10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended August 24, 2008

OR

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

For the transition period from              to             

Commission File Number: 1-7275

CONAGRA FOODS, INC.

(Exact name of registrant as specified in charter)

Delaware	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)

(402) 595-4000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨    Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Number of shares outstanding of issuer’s common stock, as of September 19, 2008, was 447,083,215.

Table of Contents

Part I. FINANCIAL INFORMATION			3
	Item 1	Financial Statements	3
		Unaudited Condensed Consolidated Statements of Earnings for the Thirteen Weeks ended August 24, 2008 and August 26, 2007	3
		Unaudited Condensed Consolidated Statements of Comprehensive Income for the Thirteen Weeks ended August 24, 2008 and August 26, 2007	4
		Unaudited Condensed Consolidated Balance Sheets as of August 24, 2008, May 25, 2008, and August 26, 2007	5
		Unaudited Condensed Consolidated Statements of Cash Flows for the Thirteen Weeks ended August 24, 2008 and August 26, 2007	6
		Notes to Unaudited Condensed Consolidated Financial Statements	8
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	39
	Item 4	Controls and Procedures	41
Part II. OTHER INFORMATION			42
	Item 1	Legal Proceedings	42
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	42
	Item 4	Submission of Matters to a Vote of Security Holders	42
	Item 6	Exhibits	43
	Signatures		44
	Exhibit Index
	Exhibit 10.1		46
	Exhibit 10.2		73
	Exhibit 10.3		97
	Exhibit 12		103
	Exhibit 31.1		104
	Exhibit 31.2		105
	Exhibit 32.1		106

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ConAgra Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

(in millions except per share amounts)

(unaudited)

	Thirteen weeks ended
	August 24, 2008		August 26, 2007
Net sales	$	3,065.6	$	2,621.1
Costs and expenses:
Cost of goods sold		2,474.1		2,002.3
Selling, general and administrative expenses		369.0		381.5
Interest expense, net		50.1		54.8
Income from continuing operations before income taxes and equity method investment earnings		172.4		182.5
Income tax expense		65.9		61.1
Equity method investment earnings		0.9		9.6
Income from continuing operations		107.4		131.0
Income from discontinued operations, net of tax		335.0		44.4
Net income	$	442.4	$	175.4
Earnings per share - basic
Income from continuing operations	$	0.23	$	0.27
Income from discontinued operations		0.72		0.09
Net income	$	0.95	$	0.36
Earnings per share - diluted
Income from continuing operations	$	0.23	$	0.27
Income from discontinued operations		0.71		0.09
Net income	$	0.94	$	0.36

See notes to the condensed consolidated financial statements.

3

ConAgra Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(in millions)

(unaudited)

	Thirteen weeks ended
	August 24, 2008			August 26, 2007
Net income	$	442.4		$	175.4
Other comprehensive income (loss):
Net derivative adjustment, net of tax		—			(0.7	)
Unrealized gains and losses on available-for-sale securities, net of tax:
Unrealized holding gains (losses) arising during the period		(0.3	)		0.3
Reclassification adjustment for gains included in net income		—			(3.8	)
Currency translation adjustment:
Unrealized translation gains (losses) arising during the period		(24.4	)		8.0
Reclassification adjustment for net losses included in net income		2.0			—
Pension and postretirement healthcare liabilities, net of tax		(2.4	)		1.7
Comprehensive income	$	417.3		$	180.9

See notes to the condensed consolidated financial statements.

4

ConAgra Foods, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in millions except share data)

(unaudited)

	August 24, 2008			May 25, 2008			August 26, 2007
ASSETS
Current assets
Cash and cash equivalents	$	296.4		$	140.9		$	307.5
Receivables, less allowance for doubtful accounts of $14.4, $17.6, and $16.8		961.3			890.6			881.1
Inventories		2,046.1			1,931.5			1,812.4
Prepaid expenses and other current assets		353.9			451.6			286.7
Current assets held for sale		—			2,667.4			1,740.2
Total current assets		3,657.7			6,082.0			5,027.9
Property, plant and equipment		5,055.7			5,023.4			4,848.8
Less accumulated depreciation		(2,563.0	)		(2,533.6	)		(2,590.2	)
Property, plant and equipment, net		2,492.7			2,489.8			2,258.6
Goodwill		3,480.5			3,483.3			3,451.8
Brands, trademarks and other intangibles, net		820.6			816.7			774.8
Other assets		1,074.8			553.2			236.3
Noncurrent assets held for sale		—			257.5			214.5
	$	11,526.3		$	13,682.5		$	11,963.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes payable	$	25.2		$	599.8		$	69.8
Current installments of long-term debt		314.8			14.9			17.4
Accounts payable		942.2			786.0			804.1
Accrued payroll		147.8			374.2			148.8
Other accrued liabilities		1,023.3			688.3			836.6
Current liabilities held for sale		—			1,188.1			859.9
Total current liabilities		2,453.3			3,651.3			2,736.6
Senior long-term debt, excluding current installments		2,848.7			3,186.9			3,218.7
Subordinated debt		200.0			200.0			200.0
Other noncurrent liabilities		1,250.4			1,293.0			1,194.2
Noncurrent liabilities held for sale		—			13.9			18.8
Total liabilities		6,752.4			8,345.1			7,368.3
Commitments and contingencies (Note 11)
Common stockholders’ equity
Common stock of $5 par value, authorized 1,200,000,000 shares; issued 567,071,713, 566,653,605, and 566,618,849		2,835.5			2,833.4			2,833.2
Additional paid-in capital		776.3			866.9			819.4
Retained earnings		3,761.5			3,409.5			2,932.4
Accumulated other comprehensive income		261.4			286.5			1.2
Less treasury stock, at cost, 120,053,780, 82,282,300, and 79,463,052 common shares		(2,860.8	)		(2,058.9	)		(1,990.6	)
Total common stockholders’ equity		4,773.9			5,337.4			4,595.6
	$	11,526.3		$	13,682.5		$	11,963.9

See notes to the condensed consolidated financial statements.

5

ConAgra Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)

	Thirteen weeks ended
	August 24, 2008			August 26, 2007
Cash flows from operating activities:
Net income	$	442.4		$	175.4
Income from discontinued operations		335.0			44.4
Income from continuing operations		107.4			131.0
Adjustments to reconcile income from continuing operations to net cash flows from operating activities:
Depreciation and amortization		76.4			72.4
Gain on sale of fixed assets		(5.0	)		(0.5	)
Gain on sale of businesses		(19.4	)		—
Distributions from affiliates greater (less) than current earnings		3.7			(4.2	)
Share-based payments expense		12.6			13.5
Non-cash interest income on payment-in-kind notes		(12.6	)		—
Other items		(16.8	)		1.0
Change in operating assets and liabilities before effects of business acquisitions and dispositions:
Accounts receivable		(101.4	)		(69.9	)
Inventory		(116.9	)		(179.6	)
Prepaid expenses and other current assets		97.7			32.2
Accounts payable		172.0			68.8
Accrued payroll		(108.6	)		(126.3	)
Other accrued liabilities		104.7			34.1
Net cash flows from operating activities – continuing operations		193.8			(27.5	)
Net cash flows from operating activities – discontinued operations		(635.2	)		(142.5	)
Net cash flows from operating activities		(441.4	)		(170.0	)
Cash flows from investing activities:
Purchases of marketable securities		—			(1,351.0	)
Sales of marketable securities		—			1,352.0
Additions to property, plant and equipment		(106.3	)		(149.9	)
Purchase of leased warehouses		—			(39.2	)
Sale of leased warehouses		—			35.6
Sale of property, plant and equipment		12.8			11.9
Sale of businesses		29.4			—
Purchase of businesses and intangible assets		(30.4	)		(50.2	)
Notes receivable and other items		0.9			1.8
Net cash flows from investing activities – continuing operations		(93.6	)		(189.0	)
Net cash flows from investing activities – discontinued operations		2,253.2			(1.7	)
Net cash flows from investing activities	$	2,159.6		$	(190.7	)

6

ConAgra Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (continued)

(in millions)

(unaudited)

	Thirteen weeks ended
	August 24, 2008			August 26, 2007
Cash flows from financing activities:
Net short-term borrowings	$	(565.3	)	$	48.7
Repayment of long-term debt		(41.8	)		(3.6	)
Repurchase of ConAgra Foods common shares		(900.0	)		(88.1	)
Cash dividends paid		(92.1	)		(88.6	)
Proceeds from exercise of employee stock options		5.8			8.4
Other items		(0.1	)		1.3
Net cash flows from financing activities – continuing operations		(1,593.5	)		(121.9	)
Net cash flows from financing activities – discontinued operations		—			54.9
Net cash flows from financing activities		(1,593.5	)		(67.0	)
Net change in cash and cash equivalents		124.7			(427.7	)
Discontinued operations cash activity included above
Add: Cash balance included in assets held for sale at beginning of period		30.8			4.4
Less: Cash balance included in assets held for sale at end of period		—			—
Cash and cash equivalents at beginning of period		140.9			730.8
Cash and cash equivalents at end of period	$	296.4		$	307.5

See notes to the condensed consolidated financial statements.

7

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited financial information reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position, and cash flows for the periods presented. The adjustments are of a normal recurring nature, except as otherwise noted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the ConAgra Foods, Inc. (the “Company,” “we,” “us,” or “our”) annual report on Form 10-K for the fiscal year ended May 25, 2008.

The results of operations for any quarter or a partial fiscal year period are not necessarily indicative of the results to be expected for other periods or the full fiscal year.

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

Variable Interest Entities – We consolidate the assets and liabilities of several entities from which we lease corporate aircraft. For the period ending prior to August 26, 2007 and prior periods, we consolidated several entities from which we lease leases office buildings. Each of these entities had been determined to be a variable interest entity and we had been determined to be the primary beneficiary of each of these entities. In September 2007, we ceased to be the primary beneficiary of the entities from which we lease office buildings and, accordingly, discontinued the consolidation of the assets and liabilities of these entities.

Due to the consolidation of variable interest entities, we reflect in our balance sheets:

	August 24, 2008		May 25, 2008		August 26, 2007
Property, plant and equipment, net	$	51.0	$	51.8	$	154.1
Other assets		—		—		13.8
Current installments of long-term debt		3.4		3.3		6.2
Senior long-term debt, excluding current installments		50.0		50.9		142.5
Other accrued liabilities		0.6		0.6		0.6
Other noncurrent liabilities		—		—		21.7

The liabilities recognized as a result of consolidating these entities do not represent additional claims on our general assets. The creditors of these entities have claims only on the assets of the specific variable interest entities to which they have advanced credit.

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

We review our investments in unconsolidated affiliates for impairment whenever events or changes in business circumstances indicate that the carrying amount of the investments may not be fully recoverable. Evidence of a loss in value that is other than temporary might include the absence of an ability to recover the carrying amount of the investment, the inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment, or, where applicable, estimated sales proceeds which are insufficient to recover the carrying amount of the investment. Management’s assessment as to whether any decline in value is other than temporary is based on our ability and intent to hold the investment and whether evidence indicating the carrying value of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. Management generally considers our investments in our equity method investees to be strategic long-term investments. Therefore, management completes its assessments with a long-term viewpoint. If the fair value of the investment is determined to be less than the carrying value and the decline in value is considered to be other than temporary, an appropriate write-down is recorded based on the excess of the carrying value over the best estimate of fair value of the investment.

Cash and Cash Equivalents – Cash and all highly liquid investments with an original maturity of three months or less at the date of acquisition, including short-term time deposits and government agency and corporate obligations, are classified as cash and cash equivalents.

8

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

Shipping and Handling – Amounts billed to customers related to shipping and handling are included in net sales. Shipping and handling costs are included in cost of goods sold.

Comprehensive Income – Comprehensive income includes net income, currency translation adjustments, certain derivative-related activity, changes in the value of available-for-sale investments, and changes in prior service cost and net actuarial gains/losses from pension and postretirement health care plans. We generally deem our foreign investments to be essentially permanent in nature and we do not provide for taxes on currency translation adjustments arising from converting the investment in a foreign currency to U.S. dollars. When we determine that a foreign investment is no longer permanent in nature, estimated taxes are provided for the related deferred tax liability (asset), if any, resulting from currency translation adjustments. We reclassified $2.0 million of foreign currency translation net losses to net income due to the disposal or substantial liquidation of foreign subsidiaries in the first quarter of fiscal 2009.

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

	Thirteen weeks ended
	August 24, 2008			August 26, 2007
Net derivative adjustment	$	—		$	(0.4	)
Unrealized gains (losses) on available-for-sale securities		(0.2	)		0.2
Reclassification adjustment for gains included in net income		—			(2.2	)
Pension and postretirement healthcare liabilities		2.9			1.5
	$	2.7		$	(0.9	)

Accounting Changes – We adopted Emerging Issues Task Force (“EITF”) 06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Contracts, as of the beginning of fiscal 2009. EITF 06-4 requires an employer to recognize a liability for future benefits provided to employees under a split-dollar life insurance arrangement. As a result of the implementation of EITF 06-4, we recognized a $6.2 million liability for such future benefits with a corresponding adjustment, net of tax, of $3.9 million to retained earnings.

In February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The provisions of SFAS No. 159 were effective as of the beginning of our fiscal 2009. The adoption of SFAS No. 159 had no impact on our consolidated financial position or results of operations.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of SFAS No. 157 were effective as of the beginning of our fiscal 2009 for our financial assets and liabilities, as well as for other assets and liabilities that are carried at fair value on a recurring basis in our consolidated financial statements. The FASB has provided for a one-year deferral of the implementation of this standard for other nonfinanical assets and liabilities. Assets and liabilities subject to this deferral include goodwill, intangible assets, and long-lived assets measured at fair value for impairment assessments, and nonfinancial assets and liabilities initially measured at fair value in a business combination. The adoption of SFAS No. 157 did not have a material impact on our consolidated financial position or results of operations. See further discussion in Note 15.

Recently Issued Accounting Pronouncements – In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities – An Amendment of FASB Statement No. 133. This standard requires enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This statement is effective for our third quarter of fiscal 2009.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51. This statement amends ARB 51 to establish accounting and reporting standards for the

9

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

noncontrolling interest (minority interest) in a subsidiary and for the deconsolidation of a subsidiary. Upon its adoption, effective as of the beginning of our fiscal 2010, noncontrolling interests will be classified as equity in our financial statements and income and comprehensive income attributed to the noncontrolling interest will be included in our income and comprehensive income. The provisions of this standard must be applied retrospectively upon adoption. We are currently evaluating the impact of adopting SFAS No. 160 on our consolidated financial position and results of operations.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS No. 141(R)”). SFAS No. 141(R) establishes principles and requirements for how an acquirer in a business combination recognizes and measures the assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree. The provisions of SFAS No. 141(R) are effective for our business combinations occurring on or after June 1, 2009.

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 consolidated financial statements. Actual results could differ from these estimates.

2. DISCONTINUED OPERATIONS AND DIVESTITURES

Trading and Merchandising Operations

On March 27, 2008, we entered into an agreement with affiliates of Ospraie Special Opportunities Fund to sell our commodity trading and merchandising operations conducted by ConAgra Trade Group (previously principally reported as the Trading and Merchandising segment). The operations include the domestic and international grain merchandising, fertilizer distribution, agricultural and energy commodities trading and services, and grain, animal and oil seed byproducts merchandising and distribution business. In June 2008, the sale of the trading and merchandising operations was completed for before-tax proceeds of: 1) approximately $2.2 billion in cash, net of transaction costs (including incentive compensation amounts due to employees due to accelerated vesting), 2) $550 million (face value) of payment-in-kind debt securities issued by the purchaser (the “Notes”) which have been recorded at an initial estimated fair value of $479 million, 3) a short-term receivable of $37 million due from the purchaser, and 4) a four-year warrant to acquire approximately 5% of the issued common equity of the parent company of the divested operations, which has been recorded at an estimated fair value of $1.8 million. We recognized an after-tax gain on the disposition of approximately $299 million in the first quarter of fiscal 2009.

The Notes were issued in three tranches: $99,990,000 principal amount of 10.5% notes due June 19, 2010; $200,035,000 principal amount of 10.75% notes due June 19, 2011; and $249,975,000 principal amount of 11.0% notes due June 19, 2012.

The Notes permit payment of interest in additional Notes. The Notes may be redeemed prior to maturity at the option of the issuer. Until June 23, 2009, the redemption price is 92.5% of face value, plus accrued interest. Thereafter, redemption is at par plus accrued interest. The Notes contain covenants that, among other things, govern the issuer’s ability to make restricted payments and enter into certain affiliate transactions. The Notes also provide for the making of mandatory offers to repurchase upon certain change of control events involving the purchaser, their co-investors or their affiliates.

During the first quarter of fiscal 2009, we collected $31 million of the short-term receivable due from the purchaser. The remaining $6 million receivable is expected to be collected in the third quarter of fiscal 2009.

We reflect the results of these operations as discontinued operations for all periods presented. The assets and liabilities of the divested trading and merchandising operations have been reclassified as assets and liabilities held for sale within our consolidated balance sheets for all periods prior to the divestiture.

Knott’s Berry Farm^® Operations

During the fourth quarter of fiscal 2008, we completed our divestiture of the Knott’s Berry Farm^® (“Knott’s”) jams and jellies brand and operations for proceeds of approximately $55 million, resulting in no significant gain or loss. We reflected the results of these operations as discontinued operations for all periods presented. The assets and liabilities of the divested Knott’s business have been reclassified as assets and liabilities held for sale within our consolidated balance sheets for all periods prior to divestiture.

10

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

Summary of Operational Results

The summary comparative financial results of the discontinued operations were as follows:

	Thirteen weeks ended
	August 24, 2008			August 26, 2007
Net sales	$	204.3		$	333.9
Operating results from discontinued operations before income taxes		57.8			70.6
Gain from disposal of businesses		488.0			—
Income before income taxes		545.8			70.6
Income tax expense		(210.8	)		(26.2	)
Income from discontinued operations, net of tax	$	335.0		$	44.4

The assets and liabilities classified as held for sale as of May 25, 2008 and August 24, 2007 are as follows:

	May 25, 2008		August 26, 2007
Cash and cash equivalents	$	30.8	$	—
Receivables, less allowances for doubtful accounts		614.9		420.0
Inventories		1,294.2		710.2
Prepaid expenses and other current assets		727.5		610.0
Current assets held for sale	$	2,667.4	$	1,740.2
Property, plant and equipment, net	$	119.0	$	112.8
Goodwill and other intangibles		17.0		43.2
Other assets		121.5		58.5
Noncurrent assets held for sale	$	257.5	$	214.5
Notes payable	$	—	$	55.0
Current installments of long-term debt		0.3		0.3
Accounts payable		596.6		444.2
Accrued payroll and other accrued liabilities		591.2		360.4
Current liabilities held for sale	$	1,188.1	$	859.9
Senior long-term debt, excluding current installments	$	1.2	$	1.4
Other noncurrent liabilities		12.7		17.4
Noncurrent liabilities held for sale	$	13.9	$	18.8

11

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

Other Divestitures

In July 2008, we completed the sale of our Pemmican beef jerky business for proceeds of approximately $29.4 million, resulting in a pretax gain of approximately $19.4 million ($10.6 million, after tax), reflected in selling, general and administrative expenses. We will also receive the greater of $2 million per year or 10% of the buyer’s net sales of Pemmican products for the next five years, not to exceed a total of $25 million. We will continue to provide sales and distribution services to the buyer for a period of five years. Due to our continuing involvement with the business, the results of operations of the Pemmican business have not been reclassified as discontinued operations.

3. ACQUISITIONS

On August 1, 2008, we acquired Saroni Sugar & Rice, Inc., a distribution company included in the Commercial Foods segment, for approximately $9 million in cash plus assumed liabilities. Approximately $5 million of the purchase price was allocated to goodwill.

On February 25, 2008, we acquired Watts Brothers, which owned and operated agricultural and farming businesses, for approximately $132 million in cash plus assumed liabilities of approximately $101 million. The Watts Brothers operations are included in the Commercial Foods segment. Approximately $19 million of the purchase price was allocated to goodwill.

On October 21, 2007, we acquired manufacturing assets of Twin City Foods, Inc. (“Twin City Foods”), a potato processing business, for approximately $23 million in cash. These operations are included in the Commercial Foods segment.

On September 5, 2007, we acquired Lincoln Snacks Holding Company, Inc. (“Lincoln Snacks”) for approximately $50 million in cash plus assumed liabilities. Lincoln Snacks, which is included in the Snacks and Store Brands subsegment of the Consumer Foods segment, offers a variety of snack food brands and private label products. Approximately $20 million of the purchase price was allocated to goodwill and $17 million to other intangible assets.

On July 23, 2007, we acquired Alexia Foods, Inc. (“Alexia Foods”) for approximately $50 million in cash plus assumed liabilities. Alexia Foods, which is included in our Frozen Foods subsegment of the Consumer Foods segment, offers premium natural and organic food items including potato products, appetizers, and artisan breads. Approximately $34 million of the purchase price was allocated to goodwill and $19 million to other intangible assets.

Under the purchase method of accounting, the assets acquired and liabilities assumed in acquisitions are recorded at their respective estimated fair values at the date of acquisition. The fair values are subject to refinement as we complete our analyses relative to the fair values at the respective acquisition dates.

SUBSEQUENT EVENTS

Ochoa Joint Venture

On September 22, 2008, we entered into an agreement with Ochoa Ag Unlimited Foods, Inc. (“Ochoa”) for the production, processing and distribution of potato products. We contributed approximately $36 million to acquire a 49.9% interest in the venture. We are currently evaluating whether we will be required to consolidate this venture in our financial statements or to reflect our ownership interest as an equity method investment.

12

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

4. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

The change in the carrying amount of goodwill for the first quarter of fiscal 2009 was as follows:

	Consumer Foods			Commercial Foods			Total
Balance as of May 25, 2008	$	3,380.5		$	102.8		$	3,483.3
Acquisitions		—			6.7			6.7
Divestitures		(4.1	)		—			(4.1	)
Translation and other		(4.9	)		(0.5	)		(5.4	)
Balance as of August 24, 2008	$	3,371.5		$	109.0		$	3,480.5

Other identifiable intangible assets were as follows:

	August 24, 2008				May 25, 2008				August 26, 2007
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Non-amortizing intangible assets	$	778.3	$	—	$	778.3	$	—	$	753.0	$	—
Amortizing intangible assets		60.7		18.4		55.2		16.8		40.8		19.0
	$	839.0	$	18.4	$	833.5	$	16.8	$	793.8	$	19.0

Non-amortizing intangible assets are comprised of brands and trademarks.

Amortizing intangible assets, carrying a weighted average life of approximately 13 years, are principally composed of licensing arrangements and customer relationships. Based on amortizing assets recognized in our balance sheet as of August 24, 2008, amortization expense is estimated to be approximately $4.9 million for each of the next five years.

Cash paid in the first quarter of fiscal 2009 for the purchase of business goodwill and other intangible assets was approximately $26 million.

5. DERIVATIVE FINANCIAL INSTRUMENTS

Our operations are exposed to market risks from adverse changes in:

• commodity prices affecting the cost of raw materials and energy

• foreign exchange rates, and

• interest rates.

In the normal course of business, these risks are managed through a variety of strategies, including the use of derivatives.

Commodity futures and options contracts are used from time to time to reduce the volatility of commodity input prices on items such as natural gas, vegetable oils, proteins, dairy, grains, and electricity. Generally, we economically hedge a portion of our anticipated consumption of commodity inputs for periods of up to 36 months. We may enter into longer-term economic hedges on particular commodities if deemed appropriate. As of August 24, 2008, we had economically hedged certain portions of our anticipated consumption of commodity inputs using derivative instruments with expiration dates through December 2010.

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ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

In order to reduce exposures related to changes in foreign currency exchange rates, when deemed prudent, we 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.

From time to time, we may use derivative instruments, including interest rate swaps, to reduce exposures related to changes in interest rates. No interest rate swap agreements were outstanding during the periods presented.

In prior periods, we have designated certain derivatives as fair value hedges or cash flow hedges qualifying for hedge accounting treatment. We discontinued designating derivatives as cash flow hedges during the first quarter of fiscal 2008 and had no qualifying fair value hedges during the periods covered by this report.

Economic Hedges of Forecasted Cash Flows

Many of our derivatives do not qualify for, and, as noted above, we are not currently designating any derivatives to achieve hedge accounting treatment. Beginning in the first quarter of fiscal 2009, we began to reflect realized and unrealized gains and losses from derivatives used to hedge anticipated commodity consumption and to mitigate foreign currency cash flow risk in earnings immediately within general corporate expense. The gains and losses are reclassified to segment operating results in the period in which the underlying item being hedged is recognized in cost of goods sold. Prior to the first quarter of fiscal 2009, these derivative gains and losses were recorded immediately in our segment results as a component of cost of goods sold or selling, general and administrative expenses, regardless of when the item being hedged impacted earnings.

We recognized net derivative losses of $33.5 million in the first quarter of fiscal 2009 ($33.0 million loss in general corporate expenses, $0.9 million loss in the Consumer Foods segment, and $0.4 million gain in the Commercial Foods segment) and net derivative gains of $4.6 million in the first quarter of fiscal 2008 ($3.5 million in the Consumer Foods segment and $1.1 million in the Commercial Foods segment) from economic hedges of forecasted cash flows including immaterial amounts transferred out of accumulated other comprehensive income for hedges that were previously designated as cash flow hedges.

Other Derivative Activity (Primarily in the Milling Operations)

We also use derivative instruments within our milling operations, which is part of the Commercial Foods segment. Derivative instruments used to economically hedge commodity inventories and forward purchase and sales contracts are marked-to-market such that realized and unrealized gains and losses are immediately included in operating results. The underlying inventory and forward contracts being hedged are also marked-to-market with changes in market value recognized immediately in operating results. For derivative trading activities within our milling operations that are not intended to mitigate commodity input cost risk, the derivative instrument is marked-to-market each period with gains and losses included in net sales of the Commercial Foods segment. In the first quarters of fiscal 2009 and 2008, net derivative losses from trading activities of $0.2 million and $1.2 million, respectively were included in the results of operations for the Commercial Foods segment.

All derivative instruments are recognized on the balance sheet at fair value. The fair value of derivative assets is recognized within prepaid expenses and other current assets and current assets held for sale, while the fair value of derivative liabilities is recognized within other accrued liabilities and current liabilities held for sale. As of August 24, 2008, May 25, 2008, and August 26, 2007, the total fair value of derivative assets recognized within prepaid expenses and other current assets was $126.1 million, $207.0 million, and $29.8 million, respectively, while the amount recognized within current assets held for sale was $536.6 million and $455.7 million as of May 25, 2008 and August 26, 2007, respectively. As of August 24, 2008, May 25, 2008, and August 26, 2007, the fair value of derivatives recognized within other current liabilities was $35.1 million, $55.8 million, and $45.8 million, respectively, while the amount recognized within current liabilities held for sale was $301.6 million and $193.4 million as of May 25, 2008 and August 26, 2007, respectively.

6. SHARE-BASED PAYMENTS

For the thirteen weeks ended August 24, 2008, we recognized total stock-based compensation expense (including stock options, restricted stock units, performance shares, and restricted cash) of $12.6 million. For the thirteen weeks ended August 26, 2007, we recognized total stock-based compensation expense (including stock options, restricted stock units, performance shares, and restricted cash) of $13.5 million. During the first quarter of fiscal 2009, we granted 0.9 million

14

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

restricted stock units at a weighted average grant date price of $21.26, 7.2 million stock options at a weighted average exercise price of $21.25, and 0.5 million performance shares at a weighted average grant date price of $21.26.

The performance shares are granted to selected executives and other key employees with vesting contingent upon the Company meeting various Company-wide performance goals. The performance goals are based upon our earnings before interest and taxes (EBIT) and our return on average invested capital (ROAIC) measured over a defined performance period. The awards actually earned will range from zero to three hundred percent of the targeted number of performance shares granted and be paid in shares of common stock. Subject to limited exceptions set forth in the plan, any shares earned will be distributed at the end of the three-year period. The value of these performance shares is adjusted based upon the market price of our stock at the end of each reporting period and amortized as compensation expense over the vesting period.

The weighted average Black-Scholes assumptions for stock options granted during the first quarter of fiscal 2009 were as follows:

Expected volatility (%)	18.04
Dividend yield (%)	3.29
Risk-free interest rate (%)	3.39
Expected life of stock option (years)	4.66

The weighted average Black-Scholes value of stock options granted during the first quarter of fiscal 2009 was $2.85.

7. 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:

	Thirteen weeks ended
	August 24, 2008		August 26, 2007
Net income:
Income from continuing operations	$	107.4	$	131.0
Income from discontinued operations, net of tax		335.0		44.4
Net income	$	442.4	$	175.4
Weighted average shares outstanding:
Basic weighted average shares outstanding		467.1		489.2
Add: Dilutive effect of stock options, restricted stock awards, and other dilutive securities		2.5		3.6
Diluted weighted average shares outstanding		469.6		492.8

For the first quarter of fiscal 2009, there were 30.2 million stock options outstanding that were excluded from the computation of shares contingently issuable upon the exercise of stock options because exercise prices exceeded the average market value of common stock during the period. For the first quarter of fiscal 2008, there were 9.7 million stock options excluded from the calculation.

The decline in the diluted weighted average shares outstanding in the first quarter of fiscal 2009 resulted principally from our repurchase of 38.4 million shares during the first quarter of fiscal 2009 under an accelerated share repurchase plan.

15

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

8. INVENTORIES

The major classes of inventories were as follows:

	August 24, 2008		May 25, 2008		August 26, 2007
Raw materials and packaging	$	610.3	$	580.8	$	549.1
Work in process		101.3		100.0		92.5
Finished goods		1,256.4		1,179.1		1,104.8
Supplies and other		78.1		71.6		66.0
	$	2,046.1	$	1,931.5	$	1,812.4

9. RESTRUCTURING

2006-2008 Restructuring Plan

In February 2006, our board of directors approved a plan recommended by executive management to simplify our operating structure and reduce our manufacturing and selling, general, and administrative costs (“2006—2008 plan”). The plan included supply chain rationalization initiatives, the relocation of a divisional headquarters from Irvine, California to Naperville, Illinois, the centralization of shared services, salaried headcount reductions, and other cost-reduction initiatives. The plan was substantially completed by the end of fiscal 2008. The forecasted cost of the plan, as updated through August 24, 2008, is $233.9 million, of which expense of $0.4 million was recorded in the first quarter of fiscal 2009, a benefit of $1.6 million was recorded in fiscal 2008, $103.0 million of expense was recorded in fiscal 2007, and $129.6 million of expense was recorded in the second half of fiscal 2006. We have recorded expenses associated with this restructuring plan, including but not limited to, asset impairment charges, accelerated depreciation (i.e., incremental depreciation due to an asset’s reduced estimated useful life), inventory write-downs, severance and related costs, and plan implementation costs (e.g., consulting, employee relocation, etc.). At August 24, 2008, approximately $3.5 million of liabilities related to this plan remained outstanding.

Included in the above estimates are $134.5 million of charges which have resulted or will result in cash outflows and $99.4 million of non-cash charges.

During fiscal 2008, we reassessed certain aspects of our plan to rationalize our supply chain. We determined that we will continue to operate three production facilities that we had previously planned to close. As a result of such determination, previously established reserves, primarily for related severance costs and pension costs, were reversed in fiscal 2008. We are currently evaluating the best use of a new production facility, the construction of which is in progress, in connection with our restructuring plans. We believe, based on our current assessment of likely scenarios, the carrying value of this facility ($40.6 million at August 24, 2008) is recoverable. In the event we determine that the future use of the new facility will not result in recovery of the recorded value of the asset, an impairment charge would be required.

16

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

2008-2009 Restructuring Plan

During fiscal 2008, our board of directors approved a plan (“2008-2009 plan”) recommended by executive management to improve the efficiency of our Consumer Foods operations and related functional organizations and to streamline our international operations to reduce our manufacturing and selling, general, and administrative costs. This plan includes the reorganization of the Consumer Foods operations, the integration of the international headquarters functions into our domestic business, and exiting a number of international markets. These plans are expected to be substantially completed by the end of fiscal 2009. The forecasted costs of this plan, as updated through August 24, 2008, are $43.3 million, of which $8.2 million was recorded during the first quarter of fiscal 2009 and $27.8 million was recorded in fiscal 2008. We have recorded expenses associated with this restructuring plan, including but not limited to, inventory write-downs, severance and related costs, and plan implementation costs (e.g., consulting, employee relocation, etc.). We anticipate that we will recognize the following pre-tax expenses associated with the 2008-2009 plan in the fiscal 2008 to 2009 timeframe (amounts include charges recognized in the first quarter of fiscal 2009 and full-year fiscal 2008):

	Consumer Foods		Corporate		Total
Inventory write-downs	$	2.4	$	—	$	2.4
Total cost of goods sold		2.4		—		2.4
Asset impairment		0.8		—		0.8
Severance and related costs		18.3		3.6		21.9
Contract termination		5.8		—		5.8
Plan implementation costs		1.2		4.1		5.3
Goodwill/Brand impairment		0.2		—		0.2
Other, net		6.9		—		6.9
Total selling, general and administrative expenses		33.2		7.7		40.9
Consolidated total	$	35.6	$	7.7	$	43.3

Included in the above estimates are $39.9 million of charges which have resulted or will result in cash outflows and $3.4 million of non-cash charges.

During the first quarter of fiscal 2009, we recognized the following pre-tax charges in our consolidated statement of earnings for the fiscal 2008-2009 plan:

	Consumer Foods		Corporate		Total
Inventory write-downs	$	—	$	—	$	—
Total cost of goods sold		—		—		—
Severance and related costs		0.5		0.3		0.8
Plan implementation costs		0.5		0.6		1.1
Other, net		6.3		—		6.3
Total selling, general and administrative expenses		7.3		0.9		8.2
Consolidated total	$	7.3	$	0.9	$	8.2

17

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

We recognized the following cumulative (plan inception to August 24, 2008) pre-tax charges related to the 2008-2009 plan in our consolidated statements of earnings:

	Consumer Foods		Corporate		Total
Inventory write-downs	$	2.4	$	—	$	2.4
Total cost of goods sold		2.4		—		2.4
Asset impairment		0.8		—		0.8
Severance and related costs		17.3		3.4		20.7
Contract termination		2.3		—		2.3
Plan implementation costs		0.8		1.9		2.7
Goodwill/Brand impairment		0.2		—		0.2
Other, net		6.9		—		6.9
Total selling, general and administrative expenses		28.3		5.3		33.6
Consolidated total	$	30.7	$	5.3	$	36.0

Liabilities recorded for the various initiatives and changes therein for the thirteen weeks ended August 24, 2008 under the 2008-2009 plan were as follows:

	Balance at May 25, 2008		Costs Paid or Otherwise Settled			Costs Incurred and Charged to Expense		Changes in Estimates		Balance at August 24, 2008
Severance and related costs	$	16.0	$	(6.8	)	$	0.6	$	0.2	$	10.0
Plan implementation costs		3.3		(1.4	)		1.1		—		3.0
Total	$	19.3	$	(8.2	)	$	1.7	$	0.2	$	13.0

10. INCOME TAXES

In the first quarter of fiscal 2009 and 2008, our income tax expense for continuing operations was $65.9 million and $61.1 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income from continuing operations, inclusive of equity method investment earnings) was approximately 38% and 32% for the first quarter of fiscal 2009 and 2008, respectively.

The amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits, was $65.9 million as of August 24, 2008 and $75.8 million as of May 25, 2008. Gross unrecognized tax benefits exclude related liabilities for gross interest and penalties of $13.4 million and $21.8 million as of August 24, 2008 and May 25, 2008 respectively.

We estimate that it is reasonably possible that the amount of gross unrecognized tax benefits will decrease by $5 million to $10 million over the next twelve months due to various federal, state, and foreign audit settlements and the expiration of statutes of limitations.

11. CONTINGENCIES

In fiscal 1991, we acquired Beatrice Company (“Beatrice”). As a result of the acquisition and the significant pre-acquisition contingencies of the Beatrice businesses and its former subsidiaries, our consolidated post-acquisition financial statements reflect 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 us. The litigation includes several public nuisance and personal injury suits against a number of lead paint and pigment manufacturers, including ConAgra Grocery Products and the Company as alleged successors to W. P. Fuller Co., a lead paint and pigment manufacturer owned and operated by Beatrice until 1967. Although decisions favorable to us have been rendered in Rhode

18

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

Island, New Jersey, and Wisconsin, we remain a defendant in active suits in Illinois, Ohio, and California. The Illinois suit seeks class-wide relief in the form of medical monitoring for elevated levels of lead in blood. The State of Ohio seeks abatement of the alleged nuisance and unspecified damages. In California, a number of cities and counties have joined in a consolidated action seeking abatement of the alleged public nuisance.

The environmental proceedings include litigation and administrative proceedings involving Beatrice’s status as a potentially responsible party at 34 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 32 of these sites. Reserves for these matters have been established based on our best estimate of the 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 our experience in remediating sites. The reserves for Beatrice environmental matters totaled $91.1 million as of August 24, 2008, a majority of which relates to the Superfund and state-equivalent sites referenced above. Expenditures for these matters are expected to continue for a period of up to 20 years.

In certain limited situations, we will guarantee an obligation of an unconsolidated entity. We have outstanding guarantees of various trade obligations of the divested Trading and Merchandising business (now operating as the Gavilon Group, LLC, “Gavilon”). The guarantees were in place prior to the divestiture and are in the process of being released by the trade counterparties. The nominal amount of these guarantees was $71 million at August 24, 2008. We have not established a liability in connection with these guarantees, as we believe the likelihood of financial exposure to us under these guarantees is remote. During this transitional period, Gavilon is contractually required to, and has, obtained letters of credit under their financing facilities (led by JP Morgan Chase) for our benefit, the effect of which is to effectively mitigate any financial exposure to us from the guarantees. We also guarantee payment of certain railcar leases of Gavilon; the railcar leases were in place prior to the divestiture and the parties are working with the lessors to secure the Company’s release. The remaining terms of these lease agreements do not exceed ten years and the maximum amount of future payments we have guaranteed is $37 million as of August 24, 2008. We have not established a liability for these guarantees, as we have determined that the likelihood of our required performance under the guarantees is remote.

We guarantee certain leases and other commercial obligations resulting from our fresh beef and pork divestiture. The remaining terms of these arrangements do not exceed seven years and the maximum amount of future payments we have guaranteed is approximately $24.7 million as of August 24, 2008. We have also guaranteed the performance of the divested fresh beef and pork business with respect to a hog purchase contract. The hog purchase contract requires the fresh beef and pork business 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.

We are a party to various potato supply agreements. Under the terms of certain such potato supply agreements, we have guaranteed repayment of short-term bank loans of the potato suppliers, under certain conditions. At August 24, 2008, the amount of supplier loans effectively guaranteed by us was approximately $35 million. We have not established a liability for these guarantees, as we have determined that the likelihood of our required performance under the guarantees is remote.

We are a party to a supply agreement with an onion processing company. We have guaranteed repayment of a loan of this supplier, under certain conditions. At August 24, 2008, the amount of this loan was $25 million. In the event of default on this loan by the supplier, we have the contractual right to purchase the loan from the lender, thereby giving us the rights to underlying collateral. We have not established a liability in connection with these guarantees, as we believe the likelihood of financial exposure to us under this agreement is remote.

We are party to a number of lawsuits and claims arising out of the operation of our business, including lawsuits and claims related to the February 2007 recall of our peanut butter products. We believe that the ultimate resolution of these lawsuits and claims will not have a material adverse effect on our financial condition, results of operations, or liquidity. On June 28, 2007, officials from the Food and Drug Administration’s Office of Criminal Investigations executed a search warrant at our peanut butter manufacturing facility in Sylvester, Georgia, to obtain a variety of records and information relating to plant operations. We have cooperated with officials in regard to the investigation.

After taking into account liabilities recorded for all of the foregoing matters, we believe the ultimate resolution of such matters should not have a material adverse effect on our financial condition, results of operations, or liquidity. Costs of legal services are recognized in earnings as services are provided.

19

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

12. PENSION AND POSTRETIREMENT BENEFITS

We 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. We also sponsor postretirement plans which provide certain medical and dental benefits (“other benefits”) to qualifying U.S. employees.

We historically had used February 28 as the measurement date for our plans. Beginning May 28, 2007, we elected to early adopt the measurement date provisions of SFAS No. 158. These provisions require the measurement date for plan assets and liabilities to coincide with the sponsor’s fiscal year-end. We used the “alternative” method for adoption. As a result, during the first quarter of fiscal 2008 we recorded a decrease to retained earnings of approximately $11.7 million, net of tax, and an increase to accumulated other comprehensive income of approximately $1.6 million, net of tax, representing the periodic benefit cost for the period from March 1, 2007 through our fiscal 2007 year-end.

Components of pension benefit and other postretirement benefit costs included:

	Pension Benefits Thirteen weeks ended						Postretirement Benefits Thirteen weeks ended
	August 24, 2008			August 26, 2007			August 24, 2008			August 26, 2007
Service cost	$	12.9		$	15.0		$	0.2		$	0.3
Interest cost		35.3			33.3			5.7			5.3
Expected return on plan assets		(39.6	)		(37.1	)		—			—
Amortization of prior service cost		0.8			0.8			(2.8	)		(2.9	)
Recognized net actuarial loss		0.5			2.1			2.5			3.0
Benefit cost - Company plans		9.9			14.1			5.6			5.7
Pension benefit cost - multi-employer plans		2.3			1.8			—			—
Total benefit cost	$	12.2		$	15.9		$	5.6		$	5.7

During the first quarter of fiscal 2009, we contributed $2.2 million to our pension plans and contributed $8.4 million to our other postretirement plans. Based upon the current funded status of the plans and the current interest rate environment, we anticipate making further contributions of approximately $7.0 million to our pension plans for the remainder of fiscal 2009. We anticipate making further contributions of $31.6 million to our other postretirement plans during the remainder of fiscal 2009. These estimates are based on current tax laws, plan asset performance, and liability assumptions, which are subject to change.

13. LONG-TERM DEBT

During the first quarter of fiscal 2009, we retired approximately $21.5 million of 7.125% senior long-term debt due October 2026 and $17.9 million of 7% senior long-term debt due October 2028, prior to the maturity of the notes, resulting in no material gain or loss.

For the period ending prior to August 26, 2007 and prior periods, we consolidated several entities from which we lease office buildings. These entities were determined to be variable interest entities and we were determined to be the primary beneficiary of each of these entities. In September 2007, we ceased to be the primary beneficiary of the entities and, accordingly, we discontinued the consolidation of the assets and liabilities of these entities. At August 26, 2007, we reflected $92 million of obligations to these entities. At the time we discontinued consolidation, a lease agreement with one of the variable interest entities was determined to be a capital lease, and, as such, at August 24, 2008 and May 25, 2008, we reflected the related leased assets of $46 million in property, plant and equipment, capital lease obligations of $44 million in senior long-term debt, and $2 million in current installments of long-term debt.

20

ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

Included in current installments of long-term debt is $300 million of 6.7% senior debt due August 2027 due to the existence of a put option that is exercisable by the holders of the debt from June 1, 2009 to July 1, 2009. If the put option is not exercised by the holders of the debt, we would reclassify the $300 million balance to senior long-term debt in the first quarter of fiscal 2010, when the put option has expired.

14. ACCELERATED SHARE REPURCHASE PROGRAM

We initiated an accelerated share repurchase program during the first quarter of fiscal 2009. We paid $900 million and have received 38.4 million shares under this program, to date. Under certain circumstances, we may receive additional shares, not to exceed 5.6 million shares, under the program in the second half of fiscal 2009 at no additional cost to us. Under certain circumstances, the likelihood of which we have determined to be remote, we could be required to surrender shares received to date under this program.

15. FAIR VALUE MEASUREMENTS

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of SFAS No. 157 were effective as of the beginning of our fiscal 2009 for our financial assets and liabilities, as well as for other assets and liabilities that are carried at fair value on a recurring basis in our consolidated financial statements. The FASB has provided for a one-year deferral of the implementation of this standard for other nonfinanical assets and liabilities. The adoption of SFAS No. 157 did not have a material impact on our consolidated financial position or results of operations.

As required by SFAS No. 157, we have categorized our financial assets and liabilities for which fair value measurement is required into three levels, based upon the nature of the inputs used to determine fair value. The three levels are defined as follows:

Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets and liabilities in markets that are not active.

Level 3 – Unobservable inputs reflecting our own assumptions about the assumptions that market participants would use in pricing the asset or liability.

The following table presents our financial assets and liabilities measured at fair value based upon the level within the fair value hierarchy in which the fair value measurements fall, as of August 24, 2008:

	Level 1		Level 2		Level 3		Total
Assets:
Derivative assets	$	46.6	$	79.5	$	—	$	126.1
Available for sale securities		2.0		—		—		2.0
Deferred compensation assets		10.7		—		—		10.7
Total assets	$	59.3	$	79.5	$	—	$	138.8
Liabilities:
Derivative liabilities	$	—	$	35.1	$	—	$	35.1
Deferred and share-based compensation liabilities		34.9		—		—		34.9
Total liabilities	$	34.9	$	35.1	$	—	$	70.0

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ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

16. RELATED PARTY TRANSACTIONS

Sales to affiliates (equity method investees) of $0.5 million and $1.0 million for the first quarter of fiscal 2009 and 2008, respectively, are included in net sales. We received management fees from affiliates of $4.3 million and $3.7 million in the first quarter of fiscal 2009 and 2008, respectively. Accounts receivable from affiliates totaled $2.6 million, $3.2 million, and $1.1 million at August 24, 2008, May 25, 2008, and August 26, 2007, respectively, of which $3.0 million and $0.4 million are included in current assets held for sale at May 25, 2008 and August 26, 2007, respectively. Accounts payable to affiliates totaled $13.8 million, $15.6 million, and $12.6 million at August 24, 2008, May 25, 2008, and August 26, 2007, respectively.

17. BUSINESS SEGMENTS AND RELATED INFORMATION

Historically, we reported our results of operations in three segments, the Consumer Foods segment, the Food and Ingredients segment, and the International Foods segment. During the first quarter of fiscal 2009, we completed the assimilation of the international operations primarily into the domestic Consumer Foods business and completed the transition of the direct management of the Consumer Foods reporting segment to the Chief Executive Officer. Accordingly, we have begun to report our operations in two reporting segments: Consumer Foods and Commercial Foods. The majority of the former International Foods segment operations are now managed within the Consumer Foods segment. Beginning in the first quarter of fiscal 2009, we began including the earnings (losses) from equity method investments in segment results below operating profit. Fiscal 2008 financial information has been conformed to reflect these changes.

Consumer Foods

The Consumer Foods reporting segment includes branded, private label, and customized food products which are sold in various retail and foodservice channels, principally in North America. The products include a variety of categories (meals, entrees, condiments, sides, snacks, and desserts) across frozen, refrigerated, and shelf-stable temperature classes. The segment is comprised of and managed through five subsegments as described below:

Grocery Foods North America – includes branded and customized refrigerated or shelf stable food products that are sold in various retail and foodservice channels across the United States. Major brands include: Angela Mia^®, Chef Boyardee^®, Egg Beaters^®, Healthy Choice Fresh Mixers^®, Hebrew National^®, Hunt’s^® , Manwich^®, PAM^®, Peter Pan^®, Snack Pack^®, Reddi-wip^®, Rosarita^®, Ro*Tel^®, Swiss Miss^®, and Van Camp’s ^®. The segment also includes the Consumer Foods businesses in Mexico and Canada which distribute packaged foods that are both locally manufactured and imported from the United States.

Frozen Foods – includes branded and customized frozen food products that are sold in various retail and foodservice channels across the United States. Major brands include: Alexia^®, Banquet^®, Healthy Choice^®, Kid Cuisine^®, and Marie Callender’s^®.

Snacks and Store Brands – includes branded popcorn, meats, seeds, and specialty snacks, as well as private label food products that are sold in various retail and foodservice channels across the United States. Major brands include: ACT II^®, DAVID^®, Orville Redenbacher’s^®, and Slim Jim^®.

Enabler Brands – includes national and regional branded food products across shelf stable, refrigerated and frozen temperature classes. Products are sold in various retail and foodservice channels across the United States. Major brands include: Blue Bonnet^®, La Choy^®, Libby’s^®, The Max^®, Parkay^®, and Wesson^®.

Domestic Export – includes branded shelf stable food products sold through distributors in various markets throughout the world.

The Consumer Foods’ supply chain and order-to-cash functions are centrally managed and largely integrated. Accordingly, we do not maintain balance sheets at the subsegment level. Selling, general and administrative expenses, other than advertising and promotion, are managed at the primary segment level, and as such, we do not separately allocate selling, general and administrative expenses other than advertising and promotion expenses to the Consumer Foods subsegments.

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ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

Commercial Foods

The Commercial Foods reporting segment includes commercially branded foods and ingredients, which are sold principally to foodservice, food manufacturing, and industrial customers. The segment’s primary products include: specialty potato products, milled grain ingredients, a variety of vegetable products, seasonings, blends, and flavors which are sold under brands such as Lamb Weston^®, ConAgra Mills^®, Gilroy Foods^® , and Spicetec^® to food processors.

****

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

	Thirteen weeks ended
	August 24, 2008			August 26, 2007
Net sales
Consumer Foods:
Grocery Foods North America	$	680.7		$	614.7
Frozen Foods		418.6			394.7
Snacks and Store Brands		359.6			339.7
Enabler Brands		363.7			322.7
Domestic Export		47.9			43.5
Consumer Foods Administration / Other		(2.1	)		(4.3	)
Total Consumer Foods	$	1,868.4		$	1,711.0
Commercial Foods		1,197.2			910.1
Total net sales	$	3,065.6		$	2,621.1
Profit contribution margin (Net sales, less cost of goods sold and advertising and promotion expenses)
Consumer Foods:
Grocery Foods North America	$	174.0		$	144.1
Frozen Foods		63.0			70.6
Snacks and Store Brands		67.6			81.9
Enabler Brands		34.4			54.7
Domestic Export		12.1			6.2
Consumer Foods Administration / Other		(2.9	)		7.6
Total Consumer Foods	$	348.2		$	365.1
Commercial Foods		178.0			162.8
Total profit contribution margin	$	526.2		$	527.9
Selling, general and administrative expenses (except advertising and promotion)
Consumer Foods	$	161.1		$	177.6
Commercial Foods		45.2			42.2
Total selling, general and administrative expenses at segments (except advertising and promotion)	$	206.3		$	219.8
Operating profit
Consumer Foods	$	187.1		$	187.3
Commercial Foods		132.8			120.6
Total operating profit	$	319.9		$	307.9
Equity method investment earnings (loss)

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ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

	Thirteen weeks ended
	August 24, 2008			August 26, 2007
Consumer Foods	$	1.3		$	0.1
Commercial Foods		(0.4	)		9.5
Total equity method investment earnings	$	0.9		$	9.6
General corporate expenses		97.4			70.6
Interest expense, net		50.1			54.8
Income tax expense		65.9			61.1
Income from continuing operations	$	107.4		$	131.0

During the first quarter of fiscal 2008, we discontinued the practice of designating derivatives as cash flow hedges of commodity inputs. As such, during fiscal 2008, derivative instruments used to create economic hedges of such commodity inputs were marked-to-market each period with both realized and unrealized changes in market value immediately included in cost of goods sold within segment operating profit.

In fiscal 2009, following the sale of our trading and merchandising operations and related organizational changes, we transferred the management of commodity hedging activities (except for those related to our milling operations) to a centralized procurement group. Beginning in the first quarter of fiscal 2009, we began to reflect realized and unrealized gains and losses from derivatives used to hedge anticipated commodity consumption in earnings immediately within general corporate expenses. The gains and losses are reclassified to segment operating results in the period in which the underlying item being hedged is recognized in cost of goods sold. Prior to the first quarter of fiscal 2009, these derivative gains and losses were recorded immediately in our segment results as a component of cost of goods sold, regardless of when the item being hedged impacted earnings. We believe this change will result in better segment management focus on key operational initiatives and improved transparency to derivative gains and losses. We did not recharacterize fiscal 2008 segment results in a comparable manner, as it was impracticable to retrospectively apply the processes which we began to use in fiscal 2009 to determine the appropriate period in which to allocate derivative gains and losses from general corporate expenses to segment operating results.

In fiscal 2008, we began to centrally manage foreign currency risk for all of our reporting segments. Foreign currency derivatives used to manage foreign currency risk are not designated for hedge accounting treatment. We believe that these derivatives provide economic hedges of the foreign currency risk of certain forecasted transactions. As such, these derivatives are recognized at fair market value with realized and unrealized gains and losses recognized in general corporate expenses. The gains and losses are subsequently recognized in the operating results of the reporting segments in the period in which the underlying transaction being economically hedged is included in earnings.

The following table presents the net derivative gains (losses) from economic hedges of forecasted commodity consumption and currency risk of our foreign operations for the first quarter of fiscal 2009, under this new methodology:

Net derivative gains (losses) incurred	$	(33.5	)
Net derivative gains (losses) allocated to reporting segments		(0.5	)
Net derivative gains (losses) recognized in general corporate expenses	$	(33.0	)
Net derivative gains (losses) allocated to Consumer Foods	$	(0.9	)
Net derivative gains (losses) allocated to Commercial Foods		0.4
Net derivative gains (losses) included in segment operating profit	$	(0.5	)

In the first quarter of fiscal 2008, net derivative gains (losses) from economic hedges of forecasted commodity consumption and currency risk of our foreign operations were $3.5 million in the Consumer Foods segment and $1.1 million in the Commercial Foods segment.

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ConAgra Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Thirteen Weeks ended August 24, 2008 and August 26, 2007

(columnar dollars in millions except per share amounts)

We also use derivative instruments within our milling operations, which are part of the Commercial Foods segment. Derivative instruments used to economically hedge commodity inventories and forward purchase and sales contracts are marked-to-market such that realized and unrealized gains and losses are immediately included in operating results. The underlying inventory and forward contracts being hedged are also marked-to-market with changes in market value recognized immediately in operating results. For derivative trading activities within our milling operations that are not intended to mitigate commodity input cost risk, the derivative instrument is marked-to-market each period with gains and losses included in net sales of the Commercial Foods segment. In the first quarters of fiscal 2009 and 2008, net derivative losses from trading activities of $0.2 million and $1.2 million, respectively, were included in the results of operations for the Commercial Foods segment.

Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 15% of consolidated net sales in the first quarter of both fiscal 2009 and 2008.

Wal-Mart Stores, Inc. and its affiliates accounted for approximately 15%, 13%, and 14% of consolidated net receivables as of August 24, 2008, May 25, 2008, and August 26, 2007, respectively, primarily in the Consumer Foods segment.

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Part I - Financial Information

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This report, including Management’s Discussion & Analysis, contains forward-looking statements. These statements are based on management’s current views and assumptions of future events and financial performance and are subject to uncertainty and changes in circumstances. Readers of this report should understand that these statements are not guarantees of performance or results. Many factors could affect our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including those set forth in this report. These factors include, among other things, availability and prices of raw materials, future economic circumstances, industry conditions, our performance and financial results, product pricing, competitive environment and related market conditions, operating efficiencies, the ultimate impact of recalls, access to capital, actions of governments and regulatory factors affecting our businesses, and other risks described in our reports filed with the Securities and Exchange Commission. We caution 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.

The following discussion should be read together with our financial statements and related notes contained in this report and with the financial statements, related notes, and Management’s Discussion & Analysis in our annual report on Form 10-K for the fiscal year ended May 25, 2008. Results for the thirteen week period ended August 24, 2008 are not necessarily indicative of results that may be attained in the future.

Fiscal 2009 First Quarter Executive Overview

ConAgra Foods, Inc. (NYSE: CAG) is one of North America’s largest packaged food companies, serving grocery retailers, as well as restaurants and other foodservice establishments. Popular ConAgra Foods consumer brands include: Banquet^®, Chef Boyardee^®, Egg Beaters^® , Healthy Choice^®, Hebrew National^®, Hunt’s^®, Marie Callender’s^®, Orville Redenbacher’s^®, Reddi-wip^®, PAM^®, Peter Pan^®, and many others.

Diluted earnings per share were $0.94 in the first quarter of fiscal 2009, including $0.23 per diluted share from continuing operations and $0.71 per diluted share from discontinued operations. Diluted earnings per share were $0.36 in the first quarter of fiscal 2008, including $0.27 per diluted share from continuing operations and $0.09 per diluted share from discontinued operations. Several significant items affect the comparability of year-over-year results of continuing operations. See “Other Significant Items of Note - Items Impacting Comparability” below.

Dispositions of Businesses

Trading and Merchandising Operations

On March 27, 2008, we entered into an agreement with affiliates of Ospraie Special Opportunities Fund to sell our commodity trading and merchandising operations conducted by ConAgra Trade Group (previously principally reported as the Trading and Merchandising segment). The operations include the domestic and international grain merchandising, fertilizer distribution, agricultural and energy commodities trading and services, and grain, animal, and oil seed byproducts merchandising and distribution businesses. In June 2008, the sale of the trading and merchandising operations was completed for before-tax proceeds of 1) approximately $2.2 billion in cash, net of transaction costs (including incentive compensation amounts due to employees due to accelerated vesting), 2) $550 million (face value) of payment-in-kind debt securities issued by the purchaser (the “Notes”) which have been recorded at an initial estimated fair value of $479 million, 3) a short-term receivable of $37 million due from the purchaser, and 4) a four-year warrant to acquire approximately 5% of the issued common equity of the parent company of the divested operations, which has been recorded at an estimated fair value of $1.8 million. We recognized an estimated after-tax gain on the disposition of approximately $299 million in the first quarter of fiscal 2009.

The Notes were issued in three tranches: $99,990,000 principal amount of 10.5% notes due June 19, 2010; $200,035,000 principal amount of 10.75% notes due June 19, 2011; and $249,975,000 principal amount of 11.0% notes due June 19, 2012.

The Notes permit payment of interest in additional Notes. The Notes may be redeemed prior to maturity at the option of the issuer. Until June 23, 2009, the redemption price is 92.5% of face value, plus accrued interest. Thereafter, redemption is at par plus accrued interest. The Notes contain covenants that, among other things, govern the issuer’s ability to make restricted payments and enter into certain affiliate transactions. The Notes also provide for the making of mandatory offers to

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Part I - Financial Information

repurchase upon certain change of control events involving the purchaser, their co-investors, or their affiliates.

During the first quarter of fiscal 2009, we collected $31 million of the short-term receivable due from the purchaser. The remaining $6 million receivable is expected to be collected in the third quarter of fiscal 2009.

We reflect the results of these operations as discontinued operations for all periods presented. The assets and liabilities of the divested trading and merchandising operations have been reclassified as assets and liabilities held for sale within our consolidated balance sheets for all periods prior to the divestiture.

Knott’s Berry Farm^® Operations

During the fourth quarter of fiscal 2008, we completed our divestiture of the Knott’s Berry Farm^® (“Knott’s”) jams and jellies brand and operations for proceeds of approximately $55 million, resulting in no significant gain or loss. We reflected the results of these operations as discontinued operations for all periods presented. The assets and liabilities of the divested Knott’s business have been reclassified as assets and liabilities held for sale within our consolidated balance sheets for all periods prior to divestiture.

Operating Initiatives

We are implementing operational improvement initiatives that are intended to generate profitable sales growth, improve profit margins, and expand returns on capital over time.

Recent developments in our strategies and action plans include:

• Pricing initiatives: We have faced significant increases in input costs during fiscal 2008 and the first quarter of fiscal 2009. We implemented price increases across a significant portion of our Consumer Foods portfolio in the last half of fiscal 2008 and the first quarter of fiscal 2009. We also increased prices in fiscal 2008 and the first quarter of fiscal 2009 in our Commercial Foods segment in order to pass on higher input costs. Although we expect the rate of inflationary pressures to moderate on certain key commodities, we continue to monitor the challenging input cost environment and will consider implementing additional pricing actions as appropriate to offset these effects.

• Innovation: Our recent innovation investments in the Consumer Foods operations resulted in the development of a variety of new products. Healthy Choice^® Café Steamers, Healthy Choice^® Fresh Mixers, Healthy Choice^® Panini, new flavors of Healthy Choice^® Soups, Hunt’s^® Fire Roasted Diced Tomatoes, Orville Redenbacher’s^® Smart Pop! Low Sodium, Orville Redenbacher’s^® Natural, PAM^® Professional, and Fleischmann’s^® and Parkay^® Soft Spreads were introduced to the market during fiscal 2008. In early fiscal 2009 we introduced Healthy Choice^® Asian Steamers and Healthy Choice^® Fresh Mixers. In addition, our Commercial Foods businesses, principally Lamb Weston, ConAgra Mills, and Gilroy Foods and Flavors, continue to invest in a variety of new foodservice products and ingredients for foodservice, food manufacturing, and industrial customers. Together with additional new products planned for fiscal 2009 and beyond, these products are expected to contribute to additional sales growth in the future.

• Sales growth initiatives: We continue to implement sales improvement initiatives focused on penetrating the fastest growing channels, better return on customer trade arrangements, and optimal shelf placement for our most profitable products.

• Reducing costs throughout the supply chain and the general and administrative functions:

• We began an intense focus on cost reduction initiatives in February 2006, when we initiated the fiscal 2006-2008 restructuring plan (the “2006-2008 restructuring plan”). Substantially completed by the end of fiscal 2008, the 2006-2008 restructuring plan focused on streamlining the supply chain and reducing selling, general and administrative costs. During fiscal 2008, we identified additional opportunities to create a more efficient organization, particularly in our Consumer Foods operations and related functional organizations and the international foods operations (the “2008-2009 restructuring plan”). The combined cost of these plans, updated through August 24, 2008, is forecasted at $277 million. We have incurred total charges under these plans, since inception through August 24, 2008, of $267 million.

References to our restructuring plans (“the plans”) refer to both the 2006-2008 restructuring plan and the 2008-2009 restructuring plan, unless otherwise noted. Our restructuring plans are expected to generate annual savings in excess of $50 million per year.

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Part I - Financial Information

• In addition to restructuring activities, we have ongoing initiatives, principally focused on supply chain activities (manufacturing, logistics, and procurement functions), which have resulted in significant cost savings in recent periods.

• Portfolio changes: In recent years, we divested non-core operations that had limited our ability to achieve our efficiency targets. Divesting these operations is helping to simplify our operations and enhance efficiency initiatives going forward. In fiscal 2008, we acquired Alexia Foods, Lincoln Snacks, Watts Brothers, and Twin City Foods for a total of approximately $255 million in cash plus assumed liabilities, enhancing our Consumer Foods and Commercial Foods portfolios.

Capital Allocation

During the first quarter of fiscal 2009, we have funded the following:

• an accelerated share repurchase program of $900 million (approximately 38.4 million shares of common stock have been repurchased to date), and repayment of $1.1 billion of commercial paper balances (including approximately $531 million drawn in the first quarter to support the working capital requirements of the trading and merchandising operations) and approximately $40 million of long-term debt, largely with the cash proceeds from the divestiture of the trading and merchandising operations,

• capital expenditures of approximately $106 million, and

• dividend payments of approximately $92 million.

Opportunities and Challenges

We believe that our operating initiatives will favorably impact future sales, profits, profit margins, and returns on capital. Because of the scope of change underway, there is risk that these broad change initiatives will not be successfully implemented. Input costs, competitive pressures, the ability to execute the operational changes planned, and successfully implement pricing actions, among other factors, will affect the timing and impact of these initiatives.

We have faced increased costs for many of our significant raw materials, packaging, and energy inputs. We seek to mitigate the higher input costs through pricing and productivity initiatives, and through the use of derivative instruments used to economically hedge a portion of forecasted future consumption. We have taken further price increases during the first quarter of fiscal 2009. We are also focusing on selling, general and administrative cost initiatives, as evidenced by the initiation of our restructuring plans. We expect the rate of input cost increases to moderate for certain key commodities in fiscal 2009. However, if the benefits from pricing actions, supply chain productivity improvements, economic hedges, and selling, general and administrative cost reduction initiatives are insufficient to cover these expected higher input costs, results of operations, particularly Consumer Foods operating profit, may continue to be negatively impacted.

Changing consumer preferences may impact sales of certain of our products. We offer a variety of food products which appeal to a range of consumer preferences and utilize innovation and marketing programs to develop products that fit with changing consumer trends. As part of these programs, we introduce new products and product extensions.

Consolidation of many of our 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 Consumer Foods segment. In order to effectively respond to this customer consolidation, we continually evaluate our consumer marketing, sales, and customer service strategies. We are implementing trade promotion programs designed to improve return on investment, and pursuing shelf placement and customer service improvement initiatives.

Other Significant Items of Note - Items Impacting Comparability

Items of note impacting comparability for the first quarter of fiscal 2009 included the following:

Reported within Continuing Operations

• a gain of $19 million ($11 million after tax) on the sale of the Pemmican beef jerky business, and

• charges totaling $9 million ($8 million after tax) for costs under our restructuring plans.

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Part I - Financial Information

See the discussion of segment presentation of gains and losses from derivatives used for hedging of anticipated commodity input costs in the segment review, below.

Reported within Discontinued Operations

• a gain of $488 million ($299 million after tax) on the sale of the trading and merchandising business.

Items of note impacting comparability for the first quarter of fiscal 2008 included the following:

Reported within Continuing Operations

• a benefit of $12 million ($7 million after tax) for recoveries of restructuring charges under the 2006-2008 restructuring plan,

• charges totaling $12 million ($7 million after tax) related to the peanut butter recall, and

• net tax benefits of approximately $3 million resulting from changes in legal structure that reduced certain state effective tax rates, partially offset by international income tax charges.

Segment Review

Historically, we reported our results of operations in three segments, the Consumer Foods segment, the Food and Ingredients segment, and the International Foods segment. During the first quarter of fiscal 2009, we completed the assimilation of the international operations primarily into the domestic Consumer Foods business and completed the transition of the direct management of the Consumer Foods reporting segment to the Chief Executive Officer. Accordingly, we have begun to report our operations in two reporting segments: Consumer Foods and Commercial Foods. The majority of the former International Foods segment operations are now managed within the Consumer Foods segment. Beginning in the first quarter of fiscal 2009, we began including the earnings (losses) from equity method investments in segment results below operating profit. Fiscal 2008 financial information has been conformed to reflect these changes.

Consumer Foods

The Consumer Foods reporting segment includes branded, private label, and customized food products which are sold in various retail and foodservice channels, principally in North America. The products include a variety of categories (meals, entrees, condiments, sides, snacks, and desserts) across frozen, refrigerated, and shelf-stable temperature classes. The segment is comprised of and managed through five subsegments as described below:

Grocery Foods North America – includes branded and customized refrigerated or shelf-stable food products that are sold in various retail and foodservice channels across the United States. Major brands include: Angela Mia^®, Chef Boyardee^®, Egg Beaters^®, Healthy Choice^® Fresh Mixers, Hebrew National^®, Hunt’s^® , Manwich^®, PAM^®, Snack Pack^®, Reddi-wip^®, Rosarita^®, Ro*Tel^®, Swiss Miss^®, and Van Camp’s ^®. The segment also includes the consumer foods businesses in Mexico and Canada which distribute packaged foods that are both locally manufactured and imported from the United States.

Frozen Foods – includes branded and customized frozen food products that are sold in various retail and foodservice channels across the Unites States. Major brands include: Alexia^®, Banquet^®, Healthy Choice^®, Kid Cuisine^®, and Marie Callender’s^®.

Snacks and Store Brands – includes branded popcorn, meats, seeds, and specialty snacks, as well as private label food products that are sold in various retail and foodservice channels across the United States. Major brands include: ACT II^®, DAVID^®, Orville Redenbacher’s^®, and Slim Jim^®.

Enabler Brands – includes national and regional branded food products across shelf-stable, refrigerated, and frozen temperature classes. Products are sold in various retail and foodservice channels across the United States. Major brands include: Blue Bonnet^®, La Choy^®, Libby’s^®, The Max^®, Parkay^®, and Wesson^®.

Domestic Export – includes branded shelf-stable food products sold through distributors in various markets throughout the world.

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Part I - Financial Information

The Consumer Foods’ supply chain and order-to-cash functions are centrally managed and largely integrated. Accordingly, we do not maintain balance sheets at the subsegment level. Selling, general and administrative expenses, other than advertising and promotion, are managed at the primary segment level, and as such, we do not separately allocate selling, general and administrative expenses other than advertising and promotion expenses to the Consumer Foods subsegments.

Commercial Foods

The Commercial Foods reporting segment includes commercially branded foods and ingredients, which are sold principally to foodservice, food manufacturing, and industrial customers. The segment’s primary products include: specialty potato products, milled grain ingredients, a variety of vegetable products, seasonings, blends, and flavors which are sold under brands such as ConAgra Mills^®, Lamb Weston^®, Gilroy Foods^® , and Spicetec^® to food processors.

Presentation of Derivative Gains (Losses) in Segment Results

In fiscal 2009, following the sale of our trading and merchandising operations and related organizational changes, we transferred the management of commodity hedging activities (except for those related to our milling operations) to a centralized procurement group. Beginning in the first quarter of fiscal 2009, we began to reflect realized and unrealized gains and losses from derivatives (except for those related to our milling operations) used to hedge anticipated commodity consumption in earnings immediately within general corporate expenses. The gains and losses are reclassified to segment operating results in the period in which the underlying item being hedged is recognized in cost of goods sold. Prior to the first quarter of fiscal 2009, these derivative gains and losses were recorded immediately in our segment results as a component of cost of goods sold regardless of when the item being hedged impacted earnings. We believe this change will result in better segment management focus on key operational initiatives and improved transparency to derivative gains and losses.

In fiscal 2008, we began to centrally manage foreign currency risk for all of our reporting segments. Foreign currency derivatives used to manage foreign currency risk are not designated for hedge accounting treatment. We believe that these derivatives provide economic hedges of the foreign currency risk of certain forecasted transactions. As such, these derivatives are recognized at fair market value with realized and unrealized gains and losses recognized in general corporate expenses. The gains and losses are subsequently recognized in the operating results of the reporting segments in the period in which the underlying transaction being economically hedged is included in earnings.

The following table presents the net derivative gains (losses) from economic hedges of forecasted commodity consumption and currency risk of our foreign operations for the first quarter of fiscal 2009, under this new methodology:

Net derivative gains (losses) incurred	$	(33.5	)
Net derivative gains (losses) allocated to reporting segments		(0.5	)
Net derivative gains (losses) recognized in general corporate expenses	$	(33.0	)
Net derivative gains (losses) allocated to Consumer Foods	$	(0.9	)
Net derivative gains (losses) allocated to Commercial Foods		0.4
Net derivative gains (losses) included in segment operating profit	$	(0.5	)

In the first quarter of fiscal 2008, net derivative gains (losses) from economic hedges of forecasted commodity consumption and currency risk of our foreign operations were $3.5 million in the Consumer Foods segment and $1.1 million in the Commercial Foods segment.

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Part I - Financial Information

Net Sales

($ in millions)	Net Sales
Reporting Segment	Thirteen weeks ended
	August 24, 2008			August 26, 2007			% Inc / (Dec)
Consumer Foods
Grocery Foods North America	$	681		$	615		11	%
Frozen Foods		419			395		6	%
Snacks and Store Brands		359			339		6	%
Enabler Brands		364			323		13	%
Domestic Export		48			43		10	%
Other		(2	)		(4	)	N/A
Total Consumer Foods		1,869			1,711		9	%
Commercial Foods		1,197			910		32	%
Total	$	3,066		$	2,621		17	%

Net sales for the first quarter of fiscal 2009 were $3.1 billion, an increase of $445 million, or 17%, from the first quarter of fiscal 2008. Increased sales were largely due to increased pricing across all segments and subsegments, including higher net sales in the milling operations driven by significant increases in wheat costs.

Consumer Foods net sales for the first quarter were $1.9 billion, an increase of 9% compared to the same period in the prior fiscal year. Results reflected effectively flat sales volume and a 9% improvement in net pricing and product mix. Highlights by subsegment are as follows:

Grocery Foods North America

Grocery Foods North America subsegment sales were $681 million, an increase of 11% compared to the first quarter of fiscal 2008. Results reflect a 5% increase in net pricing and a 5% increase in volumes, including 3% due to the reintroduction of Peter Pan^® peanut butter. Sales of all peanut butter products, including both branded and private label, in the first quarter of fiscal 2009 were $20 million higher than in the first quarter of fiscal 2008. We achieved sales growth in the first quarter of fiscal 2009 for the following brands: Chef Boyardee^®, Egg Beaters^®, Hebrew National^®, Hunts^®, and Peter Pan^®. Sales declines occurred for Swiss Miss^®. Sales for other brands were essentially flat. Sales growth was flat in Canada and increased by $12 million in Mexico.

Frozen Foods

Frozen Foods subsegment sales were $419 million, an increase of 6% compared to the first quarter of fiscal 2008. Results reflect improved volume and mix of 6% and a 1% reduction of net pricing related to competitive pricing activities. We achieved sales growth in the first quarter of fiscal 2009 for both Alexia^® and Banquet^® Sales for other brands were essentially flat. Net sales from the Alexia business, acquired in fiscal 2008 totaled $10 million and $3 million in the first quarters of fiscal 2009 and 2008, respectively.

Snacks and Store Brands

Snacks and Store Brands subsegment sales were $359 million, an increase of 6% compared to the first quarter of fiscal 2008. Results reflect an increase of 6% in net pricing with flat volume. Net sales from Lincoln Snacks, a business acquired in the second quarter of fiscal 2008, totaled $6 million in the first quarter of fiscal 2009. We achieved sales growth in the first quarter of fiscal 2009 for both Orville Redenbacher’s^® and Slim Jim^®. Sales declined for ACT II^®. Sales for other brands were essentially flat.

Enabler Brands

Enabler Brands subsegment sales were $364 million, an increase of 13% compared to the first quarter of fiscal 2008. Results reflect an 18% increase in net pricing, primarily in our oil and tablespreads products, and a 5% reduction in volume. We achieved sales growth in the first quarter of fiscal 2009 for the following brands: Blue Bonnet^®, La Choy^®, Libby’s ^®, and Van Camp’s^®. Sales declines occurred for Parkay^® and Wolf^®. Sales for other brands were essentially flat.

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Domestic Export

Domestic Export subsegment sales were $48 million, an increase of 10% compared to the first quarter of fiscal 2008. Results reflect improved volume and mix of 5% and increased net pricing of 5%. The higher sales are also reflective of better sales performance on Chef Boyardee^®, Orville Redenbacher’s^®, and Snack Pack^®.

Commercial Foods net sales were $1.2 billion in the first quarter of fiscal 2009, an increase of $287 million, or 32%, compared to the same period in the prior fiscal year. Increased net sales for the first quarter of fiscal 2009 reflected significantly higher selling prices in the segment’s flour milling operations due to higher wheat prices, and price increases in our Lamb Weston specialty potato products business. Net sales from Watts Brothers, a business acquired in the fourth quarter of fiscal 2008, were $21 million in the first quarter of fiscal 2009.

Profit Contribution Margin

(Net sales less cost of goods sold and advertising and promotion expense)

($ in millions)	Profit Contribution Margin
Reporting Segment	Thirteen weeks ended
	August 24, 2008			August 26, 2007		% Inc / (Dec)
Consumer Foods
Grocery Foods North America	$	174		$	144	21	%
Frozen Foods		63			71	(11	)%
Snacks and Store Brands		68			82	(17	)%
Enabler Brands		34			55	(37	)%
Domestic Export		12			6	94	%
Other		(3	)		7	N/A
Total Consumer Foods		348			365	(5	)%
Commercial Foods		178			163	9	%
Included in general corporate expenses		(33	)		—	N/A

Consumer Foods profit contribution margin (“PCM”) for the first quarter of fiscal 2009 was $348 million, a decrease of $17 million, or 5%, from the same period in the prior year. The decrease in PCM reflects significantly higher input costs in all subsegments that were partially offset by supply chain productivity savings and increased net pricing. We estimate that the Consumer Foods segment experienced approximately $190 million of input cost inflation in the first quarter of fiscal 2009 as compared to the first quarter of fiscal 2008. In addition, advertising and promotion expense increased approximately $6 million in the first quarter of fiscal 2009 over the same period in the prior year.

Highlights by subsegment are as follows:

Grocery Foods North America

Grocery Foods North America PCM was $174 million, an increase of 21%, reflecting the impact of higher sales and supply chain productivity savings offset by the impact of higher input costs. In addition, due to the timing of the reintroduction of Peter Pan^® peanut butter products in the prior year, PCM from Peter Pan^® peanut butter products in the first quarter of fiscal 2009 and 2008 was $4 million and $(8) million, respectively. Advertising and promotion costs were in line with prior year levels.

Frozen Foods

Frozen Foods PCM was $63 million, a decrease of 11%, as impacts of higher input costs and competitive pricing pressure more than offset the benefits of higher sales, supply chain productivity savings, and a slight decrease in advertising and promotion costs.

Snacks and Store Brands

Snacks and Store Brands PCM was $68 million, a decrease of 17%, as impacts of higher input costs and increased advertising and promotion costs of approximately $8 million more than offset the benefits of higher sales and supply chain productivity savings.

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Enabler Brands

Enabler Brands PCM was $34 million, a decrease of 38%, as impacts of higher input costs, particularly for the Wesson^® brand, more than offset the benefits of higher sales, supply chain productivity savings, and a decrease in advertising and promotion costs.

Domestic Export

Domestic Export PCM was $12 million, an increase of 94%, reflecting improved volume and mix, as well as a decrease in advertising and promotion costs.

Commercial Foods PCM was $178 million for the first quarter of fiscal 2009 and $163 million in the same period of the prior year, an increase of 9%. The acquisition of Watts Brothers in the fourth quarter of fiscal 2008 added approximately $6 million of PCM in the first quarter of fiscal 2009. All major businesses in this segment experienced significantly higher input costs in the first quarter of fiscal 2009 than in the comparable period of the prior year and increased pricing to offset these higher costs. The PCM in the milling business increased modestly, although gross margin percentage decreased as the entire amount of increased wheat component costs was passed on through higher flour pricing.

Corporate PCM represents $33 million of realized and unrealized losses on derivative instruments used to economically hedge anticipated consumption of commodity input costs and foreign currency cash flows. (See page 30.)

Selling, General and Administrative Expenses

Selling, general and administrative expenses totaled $369 million for the first quarter of fiscal 2009, a decrease of $13 million, or 3%, as compared to the same period of the prior year. Selling, general and administrative expenses for the first quarter of fiscal 2009 reflected:

• a $19 million gain on the disposition of the Pemmican business,

• a decrease in incentive compensation accruals of $13 million,

• a decrease in pension and postretirement expense of $6 million,

• a decrease of contract services expense of $9 million,

• an increase in advertising and promotion expense of $4 million,

• charges of approximately $9 million related to the execution of our restructuring plans, and

• a gain of $5 million on the sale of a facility in our Commercial Foods segment.

Selling, general and administrative expenses in the first quarter of fiscal 2008 included:

• a benefit of approximately $11 million due to a reduction of accruals for estimated costs related to the execution of our restructuring plans,

• income of $5 million for reimbursement of expenses related to transition services provided to the buyers of certain divested businesses,

• charges related to the peanut butter recall of approximately $5 million, and

• a realized gain of $3 million from an available-for-sale security.

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

($ in millions)	Operating Profit
Reporting Segment	Thirteen weeks ended
	August 24, 2008		August 26, 2007		% Inc / (Dec)
Consumer Foods	$	187	$	187	—	%
Commercial Foods		133		121	10	%

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Consumer Foods operating profit for the first quarter of fiscal 2009 was $187 million, unchanged from the first quarter of fiscal 2008. PCM was $17 million lower for the first quarter of fiscal 2009 than in the first quarter of fiscal 2008, as discussed above. We sold our Pemmican beef jerky business in the first quarter of fiscal 2009, recognizing a gain of $19 million. The Consumer Foods segment incurred costs of $8 million in the first quarter of fiscal 2009 and recognized a benefit of $11 million in the first quarter of fiscal 2008 in connection with our restructuring plans. Advertising and promotion expense was $6 million higher in the first quarter of fiscal 2009 than in the first quarter of fiscal 2008. Salaries and incentive compensation expense was $9 million lower in the first quarter of fiscal 2009 than in the first quarter of fiscal 2008.

For the first quarter of fiscal 2009, operating profit for the Commercial Foods segment was $133 million, an increase of $12 million, or 10%, from the first quarter of fiscal 2008. Improved operating profit was reflective of increased PCM, discussed above. Results include a gain of $5 million from the sale of a production facility in the first quarter of fiscal 2009.

Interest Expense, Net

Net interest expense was $50 million and $55 million for the first quarter of fiscal 2009 and 2008, respectively. The decrease reflects $13 million of interest income from the payment-in-kind notes received in connection with the disposition of the trading and merchandising business, partially offset by interest expense on higher commercial paper borrowings early in the first quarter of fiscal 2009.

Income Taxes

In the first quarter of fiscal 2009 and 2008, our income tax expense was $66 million and $61 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income from continuing operations, inclusive of equity method investment earnings) was approximately 38% for the first quarter of fiscal 2009, reflecting the impact of divestitures of international subsidiaries, a change in deferred tax items related to the divestiture of the trading and merchandising business, and a reduction in income tax contingency reserves. The effective tax rate for the first quarter of fiscal 2008 was approximately 32%, reflecting a benefit due to changes in our legal entity structure, partially offset by international income tax charges. We expect our effective income tax rate to be in the range of 35% over time.

Equity Method Investment Earnings

Equity method investment earnings were $1 million and $10 million for the first quarter of fiscal 2009 and 2008, respectively. Decreased equity method investment earnings were the result of less profitable operations of a foreign potato processing venture.

Discontinued Operations

In June 2008, we completed the sale of the trading and merchandising operations and recognized an after-tax gain on the disposition of approximately $299 million in the first quarter of fiscal 2009.

The trading and merchandising operations generated after-tax earnings of $36 million during the first quarter of fiscal 2009, prior to the divestiture.

Results from discontinued operations in the first quarter of fiscal 2008 reflect $44 million of earnings from operating the discontinued businesses.

Earnings Per Share

Our diluted earnings per share in the first quarter of fiscal 2009 were $0.94, including $0.23 per diluted share from continuing operations and $0.71 per diluted share from discontinued operations. Our diluted earnings per share in the first quarter of fiscal 2008 were $0.36, including $0.09 per diluted share of earnings from discontinued operations. See “Other Significant Items of Note – Items Impacting Comparability” above as several other significant items affect the comparability of year-over-year results of operations.

Liquidity and Capital Resources

Sources of Liquidity and Capital

Our primary financing objective is to maintain a prudent capital structure that provides us flexibility to pursue our growth objectives. We currently use short-term debt principally to finance ongoing operations, including our seasonal working

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capital (accounts receivable and prepaid expenses and other current assets, less accounts payable, accrued payroll, and other accrued liabilities) needs and a combination of equity and long-term debt to finance both our base working capital needs and our noncurrent assets.

Commercial paper borrowings (usually less than 30 days maturity) are reflected in our consolidated balance sheets within notes payable. At August 24, 2008, we had a $1.5 billion multi-year revolving credit facility with a syndicate of financial institutions which matures in December 2011. The multi-year facility is a back-up facility for our commercial paper program. Borrowings under the multi-year facility bear interest at or below prime rate and may be prepaid without penalty. As of August 24, 2008, we had short-term notes payable of $25 million. The multi-year revolving credit facility requires us to repay borrowings if our consolidated funded debt exceeds 65% of the consolidated capital base, as defined, or if fixed charges coverage, as defined, is less than 1.75 to 1.0, as such terms are defined in applicable agreements. As of the end of the first quarter of fiscal 2009, we were in compliance with the credit agreements’ financial covenants.

As of the end of the first quarter of fiscal 2009 and 2008, our senior long-term debt ratings were all investment grade. A significant downgrade in our credit ratings would not affect our ability to borrow amounts under the revolving credit facilities, although borrowing costs would increase. A downgrade of our short-term credit ratings would impact our ability to borrow under our commercial paper program by negatively impacting borrowing costs and causing shorter durations, as well as potentially limiting access.

We have repurchased our shares from time to time based on market conditions. We began fiscal 2008 with an authorization to purchase up to $88 million of our common stock in the open market or through privately negotiated transactions. During fiscal 2008, the Board of Directors authorized us to repurchase up to an additional $500 million of our common stock. We repurchased $188 million of our shares during fiscal 2008. Subsequent to fiscal 2008, our authorization increased an additional $500 million. During the first quarter of fiscal 2009, we executed an accelerated share repurchase, buying back approximately 38 million shares of our stock, to date, for $900 million, essentially exhausting our current share repurchase authorization. We expect to complete the accelerated share repurchase in the second half of 2009.

During the first quarter of fiscal 2009, we sold our trading and merchandising operations for proceeds of: 1) approximately $2.2 billion in cash, net of transaction costs, 2) $550 million (face value) of payment-in-kind debt securities issued by the purchaser which have been recorded at an estimated fair value of $479 million, 3) a short-term receivable of $37 million due from the purchaser (of which $31 million was received in the first quarter of fiscal 2009), and 4) a four-year warrant to acquire approximately 5% of the issued common equity of the parent company of the divested operations, which has been recorded at an estimated fair value of $1.8 million.

Cash Flows

During the first quarter of fiscal 2009, we generated $125 million of cash, which was the net impact of $441 million used in operating activities, $2.2 billion generated in investing activities, and $1.6 billion used by financing activities.

Cash generated in operating activities of continuing operations totaled $194 million in the first quarter of fiscal 2009, as compared to $28 million used in the same period of the prior year. Lower income from continuing operations was offset by a lower use of cash for working capital in the first quarter of fiscal 2009, due to an improvement in our cash conversion cycle. Cash used in operating activities of discontinued operations was approximately $635 million in the first quarter of fiscal 2009, as compared to $143 million of cash used in the first quarter of fiscal 2008.

Cash used in investing activities from continuing operations totaled $94 million in the first quarter of fiscal 2009, versus cash used in investing activities of $189 million in the same period of fiscal 2008. Investing activities of continuing operations in the first quarter of fiscal 2009 consisted primarily of capital expenditures of $106 million and expenditures of $30 million for the purchase of businesses and intangible assets, offset by $29 million from the sale of businesses and $13 million of proceeds from the sale of property, plant and equipment. Investing activities for the first quarter of fiscal 2008 consisted primarily of $189 million of capital expenditures, which included approximately $39 million of expenditures related to our purchase of certain warehouse facilities from our lessors (these warehouses were sold for proceeds of approximately $36 million to unrelated third parties immediately thereafter) and purchases of businesses of $50 million, offset by proceeds of $12 million from the sale of property, plant and equipment. We generated $2.3 billion of cash from investing activities of discontinued operations in the first quarter of fiscal 2009 from the disposition of the trading and merchandising business. We used $2 million of cash from investing activities of discontinued operations in the first quarter of fiscal 2008.

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Cash used in financing activities totaled $1.6 billion in the first quarter of fiscal 2009 versus cash used of $67 million in the first quarter of fiscal 2008. During the first quarter of fiscal 2009 and 2008, we paid dividends of $92 million and $89 million, respectively. In the first quarter of fiscal 2009 and 2008, we repurchased $900 million and $88 million, respectively, of our common stock as part of our share repurchase program. During the first quarter of fiscal 2009 we decreased our debt by approximately $607 million, reflecting repayment of $1.1 billion of commercial paper balances (including approximately $531 million drawn in the first quarter to support the working capital requirements of the trading and merchandising operations) and approximately $40 million of long-term debt, largely with the cash proceeds from the trading and merchandising disposition.

We estimate our capital expenditures in fiscal 2009 will be approximately $475 million. We believe that existing cash balances, cash flows from operations, divestiture proceeds, existing credit facilities, and access to capital markets will provide sufficient liquidity to meet our working capital needs, planned capital expenditures, and payment of anticipated quarterly dividends.

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Off-Balance Sheet Arrangements

We use off-balance sheet arrangements (e.g., operating leases) where the economics and sound business principles warrant their use. We periodically enter 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.

We consolidate the assets and liabilities of several entities from which we lease corporate aircraft. For the period ending prior to August 26, 2007 and prior periods, we consolidated several entities from which we lease office buildings. Each of these entities had been determined to be a variable interest entity and we were determined to be the primary beneficiary of each of these entities. In September 2007, we ceased to be the primary beneficiary of the entities from which we lease office buildings and, accordingly, we discontinued the consolidation of the assets and liabilities of these entities.

Due to the consolidation of the variable interest entities, we reflected in our balance sheets:

	August 24, 2008		May 25, 2008		August 26, 2007
Property, plant and equipment, net	$	51.0	$	51.8	$	154.1
Other assets		—		—		13.8
Current installments of long-term debt		3.4		3.3		6.2
Senior long-term debt, excluding current installments		50.0		50.9		142.5
Other accrued liabilities		0.6		0.6		0.6
Other noncurrent liabilities		—		—		21.7

The liabilities recognized as a result of consolidating these entities do not represent additional claims on our general assets. The creditors of these entities have claims only on the assets of the specific variable interest entities to which they have advanced credit.

Obligations and Commitments

As part of our ongoing operations, we enter into arrangements that obligate us 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 in our normal course of business in order to ensure adequate levels of sourced product are available. Of these items, debt and capital lease obligations, which totaled $3.4 billion and $67 million, respectively, as of August 24, 2008, were recognized as liabilities in our consolidated balance sheet. Operating lease obligations and unconditional purchase obligations, which totaled $1.3 billion as of August 24, 2008, in accordance with generally accepted accounting principles, were not recognized as liabilities in our consolidated balance sheet.

A summary of our contractual obligations as of August 24, 2008 was as follows:

	Payments Due by Period (in millions)
Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years		After 5 Years
Long-term debt	$	3,421.1	$	310.0	$	513.0	$	745.1	$	1,853.0
Capital lease obligations		67.2		4.8		8.2		5.5		48.7
Operating lease obligations		388.3		60.1		109.4		83.9		134.9
Purchase obligations		880.0		746.0		105.5		17.9		10.6
Total	$	4,756.6	$	1,120.9	$	736.1	$	852.4	$	2,047.2

We are also contractually obligated to pay interest on our long-term debt and capital lease obligations. The weighted average interest rate of the long-term debt obligations outstanding as of August 24, 2008 was approximately 7.2%.

Included in current installments of long-term debt (payments due in less than one year) is $300 million of 6.7% senior debt due August 2027 due to the existence of a put option that is exercisable by the holders of the debt from June 1, 2009 to July 1,

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2009. If the put option is not exercised by the holders of the debt, we will reclassify the $300 million balance to senior long-term debt in the first quarter of fiscal 2010, when the put option has expired.

We consolidate the assets and liabilities of certain entities from which we lease corporate aircraft. These entities have been determined to be variable interest entities and we have been determined to be the primary beneficiary of theses entities. The amounts reflected in contractual obligations of long-term debt, in the table above, include $53 million of liabilities of these variable interest entities to the creditors of such entities. The long-term debt recognized as a result of consolidating these entities does not represent additional claims on our general assets. The creditors of these entities have claims only on the assets of the specific variable interest entities. As of August 24, 2008, we were obligated to make rental payments of $65 million to the variable interest entities, of which $7 million is due in less than one year, $13 million is due in one to three years, and $45 million is due in three to five years. Such amounts are not reflected in the table, above.

The purchase obligations noted in the table above do not reflect approximately $457 million of open purchase orders, some of which are not legally binding. These purchase orders are settleable in the ordinary course of business in less than one year.

As part of our ongoing operations, we also enter into arrangements that obligate us to make future cash payments only upon the occurrence of a future event (e.g., guarantees of debt or lease payments of a third party should the third party be unable to perform). The following commercial commitments are not recognized as liabilities in our consolidated balance sheet. A summary of our commitments, including commitments associated with equity method investments, as of August 24, 2008 was as follows:

	Amount of Commitment Expiration Per Period (in millions)
Other Commercial Commitments	Total		Less than 1 Year		1-3 Years		3-5 Years		After 5 Years
Guarantees	$	196.5	$	121.9	$	21.9	$	13.6	$	39.1
Other commitments		0.7		0.7		—		—		—
Total	$	197.2	$	122.6	$	21.9	$	13.6	$	39.1

In certain limited situations, we will guarantee an obligation of an unconsolidated entity. We have outstanding guarantees of various trade obligations of the divested trading and merchandising business (now operating as the Gavilon Group, LLC, “Gavilon”). The guarantees were in place prior to the divestiture and are in the process of being released by the trade counterparties. The nominal amount of these guarantees was $71 million at August 24, 2008. We have not established a liability in connection with these guarantees, as we believe the likelihood of financial exposure to us under these guarantees is remote. During this transitional period, Gavilon is contractually required to, and has, obtained letters of credit under their financing facilities (led by JP Morgan Chase) for our benefit, the effect of which is to mitigate any financial exposure to us from the guarantees. We also guarantee payment of certain railcar leases of Gavilon; the railcar leases were in place prior to the divestiture and the parties are working with the lessors to secure the Company’s release. The remaining terms of these lease agreements do not exceed ten years and the maximum amount of future payments we have guaranteed is $37 million as of August 24, 2008. We have not established a liability for these guarantees, as we have determined that the likelihood of our required performance under the guarantees is remote.

We guarantee certain leases and other commercial obligations resulting from our fresh beef and pork divestiture. The remaining terms of these arrangements do not exceed seven years and the maximum amount of future payments we have guaranteed was approximately $25 million as of August 24, 2008. We have also guaranteed the performance of the divested fresh beef and pork business with respect to a hog purchase contract. The hog purchase contract requires the fresh beef and pork business 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.

We are a party to various potato supply agreements. Under the terms of certain such potato supply agreements, we have guaranteed repayment of short-term bank loans of the potato suppliers, under certain conditions. At August 24, 2008, the amount of supplier loans effectively guaranteed by us was approximately $35 million. We have not established a liability for these guarantees, as we have determined that the likelihood of our required performance under the guarantees is remote.

We are a party to a supply agreement with an onion processing company. We have guaranteed repayment of a loan of this supplier, under certain conditions. At August 24, 2008, the amount of this loan was $25 million. In the event of default on this loan by the supplier, we have the contractual right to purchase the loan from the lender, thereby giving us the rights to underlying collateral. We have not established a liability in connection with these guarantees, as we believe the likelihood of financial exposure to us under this agreement is remote.

The obligations and commitments tables, above, do not include any reserves for income taxes under FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (as amended), as we are unable to reasonably estimate the ultimate amount or timing of settlement of our reserves for income taxes. The liability for gross unrecognized tax benefits at August 24, 2008 was $66 million.

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Critical Accounting Estimates

A discussion of our critical accounting estimates can be found in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our annual report on Form 10-K for the fiscal year ended May 25, 2008.

Recently Issued Accounting Pronouncements

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities – An Amendment of FASB Statement No. 133. This standard requires enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This statement is effective for our third quarter of fiscal 2009.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51. This statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest (minority interest) in a subsidiary and for the deconsolidation of a subsidiary. Upon its adoption, effective as of the beginning of our fiscal 2010, noncontrolling interests will be classified as equity in our financial statements and income and comprehensive income attributed to the noncontrolling interest will be included in our income and comprehensive income. The provisions of this standard must be applied retrospectively upon adoption. We are currently evaluating the impact of adopting SFAS No. 160 on our consolidated financial position and results of operations.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS No. 141(R)”). SFAS No. 141(R) establishes principles and requirements for how an acquirer in a business combination recognizes and measures the assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree. The provisions of SFAS No. 141(R) are effective for business combinations occurring on or after June 1, 2009.

Related Party Transactions

Sales to affiliates (equity method investees) of $0.5 million and $1.0 million for the first quarter of fiscal 2009 and 2008, respectively, are included in net sales. We received management fees from affiliates of $4.3 million and $3.7 million in the first quarter of fiscal 2009 and 2008, respectively. Accounts receivable from affiliates totaled $2.6 million, $3.2 million, and $1.1 million at August 24, 2008, May 25, 2008, and August 26, 2007, respectively, of which $3.0 million and $0.4 million are included in current assets held for sale at May 25, 2008 and August 26, 2007, respectively. Accounts payable to affiliates totaled $13.8 million, $15.6 million, and $12.6 million at August 24, 2008, May 25, 2008, and August 26, 2007, respectively.

From time to time, one of our business units has engaged an environmental and agricultural engineering services firm. The firm is a subsidiary of an entity whose chief executive officer serves on our Board of Directors. Payments to this firm for environmental and agricultural engineering services performed totaled less than $0.1 million in both the first quarter of fiscal 2009 and 2008, respectively.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The principal market risks affecting us are exposures to price fluctuations of commodity and energy inputs, interest rates, and foreign currencies.

Other than the changes noted below, there have been no material changes in our market risk during the thirteen weeks ended August 24, 2008. For additional information, refer to the “Quantitative and Qualitative Disclosures about Market Risk” in Item 7A of our annual report on Form 10-K for the fiscal year ended May 25, 2008.

Commodity Market Risk

We purchase commodity inputs such as wheat, corn, oats, soybean meal, soybean oil, petroleum products, natural gas, and packaging materials to be used in our operations. These commodities are subject to price fluctuations that may create price risk. We enter into commodity hedges to manage this price risk using physical forward contracts or derivative instruments. We have policies governing the hedging instruments our businesses may use. These policies include limiting the dollar risk exposure for each business. We also monitor the amount of associated counter-party credit risk for all non-exchange-traded transactions.

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One measure of market risk exposure can be determined using sensitivity analysis. Sensitivity analysis is the measurement of potential loss of fair value of a derivative instrument resulting from a hypothetical change of 10% in market prices. Actual changes in market prices may differ from hypothetical changes. In reality, as markets move, we actively manage our risk and adjust hedging strategies as appropriate. This sensitivity analysis excludes the underlying commodity positions that are being hedged. These positions have a high inverse correlation to price changes of the derivative commodity instrument.

Fair value was determined using quoted market prices and was based on our net derivative position by commodity.

Based on our net derivative positions at the end of the first quarter of fiscal 2009, the maximum potential loss of fair value resulting from a hypothetical change of 10% in market prices was as follows:

Processing Activities

($ in millions)
Grains/Foods	$	14
Energy		4
Packaging		1

Foreign Currency Risk

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

One measure of market risk exposure can be determined using sensitivity analysis. 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. This sensitivity analysis excludes the underlying foreign denominated transactions that are being hedged, which have a high inverse correlation to price changes of the derivative commodity instrument.

Based on our net foreign currency derivative positions at August 24, 2008, the maximum potential loss of fair value resulting from a hypothetical change of 10% in exchange rates was $5 million.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s management carried out an evaluation, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of August 24, 2008. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective.

Internal Control Over Financial Reporting

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated any change in the Company’s internal control over financial reporting that occurred during the quarter covered by this report and determined that there was no change in the Company’s internal control over financial reporting during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

41

ConAgra Foods, Inc. and Subsidiaries

Part II - Other Information

ITEM 1. LEGAL PROCEEDINGS

We are party to a number of lawsuits and claims arising out of the operation of our business. After taking into account liabilities recorded for these matters, we believe the ultimate resolution of such matters should not have a material adverse effect on our financial condition, results of operations, or liquidity.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table presents the total number of shares purchased during the first quarter of fiscal 2009, 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 share repurchase program:

Period	Total Number of Shares Purchased(1)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Programs	Approximate Dollar Value of Shares that may yet be Purchased under the Programs (1)
May 26 through June 22, 2008	—	—	—	$	900,062,000
June 23 through July 20, 2008	—	—	—	$	900,062,000
July 21 through August 24, 2008	38,412,118	23.43	38,412,118	$	62,000
Total Fiscal 2009 First Quarter Activity	38,412,118	23.43	38,412,118	$	62,000

(1) Pursuant to publicly announced share repurchase programs, since December 2003, the Company has repurchased 100.9 million shares at a cost of $2.5 billion. The program has no expiration date.

We initiated an accelerated share repurchase program during the first quarter of fiscal 2009. We paid $900 million and have received 38.4 million shares under this program, to date. Under certain circumstances, we may receive additional shares under the program in the second half of fiscal 2009 at no additional cost to us.

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

The Company’s annual meeting of stockholders was held on September 25, 2008 (following the end of the period covered by this report). The vote for each matter voted upon at the meeting is set forth below:

Election of Directors:

	FOR	WITHHELD
Mogens C. Bay	390,038,418	14,882,859
Stephen G. Butler	395,718,989	9,202,288
Steven F. Goldstone	395,346,518	9,574,759
W.G. Jurgensen	395,762,467	9,158,810
Ruth Ann Marshall	395,663,475	9,257,802
Gary M. Rodkin	394,628,456	10,292,821
Andrew J. Schindler	395,668,595	9,252,682
Kenneth E. Stinson	394,378,035	10,543,242

Ratification of the appointment of KPMG LLP as independent auditors for fiscal year 2009:

FOR:	398,424,135
AGAINST:	2,731,779
ABSTAIN:	3,765,363
BROKER NON-VOTES:	0

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ConAgra Foods, Inc. and Subsidiaries

Part II - Other Information

ITEM 6. EXHIBITS

Exhibits
10.1	Master Confirmation Agreement dated June 30, 2008 between ConAgra Foods and Merrill Lynch International
10.2	Master Confirmation Agreement dated June 30, 2008 between ConAgra Foods and Bank of America, N.A.
10.3	ConAgra Foods, Inc. 2008 Performance Share Plan, effective July 16, 2008*
12	Statement regarding computation of ratio of earnings to fixed charges
31.1	Section 302 Certificate of Chief Executive Officer
31.2	Section 302 Certificate of Chief Financial Officer
32.1	Section 906 Certificates

* Management contract or compensatory plan.

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ConAgra Foods, Inc. and Subsidiaries

Part II - Other Information

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CONAGRA FOODS, INC.
	By:	/s/ ANDRE J. HAWAUX
		Andre J. Hawaux
		Executive Vice President and Chief Financial Officer
	By:	/s/ JOHN F. GEHRING
		John F. Gehring
		Senior Vice President and Corporate Controller
Dated this 2nd day of October, 2008.

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EXHIBIT	DESCRIPTION	PAGE
10.1	Master Confirmation Agreement dated June 30, 2008 between ConAgra Foods and Merrill Lynch International	46
10.2	Master Confirmation Agreement dated June 30, 2008 between ConAgra Foods and Bank of America, N.A.	73
10.3	ConAgra Foods, Inc. 2008 Performance Share Plan, effective July 16, 2008*	97
12	Statement regarding computation of ratio of earnings to fixed charges	103
31.1	Section 302 Certificate of Chief Executive Officer	104
31.2	Section 302 Certificate of Chief Financial Officer	105
32.1	Section 906 Certificates	106

* Management contract or compensatory plan.

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EX-10.1

Exhibit 10.1

Master Confirmation of OTC Collared Accelerated Share

Repurchase (VWAP Pricing, Fixed Notional)

Date:	June 30, 2008	ML Ref:
To:	ConAgra Foods, Inc. (“Counterparty”)
Attention:	Scott Messel
From:	Merrill Lynch International (“MLI”)
	Merrill Lynch Financial Centre
	2 King Edward Street
	London EC1A 1HQ

Dear Sir / Madam:

The purpose of this letter agreement (the “Master Confirmation”), each supplemental confirmation substantially in the form attached hereto as Exhibit A (each, a “Supplemental Confirmation” and the Supplemental Confirmations, together with the Master Confirmation, this “Confirmation”) is to confirm the terms and conditions of each of the above-referenced transactions entered into between Counterparty and MLI through its agent Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Agent”) on the respective Trade Dates specified in the Supplemental Confirmations (each, a “Transaction” and collectively, the “Transactions”). This Confirmation constitutes a “Confirmation” both on behalf of MLI, as referred to in the ISDA Master Agreement specified below, and on behalf of MLPF&S, as agent of MLI.

The definitions and provisions contained in the 2000 ISDA Definitions (the “Swap Definitions”) and the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions” and, together with the Swap Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will govern, in the event of any inconsistency between the Definitions and the Master Confirmation, the Master Confirmation will govern, in the event of any inconsistency between the Master Confirmation and any Supplemental Confirmation, the Supplemental Confirmation will govern. References herein to any “Transaction” shall be deemed to be references to a “Share Forward Transaction” for purposes of the Equity Definitions and a “Swap Transaction” for the purposes of the Swap Definitions.

This Confirmation evidences a complete binding agreement between you and us as to the terms of the Transactions to which this Confirmation relates. This Confirmation (notwithstanding anything to the contrary herein), shall be subject to an agreement in the 1992 form of the ISDA Master Agreement (Multicurrency Cross Border) (the “Master Agreement” or “Agreement”) as if we had executed an agreement in such form (but without any Schedule and with elections specified in the “ISDA Master Agreement” Section of the Master Confirmation) on the Trade Date of the first such Transaction between us. In the event of any inconsistency between the provisions of that agreement and this Confirmation, this Confirmation will prevail for the purpose of each Transaction.

The terms of each Transaction to which the Master Confirmation relates are as follows:

General Terms:

Trade: With respect to each Transaction, Counterparty, subject to the terms and conditions and in reliance upon the representations and warranties set forth herein, will purchase from MLI, at a time determined by MLI, as described herein, Shares in an amount equal to the Number of Shares. The parties hereto acknowledge that in selling Shares, MLI is acting as principal for its own account and has no implied duties (including any fiduciary duty) to Counterparty and any purchases of Shares by MLI in the open market in anticipation of delivery of Shares to Counterparty are solely for the account of MLI.

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Trade Date:	For each Transaction, as set forth in the corresponding Supplemental Confirmation.
Effective Date:	Prepayment Date
Buyer:	Counterparty
Seller:	MLI
Shares:	Shares of common stock, par value USD $5.00 per share, of Counterparty (Symbol: CAG)
Number of Shares:	The result of the Prepayment Amount divided by the Settlement Price, subject to a maximum number of Shares equal to Maximum Shares and a minimum number of Shares equal to the Minimum Shares.
Maximum Shares:	For each Transaction, as set forth in the corresponding Supplemental Confirmation.
Minimum Shares:	For each Transaction, as set forth in the corresponding Supplemental Confirmation.
Initial Share Price:	The arithmetic mean of the VWAP Prices for each Scheduled Trading Day in the Hedge Period, subject to the exclusion of any Exclusion Days (as defined below), as determined by the Calculation Agent; with respect to an event causing an Exclusion Day that does not affect the entirety of the Scheduled Trading Day, the Calculation Agent may effect a partial exclusion, in which case the VWAP Price for such Scheduled Trading Day shall be determined by the Calculation Agent based on Rule 10b-18 eligible transactions in the Shares on such Exclusion Day effected during the portion of the Scheduled Trading Day unaffected by such event or events, and the weighting of the VWAP Prices for the relevant Scheduled Trading Days during the Hedge Period shall be adjusted by the Calculation Agent for purposes of determining the Initial Share Price.
Forward Price:	Settlement Price
Hedge Period:	The period beginning on the Hedging Initiation Date and ending on the Hedging Completion Date.
Hedging Initiation Date:	For each Transaction, as set forth in the Supplemental Confirmation.
Hedging Completion Date:	For each Transaction, the Scheduled Hedging Completion Date; provided, however, that if any Scheduled Trading Day in the Hedge Period is an Exclusion Day, MLI may, by written notice to Counterparty (which notice need not specify the reason for MLI’s election to suspend the Hedging Period), exclude the Scheduled Trading Day(s) that are Exclusion Days and extend the Hedge Period by such number of additional Scheduled Trading Days, in which case the Hedging Completion Date shall be the final Scheduled Trading Day in such extended Hedge Period; provided further, however, MLI may designate as the Hedging Completion Date a Scheduled Trading Day that is earlier than the Scheduled Hedging Completion Date in a notice (written or oral) to Counterparty no later than 9:00 a.m. New York City time on the next following Scheduled Trading Day.
Scheduled Hedging
Completion Date:	For each Transaction, as set forth in the Supplemental Confirmation.
Prepayment:	Applicable
Prepayment Amount:	For each Transaction, as set forth in the corresponding Supplemental Confirmation.
Prepayment Date:	Hedging Initiation Date

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Additional Payment Amount:	On the Prepayment Date, Counterparty shall pay to MLI an additional amount equal to the Commission.
Commission:	For each Transaction, as set forth in the corresponding Supplemental Confirmation.
Exchange:	NYSE
Related Exchange(s):	All Exchanges
Market Disruption Event:	The definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby amended by replacing the words “at any time during the one-hour period that ends at the relevant Valuation Time” in the third line thereof with the words “at any time on any Scheduled Trading Day during the Valuation Period or” after the word “material”.
Upfront Share Delivery:	MLI shall deliver the Upfront Shares to Counterparty on the Upfront Share Delivery Date.
Upfront Shares:	For each Transaction, as set forth in the corresponding Supplemental Confirmation.
Upfront Share Delivery Date:	Hedging Initiation Date
Initial Share Delivery:	MLI shall deliver a number of Shares equal to 100% of the Minimum Shares minus any Upfront Shares to Counterparty on the Initial Share Delivery Date.
Initial Share Delivery Date:	One (1) Exchange Business Day following the Hedging Completion Date. The Initial Share Delivery Date shall be deemed to be a “Settlement Date” for purposes of Section 9.4 of the Equity Definitions.
Valuation:
Valuation Period:	For each Transaction, each Scheduled Trading Day from and including the Scheduled Trading Day immediately following the Hedging Completion Date up to and including the Valuation Date; provided, that with respect to each Suspension Event (if any) affecting such Scheduled Trading Days, MLI may, by written notice to Counterparty (which notice shall not specify the reason for MLI’s election to suspend the Valuation Period), exclude the Scheduled Trading Day(s) on which such Suspension Event has occurred (such days, “Suspension Event Days”) and extend the last possible Valuation Date by the total number of such Suspension Event Days; provided, further, that notwithstanding anything to the contrary in the Equity Definitions, to the extent that any Scheduled Trading Days in the Valuation Period are Disrupted Days, the Calculation Agent may exclude such Disrupted Days and extend the last possible Valuation Date by the number of such Disrupted Days (in addition to any Suspension Event Days, without duplication). If a Disrupted Day occurs during the Valuation Period, and each of the nine immediately following Scheduled Trading Days is a Disrupted Day, then the Calculation Agent, in its discretion, may either (i) determine the VWAP Price for such ninth Scheduled Trading Day and adjust the weighting of the VWAP Prices for the relevant Scheduled Trading Days during the Valuation Period as it deems appropriate for purposes of determining the Settlement Price based on, among other factors, the duration of any Market Disruption Event and the volume, historical trading patterns and price of the Shares or (ii) disregard such day for purposes of determining the Settlement Price and further postpone the Valuation Date, in either case, as it deems appropriate to determine the VWAP Price.
Suspension Event:	Each and every one of the following events: (i) MLI concludes, in its sole discretion, that Counterparty will be engaged in a distribution of the Shares for purposes of Regulation M or that the “restricted period” in respect of such distribution has not yet been completed; (ii) MLI reasonably concludes that it is appropriate with respect to any

48

	legal, regulatory or self-regulatory requirements or related policies and procedures, for it to refrain from purchasing Shares during any part of the Valuation Period; or (iii) Counterparty is subject to a third-party tender offer.
Partial Exclusions:	With respect to each Suspension Event Day and Disrupted Day (each, an “Exclusion Day”), the Calculation Agent must determine whether (i) such Exclusion Day should be excluded in full, in which case such Exclusion Day shall not be included for purposes of determining the Settlement Price, or (ii) such Exclusion Day should only be partially excluded, in which case the VWAP Price for such Exclusion Day shall be determined by the Calculation Agent based on Rule 10b-18 eligible transactions in the Shares on such Exclusion Day effected during the portion of the Scheduled Trading Day unaffected by such event or events, and the weighting of the VWAP Prices for the relevant Scheduled Trading Days during the Valuation Period shall be adjusted by the Calculation Agent for purposes of determining the Settlement Price.
Valuation Date	For each Transaction, the earlier to occur of the date as set forth in the Supplemental Confirmation (as the same may be postponed in accordance with the provisions hereof) (the “Scheduled Valuation Date”) and any Accelerated Valuation Date.
Accelerated Valuation Date:	For each Transaction, any date, occurring on or after the First Acceleration Date but prior to the Scheduled Valuation Date, designated by MLI to be the Valuation Date; MLI shall notify Counterparty of such designation prior to 8 p.m. New York City time on the Scheduled Trading Day immediately following such Accelerated Valuation Date.
First Acceleration Date:	For each Transaction, as set forth in the Supplemental Confirmation.
Settlement Terms:
Physical Settlement:	Applicable
Settlement Currency:	USD
Settlement Method Election:	Not Applicable
Settlement Price:	The arithmetic mean of the VWAP Prices of the Shares for each Scheduled Trading Day in the Valuation Period minus the Settlement Price Adjustment Amount.
Settlement Price Adjustment
Amount:	For each Transaction, as set forth in the Supplemental Confirmation.
Number of Shares
to be Delivered:	A number of Shares equal to (i) the Number of Shares, minus (ii) the Minimum Shares.
VWAP Price:	The daily volume weighted average price per Share traded on the New York Stock Exchange under the CAG ticker as reported on the Bloomberg Page “CAG.N <Equity> AQR SEC” (or any successor thereto). For the purpose of calculating the VWAP Price, the Calculation Agent will include only those trades which are reported during the period of time during which Counterparty could purchase its own shares under Rule 10b-18(b)(2) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to the conditions of Rule 10b-18(b)(3) and (b)(4) under the Exchange Act.
Share Adjustments:
Method of Adjustment:	Calculation Agent Adjustment; provided, however, that an Extraordinary Dividend Event occurring with respect to a Transaction shall not constitute a Potential Adjustment Event but shall be an Additional Termination Event under the Agreement with respect to

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	such Transaction, with such Transaction being an Affected Transaction and Counterparty being the sole Affected Party.
Extraordinary Dividends:	Each dividend or distribution payment (other than any dividend or distribution of the type described in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) or (B) of the Equity Definitions) having an ex-dividend date during the Valuation Period, other than the payment of the Ordinary Dividend Amount on each Scheduled Dividend Date. For the avoidance of doubt, the rescheduling of a Scheduled Dividend Date to an earlier date shall result in an Ordinary Dividend Amount payable on such rescheduled day becoming an Extraordinary Dividend.
Ordinary Dividend Amount:	For each Transaction, as set forth in the Supplemental Confirmation.
Scheduled Dividend Dates:	For each Transaction, as set forth in the Supplemental Confirmation.
Extraordinary Events:
Consequences of Merger Events:
Share-for-Share:	Modified Calculation Agent Adjustment
Share-for-Other:	Cancellation and Payment; for the avoidance of doubt, the value of any embedded optionality in the Transaction shall be taken into account in determining the Cancellation Amount.
Share-for-Combined:	Component Adjustment
Determining Party:	MLI
Consequences of Tender Offers:
Share-for-Share:	Modified Calculation Agent Adjustment
Share-for-Other:	Cancellation and Payment; for the avoidance of doubt, the value of any embedded optionality in the Transaction shall be taken into account in determining the Cancellation Amount.
Share-for-Combined:	Component Adjustment
Determining Party:	MLI
New Share:	The definition of “New Shares” in Section 12.1 of the Equity Definitions shall be amended by inserting at the beginning of subsection (i) the following: “(i) where the Exchange is located in the United States, publicly quoted, traded or listed on the New York Stock Exchange, the American Stock Exchange or the NASDAQ Stock Market LLC (or their respective successors) or otherwise,”.
Announcement Event:	If an Announcement Event occurs, the Calculation Agent will determine in good faith and in a commercially reasonable manner the economic effect of the Announcement Event on the theoretical value of the Transaction (including without limitation any change in volatility, stock loan rate or liquidity relevant to the Shares or to the Transaction) from the Announcement Date to the Valuation Date. If such economic effect is material, the Calculation Agent will adjust the terms of the Transaction to reflect such economic effect. “Announcement Event” shall mean the occurrence of the Announcement Date of a Merger Event or Tender Offer.
Nationalization, Insolvency or

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Delisting:	Cancellation and Payment; provided, that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange or The NASDAQ Global Market (or their respective successors); and if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall be deemed to be the Exchange.
Determining Party:	MLI
Additional Disruption Events:
Change in Law:	Applicable
Insolvency Filing:	Applicable
Increased Cost of Stock Borrow:	Applicable; provided, that Sections 12.9(a)(vii) and 12.9(b)(iv) of the Equity Definitions are amended by deleting the words “at a rate equal to or less than the Initial Stock Loan Rate” and replacing them with “at a rate of equal to or less than 35 basis points”.
Hedging Party:	MLI
Determining Party;	MLI
Non-Reliance/Agreements and Acknowledgements Regarding Hedging Activities/Additional Acknowledgements:	Applicable

Acquisition Transactions:

If an Acquisition Transaction Announcement occurs on or prior to the Scheduled Valuation Date for any Transaction, then the Number of Shares shall not be subject to the lower limit of the Minimum Shares. If an Acquisition Transaction Announcement occurs prior to the First Acceleration Date, then the First Acceleration Date shall become the date of such Acquisition Transaction Announcement. If the Number of Shares to be Delivered for any settlement of any Transaction is a negative number, then on the Settlement Date Counterparty shall deliver to MLI on the Settlement Date a number of Shares equal to the absolute value of the Number of Shares to be Delivered. In lieu of such Share delivery, Counterparty may, in its discretion, elect to deliver to MLI an amount in cash equal to the Acquisition Amount; such election shall be made by Counterparty in writing no later than the scheduled commencement of trading on the Scheduled Trading Day immediately following the date of such Acquisition Transaction Announcement (the date of such notice, the “Acquisition Amount Election Date”); settlement in respect of the Acquisition Amount shall occur on the Exchange Business Day immediately following the completion of the Acquisition Valuation Period.

Notwithstanding any other provision of this Confirmation, Counterparty shall not be required to deliver shares of Common Stock in excess of the number of Capped Delivery Shares. “Capped Delivery Shares” shall be equal to Maximum Shares.

Notwithstanding any other provision of this Confirmation, if for any reason Counterparty is required to deliver shares of Common Stock, Counterparty may deliver shares that are not registered under the Securities Act.

“Acquisition Transaction Announcement” means (i) the announcement of an Acquisition Transaction, (ii) an announcement that Counterparty or any of its subsidiaries has entered into an agreement, a letter of intent or an understanding designed to result in an Acquisition Transaction, (iii) the announcement of the intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, an Acquisition Transaction, or (iv) any other announcement that in the reasonable judgment of the Calculation Agent would reasonably be expected to result in an Acquisition Transaction. For the avoidance of doubt, announcements as used in the definition of Acquisition Transaction Announcement refer to any public announcement whether made by Counterparty or a third party.

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“Acquisition Transaction” means (i) any Merger Event (for purposes of this definition the definition of Merger Event shall be read with the references therein to “100%” being replaced by “15%” and without reference to the clause beginning immediately following the definition of Reverse Merger therein to the end of such definition) or Tender Offer or any other transaction involving the merger of Counterparty with or into any third party, (ii) the sale or transfer of all or substantially all of the assets of Counterparty, (iii) a recapitalization, reclassification, binding share exchange or other similar transaction, (iv) any acquisition, lease, exchange, transfer, disposition (including by way of spin-off or distribution) of assets (including any capital stock or other ownership interests in subsidiaries) or other similar event by Counterparty or any of its subsidiaries where the aggregate consideration transferable or receivable by or to Counterparty or its subsidiaries exceeds 25% of the market capitalization of Counterparty and (v) any transaction in which Counterparty or its board of directors has a legal obligation to make a recommendation to its shareholders in respect of such transaction (whether pursuant to Rule 14e-2 under the Exchange Act or otherwise).

“Acquisition Amount” means the product of the absolute value of the Number of Shares to be Delivered and the arithmetic mean of the VWAP Prices for each Scheduled Trading Day during the Acquisition Valuation Period.

“Acquisition Valuation Period” means a number of Scheduled Trading Days, designated by MLI and communicated to Counterparty in writing, beginning with the first Scheduled Trading Day immediately following the date of the relevant Acquisition Transaction Announcement (subject to the partial and full Exclusion Day provisions applicable to the Valuation Period and, if Schedule A is applicable pursuant to the relevant Supplemental Confirmation, subject to Schedule A, as if the Acquisition Valuation Period were the Valuation Period).

Other Share Deliveries in Lieu of Cash Payment:

If Counterparty would be obligated to pay cash to MLI or receive cash from MLI pursuant to the terms of this Agreement for any reason without having had the right (other than pursuant to this paragraph) to elect to deliver Shares or receive Shares, as the case may be, in satisfaction of such payment obligation or right, then Counterparty may elect that Counterparty deliver to MLI or receive from MLI, as the case may be, a number of Shares having an equivalent value (such number of Shares to be delivered to be determined by the Calculation Agent acting in a commercially reasonable manner and taking into account relevant factors, including whether or not the Shares are subject to legal or other restrictions on transfer or acquisition and the costs and expenses associated with disposing of or acquiring such Shares). Settlement relating to any delivery of Shares pursuant to this paragraph shall occur within a reasonable period of time.

Notwithstanding any other provisions of this Confirmation to the contrary, in the event that (i) in connection with any settlement upon termination of this Transaction, MLI would be required to make a cash payment to Counterparty and (ii) at such time MLI or its agent owns Shares acquired for the purpose of hedging MLI’s obligations pursuant to this Transaction (such Shares, “Hedge Shares”), MLI may elect to satisfy all or a portion of such cash payment obligation through the delivery of an equivalent value of Hedge Shares (value as determined by the Calculation Agent).

For the avoidance of doubt, other than in respect of an Acquisition Transaction Announcement that results in an amount payable to MLI, Counterparty will not owe any payment to MLI following payment of the Prepayment Amount nor be required to issue any shares to MLI.

Partial Early Settlement

Notwithstanding any other provisions of this Confirmation or any Supplemental Confirmation, if MLI (together with its affiliates, as such term is defined under the Exchange Act) acquire or hold a number of Shares or other equity securities of Counterparty exchangeable for or convertible into Shares which in aggregate would equal or exceed 4.75% of all Shares then issued and outstanding (the “Ownership Limit”), MLI may at any time and from time to time during the term of a Transaction deliver to Counterparty a number of Shares to cause MLI and its affiliates to hold less than the Ownership Limit and Counterparty agrees to take ownership of any such Shares, provided, that MLI has furnished to Counterparty three days’ prior notice in writing specifying a date for settlement (each, an “Early Settlement Date”) and the number of Shares to be delivered by MLI to Counterparty on the Early Settlement Date. The parties understand and agree that (i) the delivery of the Shares by or on behalf of MLI is irrevocable and that as of any Early Settlement Date Counterparty will be the sole beneficial owner of the Shares for all purposes and (ii) the number of Shares delivered by MLI on any such Early Settlement Date will reduce the number of Shares required to be delivered by MLI on the Settlement Date.

Registration:

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At the election of Counterparty, (x) any Shares acquired by MLI from Counterparty or (y) any Hedge Shares cannot be sold in the public market by MLI without registration under the Securities Act, Counterparty may, in order to allow MLI to sell such Shares in a registered offering, make available to MLI an effective registration statement under the Securities Act and enter into an agreement, in form and substance satisfactory to MLI, substantially in the form of an underwriting agreement for a registered secondary offering; provided, however, that if MLI, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above or if Counterparty does not register such shares, then the section “Private Placement” below shall apply at the election of Counterparty with respect to the Shares to be sold (such Shares, the “Private Shares”).

Private Placement:

In order to allow MLI to sell Private Shares in a private placement, Counterparty agrees to enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance satisfactory to MLI (in which case, the Calculation Agent shall, to the extent such adjustments have not yet already been made, make any adjustments to the terms of such Transaction that are necessary, in its reasonable judgment, to compensate MLI for an imputed 3% discount from the public market price of the Shares incurred on the sale of Shares in a private placement), or, at the election of Counterparty, purchase such Shares from MLI at the closing price on such Exchange Business Days, and in the amounts, requested by MLI.

Agreement in Respect of Adjustments:

In determining any adjustment in respect of any Transaction pursuant to Article 11 or Article 12 of the Equity Definitions, the Calculation Agent shall make such adjustments without regard to changes in expected dividends since the Trade Date for such Transaction.

Agreement in Respect of Dividends:

For the avoidance of doubt, if an Early Termination Date occurs in respect of any Transaction as a result of an Additional Termination Event, the relevant party’s Loss for purposes of Section 6(e) of the Agreement in respect of such Additional Termination Event shall be determined without regard to the difference between such Extraordinary Dividend giving rise to such Additional Termination Event and the expected dividend as of the Trade Date for such Transaction.

Additional Agreements, Representations and Covenants of Counterparty, Etc.:

1. Counterparty hereby represents and warrants to MLI that during each Hedge Period:

a. neither Counterparty nor any “affiliated purchaser” (as such term is defined in Rule 10b-18 under the Exchange Act) will acquire Shares (or equivalent interests or securities exchangeable, convertible or exercisable into Shares) or be a party to any repurchase or similar agreements pursuant to which a valuation, averaging or hedging period or similar such period overlaps or potentially overlaps with the Hedge Period;

b. Counterparty will not be engaged in a distribution of Shares or other securities for which the Shares are a reference security for purposes of Rule 102 of Regulation M under the Exchange Act; and

c. Unless the Hedge Period is covered by a Plan described below, Counterparty is not in possession of any material nonpublic information regarding Counterparty or Shares.

2. MLI hereby represents and warrants to Counterparty that during the Hedge Period, it and each person or entity subject to its control or acting on its behalf will use commercially reasonable efforts to purchase Shares to establish its Initial Hedge Position in compliance with the time of purchase, price of purchase and volume of purchase provisions of Rule 10b-18 under the Exchange Act, as if such rule could be applied to such purchases.

Compliance with Securities Laws: Each party represents and agrees that it has complied, and will comply, in connection with each Transaction and all related or contemporaneous sales and purchases of Shares, with the applicable provisions of the Securities Act, and the Exchange Act, and the rules and regulations each thereunder, including, without limitation, Rules 10b-5 and Regulation M under the Exchange Act; provided that each party shall be entitled to rely conclusively on any information communicated by the other party

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concerning such other party’s market activities.

Each party acknowledges that the offer and sale of each Transaction to it is intended to be exempt from registration under the Securities Act by virtue of Section 4(2) thereof and the provisions of Regulation D thereunder (“Regulation D”). Accordingly, each party represents and warrants to the other that (i) it has the financial ability to bear the economic risk of its investment in each Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined under Regulation D, (iii) it will purchase each Transaction for investment and not with a view to the distribution or resale thereof, and (iv) the disposition of each Transaction is restricted under this Confirmation, the Securities Act and state securities laws.

Counterparty represents and warrants as of the date hereof and each Trade Date (unless otherwise specified below) that:

(a) each of its filings under the Exchange Act that are required to be filed from and including the ending date of Counterparty’s most recent prior fiscal year have been filed, and that, as of the respective dates thereof and hereof, there is no misstatement of material fact contained therein or omission of a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading;

(b) Counterparty is not in possession of material non-public information regarding the Shares or the Counterparty; this representation shall be repeated as of any Acquisition Amount Election Date and as of the date of any other election by Counterparty in respect of the method of settlement, whether such settlement is on a regular settlement date, upon early termination, in connection with cancellation and payment or otherwise; this representation shall also be repeated as of the completion time of any Distribution Period (as defined below);

(c) Counterparty is not entering into any Transaction to facilitate a distribution of the common stock or in connection with a future distribution of securities;

(d) Counterparty is not entering into any Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to manipulate the price of the Shares (or any security convertible into or exchangeable for Shares);

(e) Counterparty is entering into each Transaction in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”); it is the intent of the parties that each Transaction comply with the requirements of Rule l0b5-l(c)(1)(i)(A) and (B) and each Transaction shall be interpreted to comply with the requirements of Rule 10b5-l(c) (the “Plan”); Counterparty will not seek to control or influence MLI or MLPF&S to make “purchases or sales” (within the meaning of Rule 10b5-1(c)(l)(i)(B)(3)) under any Transaction, including, without limitation, any decision to enter into any hedging transactions; Counterparty represents and warrants that it has consulted with its own advisors as to the legal aspects of its adoption and implementation of each Transaction under Rule 10b5-1; if a Hedge Period is covered by a Plan, then the Counterparty represents and warrants to MLI that Counterparty is not in possession of any material nonpublic information regarding Counterparty or Shares as of the Trade Date of the applicable Transaction;

(f) Neither it nor any “affiliated purchaser” (as defined in Rule 10b-18 under the Exchange Act) has made any purchases of blocks pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act during the four full calendar weeks immediately preceding the applicable Hedging Initiation

54

Date;

(g) The purchase or writing of each Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act, and Counterparty is not entering into any Transaction in anticipation of, or in connection with, or to facilitate a self-tender offer or a third-party tender offer;

(h) Each Transaction is consistent with the publicly announced program of Counterparty to repurchase, from time to time, Shares (the “Repurchase Program”);

(i) Counterparty has full power and authority to undertake the Repurchase Program, and the Repurchase Program has been duly authorized and remains valid; and

(j) If Counterparty purchases any Shares from the other party pursuant to any Transaction, such purchase(s) will comply in all material respects with (i) all laws and regulations applicable to Counterparty and (ii) all contractual obligations of Counterparty.

Counterparty covenants and agrees that:

(a) during the term of each Transaction to promptly notify MLI telephonically (which oral communication shall be promptly confirmed by telecopy to MLI) if Counterparty determines that as a result of an acquisition or other business transaction or for any other reason Counterparty will be engaged in a distribution of Shares or other securities for which the Shares are a reference security for purposes of Rule 102 of Regulation M under the Exchange Act and to promptly notify MLI by telecopy of the period commencing on the date that is one (1) business day before the commencement of such distribution and ending on the day on which Counterparty completes the distribution (the “Distribution Period”); for the purposes of this Confirmation, the “term” of a Transaction shall not be considered to have been completed until all Shares required to be transferred to party hereto have been duly transferred and all cash amounts required to be paid to a party hereto have been duly paid;

(b) without the prior written consent of MLI, neither Counterparty nor any “affiliated purchaser” (as such term is defined in Rule 10b-18 under the Exchange Act) will acquire Shares (or equivalent interests or securities exchangeable, convertible or exercisable into Shares) or be a party to any repurchase or similar agreements pursuant to which a valuation, averaging or hedging period or similar such period overlaps or potentially overlaps with the term of any Transaction, other than (i) acquisition of Shares (or any security convertible into or exchangeable for Shares) by Counterparty from holders of awards granted under Counterparty’s stock plans, in connection with vesting, exercise, settlement, expiration or termination of such awards (or Counterparty being a party to a repurchase or similar agreement for such purpose), (ii) any acquisition of Shares (or any securities convertible into or exchangeable for Shares) by any “affiliated purchaser” (as such term is defined in Rule 10b-18 under the Exchange Act) of Counterparty pursuant to awards granted under Counterparty’s stock plans or pursuant to Counterparty’s 401(k) plan(s), (iii) any acquisition of Shares (or any securities convertible into or exchangeable for Shares) by Counterparty in a private transaction from any director or employee of Counterparty, and (iv) in those transactions already disclosed in writing to MLI; in connection with such disclosed transactions and otherwise, although Counterparty acknowledges that Rule 10b-18 under the Exchange Act cannot be applied to MLI’s or MLPF&S’s purchases of Shares in connection with any Transaction, Counterparty will not take any action that would or could cause MLI’s or MLPF&S’s purchases of Shares during any Transaction term not to comply with Rule 10b-18 under the Exchange Act, as if such rule could be applied to such Transaction; and

55

(c) Counterparty shall report each Transaction as required in any applicable report filed by the Counterparty pursuant to the Exchange Act in compliance with Regulation S-K and/or Regulation S-B under the Exchange Act, as applicable.

Counterparty acknowledges and agrees that:

(a) In connection with each Transaction, MLI will engage in customary hedging activities in its sole discretion and for its own account and that such activities may involve sales or purchases at an average price that may be greater than, or less than, the price paid by Counterparty under the terms of such Transaction; and

(b) Notwithstanding the generality of Section 13.1 of the Equity Definitions, MLI is not making any representations or warranties with respect to the treatment of any Transaction under FASB Statements 133 as amended or 150, EITF 00-19 (or any successor issue statements) or under FASB’s Liabilities & Equity Project.

MLI covenants and agrees that notwithstanding anything in the foregoing to the contrary, any Shares purchased by MLI or MLPF&S during any Hedge Period shall be purchased by MLI or MLPF&S in a manner that would comply with the limitations set forth in clauses (b)(2), (b)(3), (b)(4) and (c) of Rule 10b-18 as if such purchases were made by Counterparty.

Account Details:
Account for payments to Counterparty:	To be advised
Account for payment to MLI:	JP Morgan Chase Bank, New York
	ABA#
	FAO:
	A/C:

Bankruptcy Rights:	In the event of Counterparty’s bankruptcy, MLI’s rights in connection with any Transaction shall not exceed those rights held by common shareholders. For the avoidance of doubt, the parties acknowledge and agree that MLI’s rights with respect to any other claim arising from any Transaction prior to Counterparty’s bankruptcy shall remain in full force and effect and shall not be otherwise abridged or modified in connection herewith.
No Set-Off:	Obligations under any Transaction shall not be netted, recouped or set-off (including pursuant to Section 6 of the Agreement) against any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise, and no other obligations of the parties shall be netted, recouped or set-off (including pursuant to Section 6 of the Agreement) against obligations under this Transaction, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise, and each party hereby waives any such right of set-off, netting or recoupment.
Collateral:	None.
Transfer:	Counterparty may transfer any of its rights or delegate its obligations under any Transaction with the prior written consent of MLI. MLI may assign and delegate its rights and obligations under any Transaction (the “Transferred Obligations”) to any subsidiary of Merrill Lynch & Co., Inc. (the “Assignee”) by notice specifying the effective date of such transfer (“Effective Date”) and including an executed acceptance and assumption by the Assignee of the Transferred Obligations; provided that (i) the obligation of the Assignee shall be guaranteed by a guarantee of Merrill Lynch & Co., Inc. in the form attached hereto as Exhibit B, (ii) such assignment or delegation will not result in any material adverse regulatory consequences to Counterparty, (iii) Counterparty will not, as a result of such transfer, be required to pay to the Assignee an amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) of the Agreement (except in respect of interest under Section 2(e), 6(d)(ii), or 6(e)) greater than the amount in respect of which Counterparty would have been required to pay to MLI in the absence of such transfer; and (iv) the Assignee will not, as a result of such transfer, be required to withhold or deduct on account of a Tax under Section 2(d)(i) of the Agreement (except in respect of interest under Section 2(e), 6(d)(ii), or 6(e)) an amount in excess of that which MLI would have been required to withhold or deduct in the absence of such transfer, unless the Assignee would be required to make additional payments pursuant to Section 2(d)(i)(4) of the Agreement corresponding to such excess. On the Effective Date, (a) MLI shall be released from all obligations and liabilities arising under the Transferred Obligations; and (b) if MLI has not assigned and delegated its rights and obligations under the

56

	Agreement and all Transactions thereunder, the Transferred Obligations shall cease to be a Transaction under the Agreement and shall be deemed to be a Transaction under the master agreement, if any, between Assignee and Counterparty, provided that, if at such time Assignee and Counterparty have not entered into a master agreement, Assignee and Counterparty shall be deemed to have entered into an ISDA form of Master Agreement (Multicurrency-Cross Border) and Schedule substantially in the form of the Agreement but amended to reflect the name of the Assignee and the address for notices and any amended representations under Part 2 of the Agreement as may be specified in the notice of transfer.
Regulation:	MLI is regulated by The Securities and Futures Authority Limited and has entered into each Transaction as principal.
Indemnity:	Each party hereto (an “Indemnifying Party”) agrees to indemnify the other party, its Affiliates and their respective directors, officers, agents and controlling parties (each such person being an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities, joint and several, to which such Indemnified Party may become subject because of the untruth of any representation by Indemnifying Party or a breach by Indemnifying Party of any agreement or covenant under this Confirmation, in the Agreement, the Plan or any other agreement relating to the Agreement or any Transaction and will reimburse any Indemnified Party for all reasonable expenses (including reasonable legal fees and expenses) as they are incurred in connection with the investigation of, preparation for, or defense of, any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto. Indemnifying Party will not be liable under this provision to the extent that any loss, claim, damage, liability or expense results from Indemnified Party’s gross negligence and/or willful misconduct.

ISDA Master Agreement

With respect to the Agreement, MLI and Counterparty each agree as follows:

Specified Entities:

(i) in relation to MLI, for the purposes of:

Section 5(a)(v): not applicable

Section 5(a)(vi): not applicable

Section 5(a)(vii): not applicable

Section 5(b)(iv): not applicable

and (ii) in relation to Counterparty, for the purposes of:

Section 5(a)(v): not applicable

Section 5(a)(vi): not applicable

Section 5(a)(vii): not applicable

Section 5(b)(iv): not applicable

“Specified Transaction” will have the meaning specified in Section 14 of the Agreement.

The “Credit Event Upon Merger” provisions of Section 5(b)(iv) of the Agreement will not apply to MLI and Counterparty.

The “Automatic Early Termination” provision of Section 6(a) of the Agreement will not apply to MLI or to Counterparty. Payments on Early Termination for the purpose of Section 6(e) of the Agreement: (i) Loss shall apply; and (ii) the Second Method shall apply.

“Termination Currency” means USD.

Tax Representations:

(I) For the purpose of Section 3(e) of the Agreement, each party represents to the other party that it is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii), or 6(e) of the Agreement) to be made by it to the other party under the Agreement. In making this representation, each party may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of the

57

Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of the Agreement, and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of the Agreement, and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of the Agreement; provided that it will not be a breach of this representation where reliance is placed on clause (ii) above and the other party does not deliver a form or document under Section 4(a)(iii) of the Agreement by reason of material prejudice to its legal or commercial position.

(II) For the purpose of Section 3(f) of the Agreement, each party makes the following representations to the other party:

(i) MLI represents that it is a company organized under the laws of England and Wales.

(ii) Counterparty represents that it is a corporation incorporated under the laws of Delaware.

Delivery Requirements: For the purpose of Sections 3(d), 4(a)(i) and (ii) of the Agreement, each party agrees to deliver the following documents:

Tax forms, documents or certificates to be delivered are:

Each party agrees to complete (accurately and in a manner reasonably satisfactory to the other party), execute, and deliver to the other party, United States Internal Revenue Service Form W-9 or W-8 BEN, or any successor of such form(s): (i) before the first payment date under this agreement; (ii) promptly upon reasonable demand by the other party; and (iii) promptly upon learning that any such form(s) previously provided by the other party has become obsolete or incorrect.

Other documents to be delivered:

Party Required to Deliver Document	Document Required to be Delivered	When Required	Covered by Section 3(d) Representation
Counterparty	Evidence of the authority and true signatures of each official or representative signing this Confirmation	Upon or before execution and delivery of this Confirmation	Yes
Counterparty	Certified copy of the resolution of the Board of Directors or equivalent document authorizing the execution and delivery of this Confirmation	Upon or before execution and delivery of this Confirmation	Yes
Each party	Executed Supplemental Confirmation, substantially in the form of Exhibit A hereto, in respect of each Transaction	On or before the corresponding Trade Date	Yes
MLI	Guarantee of its Credit Support Provider, substantially in the form of Exhibit C attached hereto, together with evidence of the authority and true signatures of the signatories, if applicable	Upon or before execution and delivery of this Confirmation	Yes

Addresses for Notices: For the purpose of Section 12(a) of the Agreement:

Address for notices or communications to MLI:

Address:	Merrill Lynch International
	Merrill Lynch Financial Centre 2 King Edward Street, London EC1A 1HQ Attention: Gary Rosenblum Telephone No.: (212) 449-6309
(For all purposes)
Additionally, a copy of all notices pursuant to Sections 5, 6, and 7 as well as any changes to Counterparty’s address, telephone number or facsimile number should be sent to:
	Address: GMI Counsel
	Merrill Lynch World Headquarters

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	4 Word Financial Center, 12th Floor
	New York, New York 10080
	Attention: Global Equity Derivatives
Address for notices or communications to Counterparty for all purposes:
	ConAgra Foods, Inc. One ConAgra Drive Omaha, NE 68102 Attention: Scott Messel Facsimile No.: (402) 595-4438                Telephone No.: (402) 595-4063
Process Agent: For the purpose of Section 13(c) of the Agreement, MLI appoints as its process agent:
	Merrill Lynch, Pierce, Fenner & Smith Incorporated 222 Broadway, 16th Floor New York, New York 10038 Attention: Litigation Department Counterparty does not appoint a Process Agent.

Multibranch Party. For the purpose of Section 10(c) of the Agreement: Neither MLI nor Counterparty is a Multibranch Party.

Calculation Agent. The Calculation Agent is MLI, whose judgments, determinations and calculations in each Transaction and any related hedging transaction between the parties shall be made in good faith and in a commercially reasonable manner.

Credit Support Document.

MLI: Guarantee of Merrill Lynch & Co., Inc. in the form attached hereto as Exhibit C.

Counterparty: Not Applicable

Credit Support Provider.

With respect to MLI: Merrill Lynch & Co., Inc. and with respect to Counterparty, Not Applicable.

Governing Law. This Confirmation will be governed by, and construed in accordance with, the laws of the State of New York.

Netting of Payments. The provisions of Section 2(c) of the Agreement shall not be applicable to each Transaction.

Accuracy of Specified Information. Section 3(d) of the Agreement is hereby amended by adding in the third line thereof after the word “respect” and before the period the words “or, in the case of audited or unaudited financial statements or balance sheets, a fair presentation of the financial condition of the relevant person.”

Basic Representations. Section 3(a) of the Agreement is hereby amended by the deletion of “and” at the end of Section 3(a)(iv); the substitution of a semicolon for the period at the end of Section 3(a)(v) and the addition of Sections 3(a)(vi), as follows:

Eligible Contract Participant; Line of Business. It is an “eligible contract participant” as defined in the Commodity Futures Modernization Act of 2000, and it has entered into this Confirmation and each Transaction in connection with its business or a line of business (including financial intermediation), or the financing of its business.

Amendment of Section 3(a)(iii). Section 3(a)(iii) of the Agreement is modified to read as follows:

No Violation or Conflict. Such execution, delivery and performance do not materially violate or conflict with any law known by it to be applicable to it, any provision of its constitutional documents, any order or judgment of any court or agency of government applicable to it or any of its assets or any material contractual restriction relating to Specified Indebtedness binding on or affecting it or any of its assets.

Amendment of Section 3(a)(iv). Section 3(a)(iv) of the Agreement is modified by inserting the following at the beginning thereof:

“To such party’s best knowledge,”

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Additional Representations:

Counterparty Representations. As of the date hereof and each Trade Date, Counterparty represents and warrants that it: (i) has such knowledge and experience in financial and business affairs as to be capable of evaluating the merits and risks of entering into each Transaction; (ii) has consulted with its own legal, financial, accounting and tax advisors in connection with each Transaction; and (iii) is entering into each Transaction for a bona fide business purpose to hedge or repurchase Shares.

As of the date hereof and each Trade Date, Counterparty represents and warrants that it is not and has not been the subject of any civil proceeding of a judicial or administrative body of competent jurisdiction that could reasonably be expected to impair materially Counterparty’s ability to perform its obligations hereunder.

As of the date hereof and each Trade Date, Counterparty is not insolvent.

Acknowledgements:

(1) The parties acknowledge and agree that there are no other representations, agreements or other undertakings of the parties in relation to any Transaction, except as set forth in this Confirmation.

(2) The parties hereto intend for:

(a) each Transaction to be a “securities contract” as defined in Section 741(7) of Title 11 of the United States Code (the “Bankruptcy Code”), qualifying for the protections under Section 555 of the Bankruptcy Code;

(b) a party’s right to liquidate each Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a “contractual right” as defined in the Bankruptcy Code;

(c) all payments for, under or in connection with each Transaction, all payments for the Shares and the transfer of such Shares to constitute “settlement payments” as defined in the Bankruptcy Code.

Amendment of Section 6(d)(ii). Section 6(d)(ii) of the Agreement is modified by deleting the words “on the day” in the second line thereof and substituting therefor “on the day that is three Local Business Days after the day”. Section 6(d)(ii) is further modified by deleting the words “two Local Business Days” in the fourth line thereof and substituting therefor “three Local Business Days.”

Amendment of Definition of Reference Market-Makers. The definition of “Reference Market-Makers” in Section 14 is hereby amended by adding in clause (a) after the word “credit” and before the word “and” the words “or to enter into transactions similar in nature to Transactions”.

Consent to Recording. Each party consents to the recording of the telephone conversations of trading and marketing personnel of the parties and their Affiliates in connection with this Confirmation. To the extent that one party records telephone conversations (the “Recording Party”) and the other party does not (the “Non-Recording Party”), the Recording Party shall in the event of any dispute, make a complete and unedited copy of such party’s tape of the entire day’s conversations with the Non-Recording Party’s personnel available to the Non-Recording Party. The Recording Party’s tapes may be used by either party in any forum in which a dispute is sought to be resolved and the Recording Party will retain tapes for a consistent period of time in accordance with the Recording Party’s policy unless one party notifies the other that a particular transaction is under review and warrants further retention.

Disclosure. Each party hereby acknowledges and agrees that MLI has authorized Counterparty to disclose each Transaction and any related hedging transaction between the parties if and to the extent that Counterparty reasonably determines (after consultation with MLI) that such disclosure is required by law or by the rules of any securities exchange or similar trading platform.

Severability. If any term, provision, covenant or condition of this Confirmation, or the application thereof to any party or circumstance, shall be held to be invalid or unenforceable in whole or in part for any reason, the remaining terms, provisions, covenants, and conditions hereof shall continue in full force and effect as if this Confirmation had been executed with the invalid or unenforceable provision eliminated, so long as this Confirmation as so modified continues to express, without material change, the original intentions of the parties as to the subject matter of this Confirmation and the deletion of such portion of this Confirmation will not substantially impair the respective benefits or expectations of parties to this Agreement; provided, however, that this severability provision shall not be applicable if any provision of Section 2, 5, 6 or 13 of the Agreement (or any definition or provision in Section 14 to the extent that it relates to, or is used in or in connection with any such Section) shall be so held to be invalid or unenforceable.

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Affected Parties. For purposes of Section 6(e) of the Agreement, each party shall be deemed to be an Affected Party in connection with Illegality and any Tax Event.

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Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Master Confirmation enclosed for that purpose and returning it to us.

Very truly yours,

MERRILL LYNCH INTERNATIONAL

By:

Name:

Title:

Confirmed as of the date first above written:

CONAGRA FOODS, INC.

By:

Name:

Title:

Acknowledged and agreed as to matters relating to the Agent:

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

solely in its capacity as Agent hereunder

By:

Name:

Title:

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SCHEDULE A

This Schedule A shall apply to a Transaction if specified as applicable in the relevant Supplemental Confirmation. To the extend specified below, this Schedule A shall modify the relevant terms of the Master Confirmation.

Parallel Transaction:	Counterparty is entering into a repurchase or similar agreement with another broker or dealer (“Alternate Broker”) pursuant to which, until (but excluding) the First Acceleration Date, the hedging, valuation or averaging period or similar such period occur on alternate Scheduled Trading Days with the Transaction. MLI acknowledges and agrees that nothing in this Confirmation shall prohibit, conflict with or restrict transactions by the Alternate Broker on alternate Scheduled Trading Days in a manner that is not inconsistent with the terms and conditions of this Confirmation. Counterparty hereby represents and warrants that until (but excluding) the First Acceleration Date (which date may be postponed as provided herein), no hedging, valuation or averaging period or similar such period of the Parallel Transaction shall include any MLI Day for pricing, valuation or other economic purposes.
MLI Day:	Each date listed in Annex A to the relevant Supplemental Confirmation.
Postponement:	Notwithstanding anything to the contrary in the Master Confirmation, if (i) an Exclusion Day occurs during the Hedge Period or Valuation Period and prior to the First Acceleration Date then in effect, MLI may exclude such Exclusion Day from the Hedge Period or Valuation Period, as the case may be, by written notice to Counterparty (which notice shall not specify the reason for MLI’s election to make such exclusion) and shall postpone each of the First Acceleration Date, the Scheduled Valuation Date and, if occurring prior to the Scheduled Hedging Completion Date then in effect, the Scheduled Hedging Completion Date by two Scheduled Trading Days for each Exclusion Day having resulted in such an exclusion, and if (ii) an Excess Excluded Day Event has occurred, MLI shall postpone each of the First Acceleration Date, the Scheduled Valuation Date and, for the Hedge Excess Excluded Day Event, the Scheduled Hedging Completion Date then in effect by two Scheduled Trading Days for each Valuation Excess Excluded Day or Hedge Excess Excluded Day, as the case may be.
Counterparty’s Notices with respect to the Hedge Period:	If a day has been excluded from the hedge period of the Parallel Transaction, Counterparty shall notify MLI thereof no later than 6 p.m. New York City time on the day so excluded. If the number of days excluded from the hedge period of the Parallel Transaction exceeds the number of Exclusion Days having resulted in days excluded from the Hedge Period pursuant to clause (i) of “Postponement” above (each excess excluded day under the Parallel Transaction, a “Hedge Excess Excluded Day”), Counterparty shall notify MLI of the occurrence of such event (such event, the “Hedge Excess Excluded Day Event”) prior to the first MLI Day in the Valuation Period, and shall further promptly notify MLI of the total number of Hedge Excess Excluded Days having occurred in the hedge period under the Parallel Transaction.
	Notwithstanding any to the contrary in the Master Confirmation, MLI agrees to notify Counterparty of each day it chooses to exclude from the Hedge Period or the Valuation Period as a result of an Exclusion Event no later than 5 p.m. New York City time on the day so excluded.
Counterparty’s Notices with respect to the Valuation Period:	If a day has been excluded from the valuation period of the Parallel Transaction prior to the First Acceleration Date as postponed pursuant to “Postponement” above, Counterparty shall notify MLI thereof no later than 6 p.m. New York City time on the day so excluded. If the number of days excluded from the valuation period of the Parallel

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	Transaction prior to the first acceleration date for the Parallel Transaction exceeds the number of Exclusion Days having resulted in days excluded from the Valuation Period prior to the First Acceleration Date as postponed pursuant to clause (i) of “Postponement” above (each excess excluded day under the Parallel Transaction, a “Valuation Excess Excluded Day”), Counterparty shall notify MLI of the occurrence of such event (such event, the “Valuation Excess Excluded Day Event”, and each of the Valuation Excess Excluded Day Event and the Hedge Excess Excluded Day Event, an “Excess Excluded Day Event”) prior to such First Acceleration Date, and shall further promptly notify MLI of the total number of Valuation Excess Excluded Days having occurred in the valuation period under the Parallel Transaction prior to the first acceleration date under such Parallel Transaction.
Changes related to Hedge Period Terms:	The provisions in the Master Confirmation applicable to the Hedge Period shall apply, except that (i) references in “Initial Share Price” and “Hedging Completion Date” to Scheduled Trading Days shall be replaced by references to MLI Days, and (ii) the first proviso of “Hedging Completion Date” shall be replaced by the relevant provisions of “Postponement” above. Notwithstanding clause (i) above, the words ‘Scheduled Trading Day’ in the last line of “Hedging Completion Date” shall not be amended.
Valuation Period:	For each Transaction to which this Schedule A is applicable, each MLI Day from, but excluding, the Scheduled Hedging Completion Date to, but excluding, the First Acceleration Date, and each Scheduled Trading Day from, and including, the First Acceleration Date to, and including, the Valuation Date (each a “Scheduled Valuation Day”), subject to exclusion of Scheduled Valuation Days pursuant to “Postponement” above and, solely with respect to Exclusion Days occurring on or after the First Acceleration Date (as such date may have been postponed pursuant to “Postponement” above), subject to MLI’s right to exclude Scheduled Valuation Days that are Exclusion Days from the Valuation Period by written notice to Counterparty (which notice shall not specify the reason for MLI’s election to make such exclusions), which shall result in a postponement of the Scheduled Valuation Date by the number of Scheduled Trading Days equal to the number of Scheduled Valuation Days so excluded. If a Disrupted Day occurs on a Scheduled Valuation Day during the Valuation Period, and each of the nine immediately following Scheduled Valuation Days is a Disrupted Day, then the Calculation Agent, in its discretion, may either (i) determine the VWAP Price for such ninth Scheduled Valuation Day and adjust the weighting of the VWAP Prices for the relevant Scheduled Valuation Days during the Valuation Period as it deems appropriate for purposes of determining the Settlement Price based on, among other factors, the duration of any Market Disruption Event and the volume, historical trading patterns and price of the Shares or (ii) exclude such day in the manner described in the preceding sentence or “Postponement” above, as applicable.
	The references in “Settlement Price,” “Partial Exclusions,” “Acquisition Amount” and “Acquisition Valuation Period” in the Master Confirmation to ‘Scheduled Trading Day’ shall be replaced by the words ‘Scheduled Valuation Day.’

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EXHIBIT A

FORM OF SUPPLEMENTAL CONFIRMATION

Supplemental Confirmation of OTC Collared Accelerated Share

Repurchase (VWAP Pricing, Fixed Notional)

Date:	[            ]	ML Ref:
To:	ConAgra Foods, Inc. (“Counterparty”)
Attention:	Scott Messel
From:	Merrill Lynch International (“MLI”)
	Merrill Lynch Financial Centre
	2 King Edward Street
	London EC1A 1HQ

Dear Sir / Madam:

Capitalized terms used herein, unless defined herein, have the meanings set forth in the Master Confirmation of OTC Collared ASAP Minus between Counterparty and MLI, dated as of June 30, 2008. Schedule A to the Master Confirmation is applicable to this Supplemental Confirmation .

The purpose of this Supplemental Confirmation is to confirm the terms and conditions of a Transaction under the Master Confirmation.

The terms of the Transaction to which the Supplemental Confirmation relates are as follows:

Trade Date:	[            ]
Hedging Initiation Date:	[            ]
Scheduled Hedging Completion Date:	[            ], subject to Schedule A of the Master Confirmation
Upfront Shares:	(Prepayment Amount * 70%) / Closing Price of the Shares on the Trade Date, as reported on the NYSE
Scheduled Valuation Date:	[            ], subject to Schedule A of the Master Confirmation.
First Acceleration Date:	[            ], subject to Schedule A of the Master Confirmation.
Prepayment Amount:	USD [            ]
Commission:	USD [            ]
Ordinary Dividend Amount:	USD [            ]
Scheduled Dividend Dates:	[            ]
Minimum Shares:	Prepayment Amount divided by Cap Price
Maximum Shares:	Prepayment Amount divided by Floor Price
Cap Price:	The product of [    ]% and the Initial Share Price
Floor Price:	The product of [    ]% and the Initial Share Price

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Settlement Price Adjustment Amount: USD [            ]

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Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Supplemental Confirmation enclosed for that purpose and returning it to us.

Very truly yours,

MERRILL LYNCH INTERNATIONAL

By:

Name:

Title:

Confirmed as of the date first above written:

CONAGRA FOODS, INC.

By:

Name:

Title:

Acknowledged and agreed as to matters relating to the Agent:

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

solely in its capacity as Agent hereunder

By:

Name:

Title:

67

ANNEX A

[            ]

68

EXHIBIT B

GUARANTEE OF AGENT MERRILL LYNCH & CO., INC.

FOR VALUE RECEIVED, receipt of which is hereby acknowledged, MERRILL LYNCH & CO., INC., a corporation duly organized and existing under the laws of the State of Delaware (“ML&Co.”), hereby unconditionally guarantees to ConAgra Foods, Inc. (the “Company”), the due and punctual payment of any and all amounts payable by Merrill Lynch International, a company organized under the laws of England and Wales (“MLI”), under the terms of the Master Confirmation of OTC Collared ASAP Minus (VWAP Pricing) between the Company and MLI, dated as of June 30, 2008 (with the Supplemental Confirmations thereto, the “Agreement”), including, in case of default, interest on any amount due, when and as the same shall become due and payable, whether on the scheduled payment dates, at maturity, upon declaration of termination or otherwise, according to the terms thereof. In case of the failure of MLI punctually to make any such payment, ML&Co. hereby agrees to make such payment, or cause such payment to be made, promptly upon demand made by the Company to ML&Co.; provided, however that delay by the Company in giving such demand shall in no event affect ML&Co.’s obligations under this Guarantee. This Guarantee shall remain in full force and effect or shall be reinstated (as the case may be) if at any time any payment guaranteed hereunder, in whole or in part, is rescinded or must otherwise be returned by the Company upon the insolvency, bankruptcy or reorganization of MLI or otherwise, all as though such payment had not been made. This is a guarantee of payment in full, not collection.

ML&Co. hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Agreement; the absence of any action to enforce the same; any waiver or consent by the Company concerning any provisions thereof; the rendering of any judgment against MLI or any action to enforce the same; or any other circumstances that might otherwise constitute a legal or equitable discharge of a guarantor or a defense of a guarantor. ML&Co. covenants that this guarantee will not be discharged except by complete payment of the amounts payable under the Agreement. This Guarantee shall continue to be effective if MLI merges or consolidates with or into another entity, loses its separate legal identity or ceases to exist.

ML&Co. hereby waives diligence; presentment; protest; notice of protest, acceleration, and dishonor; filing of claims with a court in the event of insolvency or bankruptcy of MLI; all demands whatsoever, except as noted in the first paragraph hereof; and any right to require a proceeding first against MLI.

ML&Co. hereby certifies and warrants that this Guarantee constitutes the valid obligation of ML&Co. and complies with all applicable laws.

This Guarantee shall be governed by, and construed in accordance with, the laws of the State of New York.

This Guarantee may be terminated at any time by notice by ML&Co. to the Company given in accordance with the notice provisions of the Agreement, effective upon receipt of such notice by the Company or such later date as may be specified in such notice; provided, however, that this Guarantee shall continue in full force and effect with respect to any obligation of MLI under the Agreement entered into prior to the effectiveness of such notice of termination.

This Guarantee becomes effective concurrent with the effectiveness of the Agreement, according to its terms.

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IN WITNESS WHEREOF, ML&Co. has caused this Guarantee to be executed in its corporate name by its duly authorized representative.

MERRILL LYNCH & CO., INC.

By:

Name:

Title:

Date:

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COVER STATEMENT

CLIENT/COUNTERPARTY RELATIONSHIP

Dear Client/Counterparty:

Merrill Lynch is pleased to provide the attached statement of Generic Risks Associated with Over-the-Counter Derivative Transactions under this Cover Statement that concerns, among other things, the nature of our relationship with you in the context of such transactions. This statement was developed for our new and our ongoing client/counterparties in response to suggestions that OTC derivative dealers consider taking steps to ensure that market participants utilizing OTC derivatives understand their risk exposures and the nature of their relationships with dealers before they enter into OTC derivative transactions.

Merrill Lynch (“we”) are providing to you and your organization (“you”) the attached statement of Generic Risks Associated with Over-the-Counter Derivative Transactions in order to identify, in general terms, certain of the principal risks associated with individually negotiated over-the-counter (“OTC”) derivative transactions. The attached statement does not purport to identify the nature of the specific market or other risks associated with a particular transaction.

Before entering into an OTC derivative transaction, you should ensure that you fully understand the terms of the transaction, relevant risk factors, the nature and extent of your risk of loss and the nature of the contractual relationship into which you are entering. You should also carefully evaluate whether the transaction is appropriate for you in light of your experience, objectives, financial resources, and other relevant circumstances and whether you have the operational resources in place to monitor the associated risks and contractual obligations over the term of the transaction. If you are acting as a financial adviser or agent, you should evaluate these considerations in light of the circumstances applicable to your principal and the scope of your authority.

If you believe you need assistance in evaluating and understanding the terms or risks of a particular OTC derivative transaction, you should consult appropriate advisers before entering into the transaction.

Unless we have expressly agreed in writing to act as your adviser with respect to a particular OTC derivative transaction pursuant to terms and conditions specifying the nature and scope of our advisory relationship, we are acting in the capacity of an arm’s length contractual Counterparty to you in connection with the transaction and not as your financial adviser or fiduciary. Accordingly, unless we have so agreed to act as your adviser, you should not regard transaction proposals, suggestions or other written or oral communications from us as recommendations or advice or as expressing our view as to whether a particular transaction is appropriate for you or meets your financial objectives.

Finally, we and/or our affiliates may from time to time take proprietary positions and/or make a market in instruments identical or economically related to OTC derivative transactions entered into with you, or may have an investment banking or other commercial relationship with and access to information from the issuer(s) of securities, financial instruments, or other interests underlying OTC derivative transactions entered into with you. We may also undertake proprietary activities, including hedging transactions related to the initiation or termination of an OTC derivative transaction with you, that may adversely affect the market price, rate index or other market factor(s) underlying an OTC derivative transaction entered into with you and consequently the value of the transaction.

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A. GENERIC RISKS ASSOCIATED WITH

OVER-THE-COUNTER DERIVATIVE TRANSACTIONS

OTC derivative transactions, like other financial transactions, involve a variety of significant risks. The specific risks presented by a particular OTC derivative transaction necessarily depend upon the terms of the transaction and your circumstances. In general, however, all OTC derivative transactions involve some combination of market risk, credit risk, funding risk and operational risk.

Market risk is the risk that the value of a transaction will be adversely affected by fluctuations in the level or volatility of or correlation or relationship between one or more market prices, rates or indices or other market factors or by illiquidity in the market for the relevant transaction or in a related market.

Credit risk is the risk that a Counterparty will fail to perform its obligations to you when due.

Funding risk is the risk that, as a result of mismatches or delays in the timing of cash flows due from or to your counterparties in OTC derivative transactions or related hedging, trading, collateral or other transactions, you or your Counterparty will not have adequate cash available to fund current obligations.

Operational risk is the risk of loss to you arising from inadequacies in or failures of your internal systems and controls for monitoring and quantifying the risks and contractual obligations associated with OTC derivative transactions, for recording and valuing OTC derivative and related transactions, or for detecting human error, systems failure or management failure.

There may be other significant risks that you should consider based on the terms of a specific transaction. Highly customized OTC derivative transactions in particular may increase liquidity risk and introduce other significant risk factors of a complex character. Highly leveraged transactions may experience substantial gains or losses in value as a result of relatively small changes in the value or level of an underlying or related market factor.

Because the price and other terms on which you may enter into or terminate an OTC derivative transaction are individually negotiated, these may not represent the best price or terms available to you from other sources.

In evaluating the risks and contractual obligations associated with a particular OTC derivative transaction, you should also consider that an OTC derivative transaction may be modified or terminated only by mutual consent of the original parties and subject to agreement on individually negotiated terms. Accordingly, it may not be possible for you to modify, terminate or offset your obligations or your exposure to the risks associated with a transaction prior to its scheduled termination date.

Similarly, while market makers and dealers generally quote prices or terms for entering into or terminating OTC derivative transactions and provide indicative or mid-market quotations with respect to outstanding OTC derivative transactions, they are generally not contractually obligated to do so. In addition, it may not be possible to obtain indicative or mid-market quotations for an OTC derivative transaction from a market maker or dealer that is not a Counterparty to the transaction. Consequently, it may also be difficult for you to establish an independent value for an outstanding OTC derivative transaction. You should not regard your Counterparty’s provision of a valuation or indicative price at your request as an offer to enter into or terminate the relevant transaction at that value or price, unless the value or price is identified by the Counterparty as firm or binding.

This brief statement does not purport to disclose all of the risks and other material considerations associated with OTC derivative transactions. You should not construe this generic disclosure statement as business, legal, tax or accounting advice or as modifying applicable law. You should consult your own business, legal, tax and accounting advisers with respect to proposed OTC derivative transactions and you should refrain from entering into any OTC derivative transaction unless you have fully understood the terms and risks of the transaction, including the extent of your potential risk of loss.

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EX-10.2

Exhibit 10.2

Master Confirmation of OTC Collared Accelerated Share Repurchase

(VWAP Pricing, Fixed Notional)

Date:	June 30, 2008
To:	ConAgra Foods, Inc. (“Counterparty”)
Attention:	Scott Messel
From:	Bank of America, N.A. (“Agent”)
	c/o Banc of America Securities LLC
	Bank of America Tower at One Bryant Park
	New York, NY 10036
	Attn: John Servidio
	Telephone: 646-855-7127
	Facsimile: 704-208-2869

Dear Sir / Madam:

The purpose of this letter agreement (the “Master Confirmation”), each supplemental confirmation substantially in the form attached hereto as Exhibit A (each, a “Supplemental Confirmation” and the Supplemental Confirmations, together with the Master Confirmation, this “Confirmation”) is to confirm the terms and conditions of each of the above-referenced transactions entered into between Counterparty and Agent on the respective Trade Dates specified in the Supplemental Confirmations (each, a “Transaction” and collectively, the “Transactions”). This Confirmation constitutes a “Confirmation” on behalf of Agent, as referred to in the ISDA Master Agreement specified below.

The definitions and provisions contained in the 2000 ISDA Definitions (the “Swap Definitions”) and the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions” and, together with the Swap Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will govern, in the event of any inconsistency between the Definitions and the Master Confirmation, the Master Confirmation will govern, in the event of any inconsistency between the Master Confirmation and any Supplemental Confirmation, the Supplemental Confirmation will govern. References herein to any “Transaction” shall be deemed to be references to a “Share Forward Transaction” for purposes of the Equity Definitions and a “Swap Transaction” for the purposes of the Swap Definitions.

This Confirmation evidences a complete binding agreement between you and us as to the terms of the Transactions to which this Confirmation relates. This Confirmation (notwithstanding anything to the contrary herein), shall be subject to an agreement in the 1992 form of the ISDA Master Agreement (Multicurrency Cross Border) (the “Master Agreement” or “Agreement”) as if we had executed an agreement in such form (but without any Schedule and with elections specified in the “ISDA Master Agreement” Section of the Master Confirmation) on the Trade Date of the first such Transaction between us. In the event of any inconsistency between the provisions of that agreement and this Confirmation, this Confirmation will prevail for the purpose of each Transaction.

The terms of each Transaction to which the Master Confirmation relates are as follows:

General Terms:

Trade: With respect to each Transaction, Counterparty, subject to the terms and conditions and in reliance upon the representations and warranties set forth herein, will purchase from Agent, at a time determined by Agent, as described herein, Shares in an amount equal to the Number of Shares. The parties hereto acknowledge that in selling Shares, Agent is acting as principal for its own account and has no implied duties (including any fiduciary duty) to Counterparty and any purchases of Shares by Agent in the open

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	market in anticipation of delivery of Shares to Counterparty are solely for the account of Agent.
Trade Date:	For each Transaction, as set forth in the corresponding Supplemental Confirmation.
Buyer:	Counterparty
Seller:	Agent
Shares:	Shares of common stock, par value USD 5.00 per share, of Counterparty (Symbol: CAG)
Number of Shares:	The result of the Prepayment Amount divided by the Settlement Price, subject to a maximum number of Shares equal to Maximum Shares and a minimum number of Shares equal to the Minimum Shares.
Maximum Shares:	For each Transaction, as set forth in the corresponding Supplemental Confirmation.
Minimum Shares:	For each Transaction, as set forth in the corresponding Supplemental Confirmation.
Initial Share Price:	The arithmetic mean of the VWAP Prices for each Scheduled Trading Day in the Hedge Period, subject to the exclusion of any Exclusion Days (as defined below), as determined by the Calculation Agent; with respect to an event causing an Exclusion Day that does not affect the entirety of the Scheduled Trading Day, the Calculation Agent may effect a partial exclusion, in which case the VWAP Price for such Scheduled Trading Day shall be determined by the Calculation Agent based on Rule 10b-18 eligible transactions in the Shares on such Exclusion Day effected during the portion of the Scheduled Trading Day unaffected by such event or events, and the weighting of the VWAP Prices for the relevant Scheduled Trading Days during the Hedge Period shall be adjusted by the Calculation Agent for purposes of determining the Initial Share Price.
Forward Price:	Settlement Price
Hedge Period:	The period beginning on the Hedging Initiation Date and ending on the Hedging Completion Date.
Hedging Initiation Date:	For each Transaction, as set forth in the Supplemental Confirmation.
Hedging Completion Date:	For each Transaction, the Scheduled Hedging Completion Date; provided, however, that if any Scheduled Trading Day in the Hedge Period is an Exclusion Day, Agent may, by written notice to Counterparty (which notice need not specify the reason for Agent’s election to suspend the Hedging Period), exclude the Scheduled Trading Day(s) that are Exclusion Days and extend the Hedge Period by such number of additional Scheduled Trading Days, in which case the Scheduled Hedging Completion Date shall be the final Scheduled Trading Day in such extended Hedge Period; provided further, however, Agent may designate as the Hedging Completion Date a Scheduled Trading Day that is earlier than the Scheduled Hedging Completion Date in a notice (written or oral) to Counterparty no later than 9:00 a.m. New York City time on the next following Scheduled Trading Day.
Scheduled Hedging Completion Date:	For each Transaction, as set forth in the Supplemental Confirmation.
Prepayment:	Applicable
Prepayment Amount:	For each Transaction, as set forth in the corresponding Supplemental Confirmation.
Prepayment Date:	For each Transaction, as set forth in the Supplemental Confirmation.

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Additional Payment Amount:	On the Prepayment Date, Counterparty shall pay to Agent an additional amount equal to the Commission.
Commission:	For each Transaction, as set forth in the corresponding Supplemental Confirmation.
Exchange:	NYSE
Related Exchange(s):	All Exchanges
Market Disruption Event:	The definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby amended by replacing the words “at any time during the one-hour period that ends at the relevant Valuation Time” in the third line thereof with the words “at any time on any Scheduled Trading Day during the Hedge Period, the Valuation Period or” after the word “material”.
Upfront Share Delivery:	Agent shall deliver the Upfront Shares to Counterparty on the Upfront Share Delivery Date.
Upfront Shares:	For each Transaction, as set forth in the corresponding Supplemental Confirmation.
Upfront Share Delivery Date:	Prepayment Date
Initial Share Delivery:	Agent shall deliver a number of Shares equal to 100% of the Minimum Shares minus any Upfront Shares to Counterparty on the Initial Share Delivery Date.
Initial Share Delivery Date:	One (1) Exchange Business Day following the Hedging Completion Date. The Initial Share Delivery Date shall be deemed to be a “Settlement Date” for purposes of Section 9.4 of the Equity Definitions.
Valuation:
Valuation Period:	For each Transaction, each Scheduled Trading Day from and including the Scheduled Trading Day immediately following the Hedging Completion Date up to and including the Valuation Date; provided, that with respect to each Suspension Event (if any) affecting such Scheduled Trading Days, Agent may, by written notice to Counterparty (which notice shall not specify the reason for Agent’s election to suspend the Valuation Period), exclude the Scheduled Trading Day(s) on which such Suspension Event has occurred (such days, “Suspension Event Days”) and postpone the Scheduled Valuation Date by the total number of such Suspension Event Days; provided, further, that notwithstanding anything to the contrary in the Equity Definitions, to the extent that any Scheduled Trading Days in the Valuation Period are Disrupted Days, the Calculation Agent may exclude such Disrupted Days and postpone the Scheduled Valuation Date by the number of such Disrupted Days (in addition to any Suspension Event Days, without duplication). If a Disrupted Day occurs during the Valuation Period, and each of the nine immediately following Scheduled Trading Days is a Disrupted Day, then the Calculation Agent, in its discretion, may either (i) determine the VWAP Price for such ninth Scheduled Trading Day and adjust the weighting of the VWAP Prices for the relevant Scheduled Trading Days during the Valuation Period as it deems appropriate for purposes of determining the Settlement Price based on, among other factors, the duration of any Market Disruption Event and the volume, historical trading patterns and price of the Shares or (ii) disregard such day for purposes of determining the Settlement Price and further postpone the Valuation Date, in either case, as it deems appropriate to determine the VWAP Price.
Suspension Event:	Each and every one of the following events: (i) Agent concludes, in its sole discretion, that Counterparty will be engaged in a distribution of the Shares for purposes of Regulation M or that the “restricted period” in respect of such distribution has not yet been completed; (ii) Agent reasonably concludes that it is appropriate with respect to

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	any legal, regulatory or self-regulatory requirements or related policies and procedures, for it to refrain from purchasing Shares during any part of the Valuation Period; or (iii) Counterparty is subject to a third-party tender offer.
Partial Exclusions:	With respect to each Suspension Event Day and Disrupted Day (each, an “Exclusion Day”), the Calculation Agent must determine whether (i) such Exclusion Day should be excluded in full, in which case such Exclusion Day shall not be included for purposes of determining the Settlement Price, or (ii) such Exclusion Day should only be partially excluded, in which case the VWAP Price for such Exclusion Day shall be determined by the Calculation Agent based on Rule 10b-18 eligible transactions in the Shares on such Exclusion Day effected during the portion of the Scheduled Trading Day unaffected by such event or events, and the weighting of the VWAP Prices for the relevant Scheduled Trading Days during the Valuation Period shall be adjusted by the Calculation Agent for purposes of determining the Settlement Price.
Valuation Date	For each Transaction, the earlier to occur of the date as set forth in the Supplemental Confirmation (as the same may be postponed in accordance with the provisions hereof) (the “Scheduled Valuation Date”) and any Accelerated Valuation Date.
Accelerated Valuation Date:	For each Transaction, any date, occurring on or after the First Acceleration Date but prior to the Scheduled Valuation Date, designated by Agent to be the Valuation Date; Agent shall notify Counterparty of such designation prior to 8 p.m. New York City time on the Scheduled Trading Day immediately following such Accelerated Valuation Date.
First Acceleration Date:	For each Transaction, as set forth in the Supplemental Confirmation.
Settlement Terms:
Physical Settlement:	Applicable; provided that the reference to Excess Dividend Amount in Section 9.2(a)(iii) of the Equity Definitions shall be deleted.
Settlement Currency:	USD
Settlement Method Election:	Not Applicable
Settlement Price:	The arithmetic mean of the VWAP Prices of the Shares for each Scheduled Trading Day in the Valuation Period minus the Settlement Price Adjustment Amount.
Settlement Price Adjustment Amount:	For each Transaction, as set forth in the Supplemental Confirmation.
Number of Shares to be Delivered:	A number of Shares equal to (i) the Number of Shares, minus (ii) the Minimum Shares.
VWAP Price:	The daily volume weighted average price per Share traded on the New York Stock Exchange under the CAG ticker as reported on the Bloomberg Page “CAG.N <Equity> AQR SEC” (or any successor thereto). For the purpose of calculating the VWAP Price, the Calculation Agent will include only those trades which are reported during the period of time during which Counterparty could purchase its own shares under Rule 10b-18(b)(2) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to the conditions of Rule 10b-18(b)(3) and (b)(4) under the Exchange Act.
Share Adjustments:
Method of Adjustment:	Calculation Agent Adjustment; provided, however, that an Extraordinary Dividend occurring with respect to a Transaction shall not constitute a Potential Adjustment Event but shall be an Additional Termination Event under the Agreement with respect to such

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	Transaction, with such Transaction being an Affected Transaction and Counterparty being the sole Affected Party.
Extraordinary Dividends:	Each dividend or distribution payment (other than any dividend or distribution of the type described in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) or (B) of the Equity Definitions) having an ex-dividend date during the Valuation Period, other than the payment of the Ordinary Dividend Amount on each Scheduled Dividend Date. For the avoidance of doubt, the rescheduling of a Scheduled Dividend Date to an earlier date shall result in an Ordinary Dividend Amount payable on such rescheduled day becoming an Extraordinary Dividend.
Ordinary Dividend Amount:	For each Transaction, as set forth in the Supplemental Confirmation.
Scheduled Dividend Dates:	For each Transaction, as set forth in the Supplemental Confirmation.
Extraordinary Events:
Consequences of Merger Events:
Share-for-Share:	Modified Calculation Agent Adjustment
Share-for-Other:	Cancellation and Payment; for the avoidance of doubt, the value of any embedded optionality in the Transaction shall be taken into account in determining the Cancellation Amount.
Share-for-Combined:	Component Adjustment
Determining Party:	Agent
Consequences of Tender Offers:
Share-for-Share:	Modified Calculation Agent Adjustment
Share-for-Other:	Cancellation and Payment; for the avoidance of doubt, the value of any embedded optionality in the Transaction shall be taken into account in determining the Cancellation Amount.
Share-for-Combined:	Component Adjustment
Determining Party:	Agent
New Share:	The definition of “New Shares” in Section 12.1 of the Equity Definitions shall be amended by inserting at the beginning of subsection (i) the following: “(i) where the Exchange is located in the United States, publicly quoted, traded or listed on the New York Stock Exchange, the American Stock Exchange, The NASDAQ Global Market or The NASDAQ Global Select Market (or their respective successors) or otherwise,”.
Announcement Event:	If an Announcement Event occurs, the Calculation Agent will determine in good faith and in a commercially reasonable manner the economic effect of the Announcement Event on the theoretical value of the Transaction (including without limitation any change in volatility, dividends, stock loan rate or liquidity relevant to the Shares or to the Transaction) from the Announcement Date to the Valuation Date. If such economic effect is material, the Calculation Agent will adjust the terms of the Transaction to reflect such economic effect. “Announcement Event” shall mean the occurrence of the Announcement Date of a Merger Event or Tender Offer.
Nationalization, Insolvency or

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Delisting:	Cancellation and Payment; provided, that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange, The NASDAQ Global Market or The NASDAQ Global Select Market (or their respective successors); and if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange, such exchange shall be deemed to be the Exchange.
Determining Party:	Agent
Additional Disruption Events:
Change in Law:	Applicable
Insolvency Filing:	Applicable
Increased Cost of Stock Borrow:	Applicable; provided, that Sections 12.9(a)(vii) and 12.9(b)(iv) of the Equity Definitions are amended by deleting the words “at a rate equal to or less than the Initial Stock Loan Rate” and replacing them with “at a rate of equal to or less than 35 basis points”.
Hedging Party:	Agent
Determining Party;	Agent
Non-Reliance/Agreements and Acknowledgements Regarding Hedging Activities/Additional Acknowledgements:	Applicable

Acquisition Transactions:

If an Acquisition Transaction Announcement occurs on or prior to the Scheduled Valuation Date for any Transaction, then the Number of Shares shall not be subject to the lower limit of the Minimum Shares. If an Acquisition Transaction Announcement occurs prior to the First Acceleration Date, then the First Acceleration Date shall become the date of such Acquisition Transaction Announcement. If the Number of Shares to be Delivered for any settlement of any Transaction is a negative number, then Counterparty shall deliver to Agent on the Settlement Date a number of Shares equal to the absolute value of the Number of Shares to be Delivered. In lieu of such Share delivery, Counterparty may, in its discretion, elect to deliver to Agent an amount in cash equal to the Acquisition Amount; such election shall be made by Counterparty in writing no later than the scheduled commencement of trading on the Scheduled Trading Day immediately following the date of such Acquisition Transaction Announcement (the date of such notice, the “Acquisition Amount Election Date”); settlement in respect of the Acquisition Amount shall occur on the Exchange Business Day immediately following the completion of the Acquisition Valuation Period.

Notwithstanding any other provision of this Confirmation, Counterparty shall not be required to deliver Shares in excess of the number of Capped Delivery Shares. “Capped Delivery Shares” shall be equal to Maximum Shares.

Notwithstanding any other provision of this Confirmation, if for any reason Counterparty is required to deliver Shares, Counterparty may deliver Shares that are not registered under the Securities Act of 1933, as amended (the “Securities Act”).

“Acquisition Transaction Announcement” means (i) the announcement of an Acquisition Transaction, (ii) an announcement that Counterparty or any of its subsidiaries has entered into an agreement, a letter of intent or an understanding designed to result in an Acquisition Transaction, (iii) the announcement of the intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, an Acquisition Transaction, or (iv) any other announcement that in the reasonable judgment of the Calculation Agent would reasonably be expected to result in an Acquisition Transaction. For the avoidance of doubt, announcements as used in the definition of Acquisition Transaction Announcement refer to any public announcement whether made by Counterparty or a third party.

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“Acquisition Transaction” means (i) any Merger Event (for purposes of this definition the definition of Merger Event shall be read with the references therein to “100%” being replaced by “15%” and without reference to the clause beginning immediately following the definition of Reverse Merger therein to the end of such definition) or Tender Offer or any other transaction involving the merger of Counterparty with or into any third party, (ii) the sale or transfer of all or substantially all of the assets of Counterparty, (iii) a recapitalization, reclassification, binding share exchange or other similar transaction, (iv) any acquisition, lease, exchange, transfer, disposition (including by way of spin-off or distribution) of assets (including any capital stock or other ownership interests in subsidiaries) or other similar event by Counterparty or any of its subsidiaries where the aggregate consideration transferable or receivable by or to Counterparty or its subsidiaries exceeds 25% of the market capitalization of Counterparty and (v) any transaction in which Counterparty or its board of directors has a legal obligation to make a recommendation to its shareholders in respect of such transaction (whether pursuant to Rule 14e-2 under the Exchange Act or otherwise).

“Acquisition Amount” means the product of the absolute value of the Number of Shares to be Delivered and the arithmetic mean of the VWAP Prices for each Scheduled Trading Day during the Acquisition Valuation Period.

“Acquisition Valuation Period” means a number of Scheduled Trading Days, designated by Agent and communicated to Counterparty in writing, beginning with the first Scheduled Trading Day immediately following the date of the relevant Acquisition Transaction Announcement (subject to the partial and full Exclusion Day provisions applicable to the Valuation Period and, if Schedule A is applicable pursuant to the relevant Supplemental Confirmation, subject to Schedule A, as if the Acquisition Valuation Period were the Valuation Period).

Other Share Deliveries in Lieu of Cash Payment:

If Counterparty would be obligated to pay cash to Agent or receive cash from Agent pursuant to the terms of this Agreement for any reason without having had the right (other than pursuant to this paragraph) to elect to deliver Shares or receive Shares, as the case may be, in satisfaction of such payment obligation or right, then Counterparty may elect that Counterparty deliver to Agent or receive from Agent, as the case may be, a number of Shares having an equivalent value (such number of Shares to be delivered to be determined by the Calculation Agent acting in a commercially reasonable manner and taking into account relevant factors, including whether or not the Shares are subject to legal or other restrictions on transfer or acquisition and the costs and expenses associated with disposing of or acquiring such Shares). Settlement relating to any delivery of Shares pursuant to this paragraph shall occur within a reasonable period of time.

Notwithstanding any other provisions of this Confirmation to the contrary, in the event that (i) in connection with any settlement upon termination of this Transaction, Agent would be required to make a cash payment to Counterparty and (ii) at such time Agent or its agent owns Shares acquired for the purpose of hedging Agent’s obligations pursuant to this Transaction (such Shares, “Hedge Shares”), Agent may elect to satisfy all or a portion of such cash payment obligation through the delivery of an equivalent value of Hedge Shares (value as determined by the Calculation Agent).

For the avoidance of doubt, other than in the case of an Acquisition Transaction Announcement that results in an amount payable to Agent, Counterparty will not owe any payment to Agent following payment of the Prepayment Amount nor be required to issue any shares to Agent.

Partial Early Settlement

Notwithstanding any other provisions of this Confirmation or any Supplemental Confirmation, if Agent (together with its affiliates, as such term is defined under the Exchange Act) acquires or holds a number of Shares or other equity securities of Counterparty exchangeable for or convertible into Shares which in aggregate would equal or exceed 4.75% of all Shares then issued and outstanding (the “Ownership Limit”), Agent may at any time and from time to time during the term of a Transaction deliver to Counterparty a number of Shares to cause Agent and its affiliates to hold less than the Ownership Limit and Counterparty agrees to take ownership of any such Shares, provided, that Agent has furnished to Counterparty three days’ prior notice in writing specifying a date for settlement (each, an “Early Settlement Date”) and the number of Shares to be delivered by Agent to Counterparty on the Early Settlement Date. The parties understand and agree that (i) the delivery of the Shares by or on behalf of Agent is irrevocable and that as of any Early Settlement Date Counterparty will be the sole beneficial owner of the Shares for all purposes and (ii) the number of Shares delivered by Agent on any such Early Settlement Date will reduce the number of Shares required to be delivered by Agent on the Settlement Date.

Registration:

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At the election of Counterparty, (x) any Shares acquired by Agent from Counterparty or (y) any Hedge Shares cannot be sold freely in the public market by Agent without registration under the Securities Act, Counterparty may, in order to allow Agent to sell such Shares in a registered offering, make available to Agent an effective registration statement under the Securities Act and enter into an agreement, in form and substance satisfactory to Agent, substantially in the form of an underwriting agreement for a registered offering; provided, however, that if Agent, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above or if Counterparty does not register such shares, then the section “Private Placement” below shall apply with respect to the Shares to be sold (such Shares, the “Private Shares”).

Private Placement:

In order to allow Agent to sell Private Shares in a private placement, Counterparty agrees to enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance satisfactory to Agent (in which case, the Calculation Agent shall, to the extent such adjustments have not yet already been made, make any adjustments to the terms of such Transaction that are necessary, in its reasonable judgment, to compensate Agent for an imputed 3% discount from the public market price of the Shares incurred on the sale of Shares in a private placement), or alternatively, at the election of Counterparty, purchase such Shares from Agent at the closing price on such Exchange Business Days, and in the amounts, requested by Agent.

Agreement in Respect of Adjustments:

In determining any adjustment in respect of any Transaction pursuant to Article 11 or Article 12 of the Equity Definitions, the Calculation Agent shall make such adjustments without regard to changes in expected dividends since the Trade Date for such Transaction.

Agreement in Respect of Dividends:

For the avoidance of doubt, if an Early Termination Date occurs in respect of any Transaction as a result of an Additional Termination Event, the relevant party’s Loss for purposes of Section 6(e) of the Agreement in respect of such Additional Termination Event shall be determined without regard to the difference between such Extraordinary Dividend giving rise to such Additional Termination Event and the expected dividend as of the Trade Date for such Transaction.

Additional Agreements, Representations and Covenants of Counterparty, Etc.:

1. Counterparty hereby represents and warrants to Agent that during each Hedge Period:

a. neither Counterparty nor any “affiliated purchaser” (as such term is defined in Rule 10b-18 under the Exchange Act) will acquire Shares (or equivalent interests or securities exchangeable, convertible or exercisable into Shares) or be a party to any repurchase or similar agreements pursuant to which a valuation, averaging or hedging period or similar such period overlaps or potentially overlaps with the Hedge Period;

b. Counterparty agrees that neither Counterparty nor any of its Affiliates or agents shall take any action that would cause Regulation M to be applicable to any purchases of Shares, or any security for which the Shares are a reference security (as defined in Regulation M), by Counterparty or any of its affiliated purchasers (as defined in Regulation M) during the Hedge Period; and

c. Unless the Hedge Period is covered by a Plan described below, Counterparty is not in possession of any material nonpublic information regarding Counterparty or Shares.

2. Agent hereby covenants to and agrees with Counterparty that during the Hedge Period, it and each person or entity subject to its control or acting on its behalf will use commercially reasonable efforts to purchase Shares in connection with the Transaction in a manner that would comply with the limitations set forth in clauses (b)(2), (b)(3), (b)(4) and (c) of Rule 10b-18 as if such purchases were made by Counterparty.

Compliance with Securities Laws: Each party acknowledges that the offer and sale of each Transaction to it is intended to be exempt from registration under the Securities Act by virtue of Section 4(2) thereof and the provisions of Regulation D thereunder (“Regulation D”). Accordingly, each party represents and warrants to the other that (i) it has the financial ability to bear the economic risk of its

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investment in each Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined under Regulation D, (iii) it will purchase each Transaction for investment and not with a view to the distribution or resale thereof, and (iv) the disposition of each Transaction is restricted under this Confirmation, the Securities Act and state securities laws.

Counterparty represents and warrants as of the date hereof and each Trade Date (unless otherwise specified below) that:

(a) each of its filings under the Exchange Act that are required to be filed from and including the ending date of Counterparty’s most recent prior fiscal year have been filed, and that, as of the respective dates thereof and hereof, there is no misstatement of material fact contained therein or omission of a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading;

(b) Counterparty is not in possession of material non-public information regarding the Shares or the Counterparty; this representation shall be repeated as of any Trade Date, any Acquisition Amount Election Date and as of the date of any other election by Counterparty in respect of the method of settlement, whether such settlement is on a regular settlement date, upon early termination, in connection with cancellation and payment or otherwise; this representation shall also be repeated as of the completion time of any Distribution Period (as defined below);

(c) Counterparty is not entering into any Transaction to facilitate a distribution of the common stock or in connection with a future distribution of securities;

(d) Counterparty is not entering into any Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to manipulate the price of the Shares (or any security convertible into or exchangeable for Shares);

(e) Counterparty is entering into each Transaction in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”); it is the intent of the parties that each Transaction comply with the requirements of Rule l0b5-l(c)(1)(i)(A) and (B) and each Transaction shall be interpreted to comply with the requirements of Rule 10b5-l(c) (the “Plan”); Counterparty will not seek to control or influence Agent to make “purchases or sales” (within the meaning of Rule 10b5-1(c)(l)(i)(B)(3)) under any Transaction, including, without limitation, any decision to enter into any hedging transactions; Counterparty represents and warrants that it has consulted with its own advisors as to the legal aspects of its adoption and implementation of each Transaction under Rule 10b5-1;

(f) Neither it nor any “affiliated purchaser” (as defined in Rule 10b-18 under the Exchange Act) has made any purchases of blocks pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act during the four full calendar weeks immediately preceding the applicable Hedging Initiation Date and during the calendar week in which the Hedging Initiation Date occurs;

(g) The purchase or writing of each Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act, and Counterparty is not entering into any Transaction in anticipation of, or in connection with, or to facilitate a self-tender offer or a third-party tender offer; (h) Each Transaction is consistent with the publicly announced program of Counterparty to repurchase, from time to time, Shares (the “Repurchase Program”);

(i) Counterparty has full power and authority to undertake the Repurchase

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Program, and the Repurchase Program has been duly authorized and remains valid; and

(j) If Counterparty purchases any Shares from the other party pursuant to any Transaction, such purchase(s) will comply in all material respects with (i) all laws and regulations applicable to Counterparty and (ii) all contractual obligations of Counterparty.

Counterparty covenants and agrees that:

(a) during the term of each Transaction to promptly notify Agent telephonically (which oral communication shall be promptly confirmed by telecopy to Agent) if Counterparty determines that it or any of its Affiliates or agents has taken any action that will cause Regulation M to be applicable to any purchases of Shares, or any security for which the Shares are a reference security (as defined in Regulation M), by Counterparty or any of its affiliated purchasers (as defined in Regulation M) during the term of such Transaction, such notice to be given at least one (1) Exchange Trading Day prior to the start of the relevant restricted period (as defined in Regulation M); for the purposes of this Confirmation, the “term” of a Transaction shall not be considered to have been completed until all Shares required to be transferred to party hereto have been duly transferred and all cash amounts required to be paid to a party hereto have been duly paid;

(b) without the prior written consent of Agent, neither Counterparty nor any “affiliated purchaser” (as such term is defined in Rule 10b-18 under the Exchange Act) will acquire Shares (or equivalent interests or securities exchangeable, convertible or exercisable into Shares) or be a party to any repurchase or similar agreements pursuant to which a valuation, averaging or hedging period or similar such period overlaps or potentially overlaps with the term of any Transaction, other than (i) an off market acquisition of Shares (or any security convertible into or exchangeable for Shares) by Counterparty from holders of awards granted under Counterparty’s stock plans, in connection with vesting, exercise, settlement, expiration or termination of such awards (or Counterparty being a party to an off market repurchase or similar agreement for such purpose), (ii) any off market acquisition of Shares (or any securities convertible into or exchangeable for Shares) by any “affiliated purchaser” (as such term is defined in Rule 10b-18 under the Exchange Act) of Counterparty pursuant to awards granted under Counterparty’s stock plans or pursuant to Counterparty’s 401(k) plan(s), (iii) any acquisition of Shares (or any securities convertible into or exchangeable for Shares) by Counterparty in a private transaction from any director or employee of Counterparty and (iv), if Schedule A is applicable to a Transaction, purchases of Shares by an affiliated purchaser (as defined in Rule 10b-18) of Counterparty during the Hedge Period for such Transaction on days other than Agent Days (as defined in Schedule A);

(c) Counterparty shall report each Transaction as required in any applicable report filed by the Counterparty pursuant to the Exchange Act in compliance with Regulation S-K and/or Regulation S-B under the Exchange Act, as applicable; and

(d) During the term of each Transaction, Counterparty shall (i) notify Agent prior to the opening of trading in the Shares on any day on which Counterparty makes, or expects to be made, any public announcement (as defined in Rule 165(f) under the Securities Act of any merger, acquisition, or similar transaction involving a recapitalization relating to Counterparty (other than any such transaction in which the consideration consists solely of cash and there is no valuation period), (ii) promptly notify Agent following any such announcement that such announcement has been made, and (iii) promptly deliver to Agent following the making of any such announcement a certificate indicating (A) Counterparty’s average daily

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Rule 10b-18 purchases (as defined in Rule 10b-18) during the three full calendar months preceding the date of the announcement of such transaction and (B) Counterparty’s block purchases (as defined in Rule 10b-18) effected pursuant to paragraph (b)(4) of Rule 10b-18 during the three full calendar months preceding the date of the announcement of such transaction. In addition, Counterparty shall promptly notify Agent of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders. Counterparty acknowledges that any such public announcement may result in a Suspension Event and may cause the Hedge Period or Valuation Period to be suspended.

Counterparty acknowledges and agrees that:

(a) In connection with each Transaction, Agent will engage in customary hedging activities in its sole discretion and for its own account and that such activities may involve sales or purchases at an average price that may be greater than, or less than, the price paid by Counterparty under the terms of such Transaction;

(b) During the term of each Transaction, Agent and its Affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to such Transaction;

(c) Agent and its Affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to each Transaction;

(d) Agent shall make its own determination as to whether, when or in what manner any hedging or market activities in Counterparty’s securities shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Settlement Price and/or the VWAP Price;

(e) Any market activities of Agent and its Affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Settlement Price and/or the VWAP Price, each in a manner that may be adverse to Counterparty; and

(f) Notwithstanding the generality of Section 13.1 of the Equity Definitions, Agent is not making any representations or warranties with respect to the treatment of any Transaction under FASB Statements 133 as amended or 150, EITF 00-19, 01-6, 03-6 or 07-5 (or any successor issue statements) or under FASB’s Liabilities & Equity Project.

Account Details:
Account for payments to Counterparty:	JP Morgan Chase
	New York, NY
	ABA No.
	SWIFT:
	Account Name:
	Account No.:
Account for payment to Agent:	Bank of America
	New York, NY
	SWIFT: BOFAUS65
	Bank Routing:
	Account Name:
	Account No. :

Bankruptcy Rights: In the event of Counterparty’s bankruptcy, Agent’s rights in connection with any Transaction shall not exceed those rights held by common shareholders. For the avoidance of doubt, the parties acknowledge and agree that Agent’s rights with respect to any other claim arising from any

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	Transaction prior to Counterparty’s bankruptcy shall remain in full force and effect and shall not be otherwise abridged or modified in connection herewith.
No Set-Off:	Obligations under any Transaction shall not be netted, recouped or set-off (including pursuant to Section 6 of the Agreement) against any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise, and no other obligations of the parties shall be netted, recouped or set-off (including pursuant to Section 6 of the Agreement) against obligations under this Transaction, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise, and each party hereby waives any such right of set-off, netting or recoupment.
Collateral:	None.
Transfer:	Counterparty may transfer any of its rights or delegate its obligations under any Transaction with the prior written consent of Agent. Agent may assign and delegate its rights and obligations under any Transaction (the “Transferred Obligations”) to any subsidiary of Bank of America Corporation (the “Assignee”) by notice specifying the effective date of such transfer (“Effective Date”) and including an executed acceptance and assumption by the Assignee of the Transferred Obligations; provided that (i) the Assignee has a credit rating, or is guaranteed by an entity having a credit rating, equal to or better than the then current credit rating of Bank of America Corporation, (ii) such assignment or delegation will not result in any material adverse regulatory consequences to Counterparty, (iii) Counterparty will not, as a result of such transfer, be required to pay to the Assignee an amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) of the Agreement (except in respect of interest under Section 2(e), 6(d)(ii), or 6(e)) greater than the amount in respect of which Counterparty would have been required to pay to Agent in the absence of such transfer; and (iv) the Assignee will not, as a result of such transfer, be required to withhold or deduct on account of a Tax under Section 2(d)(i) of the Agreement (except in respect of interest under Section 2(e), 6(d)(ii), or 6(e)) an amount in excess of that which Agent would have been required to withhold or deduct in the absence of such transfer, unless the Assignee would be required to make additional payments pursuant to Section 2(d)(i)(4) of the Agreement corresponding to such excess. On the Effective Date, (a) Agent shall be released from all obligations and liabilities arising under the Transferred Obligations; and (b) if Agent has not assigned and delegated its rights and obligations under the Agreement and all Transactions thereunder, the Transferred Obligations shall cease to be a Transaction under the Agreement and shall be deemed to be a Transaction under the master agreement, if any, between Assignee and Counterparty, provided that, if at such time Assignee and Counterparty have not entered into a master agreement, Assignee and Counterparty shall be deemed to have entered into an ISDA form of Master Agreement (Multicurrency-Cross Border) and Schedule substantially in the form of the Agreement but amended to reflect the name of the Assignee and the address for notices and any amended representations under Part 2 of the Agreement as may be specified in the notice of transfer.
Designation:	Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Agent to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Agent (the “Designator”) may designate any of its Affiliates (the “Designee”) to deliver or take delivery, as the case may be, and otherwise perform its obligations to deliver, if any, or take delivery of, as the case may be, any such Shares or other securities in respect of the Transaction, and the Designee may assume such obligations, if any. Such designation shall not relieve the Designator of any of its obligations, if any, hereunder. Notwithstanding the previous sentence, if the Designee shall have performed the obligations, if any, of the Designator hereunder, then the Designator shall be discharged of its obligations, if any, to Counterparty to the extent of such performance.
ISDA Master Agreement
With respect to the Agreement, Agent and Counterparty each agree as follows:
Specified Entities:

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(i) in relation to Agent, for the purposes of:

Section 5(a)(v): not applicable

Section 5(a)(vi): not applicable

Section 5(a)(vii): not applicable

Section 5(b)(iv): not applicable

and (ii) in relation to Counterparty, for the purposes of:

Section 5(a)(v): not applicable

Section 5(a)(vi): not applicable

Section 5(a)(vii): not applicable

Section 5(b)(iv): not applicable

“Specified Transaction” will have the meaning specified in Section 14 of the Agreement.

The “Credit Event Upon Merger” provisions of Section 5(b)(iv) of the Agreement will not apply to Agent and Counterparty.

The “Automatic Early Termination” provision of Section 6(a) of the Agreement will not apply to Agent or to Counterparty.

Payments on Early Termination for the purpose of Section 6(e) of the Agreement: (i) Loss shall apply; and (ii) the Second

Method shall apply.

“Termination Currency” means USD.

Tax Representations:

(I) For the purpose of Section 3(e) of the Agreement, each party represents to the other party that it is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii), or 6(e) of the Agreement) to be made by it to the other party under the Agreement. In making this representation, each party may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of the Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of the Agreement, and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of the Agreement, and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of the Agreement; provided that it will not be a breach of this representation where reliance is placed on clause (ii) above and the other party does not deliver a form or document under Section 4(a)(iii) of the Agreement by reason of material prejudice to its legal or commercial position.

(II) For the purpose of Section 3(f) of the Agreement, each party makes the following representations to the other party:

(i) Agent represents that it is a U.S. national association.

(ii) Counterparty represents that it is a corporation incorporated under the laws of Delaware.

Delivery Requirements: For the purpose of Sections 3(d), 4(a)(i) and (ii) of the Agreement, each party agrees to deliver the following documents:

Tax forms, documents or certificates to be delivered are:

Each party agrees to complete (accurately and in a manner reasonably satisfactory to the other party), execute, and deliver to the other party, United States Internal Revenue Service Form W-9 or W-8 BEN, or any successor of such form(s): (i) before the first payment date under this agreement; (ii) promptly upon reasonable demand by the other party; and (iii) promptly upon learning that any such form(s) previously provided by the other party has become obsolete or incorrect.

Other documents to be delivered:

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Party Required to Deliver Document	Document Required to be Delivered	When Required	Covered by Section 3(d) Representation
Counterparty	Evidence of the authority and true signatures of each official or representative signing this Confirmation	Upon or before execution and delivery of this Confirmation	Yes
Counterparty	Certified copy of the resolution of the Board of Directors or equivalent document authorizing the execution and delivery of this Confirmation	Upon or before execution and delivery of this Confirmation	Yes
Each party	Executed Supplemental Confirmation, substantially in the form of Exhibit A hereto, in respect of each Transaction	On or before the corresponding Trade Date	Yes

Addresses for Notices: For the purpose of Section 12(a) of the Agreement:

Address for notices or communications to Agent:

Address:	Bank of America, N.A.
	c/o Banc of America Securities LLC
	Bank of America Tower at One Bryant Park
	New York, NY 10036
	Attn: John Servidio
	Telephone: 646-855-7127
	Facsimile: 704-208-2869

(For all purposes)

Additionally, a copy of all notices pursuant to Sections 5, 6, and 7 as well as any changes to Counterparty’s address, telephone number or facsimile number should be sent to:

N/A

Address for notices or communications to Counterparty for all purposes:

ConAgra Foods, Inc.

One ConAgra Drive

Omaha, NE 68102

Attention: Scott Messel

Facsimile No.: (402) 595-4438                    Telephone No.: (402) 595-4063

Neither Agent nor Counterparty appoints a Process Agent.

Multibranch Party. For the purpose of Section 10(c) of the Agreement: Neither Agent nor Counterparty is a Multibranch Party.

Calculation Agent. The Calculation Agent is Agent, whose judgments, determinations and calculations in each Transaction shall be made in good faith and in a commercially reasonable manner.

Credit Support Document.

Agent: Not Applicable

Counterparty: Not Applicable

Credit Support Provider.

With respect to Agent and Counterparty, Not Applicable.

Governing Law. This Confirmation will be governed by, and construed in accordance with, the laws of the State of New York.

Netting of Payments. The provisions of Section 2(c) of the Agreement shall not be applicable to each Transaction.

Accuracy of Specified Information. Section 3(d) of the Agreement is hereby amended by adding in the third line thereof after the word “respect” and before the period the words “or, in the case of audited or unaudited financial statements or balance sheets, a fair presentation of the financial condition of the relevant person.”

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Basic Representations. Section 3(a) of the Agreement is hereby amended by the deletion of “and” at the end of Section 3(a)(iv); the substitution of a semicolon for the period at the end of Section 3(a)(v) and the addition of Sections 3(a)(vi), as follows:

Eligible Contract Participant; Line of Business. It is an “eligible contract participant” as defined in the Commodity Futures Modernization Act of 2000, and it has entered into this Confirmation and each Transaction in connection with its business or a line of business (including financial intermediation), or the financing of its business.

Amendment of Section 3(a)(iii). Section 3(a)(iii) of the Agreement is modified to read as follows:

No Violation or Conflict. Such execution, delivery and performance do not materially violate or conflict with any law known by it to be applicable to it, any provision of its constitutional documents, any order or judgment of any court or agency of government applicable to it or any of its assets or any material contractual restriction relating to Specified Indebtedness binding on or affecting it or any of its assets.

Amendment of Section 3(a)(iv). Section 3(a)(iv) of the Agreement is modified by inserting the following at the beginning thereof:

“To such party’s best knowledge,”

Additional Representations:

Counterparty Representations. As of the date hereof and each Trade Date, Counterparty represents and warrants that it: (i) has such knowledge and experience in financial and business affairs as to be capable of evaluating the merits and risks of entering into each Transaction; (ii) has consulted with its own legal, financial, accounting and tax advisors in connection with each Transaction; and (iii) is entering into each Transaction for a bona fide business purpose to hedge or repurchase Shares.

As of the date hereof and each Trade Date, Counterparty represents and warrants that it is not and has not been the subject of any civil proceeding of a judicial or administrative body of competent jurisdiction that could reasonably be expected to impair materially Counterparty’s ability to perform its obligations hereunder.

As of the date hereof and each Trade Date, Counterparty is not insolvent.

Acknowledgements:

(1) The parties acknowledge and agree that there are no other representations, agreements or other undertakings of the parties in relation to any Transaction, except as set forth in this Confirmation.

(2) The parties hereto intend for:

(a) each Transaction to be a “securities contract” as defined in Section 741(7) of Title 11 of the United States Code (the “Bankruptcy Code”), qualifying for the protections under Section 555 of the Bankruptcy Code;

(b) a party’s right to liquidate each Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a “contractual right” as defined in the Bankruptcy Code;

(c) all payments for, under or in connection with each Transaction, all payments for the Shares and the transfer of such Shares to constitute “settlement payments” as defined in the Bankruptcy Code.

Amendment of Section 6(d)(ii). Section 6(d)(ii) of the Agreement is modified by deleting the words “on the day” in the second line thereof and substituting therefor “on the day that is three Local Business Days after the day”. Section 6(d)(ii) is further modified by deleting the words “two Local Business Days” in the fourth line thereof and substituting therefor “three Local Business Days.”

Amendment of Definition of Reference Market-Makers. The definition of “Reference Market-Makers” in Section 14 is hereby amended by adding in clause (a) after the word “credit” and before the word “and” the words “or to enter into transactions similar in nature to Transactions”.

Consent to Recording. Each party consents to the recording of the telephone conversations of trading and marketing personnel of the parties and their Affiliates in connection with this Confirmation. To the extent that one party records telephone conversations (the “Recording Party”) and the other party does not (the “Non-Recording Party”), the Recording Party shall in the event of any dispute, make a complete and unedited copy of such party’s tape of the entire day’s conversations with the Non-Recording Party’s personnel available to the Non-Recording Party. The Recording Party’s tapes may be used by either party in any forum in which a dispute is sought to be resolved and the Recording Party will retain tapes

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for a consistent period of time in accordance with the Recording Party’s policy unless one party notifies the other that a particular transaction is under review and warrants further retention.

Disclosure. Each party hereby acknowledges and agrees that Agent has authorized Counterparty to disclose each Transaction and any related hedging transaction between the parties if and to the extent that Counterparty reasonably determines (after consultation with Agent) that such disclosure is required by law or by the rules of any securities exchange or similar trading platform.

Severability. If any term, provision, covenant or condition of this Confirmation, or the application thereof to any party or circumstance, shall be held to be invalid or unenforceable in whole or in part for any reason, the remaining terms, provisions, covenants, and conditions hereof shall continue in full force and effect as if this Confirmation had been executed with the invalid or unenforceable provision eliminated, so long as this Confirmation as so modified continues to express, without material change, the original intentions of the parties as to the subject matter of this Confirmation and the deletion of such portion of this Confirmation will not substantially impair the respective benefits or expectations of parties to this Agreement; provided, however, that this severability provision shall not be applicable if any provision of Section 2, 5, 6 or 13 of the Agreement (or any definition or provision in Section 14 to the extent that it relates to, or is used in or in connection with any such Section) shall be so held to be invalid or unenforceable.

Affected Parties. For purposes of Section 6(e) of the Agreement, each party shall be deemed to be an Affected Party in connection with Illegality and any Tax Event.

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Master Confirmation enclosed for that purpose and returning it to us.

Very truly yours,

BANK OF AMERICA, N.A.

By:

Name:

Title:

Confirmed as of the date first above written:

CONAGRA FOODS, INC.

By:

Name:

Title:

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SCHEDULE A

This Schedule A shall apply to a Transaction if specified as applicable in the relevant Supplemental Confirmation. To the extend specified below, this Schedule A shall modify the relevant terms of the Master Confirmation.

Parallel Transaction:	Counterparty is entering into a repurchase or similar agreement with another broker or dealer (“Alternate Broker”) pursuant to which, until (but excluding) the First Acceleration Date, the hedging, valuation or averaging period or similar such period occur on alternate Scheduled Trading Days with the Transaction. Agent acknowledges and agrees that nothing in this Confirmation shall prohibit, conflict with or restrict transactions by the Alternate Broker on alternate Scheduled Trading Days in a manner that is not inconsistent with the terms and conditions of this Confirmation. Counterparty hereby represents and warrants that until (but excluding) the First Acceleration Date (which date may be postponed as provided herein), no hedging, valuation or averaging period or similar such period of the Parallel Transaction shall include any Agent Day for pricing, valuation or other economic purposes.
Agent Day:	Each date listed in Annex A to the relevant Supplemental Confirmation.
Postponement:	Notwithstanding anything to the contrary in the Master Confirmation, if (i) an Exclusion Day occurs during the Hedge Period or Valuation Period and prior to the First Acceleration Date then in effect, the Agent may exclude such Exclusion Day from the Hedge Period or Valuation Period, as the case may be, by written notice to Counterparty (which notice shall not specify the reason for Agent’s election to make such exclusion) and shall postpone each of the First Acceleration Date, the Scheduled Valuation Date and, if occurring prior to the Scheduled Hedging Completion Date then in effect, the Scheduled Hedging Completion Date by two Scheduled Trading Days for each Exclusion Day having resulted in such an exclusion, and if (ii) an Excess Excluded Day Event has occurred, the Agent shall postpone each of the First Acceleration Date, the Scheduled Valuation Date and, for the Hedge Excess Excluded Day Event, the Scheduled Hedging Completion Date then in effect by two Scheduled Trading Days for each Valuation Excess Excluded Day or Hedge Excess Excluded Day, as the case may be.
Counterparty’s Notices with respect to the Hedge Period:	If a day has been excluded from the hedge period of the Parallel Transaction, Counterparty shall notify Agent thereof no later than 6 p.m. New York City time on the day so excluded. If the number of days excluded from the hedge period of the Parallel Transaction exceeds the number of Exclusion Days having resulted in days excluded from the Hedge Period pursuant to clause (i) of “Postponement” above (each excess excluded day under the Parallel Transaction, a “Hedge Excess Excluded Day”), Counterparty shall notify Agent of the occurrence of such event (such event, the “Hedge Excess Excluded Day Event”) prior to the first Agent Day in the Valuation Period, and shall further promptly notify Agent of the total number of Hedge Excess Excluded Days having occurred in the hedge period under the Parallel Transaction.
	Notwithstanding anything to the contrary in the Master Confirmation, Agent agrees to notify Counterparty of each day it chooses to exclude from the Hedge Period or the Valuation Period as a result of an Exclusion Event no later than at 5 p.m. New York City time on the day so excluded.
Counterparty’s Notices with respect to the Valuation Period:	If a day has been excluded from the valuation period of the Parallel Transaction prior to the First Acceleration Date as postponed pursuant to “Postponement” above, Counterparty shall notify Agent thereof no later than 6 p.m. New York City time on the day so excluded. If the number of days excluded from the valuation period of the Parallel Transaction prior to the first acceleration date for the Parallel Transaction exceeds the

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	number of Exclusion Days having resulted in days excluded from the Valuation Period prior to the First Acceleration Date as postponed pursuant to clause (i) of “Postponement” above (each excess excluded day under the Parallel Transaction, a “Valuation Excess Excluded Day”), Counterparty shall notify Agent of the occurrence of such event (such event, the “Valuation Excess Excluded Day Event”, and each of the Valuation Excess Excluded Day Event and the Hedge Excess Excluded Day Event, an “Excess Excluded Day Event”) prior to such First Acceleration Date, and shall further promptly notify Agent of the total number of Valuation Excess Excluded Days having occurred in the valuation period under the Parallel Transaction prior to the first acceleration date under such Parallel Transaction.
Changes related to
Hedge Period Terms:	The provisions in the Master Confirmation applicable to the Hedge Period shall apply, except that (i) references in “Initial Share Price” and “Hedging Completion Date” to Scheduled Trading Days shall be replaced by references to Agent Days, and (ii) the first proviso of “Hedging Completion Date” shall be replaced by the relevant provisions of “Postponement” above. Notwithstanding clause (i) above, the words ‘Scheduled Trading Day’ in the last line of “Hedging Completion Date” shall not be amended.
Valuation Period:	For each Transaction to which this Schedule A is applicable, each Agent Day from, but excluding, the Scheduled Hedging Completion Date to, but excluding, the First Acceleration Date, and each Scheduled Trading Day from, and including, the First Acceleration Date to, and including, the Valuation Date (each a “Scheduled Valuation Day”), subject to exclusion of Scheduled Valuation Days pursuant to “Postponement” above and, solely with respect to Exclusion Days occurring on or after the First Acceleration Date (as such date may have been postponed pursuant to “Postponement” above), subject to Agent’s right to exclude Scheduled Valuation Days that are Exclusion Days from the Valuation Period by written notice to Counterparty (which notice shall not specify the reason for Agent’s election to make such exclusions), which shall result in a postponement of the Scheduled Valuation Date by the number of Scheduled Trading Days equal to the number of Scheduled Valuation Days so excluded. If a Disrupted Day occurs on a Scheduled Valuation Day during the Valuation Period, and each of the nine immediately following Scheduled Valuation Days is a Disrupted Day, then the Calculation Agent, in its discretion, may either (i) determine the VWAP Price for such ninth Scheduled Valuation Day and adjust the weighting of the VWAP Prices for the relevant Scheduled Valuation Days during the Valuation Period as it deems appropriate for purposes of determining the Settlement Price based on, among other factors, the duration of any Market Disruption Event and the volume, historical trading patterns and price of the Shares or (ii) exclude such day in the manner described in the preceding sentence or “Postponement” above, as applicable.
	The references in “Settlement Price,” “Partial Exclusions,” “Acquisition Amount” and “Acquisition Valuation Period” in the Master Confirmation to ‘Scheduled Trading Day’ shall be replaced by the words ‘Scheduled Valuation Day.’

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EXHIBIT A

FORM OF SUPPLEMENTAL CONFIRMATION

Supplemental Confirmation of OTC Collared Accelerated Share

Repurchase (VWAP Pricing, Fixed Notional)

Date:	[    ]
To:	ConAgra Foods, Inc. (“Counterparty”)
Attention:	Scott Messel
From:	Bank of America, N.A. (“Agent”)
	c/o Banc of America Securities LLC
	Bank of America Tower at One Bryant Park
	New York, NY 10036
	Attn: John Servidio
	Telephone: 646-855-7127
	Facsimile: 704-208-2869

Dear Sir / Madam:

Capitalized terms used herein, unless defined herein, have the meanings set forth in the Master Confirmation of OTC Collared ASAP Minus between Counterparty and Agent, dated as of June 30, 2008.

The purpose of this Supplemental Confirmation is to confirm the terms and conditions of a Transaction under the Master Confirmation. Schedule A to the Master Confirmation is applicable.

The terms of the Transaction to which the Supplemental Confirmation relates are as follows:

Trade Date:	[    ]
Hedging Initiation Date:	[    ]
Prepayment Date:	[    ]
Scheduled Hedging
Completion Date:	[    ], subject to Schedule A of the Master Confirmation
Upfront Shares:	(Prepayment Amount * 70%) / Closing Price of the Shares on the Trade Date, as reported on the NYSE
Scheduled Valuation Date:	[    ], subject to Schedule A of the Master Confirmation
First Acceleration Date:	[    ], subject to Schedule A of the Master Confirmation
Prepayment Amount:	USD [            ]
Commission:	USD [    ]
Ordinary Dividend Amount:	USD [    ]
Scheduled Dividend Dates:	[                    ]
Minimum Shares:	Prepayment Amount divided by Cap Price
Maximum Shares:	Prepayment Amount divided by Floor Price
Cap Price:	The product of [    ]% and the Initial Share Price

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Floor Price:	The product of [    ]% and the Initial Share Price
Settlement Price Adjustment
Amount:	USD [    ]
Agent Days:	As set forth on Annex A hereto.

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Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Supplemental Confirmation enclosed for that purpose and returning it to us.

Very truly yours,

BANK OF AMERICA, N.A.

By:

Name:

Title:

Confirmed as of the date first above written:

CONAGRA FOODS, INC.

By:

Name:

Title:

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ANNEX A

AGENT DAYS

[    ]

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EXHIBIT B

COVER STATEMENT

CLIENT/COUNTERPARTY RELATIONSHIP

Dear Client/Counterparty:

Agent is pleased to provide the attached statement of Generic Risks Associated with Over-the-Counter Derivative Transactions under this Cover Statement that concerns, among other things, the nature of our relationship with you in the context of such transactions. This statement was developed for our new and our ongoing client/counterparties in response to suggestions that OTC derivative dealers consider taking steps to ensure that market participants utilizing OTC derivatives understand their risk exposures and the nature of their relationships with dealers before they enter into OTC derivative transactions.

Agent (“we”) are providing to you and your organization (“you”) the attached statement of Generic Risks Associated with Over-the-Counter Derivative Transactions in order to identify, in general terms, certain of the principal risks associated with individually negotiated over-the-counter (“OTC”) derivative transactions. The attached statement does not purport to identify the nature of the specific market or other risks associated with a particular transaction.

Before entering into an OTC derivative transaction, you should ensure that you fully understand the terms of the transaction, relevant risk factors, the nature and extent of your risk of loss and the nature of the contractual relationship into which you are entering. You should also carefully evaluate whether the transaction is appropriate for you in light of your experience, objectives, financial resources, and other relevant circumstances and whether you have the operational resources in place to monitor the associated risks and contractual obligations over the term of the transaction. If you are acting as a financial adviser or agent, you should evaluate these considerations in light of the circumstances applicable to your principal and the scope of your authority.

If you believe you need assistance in evaluating and understanding the terms or risks of a particular OTC derivative transaction, you should consult appropriate advisers before entering into the transaction.

Unless we have expressly agreed in writing to act as your adviser with respect to a particular OTC derivative transaction pursuant to terms and conditions specifying the nature and scope of our advisory relationship, we are acting in the capacity of an arm’s length contractual Counterparty to you in connection with the transaction and not as your financial adviser or fiduciary. Accordingly, unless we have so agreed to act as your adviser, you should not regard transaction proposals, suggestions or other written or oral communications from us as recommendations or advice or as expressing our view as to whether a particular transaction is appropriate for you or meets your financial objectives.

Finally, we and/or our affiliates may from time to time take proprietary positions and/or make a market in instruments identical or economically related to OTC derivative transactions entered into with you, or may have an investment banking or other commercial relationship with and access to information from the issuer(s) of securities, financial instruments, or other interests underlying OTC derivative transactions entered into with you. We may also undertake proprietary activities, including hedging transactions related to the initiation or termination of an OTC derivative transaction with you, that may adversely affect the market price, rate index or other market factor(s) underlying an OTC derivative transaction entered into with you and consequently the value of the transaction.

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A. GENERIC RISKS ASSOCIATED WITH

OVER-THE-COUNTER DERIVATIVE TRANSACTIONS

OTC derivative transactions, like other financial transactions, involve a variety of significant risks. The specific risks presented by a particular OTC derivative transaction necessarily depend upon the terms of the transaction and your circumstances. In general, however, all OTC derivative transactions involve some combination of market risk, credit risk, funding risk and operational risk.

Market risk is the risk that the value of a transaction will be adversely affected by fluctuations in the level or volatility of or correlation or relationship between one or more market prices, rates or indices or other market factors or by illiquidity in the market for the relevant transaction or in a related market.

Credit risk is the risk that a Counterparty will fail to perform its obligations to you when due.

Funding risk is the risk that, as a result of mismatches or delays in the timing of cash flows due from or to your counterparties in OTC derivative transactions or related hedging, trading, collateral or other transactions, you or your Counterparty will not have adequate cash available to fund current obligations.

Operational risk is the risk of loss to you arising from inadequacies in or failures of your internal systems and controls for monitoring and quantifying the risks and contractual obligations associated with OTC derivative transactions, for recording and valuing OTC derivative and related transactions, or for detecting human error, systems failure or management failure.

There may be other significant risks that you should consider based on the terms of a specific transaction. Highly customized OTC derivative transactions in particular may increase liquidity risk and introduce other significant risk factors of a complex character. Highly leveraged transactions may experience substantial gains or losses in value as a result of relatively small changes in the value or level of an underlying or related market factor.

Because the price and other terms on which you may enter into or terminate an OTC derivative transaction are individually negotiated, these may not represent the best price or terms available to you from other sources.

In evaluating the risks and contractual obligations associated with a particular OTC derivative transaction, you should also consider that an OTC derivative transaction may be modified or terminated only by mutual consent of the original parties and subject to agreement on individually negotiated terms. Accordingly, it may not be possible for you to modify, terminate or offset your obligations or your exposure to the risks associated with a transaction prior to its scheduled termination date.

Similarly, while market makers and dealers generally quote prices or terms for entering into or terminating OTC derivative transactions and provide indicative or mid-market quotations with respect to outstanding OTC derivative transactions, they are generally not contractually obligated to do so. In addition, it may not be possible to obtain indicative or mid-market quotations for an OTC derivative transaction from a market maker or dealer that is not a Counterparty to the transaction.

Consequently, it may also be difficult for you to establish an independent value for an outstanding OTC derivative transaction. You should not regard your Counterparty’s provision of a valuation or indicative price at your request as an offer to enter into or terminate the relevant transaction at that value or price, unless the value or price is identified by the Counterparty as firm or binding.

This brief statement does not purport to disclose all of the risks and other material considerations associated with OTC derivative transactions. You should not construe this generic disclosure statement as business, legal, tax or accounting advice or as modifying applicable law. You should consult your own business, legal, tax and accounting advisers with respect to proposed OTC derivative transactions and you should refrain from entering into any OTC derivative transaction unless you have fully understood the terms and risks of the transaction, including the extent of your potential risk of loss.

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Exhibit 10.3

CONAGRA FOODS, INC.

2008 PERFORMANCE SHARE PLAN

Effective July 16, 2008, ConAgra Foods, Inc. (“Company”) hereby adopts the ConAgra Foods, Inc. 2008 Performance Share Plan (“Plan”). Unless the context implies otherwise, capitalized terms used in this Plan have the meanings set forth in Section 16 below.

1. Purpose. The purpose of the Plan is to foster and promote the long-term financial success of the Company and increase stockholder value by (a) motivating superior performance by means of Performance Shares, (b) encouraging and providing for the acquisition of an ownership interest in the Company by Participants and (c) enabling the Company to attract and retain the services of a management team responsible for the long-term financial success of the Company. The Plan supersedes the ConAgra Foods, Inc. Performance Share Plan that was adopted on May 29, 2006 (the “Prior Plan”). The terms of the Prior Plan shall continue to apply to all awards of Performance Shares made under and pursuant to the Prior Plan.

2. Eligibility. The only persons eligible to participate in the Plan shall be those Participants selected by the Committee or the Chief Executive Officer of the Company (“CEO”); provided, however, the CEO may only select, and assign a targeted number of Performance Shares to, individuals who are not Covered Employees (and who are not expected to become Covered Employees by the time of payment of the Performance Shares).

3. Participation. Within 90 days of the commencement of each Performance Period, the Committee and/or CEO shall select the individuals, if any, who shall participate in the Plan for the applicable Performance Period. The Committee and/or CEO shall assign a targeted number of Performance Shares to each selected Participant for the Performance Period. Notwithstanding the preceding, the Committee or CEO may select additional Participants during the Performance Period and make an award to such Participants; provided, however, that no such additional Participant shall be a Covered Employee (or an employee who is expected to be a Covered Employee by the time of payment of the Performance Shares) unless such additional Participant’s award does not begin until the next succeeding fiscal year, or such additional Participant’s award is a General Award.

4. Grant of Awards – Establishment of Performance Goals.

4.1 Within 90 days of the commencement of each Performance Period, the Committee shall establish an award schedule that sets forth a range of Performance Targets and the related Performance Shares that may be earned by each Participant. The Committee may establish different award schedules for different Participants and/or groups of Participants and/or for different executive levels.

4.2 Unless the Committee determines otherwise with respect to any General Award or Qualified Performance-Based Award, the range of Performance Targets that shall determine the Performance Shares earned shall be based upon Company earnings before interest and taxes (EBIT) and Company return on average invested capital (ROAIC) measured over the Performance Period, each as defined in the definition section at the end of this Plan.

5. Administration of the Plan. The Plan shall be administered by the Committee. The Committee by majority action thereof, is authorized to prescribe, amend, and rescind rules and regulations relating to the Plan, to provide for conditions deemed necessary or advisable to protect the interest of the Company, and to make all other determinations necessary or advisable for the administration and interpretation of the Plan in order to carry out its provisions and purposes. The Committee has full authority to construe and interpret the Plan and any instruments evidencing an award under the Plan. Determinations, interpretations, or other actions made or taken by the Committee pursuant to the provisions of the Plan shall be final, binding, and conclusive for all purposes and upon all persons. Subject to the terms and conditions of this Plan, the Committee and, as applicable, the CEO shall determine the Participants to whom awards are granted and the terms and conditions of such awards. The Committee may require each individual earning an award under the Plan to enter into an agreement with the Company regarding the terms of the award and the employee’s employment. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may delegate all or any portion of its responsibilities and powers to any one or more of its members.

6. Earning of Awards.

6.1 Within 60 days after the end of each Performance Period, for each award that has been made subject to a Performance Target, the Committee shall determine whether, and to what extent, the Performance Target for such Performance Period has been satisfied.

6.2 With respect to any Performance Target applicable to a Qualified Performance-Based Award, no Performance Shares will be delivered or considered earned until the Committee has made a final written certification that a

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Performance Target established to ensure Code Section 162(m) compliance has been satisfied. In addition, prior to delivering the Performance Shares, the Committee shall complete the exercise of its Negative Discretion, if desired.

6.3 In determining satisfaction of any Performance Target, the Committee shall measure performance in accordance with United States generally accepted accounting principles, if applicable; provided that, the Committee may determine whether to include or exclude any material changes that occur during an applicable Performance Period, including, without limitation: (a) asset write-downs; (b) litigation or claim adjudication, judgments or settlements; (c) the effect of changes in tax or accounting standards or principles, or other laws, regulations or provisions affecting reported results; (d) changes in business, operations, corporate or capital structure; (e) extraordinary, unusual and/or nonrecurring items; (f) mergers, acquisitions or divestitures; and (g) foreign exchange gains and losses. In addition, the Committee may adjust any Performance Target for the Performance Period as it deems equitable to recognize unusual or non-recurring events affecting the Company, changes in tax laws or accounting procedures, mergers and acquisitions and any other factors as the Committee may determine. In the case of Qualified Performance-Based Awards, such exclusions and adjustments may only apply to the extent the Committee specifies in writing (not later than the time Performance Targets are required to be established) which exclusions and adjustments the Committee will apply to determine whether a Performance Target has been satisfied, as well as an objective manner for applying them, or to the extent that the Committee determines that they may apply without adversely affecting the award’s status as a Qualified Performance-Based Award.

6.4 If applicable tax and/or securities laws change to permit Committee discretion to alter the governing performance measures without obtaining stockholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining stockholder approval. In addition, in the event that the Committee determines that it is advisable to grant General Awards, the Committee may make such grants without satisfying the requirements of Code Section 162(m).

7. Distribution of Performance Shares Earned. Except as provided in Section 8, Performance Shares earned hereunder shall be paid (i) after the end of the Performance Period, (ii) after the Committee has certified in writing that the material terms of this Plan were satisfied and that awards were accurately computed according to the terms of the Plan, and (iii) on or before the later of (a) the fifteenth day of the third month that begins after the month containing the end of the Performance Period or (b) the fifteenth day of the third month that begins after the end of the Participant’s tax year in which the end of the Performance Period occurs. All awards of Performance Shares hereunder, including dividend equivalent payments, shall be paid in shares of Stock, with any fractional share equal to or greater than one-half share rounded up to the next whole share and any fractional share less than one-half share rounded down to the next whole share.

8. Termination of Employment

8.1 Termination for Reasons Other Than Death, Disability or Retirement A Participant who terminates employment with the Company and its Subsidiaries for any reason other than death, Disability or Retirement shall forfeit all awards hereunder that have not been paid at the date of termination, whether earned or not. Notwithstanding the preceding, if the Committee in its sole and absolute discretion deems it to be appropriate and in the best interest of the Company, the Committee may distribute Stock for all or some of the Performance Shares that are forfeited by a Participant (but only, in the case of a Qualified Performance-Based Award, to the extent the award has been certified by the Committee to have been earned). Such Performance Shares shall be distributed to the Participant at the same time Performance Shares are distributed to other Participants who remain employed with the Company.

8.2 Disability or Retirement. In the event of a Participant’s termination due to Disability or Retirement, a distribution shall be made of a pro rata share of the Performance Shares that would have been earned for the full performance period (but only, in the case of a Qualified Performance-Based Award, to the extent the award has been certified by the Committee to have been earned), prorated based upon the full number of fiscal years completed during the Performance Period as of the Participant’s termination date. Such Performance Shares shall be distributed to the Participant at the same time Performance Shares are distributed to other Participants who remain employed with the Company.

8.3 Death. In the event of a Participant’s death, a distribution shall be made of a pro rata share of the targeted Performance Shares, based upon the full number of years completed during the Performance Period. The payment shall be made within 2 ¹/2 months after the date of death.

9. Dividends and Voting Rights. Upon the payment of earned Performance Shares, the Participant shall receive additional

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shares of Stock representing dividend equivalents. The amount of dividend equivalents for each Performance Share earned shall equal the dividends paid on one share of Stock during the period between the beginning of the Performance Period and the date of distribution. A Participant shall not have voting or any other rights with respect to any Performance Shares or with respect to the Stock until the Stock is delivered to the Participant.

10. Payments Upon Change of Control. Upon a Change of Control, the Company may, at the Board’s, or the Human Resources Committee’s, as the case may be, sole and absolute discretion, pay the Participant all or a portion of the Participant’s award hereunder. The amounts paid may be based upon (a) a proration of the Participant’s target Performance Shares, (b) a proration of the projected Performance Shares at the time of the Change of Control, or (c) a pro rata amount computed at the end of the fiscal year. Any proration shall be based upon the number of completed months elapsed in the Performance Period through the date of the Change of Control. Any payments made under this Section 10 shall be paid no later than the fifteenth day of the third month that begins after the later of (i) the end of the Participant’s tax year in which the Change in Control occurs or (ii) the end of the Company’s fiscal year in which the Change in Control occurs.

11. Related Plans. Subject to the terms and conditions hereof, Qualified Performance-Based Awards shall be made pursuant to the ConAgra Foods, Inc. Executive Incentive Plan (“EIP”) or any successor incentive plan approved by the Company’s stockholders, and to the extent necessary for compliance with Code Section 162(m) for the tax deductibility of an award, the provisions of the EIP shall apply to the awards hereunder. Awards earned and Stock distributed hereunder shall be deemed granted and distributed under the ConAgra Foods 2006 Stock Plan (“Stock Plan”) or any successor stock plan approved by the Company’s stockholders. To the extent not inconsistent with the provisions of this Plan, the provisions of the Stock Plan shall apply to this Plan and the awards hereunder.

12. Miscellaneous Provisions.

12.1 Nontransferability of Awards. Except as otherwise provided by the Committee, no awards granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.

12.2 Beneficiary Designation. Each Participant under the Plan may from time to time name any beneficiary or beneficiaries (who may be named contingent or successively) to whom any benefit under the Plan is to be paid or by whom any right under the Plan is to be exercised in case of his death. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed in writing with the Committee. In the absence of any such designation, awards outstanding at death will be paid to the Participant’s surviving spouse, if any, or otherwise to the Participant’s estate.

12.3 No Guarantee of Employment or Participation. Nothing in the Plan shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant’s employment at any time, nor confer upon any individual any right to continue in the employ of the Company or any Subsidiary. No employee shall have a right to be selected as a Participant, or, having been so selected, to receive any future awards or to continue as a Participant.

12.4 Tax Withholding. The Company shall have the power to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local withholding tax requirements on any award under the Plan, and the Company may defer issuance of Stock until such requirements are satisfied. In the alternative, the Committee may withhold shares of Stock that would otherwise be delivered to the Participant, having an aggregate fair market value, determined as of the date the obligation to withhold or pay taxes arises in connection with a distribution, in the amount necessary to satisfy the minimum applicable withholding obligation.

12.5 Agreements with Company. An award under the Plan shall be subject to such terms and conditions, not inconsistent with the Plan, as the Committee may, in its sole and absolute discretion, prescribe. The terms and conditions of any award to any Participant shall be reflected in such form of written document as is determined by the Committee or its designee.

12.6 Code § 409A. Unless the Committee expressly determines otherwise, Performance Shares are intended to be exempt from Code Section 409A as short-term deferrals and, accordingly, the terms of any Performance Shares award shall be construed to preserve such exemption. To the extent the Committee determines that Code Section 409A applies to a particular award granted under the Plan, then the terms of the award shall be construed to permit the award to comply with Code Section 409A. In the event that the Plan or any award shall be deemed

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not to comply with Code Section 409A, then neither the Company, the Committee, the Board nor its or their designees or agents shall be liable to any Participant or other persons for actions, decisions or determinations made in good faith.

12.7 Unfunded Plan. The plan shall be unfunded and no trust is required to be established with respect to the Plan. Bookkeeping accounts may be established with respect to Participants who are granted Performance Shares under the Plan, but any such accounts shall be used merely as a bookkeeping convenience.

12.8 Requirements of Law. The granting of Performance Shares and the issuance of shares of Stock shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or securities exchanges as may be required.

12.9 Changes in Stock. In the event of any change in the outstanding Stock by reason of any share dividend or split, recapitalization, merger, consolidation, spin-off reorganization, combination or exchange of shares, or other similar corporate change, then the Committee shall adjust the number or kind of Performance Shares or target Performance Shares of a Participant or the measures of performance. Any such adjustments shall be conclusive and binding for all purposes of the Plan. The Committee shall have full and final discretion to determine the manner in which such adjustment(s) are made.

12.10 Facility of Payments. If a Participant shall, at the time payment of an amount is due, be incapacitated so that he cannot legally receive or acknowledge receipt of the payment, then the Committee, in its sole and absolute discretion, may direct that the payment be made to the legal guardian, attorney-in-fact or person with whom such recipient is residing, and such payment shall be in full satisfaction of the Company’s obligation under the Plan with respect to such amount.

12.11 Governing Law. The Plan shall be construed and its provisions enforced and administered in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of laws, and in accordance with applicable federal laws.

12.12 Gender and Number. Where the context admits, words in any gender shall include any other gender, words in the singular shall include the plural and words in the plural shall include the singular.

12.13 Severability. If any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

12.14 Binding Effect. The Plan shall be binding upon the Company, its successors and assigns, and Participants, their legal representatives, executors, administrators and beneficiaries.

13. Compliance with Code Section 162(m). The Company intends that compensation under the Plan payable to Covered Employees will, to the extent practicable, constitute qualified “performance-based compensation” within the meaning of Code Section 162(m), unless otherwise determined by the Committee. Accordingly, the provisions of the Plan shall be administered and interpreted in a manner consistent with Code Section 162(m). If any provision of the Plan or any award that is granted to a Covered Employee does not comply or is inconsistent with the requirements of Code Section 162(m), such provision shall be construed or deemed amended to the extent necessary to conform to such requirements.

14. Indemnification. In addition to such other rights of indemnification as they may have as directors or as members of the Committee or otherwise, the members of the Committee shall be indemnified by the Company against reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any award granted thereunder, and against all amounts paid by them in settlement thereof, provided such settlement is approved by independent legal counsel selected by the Company, or paid by them in satisfaction of a judgment or settlement in any such action, suit or proceeding, except as to matters as to which the Committee member has been negligent or engaged in misconduct in the performance of his duties; provided, that within 60 days after institution of any such action, suit or proceeding, a Committee member shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same.

15. Amendment or Termination of Plan. The Board may, in its sole and absolute discretion and from time to time, amend, modify or terminate any or all of the provisions of the Plan without providing any prior notice to Participants; provided, however, no amendment, modification or termination shall affect the rights of any Participant with respect to a previously granted award, without the written consent of the Participant. However, notwithstanding the foregoing, the Committee shall have unilateral authority to amend the Plan and any award, without participant consent, to the extent necessary to comply with applicable laws, rules or regulations or changes to applicable laws, rules or regulations (including but in no way limited

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to Code Sections 162(m) and 409A).

16. Definitions. Whenever used in this Plan, the following terms shall have the respective meanings set forth below:

16.1 “Board” means the Board of Directors of the Company.

16.2 “Change of Control” means:

(i) Individuals who constitute the Board (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 the Company’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 Plan, considered as though such person were a member of the Incumbent Board; or

(ii) Consummation of a reorganization, merger, or consolidation, in each case, with respect to which persons who were the shareholders of the Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty percent (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 the Company or of the sale of all or substantially all of its assets.

16.3 “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a particular Code section herein shall be deemed to include all related regulations, interpretations or other United States Department of Treasury guidance.

16.4 “Committee” means the Human Resources Committee of the Board, or its successor, or such other committee of the Board to which the Board delegates power to act under or pursuant to the provisions of the Plan.

16.5 “Covered Employees” means a “covered employee” as defined in Code Section 162(m).

16.6 “Disability” means that the Participant, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, is receiving income replacement benefits for a period of not less than three months under the Company’s long-term disability plan.

16.7 “EBIT” means earnings before interest and taxes. Unless determined otherwise by the Committee when granting an award, EBIT shall be calculated by adding (i) interest expense, net and (ii) income tax expense, to (iii) income from continuing operations, as adjusted for unusual items.

16.8 “General Award” means an award that is not a Qualified Performance-Based Award.

16.9 “Negative Discretion” means the discretion that the Committee may exercise to reduce (but not increase) the amount of the award that otherwise would be payable in connection with the attainment of the Performance Target. This discretion may be applied in the event that exceptional circumstances arise which, in the judgment of the Committee, would result in payouts not consistent with the intentions of the Committee at the inception of the plan or would otherwise cause the plan to operate in a manner inconsistent with the best interests of the Company.

16.10 “Participant” shall mean any salaried employee of the Company who is chosen to participate in the Plan, as specified in Section 3.

16.11 “Performance Period” means the three consecutive fiscal years beginning with the first fiscal year for which the award is granted.

16.12 “Performance Shares” means an award granted under this Plan, in an amount determined by the Committee and specified in an award agreement, stated with reference to a specified number of shares of Stock, that entitles the holder to receive shares of stock, subject to the terms of the Plan, any award agreement, and any other terms and conditions established by the Committee.

16.13 “Performance Target” means one or more specified performance goals that are used in determining awards and Performance Shares earned by Participants. In the case of Qualified Performance-Based Awards, the Performance Target that is intended to permit the award to satisfy the performance-based exception to the deductibility limitation of Code Section 162(m) shall be stated as levels of, or growth or changes in, one or more of the performance criteria approved by the Company’s stockholders in the Executive Incentive Plan or any successor stockholder-approved plan (which currently include earnings, earnings per share, growth in earnings

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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). In the case of a General Award, the Committee may establish a Performance Target that is based on categories of performance that are different than those set forth above.

If the Committee makes the opportunity to receive an award subject to a particular Performance Target, the Committee shall adopt or confirm a written definition of that Performance Target at the time the Performance Target is established, provided that the Committee retains the discretion to forgo such written definition in connection with a General Award. The Performance Target for an award may be described in terms of Company-wide objectives or objectives that are related to a specific division, subsidiary, business unit, department, region, or function. A Performance Target may be defined relative to the performance of other corporations. If more than one individual performance goal is specified by the Committee in defining a Performance Target, the Committee shall also specify, in writing, whether one, all or some other number of such goals must be attained in order for the Performance Target to be met.

16.14 “Qualified Performance-Based Award” means an award (or a specified portion of an award) to a Participant that is intended to satisfy the requirements for “performance-based compensation” under Code Section 162(m). At the time award opportunities and Performance Targets are established for a Performance Period, the Committee shall designate in writing any award opportunity that is intended to allow a Participant to receive (upon satisfaction of the Performance Target and subject to Negative Discretion) a Qualified Performance-Based Award. Any such designation is irrevocable.

16.15 “Retirement” means termination of employment from the Company or a Subsidiary on or after the earlier of (i) the Participant attains age 65, or (ii) the Participant has at least ten years of service and has attained age 55. For purposes of this Plan, years of service shall include any additional years of service provided to a Participant for pension purposes under the Company’s qualified or nonqualified retirement plan pursuant to the Participant’s written employment agreement with the Company or its Subsidiaries. If at the time of the Participant’s Retirement circumstances exist that would allow the Company to terminate the Participant for Cause, the Participant, for purposes of this Plan, shall be deemed to have terminated employment for purposes other than Death, Disability, or Retirement.

16.16 “ROAIC” means the Company’s return on average invested capital, after tax. Unless determined otherwise by the Committee when granting an award, ROAIC shall be calculated by multiplying EBIT by 1 minus the Company’s tax rate and dividing this amount by average invested capital, all as adjusted for unusual items. Average invested capital is the twelve-month rolling average of total assets less cash and cash equivalents and non-interest bearing liabilities.

16.17 “Stock” means the common stock of the Company, par value $5.00 per share.

16.18 “Subsidiary” means any corporation, partnership, joint venture or other entity in which the Company owns, directly or indirectly, 25% or more of the voting power or of the capital interest or profits interest of such entity.

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EX-10.3

Exhibit 10.3

CONAGRA FOODS, INC.

2008 PERFORMANCE SHARE PLAN

Effective July 16, 2008, ConAgra Foods, Inc. (“Company”) hereby adopts the ConAgra Foods, Inc. 2008 Performance Share Plan (“Plan”). Unless the context implies otherwise, capitalized terms used in this Plan have the meanings set forth in Section 16 below.

1. Purpose. The purpose of the Plan is to foster and promote the long-term financial success of the Company and increase stockholder value by (a) motivating superior performance by means of Performance Shares, (b) encouraging and providing for the acquisition of an ownership interest in the Company by Participants and (c) enabling the Company to attract and retain the services of a management team responsible for the long-term financial success of the Company. The Plan supersedes the ConAgra Foods, Inc. Performance Share Plan that was adopted on May 29, 2006 (the “Prior Plan”). The terms of the Prior Plan shall continue to apply to all awards of Performance Shares made under and pursuant to the Prior Plan.

2. Eligibility. The only persons eligible to participate in the Plan shall be those Participants selected by the Committee or the Chief Executive Officer of the Company (“CEO”); provided, however, the CEO may only select, and assign a targeted number of Performance Shares to, individuals who are not Covered Employees (and who are not expected to become Covered Employees by the time of payment of the Performance Shares).

3. Participation. Within 90 days of the commencement of each Performance Period, the Committee and/or CEO shall select the individuals, if any, who shall participate in the Plan for the applicable Performance Period. The Committee and/or CEO shall assign a targeted number of Performance Shares to each selected Participant for the Performance Period. Notwithstanding the preceding, the Committee or CEO may select additional Participants during the Performance Period and make an award to such Participants; provided, however, that no such additional Participant shall be a Covered Employee (or an employee who is expected to be a Covered Employee by the time of payment of the Performance Shares) unless such additional Participant’s award does not begin until the next succeeding fiscal year, or such additional Participant’s award is a General Award.

4. Grant of Awards – Establishment of Performance Goals.

4.1 Within 90 days of the commencement of each Performance Period, the Committee shall establish an award schedule that sets forth a range of Performance Targets and the related Performance Shares that may be earned by each Participant. The Committee may establish different award schedules for different Participants and/or groups of Participants and/or for different executive levels.

4.2 Unless the Committee determines otherwise with respect to any General Award or Qualified Performance-Based Award, the range of Performance Targets that shall determine the Performance Shares earned shall be based upon Company earnings before interest and taxes (EBIT) and Company return on average invested capital (ROAIC) measured over the Performance Period, each as defined in the definition section at the end of this Plan.

5. Administration of the Plan. The Plan shall be administered by the Committee. The Committee by majority action thereof, is authorized to prescribe, amend, and rescind rules and regulations relating to the Plan, to provide for conditions deemed necessary or advisable to protect the interest of the Company, and to make all other determinations necessary or advisable for the administration and interpretation of the Plan in order to carry out its provisions and purposes. The Committee has full authority to construe and interpret the Plan and any instruments evidencing an award under the Plan. Determinations, interpretations, or other actions made or taken by the Committee pursuant to the provisions of the Plan shall be final, binding, and conclusive for all purposes and upon all persons. Subject to the terms and conditions of this Plan, the Committee and, as applicable, the CEO shall determine the Participants to whom awards are granted and the terms and conditions of such awards. The Committee may require each individual earning an award under the Plan to enter into an agreement with the Company regarding the terms of the award and the employee’s employment. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may delegate all or any portion of its responsibilities and powers to any one or more of its members.

6. Earning of Awards.

6.1 Within 60 days after the end of each Performance Period, for each award that has been made subject to a Performance Target, the Committee shall determine whether, and to what extent, the Performance Target for such Performance Period has been satisfied.

6.2 With respect to any Performance Target applicable to a Qualified Performance-Based Award, no Performance Shares will be delivered or considered earned until the Committee has made a final written certification that a

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Performance Target established to ensure Code Section 162(m) compliance has been satisfied. In addition, prior to delivering the Performance Shares, the Committee shall complete the exercise of its Negative Discretion, if desired.

6.3 In determining satisfaction of any Performance Target, the Committee shall measure performance in accordance with United States generally accepted accounting principles, if applicable; provided that, the Committee may determine whether to include or exclude any material changes that occur during an applicable Performance Period, including, without limitation: (a) asset write-downs; (b) litigation or claim adjudication, judgments or settlements; (c) the effect of changes in tax or accounting standards or principles, or other laws, regulations or provisions affecting reported results; (d) changes in business, operations, corporate or capital structure; (e) extraordinary, unusual and/or nonrecurring items; (f) mergers, acquisitions or divestitures; and (g) foreign exchange gains and losses. In addition, the Committee may adjust any Performance Target for the Performance Period as it deems equitable to recognize unusual or non-recurring events affecting the Company, changes in tax laws or accounting procedures, mergers and acquisitions and any other factors as the Committee may determine. In the case of Qualified Performance-Based Awards, such exclusions and adjustments may only apply to the extent the Committee specifies in writing (not later than the time Performance Targets are required to be established) which exclusions and adjustments the Committee will apply to determine whether a Performance Target has been satisfied, as well as an objective manner for applying them, or to the extent that the Committee determines that they may apply without adversely affecting the award’s status as a Qualified Performance-Based Award.

6.4 If applicable tax and/or securities laws change to permit Committee discretion to alter the governing performance measures without obtaining stockholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining stockholder approval. In addition, in the event that the Committee determines that it is advisable to grant General Awards, the Committee may make such grants without satisfying the requirements of Code Section 162(m).

7. Distribution of Performance Shares Earned. Except as provided in Section 8, Performance Shares earned hereunder shall be paid (i) after the end of the Performance Period, (ii) after the Committee has certified in writing that the material terms of this Plan were satisfied and that awards were accurately computed according to the terms of the Plan, and (iii) on or before the later of (a) the fifteenth day of the third month that begins after the month containing the end of the Performance Period or (b) the fifteenth day of the third month that begins after the end of the Participant’s tax year in which the end of the Performance Period occurs. All awards of Performance Shares hereunder, including dividend equivalent payments, shall be paid in shares of Stock, with any fractional share equal to or greater than one-half share rounded up to the next whole share and any fractional share less than one-half share rounded down to the next whole share.

8. Termination of Employment

8.1 Termination for Reasons Other Than Death, Disability or Retirement A Participant who terminates employment with the Company and its Subsidiaries for any reason other than death, Disability or Retirement shall forfeit all awards hereunder that have not been paid at the date of termination, whether earned or not. Notwithstanding the preceding, if the Committee in its sole and absolute discretion deems it to be appropriate and in the best interest of the Company, the Committee may distribute Stock for all or some of the Performance Shares that are forfeited by a Participant (but only, in the case of a Qualified Performance-Based Award, to the extent the award has been certified by the Committee to have been earned). Such Performance Shares shall be distributed to the Participant at the same time Performance Shares are distributed to other Participants who remain employed with the Company.

8.2 Disability or Retirement. In the event of a Participant’s termination due to Disability or Retirement, a distribution shall be made of a pro rata share of the Performance Shares that would have been earned for the full performance period (but only, in the case of a Qualified Performance-Based Award, to the extent the award has been certified by the Committee to have been earned), prorated based upon the full number of fiscal years completed during the Performance Period as of the Participant’s termination date. Such Performance Shares shall be distributed to the Participant at the same time Performance Shares are distributed to other Participants who remain employed with the Company.

8.3 Death. In the event of a Participant’s death, a distribution shall be made of a pro rata share of the targeted Performance Shares, based upon the full number of years completed during the Performance Period. The payment shall be made within 2 ¹/2 months after the date of death.

9. Dividends and Voting Rights. Upon the payment of earned Performance Shares, the Participant shall receive additional

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shares of Stock representing dividend equivalents. The amount of dividend equivalents for each Performance Share earned shall equal the dividends paid on one share of Stock during the period between the beginning of the Performance Period and the date of distribution. A Participant shall not have voting or any other rights with respect to any Performance Shares or with respect to the Stock until the Stock is delivered to the Participant.

10. Payments Upon Change of Control. Upon a Change of Control, the Company may, at the Board’s, or the Human Resources Committee’s, as the case may be, sole and absolute discretion, pay the Participant all or a portion of the Participant’s award hereunder. The amounts paid may be based upon (a) a proration of the Participant’s target Performance Shares, (b) a proration of the projected Performance Shares at the time of the Change of Control, or (c) a pro rata amount computed at the end of the fiscal year. Any proration shall be based upon the number of completed months elapsed in the Performance Period through the date of the Change of Control. Any payments made under this Section 10 shall be paid no later than the fifteenth day of the third month that begins after the later of (i) the end of the Participant’s tax year in which the Change in Control occurs or (ii) the end of the Company’s fiscal year in which the Change in Control occurs.

11. Related Plans. Subject to the terms and conditions hereof, Qualified Performance-Based Awards shall be made pursuant to the ConAgra Foods, Inc. Executive Incentive Plan (“EIP”) or any successor incentive plan approved by the Company’s stockholders, and to the extent necessary for compliance with Code Section 162(m) for the tax deductibility of an award, the provisions of the EIP shall apply to the awards hereunder. Awards earned and Stock distributed hereunder shall be deemed granted and distributed under the ConAgra Foods 2006 Stock Plan (“Stock Plan”) or any successor stock plan approved by the Company’s stockholders. To the extent not inconsistent with the provisions of this Plan, the provisions of the Stock Plan shall apply to this Plan and the awards hereunder.

12. Miscellaneous Provisions.

12.1 Nontransferability of Awards. Except as otherwise provided by the Committee, no awards granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.

12.2 Beneficiary Designation. Each Participant under the Plan may from time to time name any beneficiary or beneficiaries (who may be named contingent or successively) to whom any benefit under the Plan is to be paid or by whom any right under the Plan is to be exercised in case of his death. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed in writing with the Committee. In the absence of any such designation, awards outstanding at death will be paid to the Participant’s surviving spouse, if any, or otherwise to the Participant’s estate.

12.3 No Guarantee of Employment or Participation. Nothing in the Plan shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant’s employment at any time, nor confer upon any individual any right to continue in the employ of the Company or any Subsidiary. No employee shall have a right to be selected as a Participant, or, having been so selected, to receive any future awards or to continue as a Participant.

12.4 Tax Withholding. The Company shall have the power to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local withholding tax requirements on any award under the Plan, and the Company may defer issuance of Stock until such requirements are satisfied. In the alternative, the Committee may withhold shares of Stock that would otherwise be delivered to the Participant, having an aggregate fair market value, determined as of the date the obligation to withhold or pay taxes arises in connection with a distribution, in the amount necessary to satisfy the minimum applicable withholding obligation.

12.5 Agreements with Company. An award under the Plan shall be subject to such terms and conditions, not inconsistent with the Plan, as the Committee may, in its sole and absolute discretion, prescribe. The terms and conditions of any award to any Participant shall be reflected in such form of written document as is determined by the Committee or its designee.

12.6 Code § 409A. Unless the Committee expressly determines otherwise, Performance Shares are intended to be exempt from Code Section 409A as short-term deferrals and, accordingly, the terms of any Performance Shares award shall be construed to preserve such exemption. To the extent the Committee determines that Code Section 409A applies to a particular award granted under the Plan, then the terms of the award shall be construed to permit the award to comply with Code Section 409A. In the event that the Plan or any award shall be deemed

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not to comply with Code Section 409A, then neither the Company, the Committee, the Board nor its or their designees or agents shall be liable to any Participant or other persons for actions, decisions or determinations made in good faith.

12.7 Unfunded Plan. The plan shall be unfunded and no trust is required to be established with respect to the Plan. Bookkeeping accounts may be established with respect to Participants who are granted Performance Shares under the Plan, but any such accounts shall be used merely as a bookkeeping convenience.

12.8 Requirements of Law. The granting of Performance Shares and the issuance of shares of Stock shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or securities exchanges as may be required.

12.9 Changes in Stock. In the event of any change in the outstanding Stock by reason of any share dividend or split, recapitalization, merger, consolidation, spin-off reorganization, combination or exchange of shares, or other similar corporate change, then the Committee shall adjust the number or kind of Performance Shares or target Performance Shares of a Participant or the measures of performance. Any such adjustments shall be conclusive and binding for all purposes of the Plan. The Committee shall have full and final discretion to determine the manner in which such adjustment(s) are made.

12.10 Facility of Payments. If a Participant shall, at the time payment of an amount is due, be incapacitated so that he cannot legally receive or acknowledge receipt of the payment, then the Committee, in its sole and absolute discretion, may direct that the payment be made to the legal guardian, attorney-in-fact or person with whom such recipient is residing, and such payment shall be in full satisfaction of the Company’s obligation under the Plan with respect to such amount.

12.11 Governing Law. The Plan shall be construed and its provisions enforced and administered in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of laws, and in accordance with applicable federal laws.

12.12 Gender and Number. Where the context admits, words in any gender shall include any other gender, words in the singular shall include the plural and words in the plural shall include the singular.

12.13 Severability. If any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

12.14 Binding Effect. The Plan shall be binding upon the Company, its successors and assigns, and Participants, their legal representatives, executors, administrators and beneficiaries.

13. Compliance with Code Section 162(m). The Company intends that compensation under the Plan payable to Covered Employees will, to the extent practicable, constitute qualified “performance-based compensation” within the meaning of Code Section 162(m), unless otherwise determined by the Committee. Accordingly, the provisions of the Plan shall be administered and interpreted in a manner consistent with Code Section 162(m). If any provision of the Plan or any award that is granted to a Covered Employee does not comply or is inconsistent with the requirements of Code Section 162(m), such provision shall be construed or deemed amended to the extent necessary to conform to such requirements.

14. Indemnification. In addition to such other rights of indemnification as they may have as directors or as members of the Committee or otherwise, the members of the Committee shall be indemnified by the Company against reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any award granted thereunder, and against all amounts paid by them in settlement thereof, provided such settlement is approved by independent legal counsel selected by the Company, or paid by them in satisfaction of a judgment or settlement in any such action, suit or proceeding, except as to matters as to which the Committee member has been negligent or engaged in misconduct in the performance of his duties; provided, that within 60 days after institution of any such action, suit or proceeding, a Committee member shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same.

15. Amendment or Termination of Plan. The Board may, in its sole and absolute discretion and from time to time, amend, modify or terminate any or all of the provisions of the Plan without providing any prior notice to Participants; provided, however, no amendment, modification or termination shall affect the rights of any Participant with respect to a previously granted award, without the written consent of the Participant. However, notwithstanding the foregoing, the Committee shall have unilateral authority to amend the Plan and any award, without participant consent, to the extent necessary to comply with applicable laws, rules or regulations or changes to applicable laws, rules or regulations (including but in no way limited

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to Code Sections 162(m) and 409A).

16. Definitions. Whenever used in this Plan, the following terms shall have the respective meanings set forth below:

16.1 “Board” means the Board of Directors of the Company.

16.2 “Change of Control” means:

(i) Individuals who constitute the Board (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 the Company’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 Plan, considered as though such person were a member of the Incumbent Board; or

(ii) Consummation of a reorganization, merger, or consolidation, in each case, with respect to which persons who were the shareholders of the Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty percent (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 the Company or of the sale of all or substantially all of its assets.

16.3 “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a particular Code section herein shall be deemed to include all related regulations, interpretations or other United States Department of Treasury guidance.

16.4 “Committee” means the Human Resources Committee of the Board, or its successor, or such other committee of the Board to which the Board delegates power to act under or pursuant to the provisions of the Plan.

16.5 “Covered Employees” means a “covered employee” as defined in Code Section 162(m).

16.6 “Disability” means that the Participant, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, is receiving income replacement benefits for a period of not less than three months under the Company’s long-term disability plan.

16.7 “EBIT” means earnings before interest and taxes. Unless determined otherwise by the Committee when granting an award, EBIT shall be calculated by adding (i) interest expense, net and (ii) income tax expense, to (iii) income from continuing operations, as adjusted for unusual items.

16.8 “General Award” means an award that is not a Qualified Performance-Based Award.

16.9 “Negative Discretion” means the discretion that the Committee may exercise to reduce (but not increase) the amount of the award that otherwise would be payable in connection with the attainment of the Performance Target. This discretion may be applied in the event that exceptional circumstances arise which, in the judgment of the Committee, would result in payouts not consistent with the intentions of the Committee at the inception of the plan or would otherwise cause the plan to operate in a manner inconsistent with the best interests of the Company.

16.10 “Participant” shall mean any salaried employee of the Company who is chosen to participate in the Plan, as specified in Section 3.

16.11 “Performance Period” means the three consecutive fiscal years beginning with the first fiscal year for which the award is granted.

16.12 “Performance Shares” means an award granted under this Plan, in an amount determined by the Committee and specified in an award agreement, stated with reference to a specified number of shares of Stock, that entitles the holder to receive shares of stock, subject to the terms of the Plan, any award agreement, and any other terms and conditions established by the Committee.

16.13 “Performance Target” means one or more specified performance goals that are used in determining awards and Performance Shares earned by Participants. In the case of Qualified Performance-Based Awards, the Performance Target that is intended to permit the award to satisfy the performance-based exception to the deductibility limitation of Code Section 162(m) shall be stated as levels of, or growth or changes in, one or more of the performance criteria approved by the Company’s stockholders in the Executive Incentive Plan or any successor stockholder-approved plan (which currently include earnings, earnings per share, growth in earnings

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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). In the case of a General Award, the Committee may establish a Performance Target that is based on categories of performance that are different than those set forth above.

If the Committee makes the opportunity to receive an award subject to a particular Performance Target, the Committee shall adopt or confirm a written definition of that Performance Target at the time the Performance Target is established, provided that the Committee retains the discretion to forgo such written definition in connection with a General Award. The Performance Target for an award may be described in terms of Company-wide objectives or objectives that are related to a specific division, subsidiary, business unit, department, region, or function. A Performance Target may be defined relative to the performance of other corporations. If more than one individual performance goal is specified by the Committee in defining a Performance Target, the Committee shall also specify, in writing, whether one, all or some other number of such goals must be attained in order for the Performance Target to be met.

16.14 “Qualified Performance-Based Award” means an award (or a specified portion of an award) to a Participant that is intended to satisfy the requirements for “performance-based compensation” under Code Section 162(m). At the time award opportunities and Performance Targets are established for a Performance Period, the Committee shall designate in writing any award opportunity that is intended to allow a Participant to receive (upon satisfaction of the Performance Target and subject to Negative Discretion) a Qualified Performance-Based Award. Any such designation is irrevocable.

16.15 “Retirement” means termination of employment from the Company or a Subsidiary on or after the earlier of (i) the Participant attains age 65, or (ii) the Participant has at least ten years of service and has attained age 55. For purposes of this Plan, years of service shall include any additional years of service provided to a Participant for pension purposes under the Company’s qualified or nonqualified retirement plan pursuant to the Participant’s written employment agreement with the Company or its Subsidiaries. If at the time of the Participant’s Retirement circumstances exist that would allow the Company to terminate the Participant for Cause, the Participant, for purposes of this Plan, shall be deemed to have terminated employment for purposes other than Death, Disability, or Retirement.

16.16 “ROAIC” means the Company’s return on average invested capital, after tax. Unless determined otherwise by the Committee when granting an award, ROAIC shall be calculated by multiplying EBIT by 1 minus the Company’s tax rate and dividing this amount by average invested capital, all as adjusted for unusual items. Average invested capital is the twelve-month rolling average of total assets less cash and cash equivalents and non-interest bearing liabilities.

16.17 “Stock” means the common stock of the Company, par value $5.00 per share.

16.18 “Subsidiary” means any corporation, partnership, joint venture or other entity in which the Company owns, directly or indirectly, 25% or more of the voting power or of the capital interest or profits interest of such entity.

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EX-12

Exhibit 12

ConAgra Foods Inc. and Subsidiaries

Computation of Ratio of Earnings to Fixed Charges

($ in millions)

	Thirteen weeks ended August 24, 2008
Earnings:
Income from continuing operations before income taxes and equity method investment earnings	$	172.4
Add/(deduct):
Fixed charges		77.9
Distributed income of equity method investees		4.6
Capitalized interest		(1.0	)
Earnings available for fixed charges (a)	$	253.9
Fixed charges:
Interest expense	$	65.3
Capitalized interest		1.0
One third of rental expense (1)		11.6
Total fixed charges (b)	$	77.9
Ratio of earnings to fixed charges (a/b)		3.3

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

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EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

I, Gary M. Rodkin, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended August 24, 2008 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 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

(d) 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: October 2, 2008

/s/ GARY M. RODKIN

Gary M. Rodkin

Chief Executive Officer

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EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

I, Andre J. Hawaux, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended August 24, 2008 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 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

(d) 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: October 2, 2008

/s/ ANDRE J. HAWAUX

Andre J. Hawaux

Executive Vice President and Chief Financial Officer

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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, Gary M. Rodkin, 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 Quarterly Report on Form 10-Q for the quarter ended August 24, 2008 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 Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of ConAgra Foods, Inc.

October 2, 2008

/s/ GARY M. RODKIN

Gary M. Rodkin

Chief Executive Officer

I, Andre J. Hawaux, Executive Vice President and 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 Quarterly Report on Form 10-Q for the quarter ended August 24, 2008 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 Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of ConAgra Foods, Inc.

October 2, 2008

/s/ ANDRE J. HAWAUX

Andre J. Hawaux

Executive Vice President and 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.

106