ConAgra Foods Reports Solid First-Quarter Results

First-Quarter Fiscal 2006 Overview:

-- First-quarter fiscal 2006 diluted EPS was $0.68, reflecting a large gain from selling 15.4 million shares of Pilgrim's Pride Corporation common stock as well as a solid performance in several areas of the business.

-- The $0.68 per diluted share includes a $0.40 per share gain from the sale of Pilgrim's Pride Corporation common stock, $0.04 per share of expense from asset impairment and plant closure costs, and $0.01 per share of earnings from discontinued operations. These items impacting comparability are summarized toward the end of this release.

-- Prior-year earnings of $0.26 per diluted share included $0.02 per share of net expense related to implementing cost-saving initiatives.

-- New chief executive officer Gary Rodkin will join ConAgra Foods on Oct. 1.

ConAgra Foods Inc. (NYSE:CAG), one of North America's leadingpackaged food companies, today reported results for the fiscal 2006first quarter ended Aug. 28, 2005. First-quarter diluted EPS was$0.68, and diluted EPS was $0.26 for the same period last year; themajor items affecting comparability are summarized toward the end ofthis release. Sales for the quarter were $3.4 billion, slightly lessthan the same period last year.

Bruce Rohde, chairman and chief executive officer of ConAgraFoods, commented, "Operating profitability for fiscal 2006 is off to agood start. We are executing better in key areas of our business, andwe are also encouraged by the fact that input cost inflation trendsfor some items are moderating following the significant cost increaseswe experienced in recent quarters. Fiscal 2006 should be a year ofsolid operating profit performance as we continue to improve ourpackaged meats operations and make our cost structure more efficient."

Retail Products Segment (58% of company sales)

During the quarter, sales for the Retail Products segment were$1.9 billion, a decrease of 4% compared with the same period lastyear; sales mix was slightly negative, as volume declined 3%. Salesand volume decreases reflect a combination of the effect of priceincreases, customer and product mix changes, continued challenges forsome packaged meats products, and to a lesser extent, a rigorous SKU(stock keeping unit) reduction program.

-- Sales for the company's top 30 brands as a group, which represent approximately 80% of total segment sales, decreased 1% during the quarter.

-- Several brands posted strong sales performance as a result of ongoing sales and marketing initiatives intended to strengthen brand equity and improve category share performance. Popular brands posting sales gains include: Butterball, Chef Boyardee, DAVID, Kid Cuisine, La Choy, Manwich, Marie Callender's, Orville Redenbacher's, Peter Pan, Slim Jim, Snack Pack, Van Camp's, and Wesson.

-- Those brands posting sales declines include: ACT II, Armour, Banquet, Blue Bonnet, Cook's, Eckrich, Egg Beaters, Healthy Choice, Hebrew National, Hunt's, PAM, Parkay, Reddi-wip, and Swiss Miss.

The Retail Products segment operating profit for the quarter was$211 million, slightly above the amount reported for the same quarterlast year. Several factors contributed to the profit performance,including price increases across several product lines, more efficientmanufacturing operations, and overall cost-management efforts. Thosefactors largely offset higher input costs for beef, steel, resin, andtransportation.

Profit margin trends for the packaged meats operations haveimproved from the trends experienced during the second half of fiscal2005, even though profits for those operations are substantially belowdesired levels. The packaged meats operations are benefiting from newmanagement and lower pork input costs, as well as better net pricingpolicies that are closely linked to SKU optimization efforts andproduct and customer mix improvement. The company is encouraged by theprogress being made by the new packaged meats team, and continues toexpect year-over-year profit improvement for these operations in thesecond half of fiscal 2006.

$7 million of costs associated with a plant closure in the currentyear, and $8 million of costs associated with implementing efficiencyinitiatives in the prior year, impact year-over-year comparability ofsegment operating profit.

Foodservice Products Segment (23% of company sales)

Sales for the Foodservice Products segment were $790 million forthe first quarter, roughly equal to the same period last year. Segmentoperating profit was $80 million in the first quarter, up from $66million in the year-ago period. Last year's operating profit includes$5 million of costs associated with implementing efficiencyinitiatives as well as $11 million of unfavorable production costsassociated with a planned plant consolidation.

During the first quarter, specialty potato products and culinaryproducts increased volumes with key customers. Growth in operatingprofits for specialty potato products and culinary products primarilyreflects increased volumes and improved operating efficiencies. Due totariff-related market dynamics, sales and profits for seafood productswere below year-ago levels. Higher transportation costs for theoverall segment were partially offset by effective cost-managementefforts.

Food Ingredients Segment (19% of company sales)

During the quarter, sales for the Food Ingredients segment were$631 million, an increase of 9% compared with the first quarter lastyear. Segment operating profit was $76 million, an increase of 27%over the year-ago period; this increase was largely driven by a veryfavorable market environment for the commodity trading andmerchandising operations. Those operations, which include trading andmerchandising energy, grains, fertilizer, and other input commodities,contributed $47 million of the segment's total operating profit of $76million. Despite a weak performance from the dehydrated product lines,the specialty ingredients products posted growth in sales andoperating profit due to a strong performance from the flour millingoperations.

Pilgrim's Pride Stock Sale

-- During the quarter, ConAgra Foods sold all of its remaining 15.4 million shares of Pilgrim's Pride Corporation (NYSE: PPC) common stock for approximately $482 million, resulting in a net pretax gain of approximately $329 million. That gain is classified on the company's income statement as Gain on sale of Pilgrim's Pride Corporation common stock. ConAgra Foods acquired these shares in the fall of 2003 in connection with the divestiture of its chicken-processing operations to Pilgrim's Pride.

Equity Method Investments, Corporate Expense, Capital ResourceMatters, and Tax Rate

-- Equity method investments posted a pretax loss of $14 million for the first quarter, reflecting impairment charges totaling $19 million associated with two joint ventures. For the same quarter last year, equity method investment earnings were $14 million. Prior to the company's sale of its equity investment in Swift Foods during the second quarter of fiscal 2005, that investment provided $7 million of equity method investment earnings to ConAgra Foods during the first quarter of fiscal 2005.

-- For the first quarter, corporate expense was $73 million, compared with $64 million for the same period a year ago.

-- For the quarter, capital expenditures for property, plant, and equipment totaled $71 million compared with $105 million last year. Depreciation and amortization expense was approximately $89 million for the quarter versus $88 million a year ago. Dividends paid totaled $141 million versus $135 million last year. Net interest expense for the quarter was $68 million compared with $73 million last year.

-- At the end of the first quarter, interest-bearing debt was $4.5 billion, compared with $5.7 billion for the same period a year ago. Because of debt prepayments made in fiscal 2005, the company has only $126 million of debt scheduled to be paid in fiscal 2006. As of the end of the first quarter, the company had more than $500 million of cash and cash equivalents on hand.

-- The company benefited from an effective tax rate of approximately 36% in the quarter; that rate is slightly less than the 38% effective tax rate in the first quarter of last year. The company currently expects the effective tax rate for fiscal 2006 to be in line with that of the first quarter.

New CEO and New Chairman of the Board

Recently the company announced that Gary Rodkin will become thecompany's new president and chief executive officer and a member ofits board of directors on Oct. 1. He will succeed Bruce Rohde, thecurrent chief executive officer.

Board member Steven F. Goldstone has been elected thenon-executive chairman, commencing Oct. 1. Mr. Goldstone is a retiredchairman and chief executive officer of RJR Nabisco, and succeedsBruce Rohde, the company's current chairman.

Outlook

As previously stated, the company continues to expect fiscal 2006EPS to be higher than fiscal 2005 EPS, excluding amounts that impactcomparability. That earnings improvement is expected to be moreapparent in the second half of the fiscal year as the company makesmore progress working through the issues that have negatively impactedthe packaged meats operations.

Major Items Affecting First-Quarter Fiscal 2006 EPS Comparability

Included in diluted EPS of $0.68 for the first quarter of fiscal2006 (EPS amounts after tax):

-- A gain of $0.40 per diluted share from the sale of Pilgrim's Pride Corporation common stock that is classified as such on the company's income statement.

-- Expense of $0.03 per diluted share resulting from impairment charges associated with two joint ventures. These amounts are included in the equity method investment results.

-- Expense of $0.01 per diluted share related to plant closure costs classified as part of the results for the Retail Products segment.

-- Income of $0.01 per diluted share from discontinued operations.

Included in the $0.26 diluted EPS for the first quarter of fiscal2005 (EPS amounts after tax):

-- Expense of approximately $0.02 per diluted share related to implementing cost-saving initiatives.

For more details regarding the company's financial goals, pleaserefer to the company's Web site, www.conagrafoods.com/investors, andchoose the button titled, "ConAgra Foods Comments on StrategicDirection."

ConAgra Foods Inc. (NYSE:CAG) is one of North America's largestpackaged food companies, serving consumer grocery retailers, as wellas restaurants and other foodservice establishments. Popular ConAgraFoods consumer brands include: ACT II, Armour, Banquet, Blue Bonnet,Brown 'N Serve, Butterball, Chef Boyardee, Cook's, Crunch 'n Munch,DAVID, Eckrich, Egg Beaters, Fleischmann's, Golden Cuisine, Gulden's,Healthy Choice, Hebrew National, Hunt's, Kid Cuisine, Knott's BerryFarm, La Choy, Lamb Weston, Libby's, Lightlife, Lunch Makers, MaMaRosa's, Manwich, Marie Callender's, Orville Redenbacher's, PAM,Parkay, Pemmican, Peter Pan, Reddi-wip, Rosarita, Ro*Tel, Slim Jim,Snack Pack, Swiss Miss, Van Camp's, Wesson, Wolf, and many others. Formore information, please visit us at www.conagrafoods.com.

Discussion of Results

ConAgra Foods will host a conference call at 9:00 a.m. EDT todiscuss first-quarter results. Following the company's remarks, thecall will include a question-and-answer session with the investmentcommunity. Domestic and international participants may access theconference call toll-free by dialing 1-877-447-8217 and1-706-679-0415, respectively. No confirmation or pass code is needed.This conference call also can be accessed live on the Internet atwww.conagrafoods.com/investors.

A rebroadcast of the conference call will be available after 2:00p.m. EDT. To access the digital replay, a conference I.D. number willbe required. Domestic participants should dial 1-800-642-1687, andinternational participants should dial 1-706-645-9291 and enterconference I.D. 8266376. A rebroadcast also will be available on thecompany's Web site, where it will be archived.

In addition, the company has posted a question-and-answersupplement relating to this release at www.conagrafoods.com/investors.To view recent company news, please visit www.conagrafoods.com/media.

Note on Forward-Looking Statements:

This news release contains forward-looking statements within themeaning of the Private Securities Litigation Reform Act of 1995. Thesestatements are based on management's current views and assumptions offuture events and financial performance and are subject to uncertaintyand changes in circumstances. Readers of this release shouldunderstand that these statements are not guarantees of performance orresults. Many factors could affect the company's actual financialresults and cause them to vary materially from the expectationscontained in the forward-looking statements. These factors include,among other things, future economic circumstances, industryconditions, company performance and financial results, availabilityand prices of raw materials, product pricing, competitive environmentand related market conditions, operating efficiencies, access tocapital, actions of governments and regulatory factors affecting thecompany's businesses and other risks described in the company'sreports filed with the Securities and Exchange Commission. The companycautions readers not to place undue reliance on any forward-lookingstatements included in this release, which speak only as of the datemade.

ConAgra Foods, Inc.

Segment Operating Results
In millions
FIRST QUARTER
-----------------------------------------------

13 Weeks 13 Weeks
Ended Ended
--------------- --------------- ---------------
August 28, 2005 August 29, 2004 Percent Change
--------------- --------------- ---------------
SALES
-----
Retail Products $1,941.6 $2,014.2 (3.6)%
Foodservice Products 789.9 792.2 (0.3)%
Food Ingredients 631.4 576.8 9.5%
--------------- ---------------
Total 3,362.9 3,383.2 (0.6)%
--------------- ---------------

OPERATING PROFIT
----------------
Retail Products $210.7 $209.8 0.4%
Foodservice Products 79.5 66.4 19.7%
Food Ingredients 76.3 60.1 27.0%
--------------- ---------------
Total operating
profit for
segments 366.5 336.3 9.0%

Reconciliation of
total operating
profit to income from
continuing operations
before income taxes
and equity method
investment earnings
(loss)
Items excluded from
segment operating
profit:
General corporate
expense (73.0) (63.6) 14.8%
Gain on sale of
Pilgrim's Pride
Corporation
common stock 329.4 - 100.0%
Interest expense,
net (68.1) (73.4) (7.2)%
--------------- ---------------
Income from continuing
operations before
income taxes and
equity method
investment earnings
(loss) $554.8 $199.3 178.4%
=============== ===============

Segment operating profit excludes general corporate expense, gainon sale of Pilgrim's Pride Corporation common stock, equity methodinvestment earnings (loss) and net interest expense. Managementbelieves such amounts are not directly associated with segmentperformance results for the period. Management believes thepresentation of total operating profit for segments facilitatesperiod-to-period comparison of results of segment operations.

ConAgra Foods, Inc.

Consolidated
Statements of
Earnings
In millions, except
per share amounts FIRST QUARTER
-----------------------------------------------
13 Weeks Ended 13 Weeks Ended
--------------- --------------- ---------------
Percent
August 28, 2005 August 29, 2004 Change
--------------- --------------- ---------------
Net sales $3,362.9 $3,383.2 (0.6)%
Costs and expenses:
Cost of goods sold 2,635.4 2,700.4 (2.4)%
Selling, general and
administrative
expenses 434.0 410.1 5.8%
Interest expense,
net 68.1 73.4 (7.2)%
Gain on sale of
Pilgrim's Pride
Corporation common
stock 329.4 - 100.0%
--------------- ---------------
Income from continuing
operations before
income taxes and
equity method
investment earnings
(loss) 554.8 199.3 178.4%
Income tax expense 193.6 81.0 139.0%
Equity method
investment earnings
(loss) (13.9) 14.1 -
--------------- ---------------
Income from continuing
operations 347.3 132.4 162.3%

Income from
discontinued
operations, net of
tax 4.8 2.3 108.7%
--------------- ---------------

Net income $352.1 $134.7 161.4%
=============== ===============

Earnings per share -
basic

Income from continuing
operations $0.67 $0.26 157.7%
Income from
discontinued
operations 0.01 - 100.0%
--------------- ---------------
Net income $0.68 $0.26 161.5%
=============== ===============

Weighted average
shares outstanding 518.1 517.0 0.2%
=============== ===============

Earnings per share -
diluted

Income from continuing
operations $0.67 $0.26 157.7%
Income from
discontinued
operations 0.01 - 100.0%
--------------- ---------------
Net income $0.68 $0.26 161.5%
=============== ===============

Weighted average share
and share equivalents
outstanding 520.5 521.4 (0.2)%
=============== ===============


ConAgra Foods, Inc.

Consolidated Balance Sheets
In millions
August 28, 2005 August 29, 2004
--------------- ----------------
ASSETS
Current assets
Cash and cash equivalents $501.4 $369.8
Receivables, less allowance for
doubtful accounts of $31.7 and
$28.2 1,286.9 1,322.9
Inventories 2,756.3 2,584.9
Prepaid expenses and other current
assets 572.7 372.6
Current assets of discontinued
operations 8.5 257.6
--------------- ----------------
Total current assets 5,125.8 4,907.8

Property, plant and equipment, net 2,834.5 2,868.7
Goodwill 3,794.0 3,791.2
Brands, trademarks and other
intangibles, net 819.3 826.4
Other assets 444.4 1,564.9
Noncurrent assets of discontinued
operations 0.4 54.9
--------------- ----------------
$13,018.4 $14,013.9
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $10.8 $22.4
Current installments of long-term
debt 119.1 366.9
Accounts payable 926.9 863.4
Advances on sales 128.8 103.0
Accrued payroll 194.3 175.4
Other accrued liabilities 1,177.4 1,245.0
Current liabilities of discontinued
operations 4.2 181.0
--------------- ----------------
Total current liabilities 2,561.5 2,957.1

Senior long-term debt, excluding
current installments 3,943.5 4,887.1
Subordinated debt 400.0 400.3
Other noncurrent liabilities 1,121.9 1,154.8
Common stockholders' equity 4,991.5 4,614.6
--------------- ----------------
$13,018.4 $14,013.9
=============== ================