This summary is based on the second quarter fiscal 2008 earnings call conducted by ConAgra Foods (CAG: chart) on December 20, 2007.

Management:

CEO: Gary H. Rodkin
CFO: Andre J. Hawaux
V.P. Investor Relations: Christopher W. Klinefelter
President, Consumer Operations: Dean Hollis
President, Commercial Operations: Greg Heckman

Key Investors Issues

- EPS were 50 cents per share compared to 42 cents per share last year.
- Net income was $244.8 million, up from $213.3 million a year ago.
- Revenue was $3.51 billion, up from $3.09 billion in the same period a year ago.

Second Quarter Highlights

On October 11, the company voluntarily recalled its entire Banquet and private label pot pies out of concern for salmonella.

- Direct recall costs were approximately $27 million in the second quarter, or 3 cents per share.
- The company does not expect any additional significant expenses related to this recall. After a thorough review of the pot pie plant with the USDA, the company restarted production and shipping product in early December.

The Consumer Foods segment posted sales of $1.8 billion and operating profit of $234 million, and $1.8 billion of sales and $277 million of operating profit in the year-ago period.

- Comparable unit volumes increased 3% and comparable sales increased 3%.
- Despite price increases, sales growth did not outpace unit growth because of: 1) protecting trade deal commitments to customers on several heavily promoted categories, a situation which will moderate in the back half of the fiscal year, and 2) negative sales mix resulting from the higher rate of growth for the enabler brands.

- Comparable sales for priority investment brands, which represent more than 70% of segment sales, increased 2%, reflecting the benefit of new products as well as more effective marketing. Major priority investment brands posting sales increases include Chef Boyardee, Egg Beaters, Healthy Choice, Hebrew National, Marie Callender’s, PAM, Reddi-wip, Slim Jim, and Snack Pack. More details about brand results can be found in the Q&A document accompanying this release.
- Enabler brands comparable sales increased 5%.

- Operating profit declined 16% as reported and 17% on a comparable basis.
- Comparable operating profit excludes pot pie recall costs in the current year as well as restructuring charges in the prior year.
- The current quarter’s high operating costs reflect a challenging input cost environment, which negatively impacted cost of goods sold by nearly $100 million, or more than 8% versus year-ago amounts.

- The production and start-up inefficiencies experienced earlier in the fiscal year did not have a significant effect on this quarter’s operating costs.
- Due to ongoing pricing actions, comparable operating profit and margin results for this segment are expected to improve as the fiscal year progresses, most notably in the fiscal fourth quarter.

Sales for the Food and Ingredients segment were almost $1 billion, 14% ahead of last year.

The increase reflects stronger prices and solid volumes for the Lamb Weston specialty potato and appetizer operations, as well as higher flour prices for ConAgra Mills necessitated by higher wheat input costs.

Segment operating profit was $131 million, 13% ahead of $117 million last year.

Excluding an $18 million gain on the sale of noncore assets and an $8 million benefit from insurance proceeds in the year-ago period, comparable profits in the segment increased more than 40%, an outstanding performance. These results reflect Lamb Weston’s export and appetizer sales growth, as well as growth for milled products due to expanded value-added product lines, better mix, and efficiency gains.

Sales for the Trading and Merchandising segment were $546 million, more than 80% ahead of year-ago amounts.

- Operating profit was $165 million, more than four times the dollar amount earned in the year-ago period.
- Fertilizer and agricultural merchandising operations posted a strong quarter, successfully capitalizing on rising prices and continued strong domestic and export demand.
- Agricultural trading results improved over the prior year, and energy trading results, while strong, were slightly below year-ago amounts.

Sales for the International Foods segment was $176 million, 13% ahead of year-ago amounts.