	0.51	$	0.38		$	0.40	$	0.43	$	0.45	$	0.30		$	0.29
Diluted earnings per share
Income from continuing operations	$	0.32		$	0.45	$	0.36		$	0.37	$	0.35	$	0.38	$	0.37		$	0.40
Income (loss) from discontinued operations	0.07			0.06		0.02			0.03		0.07		0.06		(0.07		)	(0.12		)
Cumulative effect of change in accounting principle	(0.02		)	—		—			—		0.01		—		—			—
Net income	$	0.37		$	0.51	$	0.38		$	0.40	$	0.43	$	0.44	$	0.30		$	0.28
Dividends declared per common share	$	0.2475		$	0.2600	$	0.2600		$	0.2600	$	0.2350	$	0.2475	$	0.2475		$	0.2475
Share price:
High	$	25.41		$	24.52	$	26.54		$	29.34	$	26.53	$	26.00	$	25.69		$	23.15
Low	21.71			21.15		24.16			25.75		21.04		23.24		23.16			19.43

¹ Amounts differ from previously filed quarterly reports. During the second quarter of fiscal 2004, the company began to reflect the operations of its Agricultural Products segment as discontinued operations. Additionally, during the fourth quarter of fiscal 2004, the company began to reflect the operations of its Spanish feed and Portuguese poultry businesses as discontinued operations. See additional detail in note 2.

² Basic and diluted earnings per share are calculated independently for each of the quarters presented. Accordingly, the sum of the quarterly earnings per share amounts may not agree with the total year.

90 ConAgra Foods 2004 Annual Report

Report of Independent Registered Public Accounting Firm

The Stockholders and Board of Directors

ConAgra Foods, Inc.

We have audited the accompanying consolidated balance sheets of ConAgra Foods, Inc. and subsidiaries (the “company”) as of May 30, 2004 and May 25, 2003, and the related consolidated statements of earnings, comprehensive income, common stockholders’ equity and cash flows for each of the three fiscal years in the period ended May 30, 2004. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of ConAgra Foods, Inc. and subsidiaries as of May 30, 2004 and May 25, 2003, and the results of their operations and their cash flows for each of the three fiscal years in the period ended May 30, 2004 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the financial statements, in 2004 the company changed its methods of accounting for variable interest entities and asset retirement obligations. In 2003 the company changed its method of accounting for goodwill and other intangible assets and in 2002 the company changed its method of accounting for derivative instruments and other hedging activities.

/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Omaha, Nebraska
July 26, 2004

ConAgra Foods 2004 Annual Report 91

EX-21. 13 a04-7990_1ex21d.htm EX-21.

Exhibit 21

SUBSIDIARIES OF CONAGRA FOODS, INC.

ConAgra Foods, Inc. is the parent corporation owning, directly or indirectly, 100% of the voting securities (unless otherwise noted) of the following subsidiaries principally engaged in the production and distribution of food products (unless otherwise noted) as of May 30, 2004:

Subsidiary		Jurisdiction of Incorporation

Alliance Grain, Inc. (principally engaged in commodity marketing)		Delaware

ConAgra Dairy Foods Company (owns 100% of two domestic corporations and 2% of one domestic corporation)		Delaware

ConAgra Foods Refrigerated Foods Co., Inc. (owns 100% of six domestic corporations, a 100% interest in one domestic limited liability company, 50% of one domestic limited liability company principally engaged in waste conversion and 27% of one domestic corporation)		Delaware

ConAgra Grocery Products Company (owns 100% of seven domestic corporations, 50% of one domestic corporation, 25% of one domestic corporation, 100% of three foreign corporations, 50% of one foreign corporation and less than 1% on one foreign corporation)		Delaware

ConAgra Foods Canada, Inc. / Aliments Conagra Canada Inc. (owns 100% of one foreign corporation)		Canada

ConAgra International Fertilizer Company (principally engaged in the agricultural chemicals business)		Delaware

ConAgra International, Inc. (owns 100% of the voting securities of ten foreign corporations, 99% of 14 foreign corporations, 98% of three foreign corporations, 90% of one foreign corporation, 81% of one foreign corporation, 54% of one foreign corporation, 50% of one foreign corporation, 30% of one foreign corporation, and less than 1% of seven foreign corporations, engaged principally in the worldwide commodities trading business, the agricultural chemicals business and the processing of malt)		Delaware

ConAgra Limited/ConAgra Limitee (owns 100% of one foreign entity and 50% of two foreign entities)		Canada

Lamb-Weston, Inc. (owns 100% of two domestic corporations, 50% of one domestic limited liability company, 19% of one foreign corporation and 82% of one

Exhibit 21

domestic limited liability company)

Delaware

The corporations listed above and on the previous page are included in the consolidated financial statements, which are a part of this report.

EX-23 14 a04-7990_1ex23.htm EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements Nos. 333-42420, 333-87937 and 333-101851 on Form S-3 and Nos. 333-70476, 333-46962, 333-46960, 333-44426, 333-78063, 333-64633, 33-50113, 33-48295, 33-28079, 2-81244, 2-96891, 33-15815, 333-17573, 33-52330, 333-17549, 33-63061, and 33-37293 on Form S-8 of ConAgra Foods, Inc. and subsidiaries of our reports dated July 26, 2004 (which reports express an unqualified opinion and include an explanatory paragraph relating to change in methods of accounting for variable interest entities and asset retirement obligations in 2004, goodwill and other intangible assets in 2003 and derivative instruments and other hedging activities in 2002), appearing in and incorporated by reference in this Annual Report on Form 10-K of ConAgra Foods, Inc. and subsidiaries for the year ended May 30, 2004.

/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Omaha, Nebraska
August 5, 2004

EX-24. 15 a04-7990_1ex24d.htm EX-24.

Exhibit 24

POWER OF ATTORNEY

The undersigned Director of ConAgra Foods, Inc., a Delaware corporation, hereby constitutes and appoints Bruce C. Rohde as his Attorney-in-Fact in his name, place and stead, to execute ConAgra Foods’ Annual Report on Form 10-K for the fiscal year ended May 30, 2004, together with any and all subsequent amendments thereof, in his capacity as a Director and hereby ratifies all that said Attorney-in-Fact may do by virtue thereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 9th day of July, 2004.

	/s/ David H. Batchelder
	David H. Batchelder

Exhibit 24 (continued)

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 9th day of July, 2004.

	/s/ Mogens C. Bay
	Mogens C. Bay

Exhibit 24 (continued)

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 9th day of July, 2004.

	/s/ Howard G. Buffett
	Howard G. Buffett

100

Exhibit 24 (continued)

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 9th day of July, 2004.

	/s/ Stephen G. Butler
	Stephen G. Butler

101

Exhibit 24 (continued)

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 9th day of July, 2004.

	/s/ John T. Chain, Jr.
	John T. Chain, Jr.

102

Exhibit 24 (continued)

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 9th day of July, 2004.

	/s/ Stephen F. Goldstone
	Stephen F. Goldstone

103

Exhibit 24 (continued)

POWER OF ATTORNEY

The undersigned Director of ConAgra Foods, Inc., a Delaware corporation, hereby constitutes and appoints Bruce C. Rohde as her Attorney-in-Fact in her name, place and stead, to execute ConAgra Foods’ Annual Report on Form 10-K for the fiscal year ended May 30, 2004, together with any and all subsequent amendments thereof, in her capacity as a Director and hereby ratifies all that said Attorney-in-Fact may do by virtue thereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 9th day of July, 2004.

	/s/ Alice B. Hayes
	Alice B. Hayes

104

Exhibit 24 (continued)

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 9th day of July, 2004.

	/s/ W.G. Jurgensen
	W.G. Jurgensen

105

Exhibit 24 (continued)

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 9th day of July, 2004.

	/s/ Robert A. Krane
	Robert A. Krane

106

Exhibit 24 (continued)

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 9th day of July, 2004.

	/s/ Mark H. Rauenhorst
	Mark H. Rauenhorst

107

Exhibit 24 (continued)

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 9th day of July, 2004.

	/s/ Carl E. Reichardt
	Carl E. Reichardt

108

Exhibit 24 (continued)

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 9th day of July, 2004.

	/s/ Ronald W. Roskens
	Ronald W. Roskens

109

Exhibit 24 (continued)

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 9th day of July, 2004.

	/s/ Kenneth E. Stinson
	Kenneth E. Stinson

110

EX-31.1 16 a04-7990_1ex31d1.htm EX-31.1

Exhibit 31.1

CERTIFICATION

I, Bruce Rohde, certify that:

1. I have reviewed this annual report on Form 10-K of ConAgra Foods, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2004

/s/ BRUCE ROHDE
Bruce Rohde
Chairman and Chief Executive Officer

111

EX-31.2 17 a04-7990_1ex31d2.htm EX-31.2

Exhibit 31.2

CERTIFICATION

I, Dwight J. Goslee, certify that:

1. I have reviewed this annual report on Form 10-K of ConAgra Foods, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2004

/s/ DWIGHT J. GOSLEE
Dwight J. Goslee
Executive Vice President, Strategic Development
(Person performing the functions of the Chief Financial Officer)

112

EX-32.1 18 a04-7990_1ex32d1.htm EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Bruce Rohde, Chairman and Chief Executive Officer of ConAgra Foods, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge that ConAgra Foods, Inc.’s Annual Report on Form 10-K for the fiscal year ended May 30, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and that the information contained in such Annual Report fairly presents, in all material respects, the financial condition and results of operations of ConAgra Foods, Inc.

August 5, 2004

/s/ BRUCE ROHDE
Bruce Rohde
Chairman and Chief Executive Officer

I, Dwight J. Goslee, Executive Vice President, Strategic Development (Person performing the functions of the Chief Financial Officer) of ConAgra Foods, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge that ConAgra Foods, Inc.’s Annual Report on Form 10-K for the fiscal year ended May 30, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and that the information contained in such Annual Report fairly presents, in all material respects, the financial condition and results of operations of ConAgra Foods, Inc.

August 5, 2004

/s/ DWIGHT J. GOSLEE
Dwight J. Goslee
Executive Vice President, Strategic Development (Person performing the function of the Chief Financial Officer)

A signed original of this written statement required by Section 906 has been provided to ConAgra Foods, Inc. and will be retained by ConAgra Foods, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

113