10-K405

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended May 27, 2001

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 No. 1-7275

CONAGRA FOODS, INC.
(Exact name of registrant, as specified in its charter)

A Delaware Corporation (State of incorporation or other jurisdiction of incorporation or organization)	47-0248710 (I.R.S. Employer Number)
One ConAgra Drive Omaha, Nebraska (Address of principal executive office)	68102-5001 (Zip Code)

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

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

Title of each class	Name of each exchange on which registered
Common Stock, $5.00 par value	New York Stock Exchange

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

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

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

   At July 31, 2001, 537,298,994 common shares were outstanding. The aggregate market value of the voting common stock of ConAgra Foods, Inc. held by non-affiliates on July 31, 2001, was approximately $11.5 billion.

   Documents incorporated by reference are listed on page 2

Documents Incorporated by Reference

   Portions of the Registrant's Annual Report to Stockholders for the fiscal year ended May 27, 2001 are incorporated into Part I, Item 1; Part II, Items 5, 7, 7A, and 8; and Part IV, Item 14.

   Portions of the Registrant's definitive Proxy Statement filed for Registrant's 2001 Annual Meeting of Stockholders are incorporated into Part III, Items 10, 11, 12, and 13.

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PART I

ITEM 1.  BUSINESS

a) General Development of Business

    ConAgra Foods, Inc. ("ConAgra Foods" or the "company") is one of the world's largest branded food companies. The company is North America's largest manufacturer and marketer of food for the foodservice channel and second-largest manufacturer and marketer of food for the retail food channel. The company's food sales are approximately $22 billion of its $27 billion in total annual sales.

    Nebraska Consolidated Mills Company, which was originally incorporated in Nebraska on September 29, 1919, changed its name to ConAgra, Inc. on February 25, 1971, and since December 5, 1975, has been incorporated in Delaware. On September 28, 2000, ConAgra, Inc. changed its name to ConAgra Foods, Inc. to indicate a focus on serving food customers.

    Acquisitions have contributed substantially to the company's sales and earnings growth, both in the years of acquisition and in subsequent years. Major acquisitions have included International Home Foods, Seaboard Poultry, Nabisco's margarine and egg alternative businesses, GoodMark Foods, Gilroy Foods, Canada Malting Company, Van Camp's canned bean and Wolf Brand Chili businesses, MC Retail Foods, Universal Frozen Foods, Golden Valley Microwave Foods, the assets of Elders' beef, malt and wool businesses in Australia, Beatrice Company, eight U.S. flour mills acquired from International Multifoods, Pillsbury's grain merchandising business, the assets of Armour Food Company, SIPCO (formerly Swift Independent Packing Company), Chun King and Patio frozen foods businesses, Morton, Monfort of Colorado, Peavey Company, Country Pride Foods, Banquet Foods, and United Agri Products.

b) Financial Information about Reporting Segments

    The company's businesses are classified into three reporting segments: Packaged Foods, Refrigerated Foods and Agricultural Products. The contributions of each reporting segment to net sales and operating profit, and the identifiable assets attributable to each reporting segment are set forth in Note 20 "Business Segments and Related Information" on pages 56 through 58 of the company's 2001 Annual Report to Stockholders and is incorporated herein by reference.

c) Narrative Description of Business

    The company competes in multiple segments of the food business and focuses on adding value for customers in the retail food, foodservice, and agricultural products channels.

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

Packaged Foods

    In its Packaged Foods segment, ConAgra Foods produces shelf-stable foods, frozen foods, dairy case products, and foodservice products for retail, foodservice and specialty markets.

    Shelf-stable products include tomato products, pasta products, cooking oils, popcorn, soup, puddings, meat snacks, canned beans, canned pasta, tuna, canned chili, cocoa mixes, and peanut butter. Shelf-stable major brands include Hunt's, Healthy Choice, Chef Boyardee, Wesson, Orville Redenbacher's, PAM, Slim Jim, Act II, Peter Pan, Van Camp's, Gulden's, Beanee Weenee, Manwich, Hunt's Snack Pack, Swiss Miss, Knott's Berry Farm, Chun King, Bumble Bee, La Choy, Gebhardt, Wolf Brand, Pemmican, Penrose, and Andy Capp's.

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    Frozen Foods' products include dinners, pizzas, entrees, snacks, ice cream, and seafood. Frozen food major brands include Healthy Choice, Banquet, Marie Callender's, Kid Cuisine, MaMa Rosa's, Papa G's, Gilardi's, The Max, Morton, Patio, Chun King, LaChoy, Artel, and Wolfgang Puck.

    Dairy Foods' products include tablespreads, cheeses, egg alternatives and dessert toppings. Dairy Foods major brands include Parkay, Blue Bonnet, Fleischmann's, Egg Beaters, Healthy Choice, County Line, Reddi-wip, and Treasure Cave.

    Foodservice products include potato products, ethnic food products, hand-held dough-based products, specialty meats, and other products primarily for foodservice markets. Foodservice major brands include Lamb Weston, Fernando's, Casa de Oro, Holly Ridge, Rosarita, and Zoll.

Refrigerated Foods

    In its Refrigerated Foods segment, ConAgra Foods produces and markets fresh and branded processed meats, beef and pork products, chicken and turkey products and meat alternative products for retail, foodservice, institutional and specialty markets.

    The processed meat products include hot dogs, bacon, ham, sausages, cold cuts, turkey products and kosher products. Fresh meat products include beef, pork and lamb. The poultry businesses include chicken and turkey products. Meat alternative products include soy-based items like meatless hot dogs and patties.

    Refrigerated Foods' major brands include Armour, Butterball, Cook's, Country Pride, Decker, Monfort, Eckrich, Healthy Choice, To-Ricos, Texas BBQ, Ready Crisp, Hebrew National, Brown "N Serve, Golden Star, Lightlife, National Deli and Swift Premium. In addition, the company owns Australia Meat Holdings Pty Ltd., a major Australian beef processor and exporter.

Agricultural Products

    In the segment's food ingredients sector, ConAgra Foods primarily processes and distributes ingredients for food and beverage products and meat and poultry production. The ingredient processing businesses include flour milling, specialty food ingredients and manufacturing, oat and corn milling, dry edible bean processing and merchandising and barley malting. ConAgra Foods also markets bulk agricultural commodities throughout the world through its grain procurement and merchandising, food-related commodity trading and commodity services.

    Through its Agricultural Products segment, ConAgra Foods distributes crop protection chemicals, fertilizers, seeds and information systems at wholesale and retail levels. Major agricultural brands include Clean Crop, ACA, Awaken mPower³ (e-merge), Savage, Shotgun, Saber, Signature, and Loveland Industries.

    The Agricultural Products businesses experience some seasonality. This seasonality coincides with normal agricultural growing seasons.

General

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

    ConAgra Foods is a food company that operates in many different areas of the food business, from basic agricultural inputs to production and sale of branded consumer products. As a result, ConAgra Foods uses many different raw materials, the bulk of which are commodities. Raw materials are generally available from several different sources and ConAgra Foods presently believes that it can obtain these as needed.

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

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

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

    ConAgra Foods and its subsidiaries have more than 89,000 employees, primarily in the United States.

d) Foreign Operations

    Foreign operations information is set forth in Note 20 "Business Segments and Related Information" on pages 56 through 58 of the company's 2001 Annual Report to Stockholders and is incorporated herein by reference.

ITEM 2. PROPERTIES

    The company's corporate headquarters are located in Omaha, Nebraska. The headquarters and principal operating locations of each business are set forth in the following list of ConAgra Foods' locations.

    The company maintains a number of distribution facilities, in addition to distribution facilities and warehouse space available at substantially all of its manufacturing facilities.

    Utilization of manufacturing capacity varies by type of product manufactured, plant and week. In general, ConAgra Foods operates most of its manufacturing facilities in excess of 80% of standard industry capacity. Standards vary by industry from 40 hours per week to 144 hours per week.

    Most principal manufacturing facilities are held in fee. However, certain parcels of land, machinery and buildings, and substantially all of ConAgra Foods' transportation equipment used in its processing and merchandising operations, are leased.

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PACKAGED FOODS

ConAgra Frozen Prepared Foods
Headquarters in Omaha, Nebraska.

ConAgra Frozen Foods
Headquarters and corporate sales office in Omaha, Nebraska.
Eight manufacturing facilities in Arkansas, Iowa and Missouri. Three manufacturing facilities and one sales office in Canada. Product development facility in Omaha, Nebraska.

Gilardi Foods
Headquarters and corporate sales office in Omaha, Nebraska. Two manufacturing facilities in Ohio.

ConAgra Grocery Products Companies
Headquarters in Irvine, California.

ConAgra Grocery Products Company
Headquarters in Irvine, California.
Product development facility in Irvine. 17 manufacturing plants, 11 distribution centers and over 20 grocery and foodservice sales offices serving the U.S. and Canada:

ConAgra Grocery Products Company International

ConAgra Grocery Products Company—Grocery Brands

Hunt-Wesson Foodservice Company

Hunt-Wesson Grocery Products Sales Company

Golden Valley Microwave Foods
Headquarters in Edina, Minnesota.
Six plants in Iowa, Minnesota and Ohio. Popcorn storage warehouse in Nebraska, product development facility in Eden Prairie, Minnesota and microwave packaging production facility in Maple Grove, Minnesota.

ConAgra Foods Ltd.
Headquarters in Manchester, England.
Manufacturer of microwave meals and snacks, supplying UK and other European countries.

GoodMark Foods, Inc.
Headquarters in Raleigh, North Carolina
Manufacturer of branded meat snacks, specialty snacks and other convenient food products, supplying mass-merchandisers, vending machines and grocery, drug, club, convenience and video stores. Plants in North Carolina, Pennsylvania and California.

ConAgra Store Brands
Headquarters in Lakeville, Minnesota
Manufacturer and distributor of private label food products for the retail grocery, club and mass-merchandise markets. One manufacturing facility in Minnesota and two manufacturing facilities in Illinois.

Bumble Bee Seafoods
Headquarters in San Diego, California
Six processing/packaging facilities in Ecuador, Puerto Rico, California, Louisiana and Minnesota. Processor of canned tuna and specialty seafood items and frozen/refrigerated surimi products.

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Cloverleaf Seafoods
Headquarters in Markham, Ontario, Canada
Market/distribute canned tuna and specialty seafood items and refrigerated surimi products.

ConAgra Foodservice Company
Headquarters in Boise, Idaho

Lamb-Weston, Inc.
Headquarters in Tri-Cities, Washington.
14 plants in Idaho, Oregon, Washington, Minnesota (50-percent owned) and Alberta, Canada. Four plants in The Netherlands (50-percent owned) and one plant in Turkey (50-percent owned). Farming operations in Washington, Oregon and Idaho. Product development facility in Richland, Washington. Sales, marketing and international business development center in Boise, Idaho.

Fernando's Foods Corporation
Headquarters in Los Angeles, California
One Mexican food processing facility in California.

Casa de Oro
Headquarters in Omaha, Nebraska
Flour and corn tortilla processing facilities in Nebraska and Kentucky.

ConAgra Signature Meats Group
Headquarters in Greeley, Colorado


Choice One Foods
Headquarters in Los Angeles, California
One meat processing facility in California

ConAgra Signature Meats—Montgomery
Headquarters in Montgomery, Alabama
One meat processing facility in Alabama

ConAgra Signature Meats—Orlando
Headquarters in Sanford, Florida
One meat processing facility in Florida

ConAgra Signature Meats—San Antonio
Headquarters in San Antonio, Texas
One meat processing facility in Texas

Zoll Foods
Headquarters in South Holland, Illinois
One meat processing facility in Illinois

ConAgra Seafood Companies

Singleton Seafood
Headquarters in Tampa, Florida
One seafood processing facility in Florida.

Meridian Products
Headquarters in Santa Fe Springs, California
Seafood trading company with facilities in New Jersey, Texas and Washington.

Dairy Foods
Headquarters in Downers Grove, Illinois

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Eight facilities located in eight states include natural cheese, aerosol, margarine and egg product manufacturing and indirect retail sales and foodservice sales.

REFRIGERATED FOODS

Processed Meats Companies
Headquarters in Downers Grove, Illinois.

Armour Swift-Eckrich
Product development in Downers Grove and 25 plants in 14 states, processed meat plant in Panama, distribution centers in Kansas, Michigan, Illinois and Puerto Rico, serving:

ASE Consumer Products Company

ASE Deli

ASE Foodservice Company

ASE International

Butterball Turkey Company

Decker Food Company

National Foods, Inc.

Louis Kemp

Lightlife Foods, Inc.
Headquarters and manufacturing facility in Massachusetts.

Cook Family Foods, Ltd.
Headquarters in Lincoln, Nebraska.
Three plants in Nebraska, Kentucky and Missouri.

Renewable Environmental Solutions
Headquarters in Downers Grove, Illinois.

ConAgra Beef Companies
Headquarters in Greeley, Colorado

Australia Meat Holdings Pty Ltd.
Headquarters in Dinmore, Australia.
Eight plants and feedlots in Australia.

ConAgra Cattle Feeding Company
Headquarters in Greeley, Colorado.
Three feedlots in Colorado. One feedlot in Texas.

ConAgra Refrigerated Foods International Sales Corporation
Headquarters in Greeley, Colorado.


E. A. Miller, Inc.
Headquarters in Hyrum, Utah.
Processing facilities in Utah and a feedlot in Idaho.

Monfort Beef and Lamb Company
Headquarters in Greeley, Colorado.
Ten plants in Colorado, Kansas, Nebraska, Texas, and Indiana.

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Monfort Food Distribution Co.
Headquarters in Greeley, Colorado.
Eight sales and distribution branches in eight states.

Monfort Fresh Meats Company
Headquarters in Greeley, Colorado.
Two plants in Idaho & Nebraska.

ConAgra Poultry Company
Headquarters in Duluth, Georgia.

ConAgra Broiler Company
Headquarters in Duluth, Georgia.
14 broiler growing and processing divisions in Alabama, Arkansas, Georgia, Kentucky, Louisiana, Tennessee, and Puerto Rico. Four further processing cook plants in Georgia, Tennessee, West Virginia, and Louisiana.

Professional Food Systems
Headquarters in El Dorado, Arkansas.
14 sales and distribution units in nine states.

Swift & Company
Headquarters in Greeley, Colorado.
Three pork processing plants in Iowa, Minnesota and Kentucky. One further processing plant in California.

AGRICULTURAL PRODUCTS

ConAgra Food Ingredients Companies
Headquarters in Omaha, Nebraska.

Grain Processing
Headquarters in Omaha, Nebraska.
25 flour mills in 14 states. Two joint ventures in the United States, one flour mill and one elevator. Corn merchandising and processing facility in Kansas. Two oat processing facilities in Nebraska and Canada. A flour mill, a dry corn mill and grain trading in Puerto Rico.

International
Headquarters in Omaha, Nebraska.
Poultry, animal feed and processed meat facilities in Portugal and feed plants in Spain. Four malt joint ventures with barley malting facilities in the United States, Canada, Australia and the United Kingdom, doing business as ConAgra Malt. A food products distribution joint venture in Mexico doing business as Verde Valle. Edible oil processing and grain trading joint venture in India, doing business as Agro Tech Foods Limited. Joint venture oilseed processing plant in Argentina, doing business as Pecom Agra. A specialty marketing business with processed eggs, Mexican food products, and food oils business headquartered in Texas. Two animal feed plants in Georgia and Alabama.

Ingredients
Headquarters in Omaha, Nebraska.
A spice plant and research and development facility in Illinois. A seasoning plant and research and development facility in New Jersey. Flavorings plants in New Jersey and Utah. Food ingredients distribution business headquartered in Iowa with distribution centers in Texas, Illinois and Colorado. A distributor of supplies and equipment for the food processing industry in Texas. Chili products plants located in California, New Mexico, and Santiago, Chile, with a research and

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development facility in California. A garlic and onion dehydration and processing facility with a supporting research and development facility in California and dehydration and processing plants in Nevada and Oregon. A vegetable dehydration and processing facility in California.

ConAgra Trade Group
Headquarters in Omaha, Nebraska.

Agricultural Division
Headquarters in Omaha, Nebraska.
The Agricultural Division is a global merchandiser and marketer of grains, oilseeds and feed ingredients, including vegetable and animal products. The division consists of an extensive network of grain merchandising offices and grain elevators in the United States and Canada. International marketing is facilitated through offices in Mexico, Italy, Hong Kong, Brazil and Australia, and with representative agents throughout the world.

KBC Edible Beans
Headquarters in Stockton, California.
KBC Edible Beans is an international leader in the sourcing, processing, distribution and marketing of dry edible beans. KBC operates an extensive network of facilities in the United States and a facility in Argentina. International marketing is facilitated through offices in Argentina, China, Chile, Switzerland and Hong Kong, and with representative agents throughout the world.

ConAgra International Fertilizer
Headquarters in Savannah, Georgia.
ConAgra International Fertilizer originates, transports and markets bulk fertilizer products throughout the world. International sourcing and distribution is facilitated through offices in the United Kingdom, Hong Kong and Singapore.

ConAgra Energy Services and Financial Products
Headquarters in Omaha, Nebraska.
ConAgra Energy Services originates and markets petroleum and other energy products throughout the United States. The financial products group provides strategic risk management services for ConAgra Foods, its customers and suppliers.

ConAgra Agri Products Companies
Headquarters in Greeley, Colorado.

United Agri Products Companies
Headquarters in Greeley, Colorado.
Over 525 field sales, administration, warehouse, rail, formulation and joint venture locations in the United States, Canada, United Kingdom, Mexico, South Africa, Chile, Bolivia, Ecuador, Argentina, France, Peru, Taiwan and Zimbabwe. Businesses are involved with crop protection products, seed, liquid and dry fertilizer operations.

ITEM 3. LEGAL PROCEEDINGS

    In fiscal 1991, the company acquired Beatrice Company ("Beatrice"). As a result of the acquisition and the significant pre-acquisition contingencies of the Beatrice businesses and its former subsidiaries, the consolidated post-acquisition financial statements of the company reflect significant liabilities associated with the estimated resolution of these contingencies. These include various litigation and environmental proceedings related to businesses divested by Beatrice prior to its acquisition by the company. The environmental proceedings include litigation and administrative proceedings involving Beatrice's status as a potentially responsible party at 41 Superfund, proposed Superfund or state-equivalent sites. Beatrice has paid or is in the process of paying its liability share at 35 of these sites. Substantial reserves for these matters have been established based on the company's best estimate of its

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undiscounted remediation liabilities, which estimates include evaluation of investigatory studies, extent of required cleanup, the known volumetric contribution of Beatrice and other potentially responsible parties and its experience in remediating sites.

    On June 22, 2001, the company filed an amended annual report on Form 10-K for the fiscal year ended May 28, 2000. The filing includes restated financial information for fiscal years 1997, 1998, 1999 and 2000. The restatement, due to accounting and conduct matters at its United Agri Products, Inc. subsidiary, was based upon an investigation undertaken by the company and the Audit Committee of its Board of Directors. That investigation, and an informal inquiry by the staff of the Securities and Exchange Commission, are continuing. The restatement was principally related to revenue recognition for deferred delivery sales and vendor rebates, advance vendor rebates, and bad debt reserves.

    On August 10, 2001, a purported class action lawsuit was filed against the company and certain of its executive officers. The complaint alleges that the defendants violated the federal securities laws in connection with the events resulting in the company's restatement of its financial statements. The complaint seeks (a) a declaration that the action is maintainable as a class action and that the plaintiff is a proper class representative, (b) unspecified compensatory damages, (c) reasonable attorneys' fees, and (d) any other relief deemed proper by the court. The lawsuit was filed in United States District Court for Nebraska and is entitled Gebhardt v. ConAgra Foods, Inc., et. Al. Case No. 810CV427. The company believes the lawsuit is without merit and plans to vigorously defend the action.

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

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

    Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT AS OF AUGUST 24, 2001

Name	Title & Capacity	Age	Year Assumed Present Office
Bruce C. Rohde	Chairman, Chief Executive Officer and President	52	1998
James P. O'Donnell	Executive Vice President, Chief Financial Officer and Corporate Secretary	53	1997
Dwight J. Goslee	Executive Vice President, Operations Control and Development	51	2001
Owen C. Johnson	Executive Vice President, Human Resources and Administration	55	1998
Jay D. Bolding	Senior Vice President, Controller	41	1999
Kenneth W. Gerhardt	Senior Vice President and Chief Information Officer	51	1998
Timothy P. McMahon	Senior Vice President, Communications and Corporate Marketing	47	2000
Stephen J. Tibey	Senior Vice President, Supply Chain Management	53	1999
Kevin W. Tourangeau	Senior Vice President, Operational Effectiveness	49	1999
Michael D. Walter	Senior Vice President, Commodity Procurement and Economic Strategy	52	2000

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

    Owen C. Johnson was Senior Vice President, Human Resources, Corporate Communications and Administration of NISOURCE from 1990 to 1998. He joined ConAgra as Senior Vice President, Human Resources and Administration in June 1998 and was named Executive Vice President in 2001.

    Jay D. Bolding joined ConAgra Foods in 1997 as Vice President, Business Processes and Financial Analysis. He became Vice President, Controller in February 1999 and was named Senior Vice President in June 2000. He was Vice President, Chief Financial Officer and Treasurer of Allen & O'Hara, Inc., a construction and property management company from 1995 to 1997.

    Kenneth W. Gerhardt was Senior Vice President and Chief Information Officer of Ameriserve Distribution, Inc. from 1997 to 1998. Prior to 1997, he worked for Pepsico, Inc. in various capacities, including Vice President and Chief Information Officer for Pepsico Food Services from 1996 to 1997; and Senior Director, Information Technology for Pepsi Cola North American from 1994 to 1996.

    Timothy P. McMahon was Vice President, Marketing for ConAgra Trading and Processing Companies from June 1997 to October 1997. Prior to that, he was President of McMahon Marketing Communications Company for ten years. He became Senior Vice President, Corporate Marketing Development in October 1997 and was named to his current position in 2000.

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    Stephen J. Tibey joined ConAgra in November 1999 as Senior Vice President Supply Chain Management. Prior to his joining the company, Mr. Tibey was with Kraft where he served as Vice President, Operation Services from 1998 to 1999 and Vice President, Distribution Operations from 1994 to 1998.

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

    Michael D. Walter joined ConAgra Foods in 1989 as President of ConAgra Specialty Grain Products. He was named to his current position in October 1996.

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OTHER SIGNIFICANT EMPLOYEES OF THE REGISTRANT AS OF AUGUST 24, 2001

Name	Title & Capacity	Age	Year Assumed Present Office
Larry A. Carter	President and Chief Operating Officer, ConAgra Food Ingredients	49	2000
Raymond J. De Riggi	President and Chief Operating Officer, ConAgra Grocery Products Companies	53	1998
Timothy M. Harris	President and Chief Operating Officer, ConAgra Refrigerated Prepared Foods	45	1997
Gregory A. Heckman	President and Chief Operating Officer, ConAgra Trade Group	39	1996
R. Dean Hollis	President and Chief Operating Officer, ConAgra Frozen Prepared Foods	41	2000
Blake D. Lovette	President and Chief Operating Officer, ConAgra Poultry Company	58	1998
Floyd McKinnerney	President and Chief Operating Officer, United Agri Products Companies	64	1998
Richard A. Porter	President and Chief Operating Officer, ConAgra Foodservice Company	52	1998
Richard G. Scalise	President and Chief Operating Officer, ConAgra Dairy Food Companies	46	2000
John S. Simons	President and Chief Operating Officer, ConAgra Beef Companies	40	1999
F. Martin Thrasher	President, ConAgra Retail Food Products Company	50	2001

    Larry A. Carter joined the company in 1994 as the Vice President and Chief Financial Officer of ConAgra's Trading and Processing Companies. He was named to his current position in 2000.

    Raymond J. De Riggi was President of United Specialty Food Ingredients Cos. since 1995. He was named to his current position in June 1998.

    Timothy M. Harris was President of ConAgra Refrigerated Prepared Foods from 1995 to 1997. He was named to his current position in 1997.

    Gregory A. Heckman joined the company in 1984 and was named Vice President and General Manager of ConAgra Commodity Services in 1995. He was named to his current position in 1996.

    R. Dean Hollis was Vice President, Trade Development ConAgra Frozen Foods from 1995 to 1998 and President of Gilardi Foods from 1998 to March 2000. He was named to his current position in 2000.

    Blake D. Lovette was named to his current position upon joining the company in 1998. Prior to joining the company he owned and operated The Lovette Company, a transportation and distribution company located in Wilkesboro, North Carolina.

    Floyd McKinnerney was named to his current position in 2000. He previously served in other executive postitions with United Agri Products Companies.

    Richard A. Porter was President of Lamb Weston, Inc. from 1990 to 1998. He was named to his current position in June 1998.

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    Richard G. Scalise joined the company in 1997 as President of the ASE Deli/Foodservice Company. He was named to his current position during 2000. Prior to joining the company, Mr. Scalise was President and Chief Operating Officer of H&M Corporation.

    John S. Simons was Vice President, Red Meat Business Development with Excel from 1996 to 1999. He was Vice President and General Manager, Canada for Excel from 1993 to 1996. He was named to his current position in 1999.

    F. Martin Thrasher was named to his current position upon joining the company in 2001. Prior to joining the company, Mr. Thrasher was with Campbell Soup Company where he served in various positions since 1996 including President North America from 2000 to 2001.

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PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    ConAgra Foods' common stock is listed on the New York Stock Exchange. Ticker symbol: CAG. At the end of fiscal 2001, 537.1 million shares of common stock were outstanding, including 12.8 million shares held in the company's Employee Equity Fund. There were 34,000 shareholders of record, 31,000 holders via ConAgra Foods' 401(k) plan for employees and more than 190,000 "street-name" beneficial holders whose shares are held in names other than their own. During fiscal 2001, 419 million shares were traded, a daily average of approximately 1.7 million shares.

    Quarterly sales price and dividend information is incorporated herein by reference to Note 21 "Quarterly Results (Unaudited)" on page 58 of the company's 2001 Annual Report to Stockholders.

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ITEM 6.  SELECTED FINANCIAL DATA

    The following table presents selected consolidated financial data for the company for each of the five fiscal years 1997 through 2001. All amounts are in millions except per share data. Prior years per share amounts have been adjusted to reflect the two-for-one stock split which was effective October 1, 1997.

For the Fiscal Years Ended May		2001*		2000		1999		1998		1997
Net sales		$	27,194.2	$	25,534.6	$	24,844.4	$	24,544.6		24,407.7
Income before cumulative effect of changes in accounting			682.5		382.3**		330.2***		632.3		630.9
Net income			638.6		382.3**		330.2***		617.5		630.9
Basic income per share
	Income before cumulative effect of changes in accounting		1.33		.80**		.70***		1.36		1.35
	Net income		1.24		.80**		.70***		1.33		1.35
Diluted income per share
	Income before cumulative effect of changes in accounting		1.33		.80**		.69***		1.33		1.32
Net income			1.24		.80**		.69***		1.30		1.32
Cash dividends declared per share of common stock			.8785		.7890		.6918		.6050		.5275
At Year End
Total assets		$	16,480.8	$	12,196.6	$	12,081.5	$	11,781.5	$	11,440.3
Senior long-term debt (noncurrent)			3,359.5		1,816.8		1,793.1		1,753.5		1,628.5
Subordinated long-term debt (noncurrent)			750.0		750.0		750.0		750.0		750.0
Preferred securities of subsidiary company			525.0		525.0		525.0		525.0		525.0

*

On August 24, 2000, ConAgra Foods acquired International Home Foods.

**

2000 amounts include restructuring and restructuring-related charges: before tax, $621.4 million; after tax, $385.3 million. Excluding the charges, basic earnings per share were $1.61 and diluted earnings per share were $1.60.

***

1999 amounts include restructuring charges: before tax, $440.8 million; after tax, $337.9 million. Excluding the charges, basic earnings per share were $1.42 and diluted earnings per share were $1.40.

17

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

    Incorporated herein by reference to "Management's Discussion & Analysis" on pages 32 through 40 of the company's 2001 Annual Report to Stockholders.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    Incorporated herein by reference to the subsection "Market Risk" in "Management's Discussion & Analysis" on pages 38 and 39 of the company's 2001 Annual Report to Stockholders.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The following consolidated financial statements of ConAgra Foods and Subsidiaries and Independent Auditors' Report set forth on pages 41 through 59 of the company's 2001 Annual Report to Stockholders are incorporated herein by reference:

    Consolidated Statements of Earnings—Years ended May 27, 2001, May 28, 2000 and May 30, 1999

    Consolidated Statements of Comprehensive Income—Years ended May 27, 2001, May 28, 2000 and May 30, 1999

    Consolidated Balance Sheets—May 27, 2001 and May 28, 2000

    Consolidated Statements of Common Stockholders' Equity—Years ended May 27, 2001, May 28, 2000 and May 30, 1999

    Consolidated Statements of Cash Flows—Years ended May 27, 2001, May 28, 2000 and May 30, 1999

    Notes to Consolidated Financial Statements

    The supplementary data regarding quarterly results of operations are set forth in Note 21 "Quarterly Results (Unaudited)" on page 58 of the company's 2001 Annual Report to Stockholders is incorporated herein by reference.

    Independent Auditors' Report

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

    None.

18

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    Incorporated herein by reference to "Board of Directors and Election" on page 3 of the company's Proxy Statement for its 2001 Annual Meeting of Stockholders. Information concerning all Executive Officers of the company is included in Part I above.

ITEM 11.  EXECUTIVE COMPENSATION

    Incorporated herein by reference to (i) "Executive Compensation" through "Benefit Plans and Retirement Programs" on pages 5 through 7 of the company's Proxy Statement, and (ii) information on director compensation on page 4 of the company's Proxy Statement for its 2001 Annual Meeting of Stockholders.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Incorporated herein by reference to "Voting Securities Owned by Certain Beneficial Owners" and "Voting Securities Owned by Executive Officers and Directors" on page 2 of the company's Proxy Statement for its 2001 Annual Meeting of Stockholders.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Incorporated herein by reference to (i) the last paragraph of "Directors' Meetings and Compensation" on page 4 of the company's Proxy Statement, and (ii) the last paragraph of "Benefit Plans and Retirement Programs" on page 9 of the company's Proxy Statement for its 2001 Annual Meeting of Stockholders.

19

PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

a)

List of documents filed as part of this report:

1.

Financial Statements

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

2.

Financial Statement Schedules

Schedule Number	Description	Page Number
S-II	Valuation and Qualifying Accounts	24

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

3.

Exhibits

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

b)

Reports on Form 8-K

    The company filed a report on Form 8-K dated May 23, 2001 relating to its intention to restate financial statements based on an investigation of its UAP subsidiary undertaken by the company and the Audit Committee of its Board of Directors.

20

SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ConAgra Foods, Inc. has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 24th day of August, 2001.

CONAGRA FOODS, INC.

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

/s/ JAMES P. O'DONNELL James P. O'Donnell
Executive Vice President, Chief Financial Officer and Corporate Secretary

/s/ DWIGHT J. GOSLEE Dwight J. Goslee
Executive Vice President, Operations
Control and Development

/s/ JAY D. BOLDING Jay D. Bolding
Senior Vice President, Controller

21

    Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 24th day of August, 2001.

Bruce C. Rohde*
Mogens C. Bay*
John T. Chain, Jr.*
Charles M. Harper*
Alice B. Hayes
Robert A. Krane*
Mark Rauenhorst*
Carl E. Reichardt*
Ronald W. Roskens*
Marjorie M. Scardino*
Walter Scott, Jr.*
Kenneth E. Stinson*
Clayton K. Yeutter* Director Director Director Director Director Director Director Director Director Director Director Director Director

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

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

22

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
ConAgra Foods, Inc.
Omaha, Nebraska

    We have audited the consolidated financial statements of ConAgra Foods, Inc. and subsidiaries as of May 27, 2001 and May 28, 2000, and for each of the three years in the period ended May 27, 2001, and have issued our report thereon dated July 13, 2001 (which report expresses an unqualified opinion and includes an explanatory paragraph relating to change in methods of accounting for revenue recognition relating to the shipping terms for certain of its product sales, retailer sales incentives, and consumer sales incentives); such financial statements and report are included in your 2001 Annual Report to Stockholders and are incorporated herein by reference. Our audits also included the financial statement schedule of ConAgra Foods, Inc. and subsidiaries, listed in Item 14. This financial statement schedule is the responsibility of the company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ DELOITTE & TOUCHE LLP  
DELOITTE & TOUCHE LLP
Omaha, Nebraska
July 13, 2001

23

Schedule II

CONAGRA FOODS, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts

For the Fiscal Years ended May 27, 2001, May 28, 2000 and May 30, 1999
(in millions)

				Additions
Description		Balance at Beginning of Period		Charged to Income	Other		Deductions from Reserves		Balance at Close of Period
Year ended May 27, 2001
	Allowance for doubtful receivables	$	62.8	61.4	3.5(2	)	27.2(1	)	$	100.5
Year ended May 28, 2000
	Allowance for doubtful receivables	$	60.0	51.4	.4(2	)	49.0(1	)	$	62.8
Year ended May 30, 1999
	Allowance for doubtful receivables	$	68.2	57.9	.2(2	)	66.3(1	)	$	60.0

(1)

Bad debts charged off, less recoveries.

(2)

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

24

EXHIBIT INDEX

Number	Description	Page No.
3.1	ConAgra Foods' Certificate of Incorporation, as amended, incorporated herein by reference to ConAgra Foods' quarterly report on Form 10-Q for the quarter ended April 27, 2000
3.2	ConAgra Foods' Bylaws, as amended, incorporated herein by reference to ConAgra Foods' quarterly report on Form 10-Q for the quarter ended February 28, 1999
4.1	Rights Agreement dated as of July 12, 1996, Certificate of Adjustment dated October 1, 1997 and Amendment dated July 10, 1998	27
4.2	Form of documents establishing Series A, Series B and Series C Preferred Securities of ConAgra Capital, L.L.C., incorporated herein by reference to Exhibit 4.8 and Exhibit 4.14 of ConAgra Foods' registration on Form S 3 (033 56973)
10.1	Form of Employment Agreement between ConAgra Foods and its executive officers, incorporated herein by reference to Exhibit 10.3 of ConAgra Foods' annual report on Form 10-K for the fiscal year ended May 31, 1998
10.2	ConAgra Foods' Employee Flexible Bonus Payment Plan, incorporated herein by reference to Exhibit 10.4 of ConAgra Foods' annual report on Form 10-K for the fiscal year ended May 25, 1997
10.3	ConAgra Foods Non-Qualified CRISP Plan, incorporated herein by reference to Exhibit 10.6 of ConAgra Foods' annual report on Form 10-K for the fiscal year ended May 30, 1999
10.4	ConAgra Foods Non-Qualified Pension Plan, and First Amendment thereto, incorporated herein by reference to Exhibit 10.7 of ConAgra Foods' annual report on Form 10-K for the fiscal year ended May 30, 1999
10.5	ConAgra Foods Supplemental Pension and CRISP Plan for Change of Control, incorporated herein by reference to Exhibit 10.8 of ConAgra Foods' annual report on Form 10-K for the fiscal year ended May 30, 1999
10.6	ConAgra Foods Incentives and Deferred Compensation Change of Control Plan, incorporated herein by reference to Exhibit 10.9 of ConAgra Foods' annual report on Form 10-K for the fiscal year ended May 30, 1999
10.7	ConAgra Foods 1990 Stock Plan, and amendments thereto incorporated herein by reference to Exhibit 10.10 of ConAgra Foods' annual report on Form 10-K for the fiscal year ended May 28, 2000
10.8	ConAgra Foods 1995 Stock Plan incorporated herein by reference to Exhibit 10.11 of ConAgra Foods' annual report on Form 10-K for the fiscal year ended May 28, 2000
10.9	ConAgra Foods 2000 Stock Plan incorporated herein by reference to Exhibit 10.1 of ConAgra Foods' quarterly report on Form 10-Q for the quarter ended August 27, 2000
10.10	ConAgra Foods Directors' Unfunded Deferred Compensation Plan	79

25

10.11	ConAgra Foods Employee Equity Fund Trust Agreement, with Stock Purchase Agreement and Revolving Promissory Note executed in connection therewith, incorporated herein by reference to Exhibit 10.14 of ConAgra Foods' annual report on Form 10 K for the fiscal year ended May 25, 1997
10.12	Employment Contract between ConAgra Foods and Bruce C. Rohde, incorporated herein by reference to Exhibit 10.1 of ConAgra Foods' quarterly report on Form 10-Q for the quarter ended February 23, 1997
10.13	Amendment dated February 16, 1998 to Bruce C. Rohde Employment Contract, incorporated herein by reference to Exhibit 10.19 of ConAgra Foods' annual report on Form 10-K for the fiscal year ended May 31, 1998
10.14	C. M. Harper Deferred Compensation Agreement dated March 15, 1976, incorporated herein by reference to Exhibit 10.20 of ConAgra Foods' annual report on Form 10-K for the fiscal year ended May 31, 1998
10.15	ConAgra Foods Executive Incentive Plan incorporated herein by reference to Exhibit 10.21 of ConAgra Foods' annual report on Form 10-K for the fiscal year ended May 30, 1999
12	Statement regarding computation of ratio of earnings to fixed charges	81
13	Pages 32 through 59 of ConAgra Foods, Inc.'s Annual Report to Stockholders for the fiscal year ended May 27, 2001	82
21	Subsidiaries of ConAgra Foods	110
23	Consent of Deloitte & Touche LLP	114
24	Powers of Attorney	115

    Pursuant to Item 601(b)(4) of Regulation S-K, certain instruments with respect to ConAgra Foods' long-term debt are not filed with this Form 10-K. ConAgra Foods will furnish a copy of any such long-term debt agreement to the Securities and Exchange Commission upon request.

    Except for those portions of ConAgra Foods, Inc.'s Annual Report to Stockholders for its fiscal year ended May 27, 2001 (such portions filed hereto as Exhibit 13) specifically incorporated by reference in the report on Form 10-K, such annual report is furnished solely for the information of the Securities and Exchange Commission and is not to be deemed "filed" as part of this filing.

    Items 10.1 through 10.15 are management contracts or compensatory plans filed as exhibits pursuant to Item 14(c) of Form 10-K.

26

QuickLinks

PART I

ITEM 1. BUSINESS
ITEM 2. PROPERTIES

ITEM 3. LEGAL PROCEEDINGS

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

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

ITEM 6. SELECTED FINANCIAL DATA

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

SIGNATURES
INDEPENDENT AUDITORS' REPORT

Schedule II

EXHIBIT INDEX

EX-4.1

                                                                     EXHIBIT 4.1


                                  CONAGRA, INC.
                                       and
            CHASEMELLON SHAREHOLDER SERVICES, L.L.C., as Rights Agent


                                RIGHTS AGREEMENT

                            Dated as of July 12, 1996



                                      27




TABLE OF CONTENTS



                                                                                                 Page
                                                                                              
Section 1.        Certain Definitions .............................................................. 1
Section 2.        Appointment of Rights Agent ...................................................... 5
Section 3.        Issue of Right Certificates ...................................................... 5
Section 4.        Form of Right Certificates ....................................................... 7
Section 5.        Countersignature and Registration ................................................ 7
Section 6.        Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
                  Destroyed, Lost or Stolen Right Certificates ..................................... 8
Section 7.        Exercise of Rights, Purchase Price; Expiration Date of Rights .................... 9
Section 8.        Cancellation and Destruction of Right Certificates ...............................10
Section 9.        Availability of Shares of Preferred Stock ........................................10
Section 10.       Preferred Stock Record Date  .....................................................11
Section 11.       Adjustment of Purchase Price, Number of Shares and Number of Rights ..............12
Section 12.       Certificate of Adjusted Purchase Price or Number of Shares .......................19
Section 13.       Consolidation, Merger or Sale or Transfer of Assets or Earnings Power ............20
Section 14.       Fractional Rights and Fractional Shares ..........................................23
Section 15.       Rights of Action .................................................................24
Section 16.       Agreement of Right Holders .......................................................24
Section 17.       Right Certificate Holder Not Deemed a Stockholder ................................25
Section 18.       Concerning the Rights Agent ......................................................25
Section 19.       Merger or Consolidation or Change of Name of Rights Agent ........................26
Section 20.       Duties of Rights Agent ...........................................................26
Section 21.       Change of Rights Agent ...........................................................28
Section 22.       Issuance of New Right Certificates ...............................................29
Section 23.       Redemption .......................................................................29
Section 24.       Exchange .........................................................................30
Section 25.       Notice of Certain Events .........................................................31
Section 26.       Notices ..........................................................................32
Section 27.       Supplements and Amendments .......................................................33
Section 28.       Successors .......................................................................33
Section 29.       Benefits of this Agreement .......................................................33
Section 30.       Determinations and Actions by the Board of Directors .............................33
Section 31.       Severability .....................................................................34
Section 32.       Governing Law ....................................................................34
Section 33.       Counterparts .....................................................................34
Section 34.       Descriptive Headings .............................................................34


                                       28




RIGHTS AGREEMENT

         Rights Agreement, dated as of July 12, 1996 ("Agreement"), between
ConAgra, Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent").

         The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each share of
Common Stock (as hereinafter defined) of the Company outstanding as of the Close
of Business (as defined below) on July 24, 1996 (the "Record Date"), each Right
representing the right to purchase one one-thousandth (subject to adjustment) of
a share of Preferred Stock (as hereinafter defined), upon the terms and subject
to the conditions herein set forth, and has further authorized and directed the
issuance of one Right (subject to adjustment as provided herein) with respect to
each share of Common Stock that shall become outstanding between the Record Date
and the earlier of the Distribution Date and the Expiration Date (as such terms
are hereinafter defined); provided, however, that Rights may be issued with
respect to shares of Common Stock that shall become outstanding after the
Distribution Date and prior to the Expiration Date in accordance with Section
22.

         Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:

         Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meaning indicated:

         (a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the shares of Common Stock then
outstanding, but shall not include an Exempt Person (as such term is hereinafter
defined); provided, however, that (i) if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person" became such inadvertently (including, without limitation, because (A)
such Person was unaware that it beneficially owned a percentage of Common Stock
that would otherwise cause such Person to be an "Acquiring Person" or (B) such
Person was aware of the extent of its Beneficial Ownership of Common Stock but
had no actual knowledge of the consequences of such Beneficial Ownership under
this Agreement) and without any intention of changing or influencing control of
the Company, and if such Person as promptly as practicable divested or divests
itself of Beneficial Ownership of a sufficient number of shares of Common Stock
so that such Person would no longer be an "Acquiring Person," then such Person
shall not be deemed to be or to have become an "Acquiring Person" for any
purposes of this Agreement; (ii) if, as of the date hereof, any Person is the
Beneficial Owner of 15% or more but less than 20% of the shares of Common Stock
outstanding, such Person shall not be or become an "Acquiring Person" unless and
until such time as such Person shall become the Beneficial Owner of additional
shares of Common Stock (other than pursuant to a dividend or distribution paid
or made by the Company on the outstanding Common Stock in shares of Common Stock
or pursuant to a split or subdivision of the outstanding Common Stock), unless,
upon becoming the Beneficial Owner of such additional shares of Common Stock,
such Person is not then the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding; and (iii) no Person shall become an "Acquiring
Person" as the result of an acquisition of shares of Common Stock by the Company
which, by reducing the number of shares outstanding, increases the proportionate
number of shares of Common Stock beneficially owned by such Person to 15% or
more of the shares of Common


                                      29



Stock then outstanding, provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding by reason of such share acquisitions by the Company and shall
thereafter become the Beneficial Owner of any additional shares of Common
Stock (other than pursuant to a dividend or distribution paid or made by the
Company on the outstanding Common Stock in shares of Common Stock or pursuant
to a split or subdivision of the outstanding Common Stock), then such Person
shall be deemed to be an "Acquiring Person" unless upon becoming the
Beneficial Owner of such additional shares of Common Stock such Person does
not beneficially own 15% or more of the shares of Common Stock then
outstanding. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on the
date hereof.

         (b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date hereof.

         (c) A Person shall be deemed the "Beneficial Owner" of, shall be deemed
to have "Beneficial Ownership" of and shall be deemed to "beneficially own" any
securities:

            (i) which such Person or any of such Person's Affiliates or
Associates is deemed to beneficially own, directly or indirectly, within the
meaning of Rule l3d-3 of the General Rules and Regulations under the Exchange
Act as in effect on the date hereof;

            (ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own, (x)
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase, (y) securities which such Person
has a right to acquire upon the exercise of Rights at any time prior to the time
that any Person becomes an Acquiring Person or (z) securities issuable upon the
exercise of Rights from and after the time that any Person becomes an Acquiring
Person if such Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or pursuant to Section
3(a) or Section 22 hereof ("Original Rights") or pursuant to Section 11(i) or
Section 11(n) with respect to an adjustment to Original Rights; or (B) the right
to vote pursuant to any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security by reason of such agreement, arrangement or
understanding if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or

            (iii)which are beneficially owned, directly or indirectly, by any
other Person and with


                                       30



respect to which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of such securities of the Company; provided, however,
that no Person who is an officer, director or employee of an Exempt Person shall
be deemed, solely by reason of such Person's status or authority as such, to be
the "Beneficial Owner" of, to have "Beneficial Ownership" of or to "beneficially
own" any securities that are "beneficially owned" (as defined in this Section
l(c)), including, without limitation, in a fiduciary capacity, by an Exempt
Person or by any other such officer, director or employee of an Exempt Person.

         (d) "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the State of Nebraska or the city in
which the principal office of the Rights Agent is located are authorized or
obligated by law or executive order to close.

         (e) "Close of Business" on any given date shall mean 5:00 P.M., Omaha,
Nebraska time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Omaha, Nebraska time, on the next
succeeding Business Day.

         (f) "Common Stock" when used with reference to the Company shall mean
the Common Stock, presently par value $5.00 per share, of the Company. "Common
Stock" when used with reference to any Person other than the Company shall mean
the common stock (or, in the case of an unincorporated entity, the equivalent
equity interest) with the greatest voting power of such other Person or, if such
other Person is a subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.

         (g) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.

         (h) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.

         (i) "Distribution Date" shall have the meaning set forth in Section 3
hereof.

         (j) "Equivalent Preferred Shares" shall have the meaning set forth in
Section 11(b) hereof.

         (k) "Exempt Person" shall mean the Company or any Subsidiary (as such
term is hereinafter defined) of the Company, in each case including, without
limitation, in its fiduciary capacity, or any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity or trustee holding
Common Stock for or pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for employees of the
Company or of any Subsidiary of the Company.

         (l) "Exchange Ratio" shall have the meaning set forth in Section 24
hereof.

         (m) "Expiration Date" shall have the meaning set forth in Section 7
hereof.

         (n) "Flip-In Event" shall have the meaning set forth in Section
11(a)(ii) hereof.


                                       31



         (o) "Final Expiration Date" shall have the meaning set forth in Section
7 hereof.

         (p) "NASDAQ" shall mean The NASDAQ Stock Market.

         (q) "New York Stock Exchange" shall mean the New York Stock Exchange,
Inc.

         (r) "Person" shall mean any individual, firm, corporation, partnership,
limited liability company, trust or other entity, and shall include any
successor (by merger or otherwise) to such entity.

         (s) "Preferred Stock" shall mean the Series A Junior Participating
Class E Preferred Stock, without par value, of the Company having the rights and
preferences set forth in the Form of Certificate of Designation attached to this
Agreement as Exhibit A.

         (t) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.

         (u) "Redemption Date" shall have the meaning set forth in Section 7
hereof.

         (v) "Redemption Price" shall have the meaning set forth in Section 23
hereof.

         (w) "Right Certificate" shall have the meaning set forth in Section 3
hereof.

         (x) "Securities Act" shall mean the Securities Act of 1933, as amended.

         (y) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iii) hereof.

         (z) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.

         (aa) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such, or such
earlier date as a majority of the Board of Directors shall become aware of the
existence of an Acquiring Person.

         (bb) "Subsidiary" of any Person shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
such Person, and any corporation or other entity that is otherwise controlled by
such Person.

         (cc) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.

         (dd) "Summary of Rights" shall have the meaning set forth in Section 3
hereof.

         (ee) "Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.

         Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights


                                       32



Agent to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall prior to the Distribution Date be the
holders of Common Stock) in accordance with the terms and conditions hereof,
and the Rights Agent hereby accepts such appointment. The Company may from
time to time appoint such co-Rights Agents as it may deem necessary or
desirable.

         Section 3.  Issue of Right Certificates.

         (a) Until the Close of Business on the earlier of (i) the tenth day
after the Stock Acquisition Date or (ii) the tenth Business Day (or such later
date as may be determined by action of the Board of Directors prior to such time
as any Person becomes an Acquiring Person) after the date of the commencement by
any Person (other than an Exempt Person) of, or of the first public announcement
of the intention of such Person (other than an Exempt Person) to commence, a
tender or exchange offer the consummation of which would result in any Person
(other than an Exempt Person) becoming the Beneficial Owner of shares of Common
Stock aggregating 15% or more of the Common Stock then outstanding (the earlier
of such dates being herein referred to as the "Distribution Date", provided,
however, that if either of such dates occurs after the date of this Agreement
and on or prior to the Record Date, then the Distribution Date shall be the
Record Date), (x) the Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for Common Stock registered in the
names of the holders thereof and not by separate Right Certificates, and (y) the
Rights will be transferable only in connection with the transfer of Common
Stock. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign and the Company will send
or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Stock as of the close of business on the Distribution Date (other than any
Acquiring Person or any Associate or Affiliate of an Acquiring Person), at the
address of such holder shown on the records of the Company, a Right Certificate,
in substantially the form of Exhibit B hereto (a "Right Certificate"),
evidencing one Right (subject to adjustment as provided herein) for each share
of Common Stock so held. As of the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.

         (b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Shares of Preferred
Stock, in substantially the form of Exhibit C hereto (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Stock as
of the Close of Business on the Record Date (other than any Acquiring Person or
any Associate or Affiliate of any Acquiring Person), at the address of such
holder shown on the records of the Company. With respect to certificates for
Common Stock outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the names of the
holders thereof together with the Summary of Rights. Until the Distribution Date
(or, if earlier, the Expiration Date), the surrender for transfer of any
certificate for Common Stock outstanding on the Record Date, with or without a
copy of the Summary of Rights, shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby.

         (c) Certificates issued for Common Stock (including, without
limitation, upon transfer of outstanding Common Stock, disposition of Common
Stock out of treasury stock or issuance or reissuance of Common Stock out of
authorized but unissued shares) after the Record Date but prior to the earlier
of the Distribution Date and the Expiration Date shall have impressed on,
printed on, written on or otherwise affixed to them the following legend:


                                       33



         This certificate also evidences and entitles the holder hereof to
         certain rights as set forth in a Rights Agreement between ConAgra, Inc.
         and ChaseMellon Shareholder Services, L.L.C., as Rights Agent, dated as
         of July 12, 1996 as the same may be amended from time to time (the
         "Rights Agreement"), the terms of which are hereby incorporated herein
         by reference and a copy of which is on file at the principal executive
         offices of ConAgra, Inc. Under certain circumstances, as set forth in
         the Rights Agreement, such Rights will be evidenced by separate
         certificates and will no longer be evidenced by this certificate.
         ConAgra, Inc. will mail to the holder of this certificate a copy of the
         Rights Agreement without charge after receipt of a written request
         therefor. Under certain circumstances, as set forth in the Rights
         Agreement, Rights owned by or transferred to any Person who is or
         becomes an Acquiring Person (as defined in the Rights Agreement) and
         certain transferees thereof will become null and void and will no
         longer be transferable.

With respect to such certificates containing the foregoing legend, until the
Distribution Date the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Company purchases or
otherwise acquires any Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Stock shall be deemed
canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Stock which are no longer outstanding.

         Notwithstanding this paragraph (c), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.

         Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or interdealer quotation system on which the Rights may from time to
time be listed or quoted, or to conform to usage. Subject to the provisions of
Sections 11, 13 and 22 hereof, the Right Certificates shall entitle the holders
thereof to purchase such number of one one-thousandths of a share of Preferred
Stock as shall be set forth therein at the price per one one-thousandth of a
share of Preferred Stock set forth therein (the "Purchase Price"), but the
number of such one one-thousandths of a share of Preferred Stock and the
Purchase Price shall be subject to adjustment as provided herein.

         Section 5.  Countersignature and Registration.

         (a) The Right Certificates shall be executed on behalf of the Company
by the Chief Executive Officer of the Company, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile thereof
and shall be attested by the Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned.


                                       34



In case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the
Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the Person who signed such Right Certificates had not ceased
to be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any Person who, at the actual date of the execution
of such Right Certificate, shall be a proper officer of the Company to sign
such Right Certificate, although at the date of the execution of this
Agreement any such Person was not such an officer.

         (b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at an office or agency designated for such purpose, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.

         Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.

         (a) Subject to the provisions of Sections 7(e), 11(a)(ii), 13 and 14
hereof, at any time after the Distribution Date and prior to the Expiration
Date, any Right Certificate or Right Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-thousandths
of a share of Preferred Stock as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the office or agency of the
Rights Agent designated for such purpose. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.

         (b) Subject to the provisions of Section 11(a)(ii) hereof, at any time
after the Distribution Date and prior to the Expiration Date, upon receipt by
the Company and the Rights Agent of evidence reasonably satisfactory to them of
the loss, theft, destruction or mutilation of a Right Certificate, and, in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to them, and, at the Company's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will make and deliver a new Right Certificate of like tenor to the
Rights Agent for delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.


                                      35



         Section 7. Exercise of Rights, Purchase Price; Expiration Date of
Rights.

         (a) Except as otherwise provided herein, the Rights shall become
exercisable on the Distribution Date, and thereafter the registered holder of
any Right Certificate may, subject to Section 11(a)(ii) hereof and except as
otherwise provided herein, exercise the Rights evidenced thereby in whole or in
part upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at the
office or agency of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to the total number of one
one-thousandths of a share of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which the Rights are exercised, at any
time which is both after the Distribution Date and prior to the time (the
"Expiration Date") that is the earliest of (i) the Close of Business on July 12,
2006 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date") or (iii) the
time at which such Rights are exchanged as provided in Section 24 hereof.

         (b) The Purchase Price shall be initially $200.00 for each one
one-thousandth of a share of Preferred Stock purchasable upon the exercise of a
Right. The Purchase Price and the number of one one-thousandths of a share of
Preferred Stock or other securities or property to be acquired upon exercise of
a Right shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) of this Section 7.

         (c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase Price
for the shares of Preferred Stock to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof, in cash or by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Stock certificates for the number of shares of Preferred Stock to
be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) requisition from the depositary agent
depositary receipts representing interests in such number of one one-thousandths
of a share of Preferred Stock as are to be purchased (in which case certificates
for the Preferred Stock represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) when appropriate, requisition
from the Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof, (iii) promptly after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder and (iv) when
appropriate, after receipt, promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate.

         (d) Except as otherwise provided herein, in case the registered holder
of any Right Certificate shall exercise less than all of the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to the exercisable
Rights remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.

         (e) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of


                                       36




Rights upon the occurrence of any purported transfer or exercise of Rights
pursuant to Section 6 hereof or this Section 7 unless such registered holder
shall have (i) completed and signed the certificate contained in the form of
assignment or form of election to purchase set forth on the reverse side of
the Rights Certificate surrendered for such transfer or exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) thereof as the Company shall reasonably request.

         Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.

         Section 9.  Availability of Shares of Preferred Stock.

         (a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred Stock
or any shares of Preferred Stock held in its treasury, the number of shares of
Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding Rights.

         (b) So long as the shares of Preferred Stock (and, following the time
that any Person becomes an Acquiring Person, shares of Common Stock and other
securities) issuable upon the exercise of Rights may be listed or admitted to
trading on any national securities exchange, or quoted on NASDAQ, the Company
shall use its best efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to be listed or
admitted to trading on such exchange, or quoted on NASDAQ, upon official notice
of issuance upon such exercise.

         (c) From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance of
shares of Preferred Stock (and, following the time that any Person becomes an
Acquiring Person, shares of Common Stock and other securities) upon the exercise
of Rights, to register and qualify such shares of Preferred Stock (and,
following the time that any Person becomes an Acquiring Person, shares of Common
Stock and other securities) under the Securities Act and any applicable state
securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the date as of which the Rights
are no longer exercisable for such securities and the Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction


                                       37



unless the requisite qualification in such jurisdiction shall have been
obtained and until a registration statement under the Securities Act (if
required) shall have been declared effective.

         (d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock (and, following
the time that any Person becomes an Acquiring Person, shares of Common Stock and
other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates therefor (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.

         (e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any shares of Preferred Stock (or shares of Common Stock or other securities)
upon the exercise of Rights. The Company shall not, however, be required to pay
any transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Stock (or shares of Common
Stock or other securities) in a name other than that of, the registered holder
of the Right Certificate evidencing Rights surrendered for exercise or to issue
or deliver any certificates or depositary receipts for Preferred Stock (or
shares of Common Stock or other securities) upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by that
holder of such Right Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such tax is due.

         Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for Preferred Stock is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the shares of
Preferred Stock represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Stock transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Preferred Stock for which the
Rights shall be exercisable, including, without limitation, the right to vote or
to receive dividends or other distributions, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.

         Section 11. Adjustment of Purchase Price, Number and Kind of Shares and
Number of Rights. The Purchase Price, the number of shares of Preferred Stock or
other securities or property purchasable upon exercise of each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.

         (a)(i) In the event the Company shall at any time after the date of
this Agreement (A) declare and pay a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C)
combine the outstanding Preferred Stock into a smaller number of shares of
Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation),


                                       38



except as otherwise provided in this Section 11(a), the Purchase Price in
effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and
kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to
such date and at a time when the Preferred Stock transfer books of the
Company were open, the holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par
value of the shares of capital stock of the Company issuable upon exercise of
one Right.

         (ii) Subject to Section 24 of this Agreement, in the event any Person
becomes an Acquiring Person (the first occurrence of such event being referred
to hereinafter as the "Flip-In Event"), then (A) the Purchase Price shall be
adjusted to be the Purchase Price in effect immediately prior to the Flip- In
Event multiplied by the number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such Flip-In Event,
whether or not such Right was then exercisable, and (B) each holder of a Right,
except as otherwise provided in this Section 11(a)(ii) and Section 11(a)(iii)
hereof, shall thereafter have the right to receive, upon exercise thereof at a
price equal to the Purchase Price (as so adjusted), in accordance with the terms
of this Agreement and in lieu of shares of Preferred Stock, such number of
shares of Common Stock as shall equal the result obtained by dividing the
Purchase Price (as so adjusted) by 50% of the current per share market price of
the Common Stock (determined pursuant to Section 11(d) hereof) on the date of
such Flip-In Event; provided, however, that the Purchase Price (as so adjusted)
and the number of shares of Common Stock so receivable upon exercise of a Right
shall, following the Flip-In Event, be subject to further adjustment as
appropriate in accordance with Section 11(f) hereof. Notwithstanding anything in
this Agreement to the contrary, however, from and after the Flip-In Event, any
Rights that are beneficially owned by (x) any Acquiring Person (or any Affiliate
or Associate of any Acquiring Person), (y) a transferee of any Acquiring Person
(or any such Affiliate or Associate) who becomes a transferee after the Flip-In
Event or (z) a transferee of any Acquiring Person (or any such Affiliate or
Associate) who became a transferee prior to or concurrently with the Flip-In
Event pursuant to either (I) a transfer from the Acquiring Person to holders of
its equity securities or to any Person with whom it has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (II)
a transfer which the Board of Directors has determined is part of a plan,
arrangement or understanding which has the purpose or effect of avoiding the
provisions of this paragraph, and subsequent transferees of such Persons, shall
be void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Agreement. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 11(a)(ii) are complied with, but
shall have no liability to any holder of Right Certificates or other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. From and after
the Flip-In Event, no Right Certificate shall be issued pursuant to Section 3 or
Section 6 hereof that represents Rights that are or have become void pursuant to
the provisions of this paragraph, and any Right Certificate delivered to the
Rights Agent that represents Rights that are or have become void pursuant to the
provisions of this paragraph shall be canceled. From and after the occurrence of
an event specified in Section 13(a) hereof, any Rights that theretofore have not
been exercised pursuant to this Section 11(a)(ii) shall thereafter be
exercisable only in accordance with Section 13 and not pursuant to this Section
11(a)(ii).


                                       39



         (iii) The Company may at its option substitute for a share of Common
Stock issuable upon the exercise of Rights in accordance with the foregoing
subparagraph (ii) a number of shares of Preferred Stock or fraction thereof such
that the current per share market price of one share of Preferred Stock
multiplied by such number or fraction is equal to the current per share market
price of one share of Common Stock. In the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but
unissued to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Board of Directors shall, to the extent
permitted by applicable law and any material agreements then in effect to which
the Company is a party (A) determine the excess (such excess, the "Spread") of
(1) the value of the shares of Common Stock issuable upon the exercise of a
Right in accordance with the foregoing subparagraph (ii) (the "Current Value")
over (2) the Purchase Price (as adjusted in accordance with the foregoing
subparagraph (ii)), and (B) with respect to each Right (other than Rights which
have become void pursuant to the foregoing subparagraph (ii)), make adequate
provision to substitute for the shares of Common Stock issuable in accordance
with the foregoing subparagraph (ii) upon exercise of the Right and payment of
the Purchase Price (as adjusted in accordance therewith), (1) cash, (2) a
reduction in such Purchase Price, (3) shares of Preferred Stock or other equity
securities of the Company (including, without limitation, shares or fractions of
shares of preferred stock which, by virtue of having dividend, voting and
liquidation rights substantially comparable to those of the shares of Common
Stock, are deemed in good faith by the Board of Directors to have substantially
the same value as the shares of Common Stock (such shares of Preferred Stock and
shares or fractions of shares of preferred stock are hereinafter referred to as
"Common Stock Equivalents")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having a value which, when
added to the value of the shares of Common Stock issued upon exercise of such
Right, shall have an aggregate value equal to the Current Value (less the amount
of any reduction in such Purchase Price), where such aggregate value has been
determined by the Board of Directors upon the advice of a nationally recognized
investment banking firm selected in good faith by the Board of Directors;
provided, however, that if the Company shall not make adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days following the
Flip-In Event (the "Section 11(a) (ii) Trigger Date"), then the Company shall be
obligated to deliver, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party, upon the surrender
for exercise of a Right and without requiring payment of such Purchase Price,
shares of Common Stock (to the extent available), and then, if necessary, such
number or fractions of shares of Preferred Stock (to the extent available) and
then, if necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If, upon the occurrence of the Flip-In Event, the Board of
Directors shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights, then, if the Board of Directors so elects, the thirty
(30) day period set forth above may be extended to the extent necessary, but not
more than ninety (90) days after the Section 11(a) (ii) Trigger Date, in order
that the Company may seek stockholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be extended, is herein
called the "Substitution Period"). To the extent that the Company determines
that some action need be taken pursuant to the second and/or third sentence of
this Section 11(a)(iii), the Company (x) shall provide, subject to Section
11(a)(ii) hereof and the last sentence of this Section 11(a)(iii) hereof, that
such action shall apply uniformly to all outstanding Rights and (y) may suspend
the exercisability of the


                                       40



Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such second sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii),
the value of the shares of Common Stock shall be the current per share market
price (as determined pursuant to Section 11(d)(i)) on the Section 11(a)(ii)
Trigger Date and the per share or fractional value of any "Common Stock
Equivalent" shall be deemed to equal the current per share market price of
the Common Stock. The Board of Directors of the Company may, but shall not be
required to, establish procedures to allocate the right to receive shares of
Common Stock upon the exercise of the Rights among holders of Rights pursuant
to this Section 11(a)(iii).

         (b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the Preferred Stock ("equivalent preferred
shares")) or securities convertible into Preferred Stock or equivalent preferred
shares at a price per share of Preferred Stock or equivalent preferred shares
(or having a conversion price per share, if a security convertible into shares
of Preferred Stock or equivalent preferred shares) less than the then current
per share market price of the Preferred Stock (determined pursuant to Section
11(d) hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock and equivalent preferred shares
outstanding on such record date plus the number of shares of Preferred Stock and
equivalent preferred shares which the aggregate offering price of the total
number of shares of Preferred Stock and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price, and
the denominator of which shall be the number of shares of Preferred Stock and
equivalent preferred shares outstanding on such record date plus the number of
additional shares of Preferred Stock and/or equivalent preferred shares to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Shares of Preferred Stock and equivalent preferred
shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.

         (c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Stock) or subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
then current per share market price of the Preferred Stock (determined pursuant
to Section 11(d) hereof) on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company whose


                                       41




determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to one share of Preferred
Stock, and the denominator of which shall be such current per share market price
(determined pursuant to Section 11(d) hereof) of the Preferred Stock; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company to be issued upon exercise of one Right. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.

         (d)(i) Except as otherwise provided herein, for the purpose of any
computation hereunder, the "current per share market price " of any security (a
"Security " for the purpose of this Section 11(d)(i)) on any date shall be
deemed to be the average of the daily closing prices per share of such Security
for the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security, and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported by the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use, or, if on any
such date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors of the
Company. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading is
open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business Day.

         (ii) For the purpose of any computation hereunder, if the Preferred
Stock is publicly traded, the "current per share market price" of the Preferred
Stock shall be determined in accordance with the method set forth in Section
11(d)(i). If the Preferred Stock is not publicly traded but the Common Stock is
publicly traded, the "current per share market price" of the Preferred Stock
shall be conclusively deemed to be the current per share market price of the
Common Stock as determined pursuant to Section 11(d)(i) multiplied by the then
applicable Adjustment Number (as defined in and determined in accordance with
the Certificate of Designation for the Preferred Stock). If neither the Common
Stock nor the Preferred Stock is publicly traded, "current per share market
price" shall mean the fair value per share as determined in good faith by the
Board of Directors of the Company, whose determination shall be described


                                      42



in a statement filed with the Rights Agent.

         (e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one hundred-thousandth of a
share of Preferred Stock or one-hundreth of a share of Common Stock or other
share or security as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the transaction which
requires such adjustment or (ii) the Expiration Date.

         (f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than the Preferred
Stock, thereafter the Purchase Price and the number of such other shares so
receivable upon exercise of a Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a),
11(b), 11(c), 11(e), 11(h), 11(i) and 11(m) hereof, as applicable, and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Stock shall apply on like terms to any such other shares.

         (g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.

         (h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-thousandths of
a share of Preferred Stock (calculated to the nearest one hundred-thousandth of
a share of Preferred Stock) obtained by (i) multiplying (x) the number of one
one-thousandths of a share purchasable upon the exercise of a Right immediately
prior to such adjustment by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.

         (i) The Company may elect on or after the date of any adjustment of the
Purchase Price pursuant to Sections 11(b) or 11(c) hereof to adjust the number
of Rights, in substitution for any adjustment in the number of one
one-thousandths of a share of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
one-hundredth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right


                                       43



Certificates have been issued, shall be at least 10 days later than the date
of the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company may, as promptly as practicable, cause to be distributed to holders
of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.

         (j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a share of Preferred Stock issuable upon
the exercise of a Right, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-thousandths of a share of Preferred Stock which were expressed in the
initial Right Certificates issued hereunder.

         (k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the fraction of
Preferred Stock or other shares of capital stock issuable upon exercise of a
Right, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of Preferred Stock or other such
shares at such adjusted Purchase Price.

         (l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event issuing to the holder of any Right exercised after such record date the
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.

         (m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such adjustments in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash of any shares of Preferred Stock at less than the current market
price, issuance wholly for cash of Preferred Stock or securities which by their
terms are convertible into or exchangeable for Preferred Stock, dividends on
Preferred Stock payable in shares of Preferred Stock or issuance of rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of its Preferred Stock shall not be taxable to such
stockholders.

         (n) Anything in this Agreement to the contrary notwithstanding, in the
event that at any time after the date of this Rights Agreement and prior to the
Distribution Date, the Company shall (i) declare and pay any dividend on the
Common Stock payable in Common Stock or (ii) effect a


                                      44



subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of a dividend payable in Common
Stock) into a greater or lesser number of shares of Common Stock, then, in
each such case, the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter, shall be
proportionately adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event shall equal the
result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.

         (o) The Company agrees that, after the earlier of the Distribution Date
or the Stock Acquisition Date, it will not, except as permitted by Sections 23,
24 or 27 hereof, take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action will
diminish substantially or eliminate the benefits intended to be afforded by the
Rights.


                                       45



         Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Stock and the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25 hereof (if
so required under Section 25 hereof). The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of any such adjustment unless and until it
shall have received such certificate.

         Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.

         (a) In the event, directly or indirectly, at any time after the Flip-In
Event (i) the Company shall consolidate with or shall merge into any other
Person, (ii) any Person shall merge with and into the Company and the Company
shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Stock shall be changed
into or exchanged for stock or other securities of any other Person (or of the
Company) or cash or any other property, or (iii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person (other than the Company or one or more
wholly owned Subsidiaries of the Company), then upon the first occurrence of
such event, proper provision shall be made so that: (A) each holder of a Right
(other than Rights which have become void pursuant to Section 11(a)(ii) hereof)
shall thereafter have the right to receive, upon the exercise thereof at the
Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof), in accordance with the terms of this Agreement and in lieu of shares of
Preferred Stock or Common Stock of the Company, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by dividing the Purchase Price (as
theretofore adjusted in accordance with Section 11(a)(ii) hereof) by 50% of the
current per share market price of the Common Stock of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; provided, however, that the
Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof) and the number of shares of Common Stock of such Principal Party so
receivable upon exercise of a Right shall be subject to further adjustment as
appropriate in accordance with Section 11(f) hereof to reflect any events
occurring in respect of the Common Stock of such Principal Party after the
occurrence of such consolidation, merger, sale or transfer; (B) such Principal
Party shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Rights Agreement; (C) the term "Company" shall
thereafter be deemed to refer to such Principal Party; and (D) such Principal
Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of its shares of Common Stock in accordance with Section 9
hereof) in connection with such consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the shares of its Common Stock
thereafter deliverable upon the exercise of the Rights; provided that, upon the
subsequent occurrence of any consolidation, merger, sale or transfer of assets
or other extraordinary transaction in respect of such Principal Party, each
holder of a Right shall thereupon be entitled to receive, upon exercise of a
Right and payment of the Purchase Price as provided in this Section 13(a), such
cash, shares, rights, warrants and other property which


                                       46



such holder would have been entitled to receive had such holder, at the time
of such transaction, owned the Common Stock of the Principal Party receivable
upon the exercise of a Right pursuant to this Section 13(a), and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.

         (b)  "Principal Party" shall mean:

            (i) in the case of any transaction described in (i) or (ii) of the
first sentence of Section 13(a) hereof: (A) the Person that is the issuer of the
securities into which the shares of Common Stock are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer the shares
of Common Stock of which have the greatest aggregate market value of shares
outstanding, or (B) if no securities are so issued, (x) the Person that is the
other party to the merger, if such Person survives said merger, or, if there is
more than one such Person, the Person the shares of Common Stock of which have
the greatest aggregate market value of shares outstanding or (y) if the Person
that is the other party to the merger does not survive the merger, the Person
that does survive the merger (including the Company if it survives) or (z) the
Person resulting from the consolidation; and

            (ii) in the case of any transaction described in (iii) of the first
sentence in Section 13(a) hereof, the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons is the
issuer of Common Stock having the greatest aggregate market value of shares
outstanding; provided, however, that in any such case described in the foregoing
clause (b)(i) or (b)(ii), if the Common Stock of such Person is not at such time
or has not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stock of all of which is and has been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of
Common Stock having the greatest aggregate market value of shares outstanding,
or (3) if such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by the
same Person, the rules set forth in clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person owned by
the joint venture was a Subsidiary of both or all of such joint venturers, and
the Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to the
total of such interests.

         (c) The Company shall not consummate any consolidation, merger, sale or
transfer referred to in Section 13(a) hereof unless prior thereto the Company
and the Principal Party involved therein shall have executed and delivered to
the Rights Agent an agreement confirming that the requirements of Sections 13(a)
and (b) hereof shall promptly be performed in accordance with their terms and
that such consolidation, merger, sale or transfer of assets shall not result in
a default by the Principal Party under this Agreement as the same shall have
been assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof
and providing that, as soon as


                                       47


practicable after executing such agreement pursuant to this Section 13, the
Principal Party will:

            (i) prepare and file a registration statement under the Securities
Act, if necessary, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts to
cause such registration statement to become effective as soon as practicable
after such filing and use its best efforts to cause such registration statement
to remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date and similarly comply with
applicable state securities laws;

            (ii) use its best efforts, if the Common Stock of the Principal
Party shall be listed or admitted to trading on the New York Stock Exchange or
on another national securities exchange, to list or admit to trading (or
continue the listing of) the Rights and the securities purchasable upon exercise
of the Rights on the New York Stock Exchange or such securities exchange, or, if
the Common Stock of the Principal Party shall not be listed or admitted to
trading on the New York Stock Exchange or a national securities exchange, to
cause the Rights and the securities receivable upon exercise of the Rights to be
authorized for quotation on NASDAQ or on such other system then in use;

            (iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and

            (iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party subject to purchase
upon exercise of outstanding Rights.


                                       48



         (d) In case the Principal Party has provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue (other than to holders of Rights pursuant
to this Section 13), in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, shares of Common
Stock or Common Stock Equivalents of such Principal Party at less than the then
current market price per share thereof (determined pursuant to Section 11(d)
hereof) or securities exercisable for, or convertible into, Common Stock or
Common Stock Equivalents of such Principal Party at less than such then current
market price, or (ii) providing for any special payment, tax or similar
provision in connection with the issuance of the Common Stock of such Principal
Party pursuant to the provisions of Section 13, then, in such event, the Company
hereby agrees with each holder of Rights that it shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
that the provision in question of such Principal Party shall have been canceled,
waived or amended, or that the authorized securities shall be redeemed, so that
the applicable provision will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.

         (e) The Company covenants and agrees that it shall not, at any time
after the Flip-In Event, enter into any transaction of the type described in
clauses (i) through (iii) of Section 13(a) hereof if (i) at the time of or
immediately after such consolidation, merger, sale, transfer or other
transaction there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (ii)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, transfer or other transaction, the stockholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of Section
13(b) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (iii) the form or nature
of organization of the Principal Party would preclude or limit the
exercisability of the Rights.

         Section 14.  Fractional Rights and Fractional Shares.

         (a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights (except prior
to the Distribution Date in accordance with Section 11(n) hereof). In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of


                                      49



the closing bid and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors of the
Company. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith
by the Board of Directors of the Company shall be used.

         (b) The Company shall not be required to issue fractions of Preferred
Stock (other than fractions which are integral multiples of one one-thousandths
of a share of Preferred Stock) or to distribute certificates which evidence
fractional shares of Preferred Stock (other than fractions which are integral
multiples of one one-thousandths of a share of Preferred Stock) upon the
exercise or exchange of Rights. Interests in fractions of Preferred Stock in
integral multiples of one one- thousandths of a share of Preferred Stock may, at
the election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-thousandths of a share of Preferred Stock, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised or exchanged as herein provided an amount in cash
equal to the same fraction of the current market value of a whole share of
Preferred Stock (as determined in accordance with Section 14(a) hereof) for the
Trading Day immediately prior to the date of such exercise or exchange.

         (c) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock upon the exercise or exchange of Rights. In lieu of such fractional
shares of Common Stock, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional shares of Common Stock
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock (as determined in
accordance with Section 14(a) hereof) for the Trading Day immediately prior to
the date of such exercise or exchange.

         (d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise or exchange of a Right (except as provided above).


                                       50



         Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), on his own behalf and for his own
benefit, may enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate (or, prior to
the Distribution Date, such Common Stock) in the manner provided therein and in
this Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person subject to this Agreement.

         Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:

         (a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Stock;

         (b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or agency of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer; and

         (c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the Common
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary.

         Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Stock or any
other securities of the Company which may at any time be issuable on the
exercise or exchange of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in this Agreement), or to
receive dividends or subscription rights, or otherwise, until the Rights
evidenced by such Right Certificate shall have been exercised or exchanged in
accordance with the provisions hereof.

         Section 18.  Concerning the Rights Agent.

         (a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its


                                       51



reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly. In no case will the Rights Agent
be liable for special, indirect, incidental or consequential loss or damages
of any kind whatsoever, even if the Rights Agent has been advised of the
possibility of such damages.

         (b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Stock or Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.

         Section 19.  Merger or Consolidation or Change of Name of Rights Agent.

         (a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
stock transfer or corporate trust powers of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.

         (b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.

         Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:

         (a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the


                                        52



Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.

         (b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chief Executive Officer and the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.

         (c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.

         (d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.

         (e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in
the terms of the Rights provided for in Sections 3, 11, 13, 23 and 24, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of a certificate furnished pursuant to Section 12,
describing such change or adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock or other securities to be issued
pursuant to this Agreement or any Right Certificate or as to whether any shares
of Preferred Stock or other securities will, when issued, be validly authorized
and issued, fully paid and nonassessable.

         (f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.

         (g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person reasonably believed by the Rights Agent to be one of the Chief Executive
Officer or the Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this


                                       53



Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any officer of the Company actually receives such application unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.

         (h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.


                                       54



         (i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.

         (j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed to certify the holder is not an
Acquiring Person (or an Affiliate or Associate thereof), the Rights Agent shall
not take any further action with respect to such requested exercise or transfer
without first consulting with the Company.

         Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock or Preferred Stock by registered or certified mail, and,
following the Distribution Date, to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock or Preferred Stock by registered or certified mail, and, following
the Distribution Date, to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation, or an affiliate of
such corporation, organized and doing business under the laws of the United
States or the laws of any state of the United States or the District of
Columbia, in good standing, having an office in the State of New York, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock or Preferred Stock, and, following the Distribution Date, mail
a notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.

         Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new


                                       55



Right Certificates evidencing Rights in such forms as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase Price
and the number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company may with respect to shares of Common Stock so
issued or sold pursuant to (i) the exercise of stock options, (ii) under any
employee plan or arrangement, (iii) upon the exercise, conversion or exchange
of securities, notes or debentures issued by the Company or (iv) a
contractual obligation of the Company, in each case existing prior to the
Distribution Date, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale.

         Section 23.  Redemption.

         (a) The Board of Directors of the Company may, at any time prior to the
Flip-In Event, redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(the redemption price being hereinafter referred to as the "Redemption Price").
The redemption of the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole discretion may
establish. The Redemption Price shall be payable, at the option of the Company,
in cash, shares of Common Stock, or such other form of consideration as the
Board of Directors shall determine.

         (b) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights pursuant to paragraph (a) of this Section 23 (or at
such later time as the Board of Directors may establish for the effectiveness of
such redemption), and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights (or such later time as the Board of
Directors may establish for the effectiveness of such redemption), the Company
shall mail a notice of redemption to all the holders of the then outstanding
Rights at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption shall state the method by which the
payment of the Redemption Price will be made.

         Section 24.  Exchange.

         (a) The Board of Directors of the Company may, at its option, subject
to the provisions of Article XVIII of the Company's Certificate of
Incorporation, at any time after the Flip-In Event, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 11(a)(ii) hereof) for
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such amount per Right being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after an Acquiring Person shall have become the Beneficial Owner of


                                       56



shares of Common Stock aggregating 50% or more of the shares of Common Stock
then outstanding. From and after the occurrence of an event specified in
Section 13(a) hereof, any Rights that theretofore have not been exchanged
pursuant to this Section 24(a) shall thereafter be exercisable only in
accordance with Section 13 and may not be exchanged pursuant to this Section
24(a). The exchange of the Rights by the Board of Directors may be made
effective at such time, on such basis and with such conditions as the Board
of Directors in its sole discretion may establish.

         (b) Immediately upon the effectiveness of the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of shares
of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The Company
shall promptly mail a notice of any such exchange to all of the holders of the
Rights so exchanged at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
shares of Common Stock for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 11(a)(ii)
hereof) held by each holder of Rights.

         (c) The Company may at its option substitute, and, in the event that
there shall not be sufficient shares of Common Stock issued but not outstanding
or authorized but unissued to permit an exchange of Rights for Common Stock as
contemplated in accordance with this Section 24, the Company shall substitute to
the extent of such insufficiency, for each share of Common Stock that would
otherwise be issuable upon exchange of a Right, a number of shares of Preferred
Stock or fraction thereof (or equivalent preferred shares, as such term is
defined in Section 11(b)) such that the current per share market price
(determined pursuant to Section 11(d) hereof) of one share of Preferred Stock
(or equivalent preferred share) multiplied by such number or fraction is equal
to the current per share market price of one share of Common Stock (determined
pursuant to Section 11(d) hereof) as of the date of such exchange.

         Section 25.  Notice of Certain Events.

         (a) In case the Company shall at any time after the earlier of the
Distribution Date or the Stock Acquisition Date propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Stock or to make
any other distribution to the holders of its Preferred Stock (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision or combination of
outstanding Preferred Stock), (iv) to effect the liquidation, dissolution or
winding up of the Company, or (v) to pay any dividend on the Common Stock
payable in Common Stock or to effect a subdivision, combination or consolidation
of the Common Stock (by reclassification or otherwise than by payment of
dividends in Common Stock), then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with


                                      57



Section 26 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, or distribution of
rights or warrants, or the date on which such liquidation, dissolution or
winding up is to take place and the date of participation therein by the
holders of the Common Stock and/or Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least 10 days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and
in the case of any such other action, at least 10 days prior to the date of
the taking of such proposed action or the date of participation therein by
the holders of the Common Stock and/or Preferred Stock, whichever shall be
the earlier.

         (b) In case any event described in Section 11(a)(ii) or Section 13
shall occur then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate (or if occurring prior to the Distribution
Date, the holders of the Common Stock) in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
and Section 13 hereof.

         Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:


                                       58



                  ConAgra, Inc.
                  One ConAgra Drive
                  Omaha, Nebraska 68102
                  Attention: Secretary

Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:

                  ChaseMellon Shareholder Services, L.L.C.
                  450 West 33rd Street
                  New York, New York 10001
                  Attn: V.P. Administration

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.

         Section 27. Supplements and Amendments. Except as provided in the
penultimate sentence of this Section 27, for so long as the Rights are then
redeemable, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of any holders of the Rights. At
any time when the Rights are no longer redeemable, except as provided in the
penultimate sentence of this Section 27, the Company may, and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights in order to (i) cure any ambiguity, (ii)
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, (iii) shorten or lengthen any time
period hereunder, or (iv) change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable; provided that no such
supplement or amendment shall adversely affect the interests of the holders of
Rights as such (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person), and no such amendment may cause the Rights again to become
redeemable or cause the Agreement again to become amendable other than in
accordance with this sentence. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment.

         Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

         Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock).


                                       59



         Section 30. Determinations and Actions by the Board of Directors. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise the rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend this Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that
are done or made by the Board of Directors of the Company in good faith, shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights, as such, and all other parties, and (y) not subject the
Board of Directors to any liability to the holders of the Rights.

         Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

         Section 32. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.

         Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.

         Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.


                                      60



         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.

                                       CONAGRA, INC.


                                       By: /s/ James P. O'Donnell
                                          ------------------------------------
                                       Name: James P. O'Donnell
                                       Title: Senior Vice President
                                       and Chief Financial Officer


                                       CHASEMELLON SHAREHOLDER
                                       SERVICES, L.L.C., as Rights Agent
                                       By:     /s/ Stanley E. Siekierski
                                          ------------------------------------
                                       Name: Stanley E. Siekierski
                                       Title: Vice President


                                      61



                                                                       Exhibit A
                                     FORM OF
                           CERTIFICATE OF DESIGNATION

                                       of

             SERIES A JUNIOR PARTICIPATING CLASS E PREFERRED STOCK

                                       of

                                  CONAGRA, INC.

Pursuant to Section 151 of the General Corporation Law of the State of Delaware

         ConAgra, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Section 103 thereof, DOES HEREBY CERTIFY:

         That pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Certificate of Incorporation of the said
Corporation, the said Board of Directors on July 12, 1996 adopted the following
resolution creating a series of 1,000,000 shares of Class E Preferred Stock
designated as "Series A Junior Participating Class E Preferred Stock":

         RESOLVED, that pursuant to the authority vested in the Board of
         Directors of this Corporation in accordance with the provisions of
         the Certificate of Incorporation, a series of Class E Preferred
         Stock, without par value, of the Corporation be and hereby is
         created, and that the designation and number of shares thereof and
         the voting and other powers, preferences and relative,
         participating, optional or other rights of the shares of such series
         and the qualifications, limitations and restrictions thereof are as
         follows:

         Series A Junior Participating Class E Preferred Stock

         1. Designation and Amount. There shall be a series of Class E Preferred
Stock that shall be designated as "Series A Junior Participating Class E
Preferred Stock," and the number of shares constituting such series shall be
1,000,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, however, that no decrease shall reduce the
number of shares of Series A Junior Participating Class E Preferred Stock to
less than the number of shares then issued and outstanding plus the number of
shares issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.

         2.  Dividends and Distribution.

         (A) Subject to the prior and superior rights of the holders of any
shares of any series of


                                     62



preferred stock ranking prior and superior to the shares of Series A Junior
Participating Class E Preferred Stock with respect to dividends, the holders
of shares of Series A Junior Participating Class E Preferred Stock, in
preference to the holders of shares of any class or series of stock of the
Corporation ranking junior to the Series A Junior Participating Class E
Preferred Stock in respect thereof, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the first day of March,
June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Class E Preferred Stock,
in an amount per share (rounded to the nearest cent) equal to the greater of
(a) $1.00 or (b) the Adjustment Number (as defined below) times the aggregate
per share amount of all cash dividends, and the Adjustment Number times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, par value $5.00
per share, of the Corporation (the "Common Stock") since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Class E Preferred Stock.
The "Adjustment Number" shall initially be 1000. In the event the Corporation
shall at any time after July 12, 1996 (the "Rights Declaration Date") (i)
declare and pay any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.

         (B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Class E Preferred Stock as provided in paragraph
(A) above immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock).

         (C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Class E Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Class E Preferred Stock, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Junior Participating Class E
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Junior Participating Class E Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Junior Participating Class E
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 60 days prior to the
date fixed for the payment thereof.


                                       63



         3. Voting Rights. The holders of shares of Series A Junior
Participating Class E Preferred Stock shall have the following voting rights:

         (A) Each share of Series A Junior Participating Class E Preferred Stock
shall entitle the holder thereof to a number of votes equal to the Adjustment
Number on all matters submitted to a vote of the stockholders of the
Corporation.

         (B) Except as required by law and by Section 10 hereof, holders of
Series A Junior Participating Class E Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the extent they
are entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.

         4.  Certain Restrictions.

         (A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Class E Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Junior Participating Class E Preferred Stock outstanding shall have been paid in
full, the Corporation shall not

             (i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Class E Preferred Stock,

             (ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior Participating
Class E Preferred Stock, except dividends paid ratably on the Series A Junior
Participating Class E Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled; or

             (iii) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Class E Preferred Stock, or any shares of stock
ranking on a parity with the Series A Junior Participating Class E Preferred
Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of Series A
Junior Participating Class E Preferred Stock, or to such holders and holders of
any such shares ranking on a parity therewith, upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.

         (B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.

         5. Reacquired Shares. Any shares of Series A Junior Participating Class
E Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired promptly after the acquisition thereof. All
such shares shall upon their retirement become


                                       64



authorized but unissued shares of Class E Preferred Stock and may be reissued
as part of a new series of Class E Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to any
conditions and restrictions on issuance set forth herein.

         6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation,
dissolution or winding up of the Corporation, voluntary or otherwise, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Class E Preferred Stock unless, prior thereto, the
holders of shares of Series A Junior Participating Class E Preferred Stock shall
have received an amount per share (the "Series A Liquidation Preference") equal
to the greater of (i) $100 plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
or (ii) the Adjustment Number times the per share amount of all cash and other
property to be distributed in respect of the Common Stock upon such liquidation,
dissolution or winding up of the Corporation.

         (B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of all classes of preferred
stock, if any, that rank on a parity with the Series A Junior Participating
Class E Preferred Stock in respect thereof, then the assets available for such
distribution shall be distributed ratably to the holders of the Series A Junior
Participating Class E Preferred Stock and the holders of such parity shares in
proportion to their respective liquidation preferences.


                                       65



         (C) Neither the merger or consolidation of the Corporation into or with
another corporation nor the merger or consolidation of any other corporation
into or with the Corporation shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of this Section 6.

         7. Consolidation, Merger, Etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the
outstanding shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each share
of Series A Junior Participating Class E Preferred Stock shall at the same time
be similarly exchanged or changed in an amount per share equal to the Adjustment
Number times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged.

         8. No Redemption. Shares of Series A Junior Participating Class E
Preferred Stock shall not be subject to redemption by the Company.

         9. Ranking. The Series A Junior Participating Class E Preferred Stock
shall rank junior to all other series of all classes of the Corporation's
preferred stock as to the payment of dividends and as to the distribution of
assets upon liquidation, dissolution or winding up, unless the terms of any such
series shall provide otherwise, and shall rank senior to the Common Stock as to
such matters.

         10. Amendment. At any time that any shares of Series A Junior
Participating Class E Preferred Stock are outstanding, the Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Class E Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of two- thirds of the
outstanding shares of Series A Junior Participating Class E Preferred Stock,
voting separately as a class.

         11. Fractional Shares. Series A Junior Participating Class E Preferred
Stock may be issued in fractions of a share that shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Participating Class E Preferred
Stock.

         IN WITNESS WHEREOF, the undersigned has executed this Certificate this
12th day of July, 1996.

                                       CONAGRA, INC.

                                       By
                                          ------------------------------------
                                       Name:
                                       Title:


                                       66



                                    Exhibit B
                            Form of Right Certificate

Certificate No. R-______

         NOT EXERCISABLE AFTER JULY 12, 2006 OR EARLIER IF REDEMPTION OR
         EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT
         AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
         CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
         OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING
         PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES
         THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.


Right Certificate

                                     CONAGRA, INC.

         This certifies that ____________________________ or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of July 12, 1996, as the same may be amended from
time to time (the "Rights Agreement"), between ConAgra, Inc., a Delaware
corporation (the "Company"), and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M., Omaha, Nebraska time, on July 12, 2006 at the office or
agency of the Rights Agent designated for such purpose, or of its successor as
Rights Agent, one one- thousandth of a fully paid non-assessable share of Series
A Junior Participating Class E Preferred Stock, without par value (the
"Preferred Stock"), of the Company, at a purchase price of $200.00 per one
one-thousandth of a share of Preferred Stock (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of one one-thousandths of a share of Preferred Stock
which may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of July 12, 1996,
based on the Preferred Stock as constituted at such date. As provided in the
Rights Agreement, the Purchase Price, the number of one one-thousandths of a
share of Preferred Stock (or other securities or property) which may be
purchased upon the exercise of the Rights and the number of Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the
happening of certain events.

         This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of


                                       67



the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the principal executive offices
of the Company and the above- mentioned office or agency of the Rights Agent.
The Company will mail to the holder of this Right Certificate a copy of the
Rights Agreement without charge after receipt of a written request therefor.

         This Right Certificate, with or without other Right Certificates, upon
surrender at the office or agency of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.

         Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for shares of the
Company's Common Stock, par value $5.00 per share, or shares of Preferred Stock.

         No fractional shares of Preferred Stock or Common Stock will be issued
upon the exercise or exchange of any Right or Rights evidenced hereby (other
than fractions of Preferred Stock which are integral multiples of one
one-thousandths of a share of Preferred Stock, which may, at the election of the
Company, be evidenced by depository receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.

         No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise or exchange hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement) or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised or exchanged as provided in the Rights
Agreement.

         This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.

         WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _____________________________ ___, 199_.

                                       CONAGRA, INC.


ATTEST

                                       By:
                                          ------------------------------------
                                       [Title]


                                       68



- ---------------------------------
[Title]

Countersigned:



CHASEMELLON SHAREHOLDER SERVICES, L.L.C., as Rights Agent


By
  -------------------------------
      [Title]


                                       69



                    Form of Reverse Side of Right Certificate

                               FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to transfer the
Right Certificate)

         FOR VALUE RECEIVED __________________________ hereby sells, assigns and
transfers unto

- -----------------------------------------------------------------------
                  (Please print name and address of transferee)

- -----------------------------------------------------------------------
Rights represented by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
________________________ Attorney, to transfer said Rights on the books of the
within-named Company, with full power of substitution.

Dated:
       -----------------------------


- ------------------------------------
                  Signature

Signature Guaranteed:


         Signatures must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program.

 .............................................................................
                  (To be completed)

         The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by, were not acquired by the
undersigned from, and are not being assigned to an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).


- ------------------------------------
                  Signature

              Form of Reverse Side of Right Certificate - continued

                          FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise Rights represented by the
Rights Certificate)

                                       70


To  CONAGRA, INC.:

         The undersigned hereby irrevocably elects to exercise ________ Rights
represented by this Right Certificate to purchase the shares of Preferred Stock
(or other securities or property) issuable upon the exercise of such Rights and
requests that certificates for such shares of Preferred Stock (or such other
securities) be issued in the name of:

- ------------------------------------------------------------------------
                         (Please print name and address)

- ------------------------------------------------------------------------

If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:

Please insert social security
or other identifying number

- ------------------------------------------------------------------------
                         (Please print name and address)

- ------------------------------------------------------------------------

Dated:
      ------------------------

- ------------------------------------
                  Signature
(Signature must conform to holder specified on Right Certificate)

Signature Guaranteed:

         Signature must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program.



Form of Reverse Side of Right Certificate - continued

- ------------------------------------------------------------------------
                         (To be completed)

         The undersigned certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by, and were not acquired by the
undersigned from, an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).


- ------------------------------------
                  Signature


                                       71



NOTICE

         The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.

         In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, such Assignment or Election to Purchase will not be honored.

                                       72



Exhibit C

         UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
         RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
         ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
         TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE
         TRANSFERABLE.

                          SUMMARY OF RIGHTS TO PURCHASE
                          SHARES OF PREFERRED STOCK OF
                                  CONAGRA, INC.

         On July 12, 1996, the Board of Directors of ConAgra, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each outstanding share of common stock, par value $5.00 per share, of the
Company (the "Common Stock"). The dividend is payable on July 24, 1996 (the
"Record Date") to the stockholders of record on that date. Each Right entitles
the registered holder to purchase from the Company one one-thousandth of a share
of Series A Junior Participating Class E Preferred Stock, without par value, of
the Company (the "Preferred Stock") at a price of $200.00 per one one-thousandth
of a share of Preferred Stock (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement dated as
of July 12, 1996, as the same may be amended from time to time (the "Rights
Agreement"), between the Company and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent (the "Rights Agent").

         Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 15% or more of the
outstanding shares of Common Stock or (ii) 10 business days (or such later date
as may be determined by action of the Board of Directors prior to such time as
any person or group of affiliated persons becomes an Acquiring Person) following
the commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding shares of
Common Stock (the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced, with respect to any of the Common Stock
certificates outstanding as of the Record Date, by such Common Stock certificate
together with a copy of this Summary of Rights.

         The Rights Agreement provides that, until the Distribution Date (or
earlier expiration of the Rights), the Rights will be transferred with and only
with the Common Stock. Until the Distribution Date (or earlier expiration of the
Rights), new Common Stock certificates issued after the Record Date upon
transfer or new issuances of Common Stock will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date (or earlier
expiration of the Rights), the surrender for transfer of any certificates for
shares of Common Stock outstanding as of the Record Date, even without such
notation or a copy of this Summary of Rights, will also constitute the transfer
of the Rights associated with the shares of Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.


                                       73



         The Rights are not exercisable until the Distribution Date. The Rights
will expire on July 12, 2006 (the "Final Expiration Date"), unless the Final
Expiration Date is advanced or extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.

         The Purchase Price payable, and the number of shares of Preferred Stock
or other securities or property issuable, upon exercise of the Rights is subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights
or warrants to subscribe for or purchase Preferred Stock at a price, or
securities convertible into Preferred Stock with a conversion price, less than
the then-current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).

         The number of outstanding Rights is subject to adjustment in the event
of a stock dividend on the Common Stock payable in shares of Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Distribution Date.

         Shares of Preferred Stock purchasable upon exercise of the Rights will
not be redeemable. Each share of Preferred Stock will be entitled, when, as and
if declared, to a minimum preferential quarterly dividend payment of $1.00 per
share but will be entitled to an aggregate dividend of 1000 times the dividend
declared per share of Common Stock. In the event of liquidation, dissolution or
winding up of the Company, the holders of the Preferred Stock will be entitled
to a minimum preferential payment of $100 per share (plus any accrued but unpaid
dividends) but will be entitled to an aggregate payment of 1000 times the
payment made per share of Common Stock. Each share of Preferred Stock will have
1000 votes, voting together with the Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which outstanding shares of Common
Stock are converted or exchanged, each share of Preferred Stock will be entitled
to receive 1000 times the amount received per share of Common Stock. These
rights are protected by customary antidilution provisions.

         Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
         In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right to receive upon exercise of a Right that number
of shares of Common Stock having a market value of two times the exercise price
of the Right.

         In the event that, after a person or group has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provisions will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become void) will
thereafter have the right to receive upon the exercise of a Right that number of
shares of common stock of the person with whom the Company has engaged in the
foregoing transaction (or its parent) that at the time of such transaction have
a market value of two times the exercise price of the Right.


                                       74



         At any time after any person or group becomes an Acquiring Person and
prior to the earlier of one of the events described in the previous paragraph or
the acquisition by such Acquiring Person of 50% or more of the outstanding
shares of Common Stock, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such Acquiring Person which will have become
void), in whole or in part, for shares of Common Stock or Preferred Stock (or a
series of the Company's preferred stock having equivalent rights, preferences
and privileges), at an exchange ratio of one share of Common Stock, or a
fractional share of Preferred Stock (or other preferred stock) equivalent in
value thereto, per Right.

         With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock or Common Stock
will be issued (other than fractions of Preferred Stock which are integral
multiples of one one-thousandths of a share of Preferred Stock, which may, at
the election of the Company, be evidenced by depositary receipts), and in lieu
thereof an adjustment in cash will be made based on the current market price of
the Preferred Stock or the Common Stock.

         At any time prior to the time an Acquiring Person becomes such, the
Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.

         For so long as the Rights are then redeemable, the Company may, except
with respect to the redemption price, amend the Rights Agreement in any manner.
After the Rights are no longer redeemable, the Company may, except with respect
to the redemption price, amend the Rights Agreement in any manner that does not
adversely affect the interests of holders of the Rights.

         Until a Right is exercised or exchanged, the holder thereof, as such,
will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.

         A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
July __, 1996. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
as the same may be amended from time to time, which is hereby incorporated
herein by reference.



                            CERTIFICATE OF ADJUSTMENT


         This is to certify pursuant to Section 12 of the Rights Agreement,
dated as of July 12, 1996, as amended (the "Rights Agreement"), between ConAgra,
Inc., a Delaware corporation (the "Company") and Chase Mellon Shareholder


                                       75



Services, L.L.C., as Rights Agent, that:

I.       Statement of Facts.

         At its July 11, 1997 meeting, the Company's Board of Directors declared
a two-for-one split of the shares of common stock, par value $5.00 per share, of
the Company (the "Common Stock"), to be effected in the form of a stock dividend
(the "Distribution") on October 1, 1997 to holders of record of the Common Stock
on September 5, 1997.

II.      Adjustments Pursuant to the Rights Agreement.

         Pursuant to the provisions of the Sections 11(n) of the Rights
Agreement effective, as of October 1, 1997, the Right associated with each share
of Common Stock is hereby adjusted so that one-half Right shall be associated
with each share of Common Stock outstanding immediately after the Distribution.

Dated this 1st day of October, 1997.


                                       CONAGRA, INC.


                                       By:     /s/ J. P. O'Donnell
                                          ------------------------------------
                                       Name:  J. P. O'Donnell
                                       Title: Executive Vice President,
                                              Chief Financial Officer
                                              Corporate Secretary



                                       76



                                    AMENDMENT

                                       TO

                      RIGHTS AGREEMENT DATED JULY 12, 1996

         This Amendment executed between ConAgra, Inc. (the "Company") and
ChaseMellon Shareholder Services, L.L.C. ("ChaseMellon") dated as of July 10,
1998 amends the Rights Agreement between the Company and ChaseMellon dated July
12, 1996 (the "Rights Agreement").

RECITALS

         A. Section 21 of the Rights Agreement permits the Company to remove a
Rights Agent (as defined in the Rights Agreement) and appoint a successor Rights
Agent.

         B. Pursuant to the terms of the Rights Agreement, ChaseMellon serves as
the Rights Agent.

         C. The Company has appointed Norwest Bank of Minnesota, N.A.
("Norwest") as its transfer agent and registrar and dividend disbursing agent
and Rights Agent pursuant to a resolution adopted by the Board of Directors of
the Company on July 10, 1998.

         D. Pursuant to Section 21 of the Rights Agreement, the Company has
provided notification to ChaseMellon on July 10, 1998 that it has appointed
Norwest as Rights Agent effective August 10, 1998.

         NOW, THEREFORE, the Company and ChaseMellon agree as follows:

         Effective August 10, 1998, the term "Rights Agent" shall be amended to
         mean Norwest and its successors and assigns or any successor entity
         appointed by the Company.

         The fifth sentence of Section 21 is deleted and is replaced with the
following:

         Any successor Rights Agent, whether appointed by the Company or by such
         a court, shall be a corporation organized and doing business under the
         laws of the United States or of any state of the United States or the
         District of Columbia so long as such corporation is in good standing,
         and is authorized under such laws to exercise corporate trust powers
         and is subject to supervision or examination by federal or state
         authority and which has at the time of its appointment as Rights Agent
         a combined capital and surplus of at least $50 million.


                                       77






         Section 26 is amended by deleting the address for the Rights Agent
provided for and inserting instead:

                  Norwest Bank of Minnesota, N.A.
                  161 North Concord Exchange
                  South St. Paul, MN  55075

         This amendment shall be governed by and construed in accordance with
the laws of the State of Delaware.

         This amendment may be executed in counterparts and each such
counterpart shall be deemed to be an original.

         The Rights Agreement as amended by this Amendment shall be read
together to constitute one agreement.

CONAGRA, INC.                               CHASEMELLON SHAREHOLDER
                                            SERVICES, L.L.C.


By:  /s/ J. P. O'Donnell                    By:  /s/ Stanley E. Siekierski
   --------------------------------            ----------------------------
     J.P. O'Donnell                              Stanley E. Siekierski
     Executive Vice President,                   Title:  Vice President
     Chief Financial Officer and
     Corporate Secretary



         Norwest Bank of Minnesota, N.A. herewith accepts appointment as
successor Rights Agent effective August 10, 1998 as described in the attached
Amendment dated as of July 10, 1998 to Rights Agreement between ConAgra, Inc.
and ChaseMellon Shareholder Services, L.L.C. dated July 12, 1996.

                                       NORWEST BANK OF MINNESOTA, N.A.


                                       /s/ Lisa Dornburg
                                       ------------------------------------
                                       By:  Lisa Dornburg
                                       Title:  OFFICER, NORWEST BANK MN, N.A.


                                       78

EX-10.10

                                                                   EXHIBIT 10.10


                     CONAGRA FOODS, INC. DIRECTORS' UNFUNDED
                           DEFERRED COMPENSATION PLAN
                       (Amended and Restated May 3, 2001)

         ConAgra Foods, Inc., has established and hereby amends and restates the
"ConAgra, Inc., Directors' Unfunded Deferred Compensation Plan" as the ConAgra
Foods, Inc. Directors' Unfunded Deferred Compensation Plan with the following
terms and conditions:

         1. The Plan shall be named the "ConAgra Foods, Inc. Directors' Unfunded
Deferred Compensation Plan" (hereinafter described as "the Plan").

         2. A director may defer all or a proportion of his or her fees for the
following year by giving written notice to ConAgra Foods, prior to December 31st
of the current year. Any person elected to the Board who is not a director on
the preceding December 31st may elect before his or her term begins to defer all
or part of his or her fees for the balance of the calendar year. The director
shall elect that his or her deferrals be credited to his or her Interest Bearing
Account or ConAgra Foods Common Stock Account ("Stock Account"), or a
combination of the two. The election shall be subject to any limitations imposed
by laws or regulations. Amounts credited to the director's Stock Account shall
be a book entry by the Company payable in shares of ConAgra Foods Common Stock
as provided in paragraph 4 of this Plan. A director may also transfer all or a
portion of the director's Interest-Bearing Account to the director's Stock
Account, subject to any limitations imposed by laws or regulations; any such
transfer shall be effective on January 1st following the election. All elections
shall be made during ConAgra Foods' insider trading "windows".

         3. ConAgra Foods shall establish and maintain two deferred compensation
accounts for each director: (i) a Stock Account, to which there shall be
credited as a book entry the portion of cash compensation which the director has
elected to defer in the form of ConAgra Foods Common Stock and any transfers
from the Interest-Bearing Account and (ii) an Interest-Bearing Account to which
all other deferred cash compensation shall be credited.

         At the end of each calendar quarter, there shall be credited to the
respective Accounts the deferred compensation accrued during such quarter. If a
director has elected to defer cash compensation in the form of ConAgra Foods
Common Stock, a book entry in the amount of the number of full shares to be
credited to the Stock Account for each quarter shall be determined on the basis
of the closing price of the ConAgra Foods Common Stock on the last trading day
of the quarter as reported for New York Stock Exchange - Composite Transactions,
and any amount which would represent a fractional share shall be credited to the
director's Interest-Bearing Account.

         Dividend equivalents on shares credited to a director's Stock Account
shall be credited by book entry at the end of each quarter to his or her Stock
Account in the form of full shares of Common Stock; any amount which would
represent a fractional share shall be credited to his or her Interest-Bearing
Account.

         The Interest-Bearing Account shall be credited semiannually (on each
January 1st and July 1st), with interest on the balance held in the fund for the
prior six months. The rate of interest to be credited shall be the daily prime
rate of interest on such date as published in the Federal Reserve Statistical
Release H.15 Daily Update.

         The Company shall annually supply the director participating in the
Plan a statement of his or her total interest in the Plan.


                                       79



         4. Amounts deferred under the Plan together with accumulated interest,
including interest accruing after the participant ceases to be a director, shall
be distributed in twenty (20) semi-annual installments on January 1 and July 1
of each year after the year in which the participant in the Plan ceases to be a
director, provided that a participant may also, upon becoming a participant in
the Plan, elect to receive payment of deferred amounts, to begin no earlier than
six months following the election, (i) in a lump sum at a date certain or (ii)
in semi-annual installments over a period elected by the participant commencing
at the date certain elected by the participant. If the participant dies prior to
the payment in full of all amounts due him or her under the Plan, the balance of
the account shall be payable to his or her designated beneficiary in a lump sum.
The beneficiary designation shall be revocable and should be made in writing in
a manner provided by ConAgra Foods. In addition, at the request of a
participant, the Human Resources Committee of the Board, at their sole
discretion, may authorize a change in the method of payment elected by a
participant. If for any reason, the Human Resources Committee of the Board
determines it to be in the best interest of ConAgra Foods or the participant to
pay the participant in full, including a determination that the participant upon
termination becomes a proprietor, officer, partner, employer or otherwise
becomes affiliated with any business that is in competition with ConAgra Foods,
ConAgra Foods may make a payment in full to said participant when he or she
ceases to be a director without his or her consent. Payment of the aggregate
number of shares credited by book entry to a director's Stock Account shall be
made in shares of Common Stock.

         5. This Plan may be amended, suspended, terminated or modified by of
the Board of Directors of the Company at any time provided that such amendment,
modification, suspension or termination shall not affect the obligation of the
Company to pay to the participants the amounts accrued or credited to said
account up to December 31st of the year in which said action is taken concerning
the Plan by the Board of Directors.


         6. Unless notified to the contrary, all notices under this Plan shall
be sent in writing to the Company by mailing to the "Office of the Secretary",
ConAgra Foods, Inc., One ConAgra Drive, Omaha, Nebraska 68102 All notices to the
participants shall be sent to the address which is their record address for
notices as directors of the Company unless a participant, by written notice,
otherwise directs.


                                       80

EX-12

                                                                      EXHIBIT 12


                      CONAGRA FOODS, INC. AND SUBSIDIARIES
               COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
                              (DOLLARS IN MILLIONS)



                                                                                        FISCAL YEAR ENDED

                                                                      1997          1998           1999           2000         2001
                                                                      ----          ----           ----           ----         ----
                                                                                                               
Fixed Charges As Defined:
  Interest expense.......................................            $353.1        $368.9         $368.3         $351.3       $477.2
  Capitalized interest...................................              11.2          11.4            6.9            5.5          5.1
  Interest in cost of goods sold.........................              21.8          19.1           20.0           31.4         35.0
  Preferred distributions of subsidiary..................              44.2          44.3           41.4           43.0         42.4
  One third of non-cancelable lease rent.................              37.7          38.8           39.8           33.5         31.0

  Total fixed charges (A)................................             468.0         482.5          476.4          464.7        590.7




Earnings as Defined:
  Pretax income after elimination of undistributed earnings
  of equity method investees.............................          $1,036.6      $1,005.3         $622.2         $605.6     $1,112.5
  Add fixed charges......................................             468.0         482.5          476.4          464.7        590.7
  Less capitalized interest..............................            (11.2)        (11.4)          (6.9)          (5.5)        (5.1)

  Earnings and fixed charges (B).........................          $1,493.4      $1,476.4       $1,091.7       $1,064.8     $1,698.1

  Ratio of earnings to fixed charges (B/A)...............               3.2           3.1           2.3*          2.3**          2.9

- -----------

*        In 1999, pretax income includes restructuring charges of $440.8
         million. Excluding the charges, the "ratio of earnings to fixed
         charges" was 3.2. See Note 14 on pages 51 and 52 of the company's
         2001 Annual Report to Stockholders.

**       In 2000, pretax income includes restructuring and restructuring-related
         charges of $621.4 million. Excluding the charges, the "ratio of
         earnings to fixed charges" was 3.6. See Note 14 on page 51 and 52 of
         the company's 2001 Annual Report to Stockholders.


                                       81

EX-13

                                                                      EXHIBIT 13

MANAGEMENT'S DISCUSSION & ANALYSIS

Our discussion and analysis is intended to give our stockholders a summary of
the major topics relevant to our financial performance and condition. This
discussion should be read in conjunction with our financial statements and
related notes beginning on page 41. Years cited in this discussion refer to
ConAgra Foods' fiscal years.

2001 vs. 2000
                           BUSINESS SEGMENT HIGHLIGHTS



- ------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS                FY 2001 Net Sales                 FY 2001 Operating Profit
- ------------------------------------------------------------------------------------------------------------
                                                                             % Change
                                                                              from FY
                                                                                2000
                                                                              excluding
                                               % Change                        FY 2000        % Change
                                                 from                       Restructuring       from
                                      $         FY 2000            $          Charges         FY 2000
- ------------------------------------------------------------------------------------------------------------
                                                                              
Packaged Foods                 $   8,681.7         14%          $  1,139.2          5%            47%
- ------------------------------------------------------------------------------------------------------------
Refrigerated Foods                13,212.1          3%               437.8        (11%)           36%
- ------------------------------------------------------------------------------------------------------------
TOTAL FOOD BUSINESS               21,893.8          7%             1,577.0         --             43%
- ------------------------------------------------------------------------------------------------------------
Agricultural Products              5,300.4          5%               281.0         (1%)          103%
- ------------------------------------------------------------------------------------------------------------
CONAGRA FOODS TOTAL            $  27,194.2          7%          $  1,858.0         --             50%
============================================================================================================


The business environment for the second half of fiscal 2001 reflected higher
energy costs and a slowing economy. The company believes that both of these
factors negatively impacted operating results for its three reporting segments
in fiscal 2001.

Packaged Foods sales grew 14% for the fiscal year to reach $8,682 million,
largely the result of the acquisition of brands including Chef Boyardee,
Gulden's mustard, Bumble Bee tuna, Libby's, PAM and Louis Kemp from
International Home Foods, Inc. (IHF) on August 24, 2000. The company invested
significantly in numerous new and existing products in the shelf stable and
frozen foods business units as part of its strategy to improve future sales
growth. Changing inventory levels among its customer base resulted in slower
orders, and therefore lower company sales, than would be expected given improved
consumer purchasing trends for some key items during the year.

Packaged Foods sales were also impacted by growth for several key brands and
product lines, most notably the company's foodservice-focused business unit
which offers french fries, specialty meats, seafood and tortillas to this
customer channel. The popcorn and meat snacks businesses were among the
strongest performing large shelf-stable grocery operations for the year, posting
significant sales gains. The company's frozen foods business unit posted an
overall sales decline for the year, largely due to lower volumes of
higher-priced products in the mix of products sold. Although numerous new frozen
products were introduced in fiscal 2001, many of them had not reached a
sufficient level of distribution early enough in the fiscal year to
substantially benefit fiscal 2001 sales performance. The company's dairy
operations, which include aerosol whipped topping, cheese, egg alternatives and
tablespreads, posted a decline in sales reflecting the discontinuation of
certain commodity cheese operations late in fiscal 2000 as well as a poor
performance from its tablespreads business. The poor performance of the
tablespreads business resulted from a highly competitive environment as well as
unfavorable pricing of products in relation to butter for a large portion of the
fiscal year.

Excluding brands acquired in the IHF acquisition, the major Packaged Foods
retail brands which posted sales gains this fiscal year were Act II, Slim
Jim, Swiss Miss, Reddi-wip and Egg Beaters, while Hunt's, Banquet, Marie
Callender's, Healthy Choice, Wesson, Peter Pan, Blue Bonnet and Parkay posted
sales declines.

Refrigerated Foods sales grew 3% for the year to reach $13,212 million,
reflecting gains for the processed meat, fresh pork and fresh poultry
operations. Processed meats sales reflect growth for large brands including
Butterball, Armour, Eckrich, Cook's, Swift and Hebrew National. Sales for the
segment's processed meats business grew partly in response to recently
introduced new products, increased marketing support for new and existing
products and distribution gains for some items. Fresh beef sales declined
modestly compared to fiscal 2000, partly due to a loss of capacity from a fire
which destroyed the Garden City, Kansas, processing facility during the fiscal
year.

Agricultural Products sales increased 5% to $5,300 million for the year,
reflecting sales gains for United Agri Products (UAP) and the ConAgra Trade
Group. Sales for UAP were higher in fiscal 2001, despite an increasingly
competitive environment. Sales for the ConAgra Trade Group largely reflect
increased activity and volatility in some key trading sectors.

Other than IHF, the company made several small acquisitions and dispositions
during fiscal 2001, the effect of which was negligible on the growth of total
sales.

The company's cost of goods sold was $23,312 million for the fiscal year,
compared to $22,183 million in fiscal 2000. Cost of goods sold for fiscal 2000
includes $223 million of restructuring-related charges. Gross profit (sales less
cost of goods sold) for fiscal 2001 was 16% higher than that of fiscal 2000, and
9% higher excluding restructuring-related charges in fiscal 2000. Gross margin
(gross profit as a percent of sales)

32 ConAgra Foods 2001 Annual Report

                                       82



improved to 14.3%, primarily due to an improved mix of higher-margin products
as a result of the acquisition of IHF, compared with 13.1% in fiscal 2000 and
14.0% in fiscal 2000 excluding restructuring charges. Higher energy and other
input costs impeded gross margin growth, as did lower volumes of
higher-margin products in the mix of products sold at UAP and the frozen
foods business units.

Selling, general and administrative expenses (SG&A) increased 12% to $2,355
million for fiscal 2001, compared to $2,108 million in fiscal 2000. Excluding
restructuring-related charges in fiscal 2000 of $76 million, SG&A expenses for
fiscal 2001 increased 16% primarily as a result of the acquisition of IHF and
substantially increased marketing investment. Advertising and promotion expense
increased at a double-digit rate, reflecting the company's commitment to
building for the future. SG&A expenses were 9% of sales during fiscal 2001, as
compared to 8% for fiscal 2000.

Packaged Foods operating profit (earnings before interest, goodwill
amortization, general corporate expense and income taxes) increased from $777
million in fiscal 2000 to $1,139 million in fiscal 2001, due primarily to
restructuring and restructuring-related charges ("restructuring charges")
recognized in fiscal 2000 which did not recur in fiscal 2001. Excluding
restructuring charges of $310 million in fiscal 2000, operating profit grew 5%,
largely the result of the acquisition of brands including Chef Boyardee,
Gulden's mustard, Bumble Bee tuna, Libby's, PAM, Louis Kemp, and others early in
the fiscal year. The company's introduction of and investment in many new
products in the shelf-stable and frozen foods business units slowed the growth
of the Packaged Foods profit for the year. Changing inventory levels among the
company's customer base, which resulted in slower orders, also resulted in lower
profits than would be expected given improved consumer purchasing trends for
some key items during the year.

Packaged Foods profit results were also impacted by growth for several key
brands and product lines, as described above in the discussion of Packaged Foods
sales. The company's frozen foods business unit and the company's dairy
operations posted overall profit declines for the year, for the reasons provided
above in the discussion of Packaged Foods sales.

Refrigerated Foods operating profit increased from $323 million in fiscal 2000
to $438 million in fiscal 2001 due to restructuring charges recognized in fiscal
2000 which did not recur in fiscal 2001. Excluding restructuring charges of $168
million in fiscal 2000, operating profit decreased 11%, resulting in part from
increased marketing support for new and existing products. In addition, higher
input costs for the company's fresh beef and pork operations, and difficult
industry conditions for the fresh poultry operations also contributed to the
segment's operating profit decrease. Fiscal 2000 showed unusually strong profits
for the company's fresh beef and pork operations during that year, making
difficult comparisons in those business units for most of fiscal 2001.

Agricultural Products operating profit increased from $139 million in fiscal
2000 to $281 million in fiscal 2001 due to restructuring charges recognized in
fiscal 2000 which did not recur in fiscal 2001. Excluding restructuring charges
of $144 million in fiscal 2000, operating profit declined 1%, despite profit
gains for ConAgra Food Ingredients and the ConAgra Trade Group. Overall segment
profitability declined due to lower profits for UAP, which was negatively
impacted by lower volumes of higher-margin orders in the mix of customer orders
and expansion-related overhead.

The company's total operating profit for fiscal 2001 was $1,858 million as
compared to $1,239 million in fiscal 2000. Excluding restructuring charges of
$621 million in fiscal 2000, operating profit in fiscal 2001 was essentially
flat compared to fiscal 2000.

During fiscal 2001, the company achieved $180 million of pre-tax cost savings as
a result of the restructuring plan undertaken in fiscal 1999 and 2000. These
cost savings, positively impacting the company's cost of goods sold and selling,
general and administrative expenses, were more than offset by increased
marketing expense, increased energy costs and weakness in operating results for
some of the company's businesses.

For fiscal 2001, interest expense was $423 million, an increase of 39% over
fiscal 2000 amounts, primarily due to financing required for the acquisition of
IHF as well as greater working capital requirements. Also as a result of the
acquisition of IHF, amortization of intangibles grew to $130 million in fiscal
2001 compared to $80 million in fiscal 2000.

Income before income taxes and cumulative effect of changes in accounting was
$1,104 million in fiscal 2001 as compared to $618 million in fiscal 2000.
Excluding fiscal 2000 restructuring charges of $621 million, income before
income taxes and cumulative effect of changes in accounting declined 11%. The
cumulative effect of changes in accounting for fiscal 2001 was a $44 million
after-tax charge resulting from the company's changes in accounting for revenue
recognition relating to the shipping terms for certain of its product sales,
recognition of sales incentives granted to retailers and recognition of consumer
sales incentives. The effective tax rate for fiscal 2001 and fiscal 2000 was
approximately 38%.

                                          ConAgra Foods 2001 Annual Report  33


                                       83



Fiscal 2001 income before cumulative effect of changes in accounting was $683
million, or $1.33 per diluted share, compared to fiscal 2000 diluted earnings
per share of $.80 ($1.60 per diluted share excluding restructuring charges).
Fiscal 2001 net income was $639 million, or $1.24 per diluted share, compared
with diluted earnings per share of $.80 in fiscal 2000, and diluted earnings per
share of $1.60 excluding restructuring charges.

On June 22, 2001, the company filed an amended annual report on Form 10-K for
the fiscal year ended May 28, 2000. The filing includes restated financial
information for fiscal years 1997, 1998, 1999 and 2000. The restatement, due to
accounting and conduct matters at its United Agri Products, Inc. subsidiary, was
based upon an investigation undertaken by the company and the Audit Committee of
its Board of Directors. That investigation, and an informal inquiry by the staff
of the Securities and Exchange Commission, are continuing. The restatement was
principally related to revenue recognition for deferred delivery sales and
vendor rebates, advance vendor rebates and bad debt reserves.

2000 vs. 1999

In 1999, ConAgra Foods announced Operation Overdrive, a series of initiatives
designed to accelerate growth in sales and profit by aligning the company's
resources by customer channel, increasing investment in brands and market
position and removing excess costs and capital. The implementation of Operation
Overdrive contributed to the performance of all of the company's business
segments in 2000, most notably through cost savings and efficiency gains. A
portion of the cost savings associated with Operation Overdrive has been
reinvested, as planned, in ConAgra Foods' marketing programs in an effort to
build for the future. ConAgra Foods expects this trend of increased marketing
investment to continue in the foreseeable future.

                           BUSINESS SEGMENT HIGHLIGHTS



- -------------------------------------------------------------------------------------------------------------------
                                                                FY 2000 Operating
                                                                Profit Excluding
                                                                 Restructuring                   FY 2000
DOLLARS IN MILLIONS               FY 2000 Net Sales                  Charges                Operating Profit
- -------------------------------------------------------------------------------------------------------------------
                                           % Change                      % Change                     % Change
         Segment                              From                         From                          From
                                $            FY 1999          $           FY 1999              $        FY 1999
- -------------------------------------------------------------------------------------------------------------------
                                                                                    
Packaged Foods              $   7,610.9          3%        $  1,086.9         11%        $    777.4        (17%)
- -------------------------------------------------------------------------------------------------------------------
Refrigerated Foods             12,880.8          8%             490.9         33%             322.9      2,946%
- -------------------------------------------------------------------------------------------------------------------
TOTAL FOOD BUSINESS            20,491.7          6%           1,577.8         17%           1,100.3         16%
- -------------------------------------------------------------------------------------------------------------------
Agricultural Products           5,042.9         (9%)            282.6         (9%)            138.7        (48%)
- -------------------------------------------------------------------------------------------------------------------
CONAGRA FOODS TOTAL         $  25,534.6          3%        $  1,860.4         12%        $  1,239.0          2%
- -------------------------------------------------------------------------------------------------------------------


Packaged Foods sales grew 3% for the fiscal year to reach $7,611 million,
largely the result of gains in the segment's french fry and specialty meat
operations, both of which focus on the foodservice channel. Sales growth was
also impacted by gains for the company's shelf-stable grocery snack products,
including Slim Jim, Orville Redenbacher's, Act II and Hunt's Snack Pack, as well
as some of the company's significant frozen foods brands, specifically Banquet
and Marie Callender's. Segment sales growth was slowed by declines for Wesson,
Healthy Choice and commodity cheese operations. Sales declines for commodity
cheese were expected as ConAgra Foods divested commodity cheese assets during
the fiscal year.

Refrigerated Foods sales grew 8% for the year to reach $12,881 million,
reflecting gains for the beef, pork, poultry and processed meat operations.
Strong consumer demand improved the segment's sales growth, as did the company's
increased emphasis on value-added products and increased marketing investment.
The best-performing brands for 2000 in the segment's processed meat operations
included Butterball, Cook's, Eckrich and Hebrew National.

Agricultural Products sales declined 9% to $5,043 million for the year, mostly
due to the impact of lower grain volumes and prices on ConAgra's Trade Group.
Sales for UAP, the segment's largest sales contributor, were essentially flat
for the year.

ConAgra Foods' cost of goods sold for 2000 includes $223 million of
restructuring-related charges resulting in a consolidated gross profit of $3,352
million in 2000. Cost of goods sold in 1999 did not include any
restructuring-related charges. Excluding restructuring-related charges, overall
gross profit (sales less cost of goods sold) grew 8% to $3,575 million and gross
margin (gross profit as a percent of sales) improved to 14%, as compared to 13%
in 1999, primarily due to increased food volumes, improved sales of
higher-margin products, more efficient processes, and favorable industry
conditions for the beef operations. Although all of the company's business
segments reported an increase in gross margin, fresh beef and pork operations
experienced the largest increases. Due to declines in sales, gross profit for
the Agricultural Products segment declined modestly compared to last year,
although gross margin for the segment improved due to more efficient operations.
ConAgra Foods' gross margin has steadily grown over the last few years,
reflecting improved sales of higher-margin products and efficiency gains.

Selling, general and administrative (SG&A) expenses for 2000 include $76 million
of restructuring-related charges resulting in consolidated SG&A expenses of
$2,108 million. SG&A of $1,911 million in 1999 did not include any
restructuring-related charges. Excluding restructuring-related charges, SG&A
expenses increased 6% to $2,032 million, primarily as a result of increased
investment in Operation Overdrive-related personnel, services and marketing
support. Advertising and promotion expense increased at a double-digit rate,
reflecting the company's commitment to building for the future. SG&A expenses
were 8% of sales during 2000, unchanged compared to 1999.

34  ConAgra Foods 2001 Annual Report


                                        84



Packaged Foods operating profit for 2000 decreased 17% to $777 million due to
increased restructuring and restructuring-related charges compared to fiscal
1999. Excluding restructuring and restructuring-related charges ("restructuring
charges"), operating profit grew 11% to $1,087 million as the segment's french
fry and specialty meat businesses, which are focused on the foodservice channel,
posted improvement in profitability. Gains were also made in the frozen foods
and grocery products businesses; profit growth in frozen foods was primarily
driven by growth for Banquet and Marie Callender's, while growth for the grocery
products division was mostly the result of gains for Hunt's pudding products as
well as other snack items, including Slim Jim and Act II. Volume and profit
declines for Healthy Choice, certain non-core nonperishable products, and
commodity cheese operations slowed the rate of overall segment operating profit
growth. In addition to sales gains and improved sales of higher-margin products,
cost savings and efficiency gains favorably impacted operating profit growth.

Operating profit for Refrigerated Foods grew to $323 million in 2000 due to
significantly lower restructuring charges. Excluding restructuring charges,
operating profit grew 33% to $491 million as results for beef and pork showed
significant improvement over the prior year. Strong consumer demand for fresh
red meat as well as operating improvements drove the profitability gains for
beef and pork. Processed meat profitability improved over last year due to
increased volumes and operating efficiencies. Butterball, Cook's, Eckrich and
Hebrew National were the strongest performing processed meat brands.
Profitability for poultry declined compared to last year, mostly as a result of
unfavorable industry conditions due to oversupply of poultry inventories.

Agricultural Products operating profit for 2000 declined 48% to $139 million due
primarily to increased restructuring charges. Excluding restructuring charges,
operating profit declined 9% to $283 million, as lower grain volumes and prices
negatively influenced the results for the ConAgra Trade Group. Profits for UAP
and the company's grain processing business increased for the year, primarily
due to operating improvements.

ConAgra Foods' total operating profit for 2000 grew 2% to $1,239 million.
Excluding restructuring charges, operating profit grew 12% to $1,860 million.

As part of Operation Overdrive, the company implemented restructuring
initiatives that resulted in pre-tax total charges of $621 million and $441
million during 2000 and 1999, respectively. These restructuring initiatives were
part of the company's efforts to improve margins by streamlining operations and
becoming more efficient. When originally announced in May of 1999, the
restructuring plan was expected to span three fiscal years and result in total
charges of up to $1,300 million. However, during 2000, ConAgra Foods accelerated
the implementation of the restructuring plan. Accordingly, ConAgra Foods
incurred the final charges associated with its restructuring plan during 2000,
thus completing its restructuring plan in two fiscal years with restructuring
plan charges (2000 and 1999) totaling less than $1,100 million. On both a
pre-tax and after-tax basis, less than 20% of these charges result in cash
outlays.

Total pre-tax cost savings associated with the restructuring plan are currently
projected to approximate $180 million in each of the next two fiscal years,
while 2000 cost savings approximated $100 million. These actual and planned cost
savings are primarily a result of reducing duplicative efforts, lowering
employee-related expenses and, to a lesser degree, reducing future depreciation
and amortization costs. Accordingly, these cost savings positively impact
ConAgra Foods' cost of goods sold and selling, general and administrative
expenses line items within its consolidated statements of earnings.

The following is a breakdown of the restructuring and restructuring-related
charges by segment and category for 2000.




- ---------------------------------------------------------------------
                         Packaged  Refrigerated  Agricultural
Dollars in millions        Foods      Foods      Products      Total
- ---------------------------------------------------------------------
                                                  
Restructuring/Impairment
  charges                $ 109.9     $ 131.3     $   81.0     $ 322.2
Accelerated Depreciation   128.2        10.9            -       139.1
Inventory Markdowns         46.2        11.2         57.1       114.5
Other                       25.2        14.6          5.8        45.6
- ---------------------------------------------------------------------
Total                    $ 309.5     $ 168.0     $  143.9     $ 621.4
- ---------------------------------------------------------------------


Of the $621 million of pre-tax charges incurred in 2000, $223 million is
included in cost of goods sold, $76 million is included in SG&A expense, and the
remaining $322 million is reflected as restructuring and impairment charges on
ConAgra Foods' consolidated statements of earnings.

In 2000, the pre-tax charges of $621 million reduced net income by $385 million,
or $.81 per diluted share. Essentially all of the restructuring charges in 2000
resulted in a tax benefit. Of the pre-tax charges incurred in 2000, $154 million
represents a cash expense. Reflecting the tax deductibility of these cash
expenses, the after-tax cash expense related to the 2000 charges totals $95
million.

Of the $441 million of pre-tax charges incurred in 1999, $39 million related to
the Packaged Foods segment, $359 million related to the Refrigerated Foods
segment, and $43 million related to the Agricultural Products segment. The $441
million charge is classified as restructuring and impairment charges in ConAgra
Foods' consolidated statements of earnings.

                                           ConAgra Foods 2001 Annual Report 35


                                       85



In 1999, the pre-tax charges of $441 million reduced net income by $338 million,
or $.71 per diluted share. Of the $441 million charge, $277 million resulted in
a tax benefit. Of the charges incurred in 1999, $52 million represented a cash
expense. Reflecting the tax deductibility of this cash expense, the after-tax
cash expense of the restructuring charges totaled $32 million.

For the restructuring initiative as a whole (amounts reported in 2000 and 1999),
the total charges of $1,062 million reduced after-tax earnings for 1999 and
2000, combined, by $723 million. Of the $1,062 million of pre-tax charges, $206
million represents a cash expense, while the after-tax cash expense related to
the restructuring initiative totals $127 million.

Of the total $1,062 million of charges incurred during 2000 and 1999, $223
million is included in cost of goods sold, $76 million is included in SG&A
expense, and the remaining $763 million is reflected as restructuring and
impairment charges on the consolidated statements of earnings for these years.

As part of the restructuring initiative associated with Operation Overdrive,
approximately 8,450 employees received notification of their termination. In
addition, 31 production facilities were closed, 106 non-production facilities
were closed, and 18 non-core businesses were divested.

For 2000, interest expense was $304 million, a decline of $13 million, or 4%,
over the prior year, primarily due to better management of accounts receivable,
inventory and capital expenditures. During the fourth quarter of 2000, interest
expense grew compared to the fourth quarter of 1999 due to higher interest
rates, as well as a debt-financed acquisition that was completed in January of
2000.

Income before income taxes declined 3% to $618 million in 2000 as a result of
increased restructuring charges. Excluding restructuring charges, income before
income taxes grew 15% to $1,239 million. The effective tax rate for 2000 was 38%
both before and after the impact of restructuring charges. Net income in 2000
reached $382 million, or $.80 per diluted share, a 16% increase as compared to
1999. Excluding restructuring charges, net income was $768 million, or $1.60 per
diluted share, representing 14% growth in diluted earnings per share over 1999.

Financial Condition and Cash Flow

ACQUISITION OF INTERNATIONAL HOME FOODS--Management's discussion and analysis of
the company's financial condition and cash flow for fiscal 2001 reflects the
acquisition of IHF, which was completed on August 24, 2000. In this transaction,
the company assumed approximately $1.1 billion of IHF debt, paid approximately
$875 million in cash, which was financed with short-term credit facilities, and
issued company common stock valued at approximately $850 million for a total
purchase price of approximately $2.8 billion.

CAPITAL RESOURCES--The company's earnings are generated principally from its
capital investment, which consists of working capital (current assets less
current liabilities) plus all noncurrent assets. Capital investment is financed
with stockholders' equity, long-term debt and other noncurrent liabilities.

Capital Investment



- -----------------------------------------------------------------
DOLLARS IN MILLIONS            2001        2000    % Change
- -----------------------------------------------------------------
                                          
Working capital            $    427.0   $   394.5       8%
- -----------------------------------------------------------------
Property, plant and
  equipment, net              3,884.7     3,584.0       8%
Intangible assets, net        4,840.2     2,366.0     105%
Other noncurrent assets         393.3       386.7       2%
- -----------------------------------------------------------------
Total noncurrent assets       9,118.2     6,336.7      44%
- -----------------------------------------------------------------
Capital investment          $ 9,545.2   $ 6,731.2      42%
- -----------------------------------------------------------------


During 2001, capital investment increased $2.8 billion, or 42%, primarily as a
result of the acquisition of IHF. Investments in property, plant and equipment,
including acquisitions, totaled $890 million. The investments were offset by
$462 million of depreciation expense and net asset retirements of $127 million.

Intangible assets are primarily brands and goodwill related to acquisitions. The
brands represent valuable assets with significant marketplace acceptance.
Intangible asset amortization was $130 million in 2001 and $80 million in 2000.

The company financed its capital investment as shown in the following table:

Capitalization



- -------------------------------------------------------------------
DOLLARS IN MILLIONS           2001        2000     % Change
- -------------------------------------------------------------------
                                          
Senior long-term debt      $ 3,359.5   $ 1,816.8     85%
Other noncurrent
  liabilities                  927.5       750.7     24%
Subordinated
  long-term debt               750.0       750.0       -
Subsidiary's preferred
  securities                   525.0       525.0       -
Common stockholders'
  equity                     3,983.2     2,888.7     38%
- -------------------------------------------------------------------
Total capitalization       $ 9,545.2   $ 6,731.2     42%
- -------------------------------------------------------------------


On September 15, 2000, the company issued $1.65 billion of senior notes,
comprised of $600 million of 7.5% senior notes, due September 15, 2005, $750
million of 7.875% senior notes, due September 15,

36  ConAgra Foods 2001 Annual Report


                                       86



2010, and $300 million of 8.25% senior notes, due September 15, 2030. The net
proceeds were used to reduce outstanding borrowings under short-term credit
facilities used, and the senior secured notes assumed, as part of the IHF
acquisition.

Other noncurrent liabilities increased $177 million primarily as a result of the
acquisition of IHF. Other noncurrent liabilities consist of postretirement
health care and pension benefits, and, to a lesser extent, reserves for
estimated legal and environmental liabilities Beatrice Company incurred before
its acquisition by ConAgra Foods, and deferred income taxes. It will require a
number of years to resolve remaining issues related to the Beatrice liabilities.
Resolution over time will use cash, but is not expected to affect earnings
adversely because ConAgra Foods believes reserves are adequate.

The company considers purchasing shares of its common stock on the open market
to replace shares issued for employee incentive and benefit programs and smaller
acquisitions accounted for as purchases if such issuances will dilute earnings
per share. In 2001, ConAgra Foods made no purchases of its common stock on the
open market. Common stockholders' equity increased $1.1 billion in 2001
primarily because net income and the value of shares issued exceeded cash
dividends declared and the foreign currency translation adjustment.

CASH FLOW--Cash provided by operating activities was $125 million in 2001,
compared to $691 million in 2000. The decrease in 2001 versus 2000 was primarily
the result of lower net income (excluding non-cash restructuring charges
recognized in fiscal 2000), higher receivables and inventory in the Agricultural
Products and Packaged Foods reporting segments, and lower advances on sales in
the Agricultural Products reporting segment. These changes were offset, in part,
by higher accounts payable and accrued expenses, mainly in the Agricultural
Products and Packaged Foods reporting segments. Depreciation and amortization
increased $56 million in 2001 as compared to 2000, primarily as a result of the
IHF acquisition.

Cash provided by operating activities was $691 million in 2000, compared to
$1,180 million in 1999. The decrease in 2000 versus 1999 was primarily the
result of lower advances on sales in Agricultural Products and Refrigerated
Foods, offset in part by a lower level of receivables increases, mainly in
Agricultural Products. The restructuring and restructuring-related charges did
not have a significant impact on cash flow in 2000. Depreciation and
amortization increased $37 million in 2000 as compared to 1999.

Cash used for investing activities was $1,568 million in 2001. The company
invested $560 million in property, plant and equipment, and its investment in
businesses acquired, net of disposals, totaled $982 million in 2001. This was
primarily a result of the acquisition of IHF.

Cash used for investing activities was $811 million in 2000. ConAgra Foods
invested $539 million in property, plant and equipment, and its investment in
businesses acquired, net of disposals, totaled $236 million in 2000. This was
mainly due to the $360 million acquisition of the assets of Seaboard Farms.

Cash used for investing activities was $1,010 million in 1999. ConAgra Foods
invested $662 million in property, plant and equipment, and its investment in
businesses acquired, net of disposals, totaled $373 million in 1999. This was
mainly due to the $400 million acquisition of the tablespreads and Egg Beaters
business.

In 2002, the company expects to invest $525 million to $550 million in additions
to property, plant and equipment of present businesses. Capital projects in 2001
and planned for 2002 are broadly based investments in modernization, efficiency
and capacity expansion.

Cash provided by financing activities in 2001 was $1,484 million. The company
increased short-term borrowings $1,422 million and long-term borrowings $1,664
million, largely as a result of the IHF acquisition. In 2001, the company repaid
approximately $1,114 million of debt related to the IHF acquisition. The
dividend rate per share was up 11% in 2001 over the prior year, and the
remaining increase in cash dividends paid was caused by a larger number of
shares outstanding, primarily issued for the IHF acquisition. No shares were
repurchased in 2001.

Cash provided by financing activities in 2000 was $215 million. ConAgra Foods
increased short-term borrowings $403 million and accounts receivable sold by
$165 million. Cash dividends paid totaled $375 million, up 20% due to the
dividend rate per share being up 14% in 2000 over the prior year and an increase
of shares outstanding, mainly issued for acquisitions. No shares were
repurchased in 2000.

Cash used for financing activities in 1999 was $215 million. The company issued
$595 million of senior notes. Long-term debt repayments totaled $70 million in
1999, and ConAgra Foods reduced the amount of short-term borrowings backed by
long-term credit agreements, and classified as long-term, by $532 million.
Accounts receivable sold increased by $126 million during 1999. Cash dividends
paid totaled $312 million, up 19%. The dividend rate per share was up 14% in
1999 over the prior year, and the remaining increase was caused by a larger
number of shares outstanding, mainly issued for acquisitions. The cost of stock
repurchased in 1999 totaled $31 million. Short-term debt decreased slightly
during 1999.

FINANCING OBJECTIVES--The company's primary financing objective is to maintain a
conservative balance sheet that provides the flexibility to pursue its growth
objectives. This is defined as using appropriate levels

                                           ConAgra Foods 2001 Annual Report 37


                                       87



of equity and long-term debt to finance noncurrent assets and permanent
working capital needs. Short-term debt is used to finance liquid and seasonal
asset requirements.

The company will generally maintain a current ratio greater than 1.0, which will
result in current assets being greater than current liabilities. On occasion,
the company has the opportunity to lock in attractive costs of long-term debt.
If the company refinances short-term debt into long-term debt, long-term debt as
a percent of total capital will increase, and there will be a corresponding
improvement in the current ratio.

The company normally utilizes senior long-term debt at a rate not exceeding 30%
of total capital. In addition to long-term debt, the company utilizes short-term
debt to finance working capital requirements.

ConAgra Foods' policy has been to temporarily exceed the self-imposed 30% limit
for a major strategic purpose that is intended to create value for shareholders.
In management's view, the fiscal 2001 acquisition of IHF, which substantially
increased the company's earnings potential and its debt level, represented such
an opportunity. The company also considers it appropriate to exceed the 30%
limit in the case of refinancing short-term debt into long-term debt, provided
that long-term rates are such that it is advantageous for the company to
structure its financing in that manner. In the event of a large acquisition or
specific financing opportunity, the company expects senior long-term debt to be
no more than 50% of total capital.

ConAgra Foods has access to a wide variety of financing markets. Public debt
offerings and private debt placements provide long-term financing. At the end of
2001, ConAgra Foods' senior debt ratings were BBB+ (Fitch), Baa1 (Moody's), and
BBB+ (Standard & Poor's), all investment grade ratings.

Short-term credit is provided by the sale of commercial paper and bank
financing. Commercial paper borrowings are backed by multiyear bank credit
facilities. During 2001, short-term borrowings continued at interest rates below
the prime rate. Short-term debt averaged $3.4 billion in 2001 compared to $2.7
billion in 2000, excluding short-term borrowings classified as long-term. Higher
working capital requirements for most of the year, due in part to the IHF
acquisition, caused the increase in short-term debt. The company uses cancelable
and noncancelable leases in its financing activities, particularly for
transportation equipment. In 2001, cancelable lease expense was $167 million
versus $189 million in 2000, and noncancelable lease expense was $120 million
versus $97 million in 2000.

To maintain a conservative financial position, ConAgra Foods focuses on cash
flow as well as its balance sheet. The company's plans generate cash flow
sufficient to meet financing obligations, maintain capital investment, and pay
stockholder dividends even if a severe and unexpected decline in earnings
occurs. This measure of cash-flow adequacy provides an effective tool for
managing the company's leverage.

ASSET LIQUIDITY--Many of the company's businesses are current asset intensive.
Inventory and accounts receivable were 1.7 and 1.5 times net property, plant and
equipment at the end of 2001 and 2000, respectively. The seasonal nature and
liquidity of the company's current asset investments result in significant use
of short-term debt. From time to time, ConAgra Foods also obtains product
financing for certain commodity inventories, classified as advances on sales, in
the Consolidated Balance Sheets.

The company's current ratio (current assets divided by current liabilities) was
1.06 to 1 at the end of 2001 and 1.07 to 1 at the end of 2000. ConAgra Foods'
consolidated current ratio is a composite of various current ratios appropriate
for its individual businesses. The company focuses more on appropriate use of
short-term debt and trade credit financing than on the absolute level of its
current ratio. Some of the company's businesses are able to generate substantial
trade credit that does not result in financing costs.

MARKET RISK--The principal market risks affecting the company are exposure to
changes in commodity or energy prices and interest rates on debt. While ConAgra
Foods does have international operations, and operates in international markets,
it considers its market risk in such activities to be immaterial.

COMMODITIES--ConAgra Foods operates in many areas of the food industry, from
basic agricultural inputs to the production and sale of branded consumer
products. As a result, the company uses various raw materials, many of which are
commodities. Raw materials are generally available from several different
sources, and the company presently believes that it can obtain them as needed.

Commodities are subject to price fluctuations that may create price risk.
Generally, it is the company's intent to hedge commodities in order to mitigate
this price risk. While this may tend to limit the company's ability to
participate in gains from commodity price fluctuations, it also tends to reduce
the risk of loss from changes in commodity prices. ConAgra Foods has established
policies that limit the amount of unhedged inventory positions permissible for
its operating companies. Each operating company is limited to a dollar risk
exposure, which is monitored to ensure compliance.

ConAgra Foods typically purchases certain commodities such as wheat, corn, oats,
soybeans, soybean meal, soybean oil, cattle and hogs for use in its processing
businesses. In addition, the company purchases and sells certain commodities
such as wheat, corn, soybeans, soybean meal, soybean oil and oats in its trading
businesses. The commodity price risk associated with these activities can be
hedged by selling (or buying) the

38 ConAgra Foods 2001 Annual Report


                                       88



underlying commodity, or by using an appropriate derivative commodity
instrument. The particular hedging instrument used by ConAgra Foods depends
on a number of factors, including availability of appropriate derivative
instruments. ConAgra Foods utilizes exchange-traded futures and options as
well as non-exchange-traded derivatives, in which case the company monitors
the amount of associated counterparty credit risk.

The following table presents one measure of market risk exposure using
sensitivity analysis. Market risk exposure is defined as the change in the fair
value of the derivative commodity instruments assuming a hypothetical change of
10% in market prices. Actual changes in market prices may differ from
hypothetical changes. Fair value was determined using quoted market prices and
was based on the company's net derivative position by commodity at each
month-end during the fiscal year. The market risk exposure analysis excludes the
underlying commodity positions that are being hedged. The underlying commodities
hedged have a high inverse correlation to price changes of the derivative
commodity instrument.

Effect of 10% Change in Fair Value



- -----------------------------------------------------------------
DOLLARS IN MILLIONS                       2001       2000
- -----------------------------------------------------------------
                                             
Processing Businesses
   Grains/Food
     High                               $  60.1    $  38.0
     Low                                   28.6       24.3
     Average                               41.3       30.2
   Meats
     High                                  90.9       49.5
     Low                                    5.0       22.8
     Average                               30.4       34.5
Trading Businesses
   Grains
     High                                  32.3       18.6
     Low                                   12.4       11.1
     Average                               19.2       15.7
   Meats
     High                                  14.7        7.6
     Low                                    0.3        1.2
     Average                                5.1        3.1
- -----------------------------------------------------------------


ENERGY--ConAgra Foods' operating companies incur substantial energy costs in
their manufacturing facilities and incur higher operating expenses as a result
of increases in energy costs. The company takes positions in commodities used in
its operations to partially offset adverse price movements in energy costs,
primarily natural gas and electricity. In addition, ConAgra Foods' energy
subsidiary may trade derivative commodity and financial instruments when markets
are favorable for such activity. Trading is limited in terms of maximum dollar
exposure and monitored to ensure compliance with these limits. Exchange-traded
derivative commodity instruments and non-exchange-traded swaps and options are
used. ConAgra Foods monitors the amount of associated counterparty credit risk
for non-exchange-traded transactions.

The following presents one measure of market risk exposure using sensitivity
analysis. Market risk exposure is defined as the change in the fair value of the
derivative commodity and financial instruments assuming a hypothetical change of
10% in market prices. Actual changes in market prices may differ from
hypothetical changes. Fair value was determined using quoted market prices, if
available, and was based on the subsidiary's net derivative position by
commodity at each month-end during the fiscal year. The market risk exposure
analysis excludes the anticipated energy requirements or physical delivery
commitments that are being hedged by these instruments.

Effect of 10% Change in Fair Value




- -----------------------------------------------------------------
DOLLARS IN MILLIONS                        2001       2000
- -----------------------------------------------------------------
                                              
Energy
   High                                  $  7.9     $  5.6
   Low                                      0.7        0.2
   Average                                  2.7        2.0
- -----------------------------------------------------------------


INTEREST RATES--ConAgra Foods has used interest rate swaps to hedge adverse
interest rate changes on a portion of its short-term debt. The company did not
enter into any interest rate swaps in fiscal 2001. During 2000 these swaps
effectively changed the interest rate on a portion of short-term debt from a
variable rate to a fixed rate, thus reducing the company's exposure to interest
rate risk. The average short-term debt covered by swaps was $380 million for
2000. A one hundred basis-point change in interest rates on average short-term
borrowings would have impacted net interest expense by $24.7 million for 2000.

FOREIGN OPERATIONS--Transactions denominated in a currency other than an
entity's functional currency are generally hedged to reduce market risk. ConAgra
Foods principally uses non-exchange-traded contracts to effect this coverage.
Market risk on such transactions is not material to the company's results of
operations or financial position. ConAgra Foods' market risk from translation of
foreign-based entities' annual profit and loss, and from amounts permanently
invested in foreign subsidiaries, is not material.

ACCOUNTING CHANGES--In the fourth quarter of fiscal 2001, in connection with the
company's assessment of the guidance in Staff Accounting Bulletin (SAB) No. 101,
REVENUE RECOGNITION IN FINANCIAL STATEMENTS, and its consideration of recent
Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF)
issues, the

                                            ConAgra Foods 2001 Annual Report 39


                                       89



company changed its methods of accounting for revenue recognition relating to
the shipping terms for certain of its product sales, recognition of sales
incentives granted to retailers and recognition of consumer sales incentives.

The company's method of accounting for revenue recognition, relating to the
shipping terms for certain of its product sales, was changed from recognition
when title and risk of loss to finished product passed upon shipment to
customers, to recognition of revenue for these sales when title and risk of loss
transfer to customers upon delivery. Previously, the company had recognized
revenue in accordance with its interpretation of Statement of Financial
Accounting Concepts No. 5, RECOGNITION AND MEASUREMENT IN FINANCIAL STATEMENTS
OF BUSINESS ENTERPRISES.

The company's method of accounting for sales incentives provided to retailers
was changed from recognition of expense over the period of expected future
benefit, to recognition of the costs at the later of the date the related sale
is recorded or the sales incentive is offered to the retailer.

The company's method of accounting for coupons and related consumer sales
incentives was changed from recognition of expense over the expected redemption
period of the sales incentive, to recognition of the costs as a reduction in net
sales at the later of the date the related sale is recorded or the sales
incentive is offered.

Statement of Financial Accounting Standards (SFAS) No. 133, ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, as amended, is effective for the
company in the first quarter of fiscal 2002. SFAS No. 133 establishes accounting
and reporting standards for derivative instruments, including certain
derivatives embedded in other contracts, and for hedging activities. Under SFAS
No. 133, certain contracts that were not formerly considered derivatives may now
meet the definition of a derivative. The standard requires that all derivatives
be recorded on the balance sheet at fair value. Changes in the fair value of
derivatives are recorded in earnings or other comprehensive income, depending on
whether the derivative is designated as part of a hedge transaction and, if so
designated, the type of hedge transaction. The company estimates the adoption
impact of this new standard will be a reduction of net income of $2 million and
a reduction of other comprehensive income of $25 million in the company's first
quarter of fiscal 2002. The adoption impact of the standard will be presented as
a cumulative effect of change in accounting principle. Subsequent to adoption in
fiscal 2002, the impact of the standard on the company's results will depend on
the fair values of the company's derivatives and may result in increased
volatility in the company's reported earnings.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In accordance with the guidance provided in EITF 00-25, ACCOUNTING FOR
CONSIDERATION FROM A VENDOR TO A RETAILER IN CONNECTION WITH THE PURCHASE OR
PROMOTION OF THE VENDOR'S PRODUCTS, beginning in the first quarter of fiscal
2002, the company will classify the costs associated with sales incentives
provided to retailers as a reduction in net sales. These costs are currently
included in selling, general and administrative expenses. This reclassification
will have no impact on reported income before income taxes and cumulative effect
of changes in accounting, net income or income-per-share amounts.

In June 2001, the FASB approved the issuance of SFAS No. 141, BUSINESS
COMBINATIONS, and SFAS No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. These
standards, issued in July 2001, establish accounting and reporting for business
combinations. SFAS No. 141 requires all business combinations entered into
subsequent to June 30, 2001, to be accounted for using the purchase method of
accounting. SFAS No. 142 provides that goodwill and other intangible assets with
indefinite lives will not be amortized, but will be tested for impairment on an
annual basis. These standards are effective for fiscal years beginning after
December 15, 2001; however, early adoption is permitted. The company has not yet
determined when it will adopt these standards. The company also has not
quantified the impact resulting from the adoption of these standards.

FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements in the Letter to Shareholders,
business description and review sections, and Management's Discussion and
Analysis within the meaning of the Private Securities Litigation Reform Act of
1995. The statements are based on management's current expectations and are
subject to uncertainty and changes in circumstances. Future economic
circumstances, industry conditions, company performance and financial results,
availability and prices of raw materials, product pricing, competitive
environment and related market conditions, operating efficiencies, access to
capital, actions of governments and regulatory factors affecting the company's
businesses are examples of factors, among others, that could cause results to
differ materially from those described in the forward-looking statements.

40 ConAgra Foods Annual Report


                                       90



CONSOLIDATED STATEMENTS OF EARNINGS
ConAgra Foods, Inc. and Subsidiaries



                                                                                      For the fiscal years ended May
- --------------------------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS EXCEPT PER-SHARE AMOUNTS                                       2001              2000             1999
- --------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
Net sales                                                                       $   27,194.2      $   25,534.6     $   24,844.4
Costs and expenses
   Cost of goods sold*                                                              23,311.7          22,182.9         21,540.5
   Selling, general and administrative expenses*                                     2,355.1           2,108.1          1,910.9
   Interest expense                                                                    423.3             303.8            316.6
   Restructuring/Impairment charges                                                        -             322.2            440.8
- --------------------------------------------------------------------------------------------------------------------------------
                                                                                    26,090.1          24,917.0         24,208.8
- --------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative effect of changes in accounting            1,104.1             617.6            635.6
Income taxes                                                                           421.6             235.3            305.4
- --------------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of changes in accounting                               682.5             382.3            330.2
Cumulative effect of changes in accounting                                             (43.9)                -                -
- --------------------------------------------------------------------------------------------------------------------------------
NET INCOME                                                                      $      638.6      $      382.3     $      330.2
- --------------------------------------------------------------------------------------------------------------------------------
INCOME PER SHARE - BASIC
   Income before cumulative effect of changes in accounting                     $       1.33      $        .80     $        .70
   Cumulative effect of changes in accounting                                           (.09)                -                -
- --------------------------------------------------------------------------------------------------------------------------------
   NET INCOME                                                                   $       1.24      $        .80     $        .70
- --------------------------------------------------------------------------------------------------------------------------------
INCOME PER SHARE - DILUTED
   Income before cumulative effect of changes in accounting                     $       1.33      $        .80     $        .69
   Cumulative effect of changes in accounting                                           (.09)                -                -
- --------------------------------------------------------------------------------------------------------------------------------
   NET INCOME                                                                   $       1.24      $        .80     $        .69
- --------------------------------------------------------------------------------------------------------------------------------


*   Other restructuring-related items in fiscal 2000 include accelerated
    depreciation of $108.3 million and inventory markdowns of $114.5 million
    included in cost of goods sold and $30.8 million of accelerated depreciation
    and $45.6 million of restructuring plan implementation costs included in
    selling, general and administrative expenses.

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


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
ConAgra Foods, Inc. and Subsidiaries



                                                               For the fiscal years ended May
- ----------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS                                        2001              2000             1999
- ----------------------------------------------------------------------------------------------------
                                                                                  
NET INCOME                                             $   638.6          $   382.3        $  330.2
- ----------------------------------------------------------------------------------------------------
   Other comprehensive income (loss)
     Foreign currency translation adjustment               (17.6)             (37.2)            1.7
- ----------------------------------------------------------------------------------------------------
   COMPREHENSIVE INCOME                                $   621.0          $   345.1        $  331.9
- ----------------------------------------------------------------------------------------------------


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

                                             ConAgra Foods 2001 Annual Report 41

                                       91



CONSOLIDATED BALANCE SHEETS
ConAgra Foods, Inc. and Subsidiaries



                                                                                                 May 27           May 28
- -----------------------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS                                                                                2001             2000
- -----------------------------------------------------------------------------------------------------------------------------
                                                                                                            
ASSETS
Current assets
   Cash and cash equivalents                                                                    $   198.1        $   157.6
   Receivables, less allowance for doubtful accounts of $100.5 and $62.8                          1,605.4          1,241.5
   Inventories                                                                                    5,071.4          4,056.0
   Prepaid expenses                                                                                 487.7            404.8
- -----------------------------------------------------------------------------------------------------------------------------
       Total current assets                                                                       7,362.6          5,859.9
- -----------------------------------------------------------------------------------------------------------------------------

Property, plant and equipment
   Land                                                                                             125.4            147.1
   Buildings, machinery and equipment                                                             5,776.9          5,430.3
   Other fixed assets                                                                               640.3            537.0
   Construction in progress                                                                         308.5            327.4
- -----------------------------------------------------------------------------------------------------------------------------
                                                                                                  6,851.1          6,441.8
   Less accumulated depreciation                                                                 (2,966.4)        (2,857.8)
- -----------------------------------------------------------------------------------------------------------------------------

     Property, plant and equipment, net                                                           3,884.7          3,584.0
- -----------------------------------------------------------------------------------------------------------------------------
Brands, trademarks and goodwill, at cost less accumulated amortization of $878.7 and $748.3       4,840.2          2,366.0
Other assets                                                                                        393.3            386.7
- -----------------------------------------------------------------------------------------------------------------------------
                                                                                                $16,480.8        $12,196.6
- -----------------------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Notes payable                                                                                $ 2,677.1         $1,255.5
   Current installments of long-term debt                                                           123.1             20.6
   Accounts payable                                                                               2,289.8          2,042.5
   Advances on sales                                                                                349.0            912.7
   Accrued payroll                                                                                  249.7            258.9
   Other accrued liabilities                                                                      1,246.9            975.2
- -----------------------------------------------------------------------------------------------------------------------------
       Total current liabilities                                                                  6,935.6          5,465.4
- -----------------------------------------------------------------------------------------------------------------------------
Senior long-term debt, excluding current installments                                             3,359.5          1,816.8
Other noncurrent liabilities                                                                        927.5            750.7
Subordinated debt                                                                                   750.0            750.0
Preferred securities of subsidiary company                                                          525.0            525.0
Commitments and contingencies
Common stockholders' equity
   Common stock of $5 par value, authorized 1,200,000,000 shares;
     issued 565,337,949 and 524,137,617                                                           2,826.7          2,620.7
   Additional paid-in capital                                                                       682.5            147.5
   Retained earnings                                                                              1,534.8          1,345.3
   Accumulated other comprehensive income                                                          (120.7)          (103.1)
   Less treasury stock, at cost, common shares of 28,270,610 and 31,925,505                        (672.9)          (760.2)
- -----------------------------------------------------------------------------------------------------------------------------
                                                                                                  4,250.4          3,250.2
   Less unearned restricted stock and value of 12,787,862 and 15,246,068
     common shares held in Employee Equity Fund                                                    (267.2)          (361.5)
- -----------------------------------------------------------------------------------------------------------------------------
       Total common stockholders' equity                                                          3,983.2          2,888.7
- -----------------------------------------------------------------------------------------------------------------------------
                                                                                                $16,480.8        $12,196.6
- -----------------------------------------------------------------------------------------------------------------------------


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

ConAgra Foods 2001 Annual Report   42

                                      92



CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
ConAgra Foods, Inc. and Subsidiaries



                                                             For the fiscal years ended May
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                       Accumulated             EEF*
                                                               Additional                 Other               Stock
                                           Common     Common     Paid-in    Retained Comprehensive  Treasury   and
COLUMNAR AMOUNTS IN MILLIONS               Shares     Stock      Capital    Earnings      Income      Stock   Other        Total
- ----------------------------------------   ------   ---------   ---------   --------  ------------ ---------  ------    ----------
                                                                                                
BALANCE AT MAY 31, 1998                     519.4   $ 2,597.1   $  320.0    $ 1,321.2   $ (67.6)   $(705.2)  $(643.0)   $  2,822.5
Shares issued
   Stock option and incentive plans            .2         1.1        1.8                                .5                     3.4
   EEF*: stock option, incentive and
     other employee benefit plans                                   13.6                                        62.3          75.9
   Fair market valuation of EEF shares                            (116.4)                                      116.4           -
   Acquisitions                                                       .4                               2.2                     2.6
Shares acquired for incentive plans                                                                  (47.6)      1.5         (46.1)
Shares retired                                                                    (.2)                  .2                     -
Foreign currency translation adjustment                                                     1.7                                1.7
Dividends declared
   Common stock, $.69175 per share                                             (324.9)                                      (324.9)
   Pooled companies                                                              (1.2)                                        (1.2)
Net income                                                                      330.2                                        330.2
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MAY 30, 1999                     519.6     2,598.2      219.4      1,325.1     (65.9)    (749.9)   (462.8)      2,864.1
Shares issued
   Stock option and incentive plans            .5         2.4        2.5                                .4                     5.3
   EEF*: stock option, incentive and
     other employee benefit plans                                    9.4                                        26.1          35.5
   Fair market valuation of EEF shares                             (70.0)                                       70.0           -
   Acquisitions                               4.0        20.1      (13.7)        13.4                                         19.8
Shares acquired for incentive plans                                  (.1)                            (10.7)      5.2          (5.6)
Foreign currency translation adjustment                                                   (37.2)                             (37.2)
Dividends declared
   Common stock, $.789 per share                                               (375.5)                                      (375.5)
Net income                                                                      382.3                                        382.3
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MAY 28, 2000                     524.1     2,620.7      147.5      1,345.3    (103.1)    (760.2)   (361.5)      2,888.7
Shares issued
   Stock option and incentive plans            .2          .9         .8                              89.0                    90.7
   EEF*: stock option, incentive and
     other employee benefit plans                                  (54.2)                                       32.2         (22.0)
   Fair market valuation of EEF shares                             (54.7)                                       54.7           -
   Acquisitions                              41.0       205.1      643.2                                                     848.3
Shares acquired for incentive plans                                  (.1)          .1                 (1.7)      7.4           5.7
Foreign currency translation adjustment                                                   (17.6)                             (17.6)
Dividends declared
   Common stock, $.879 per share                                               (449.2)                                      (449.2)
Net income                                                                      638.6                                        638.6
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MAY 27, 2001                     565.3   $ 2,826.7   $  682.5    $ 1,534.8   $(120.7)   $(672.9)  $(267.2)   $  3,983.2
- ----------------------------------------------------------------------------------------------------------------------------------


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

* Employee Equity Fund (Note 12)


                                           ConAgra Foods 2001 Annual Report 43


                                       93



CONSOLIDATED STATEMENTS OF CASH FLOWS
ConAgra Foods, Inc. and Subsidiaries




                                                                                          For the fiscal years ended May
- -------------------------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS                                                                       2001           2000           1999
- -------------------------------------------------------------------------------------------------------------------------------
                                                                                                           
Cash flows from operating activities
Net income                                                                            $    638.6      $   382.3     $    330.2
   Adjustments to reconcile net income to net cash provided by
     operating activities
       Depreciation and other amortization                                                 498.7          473.1          430.4
       Goodwill amortization                                                                94.2           63.4           69.4
       Restructuring and other restructuring-related charges (including
         accelerated depreciation)                                                           -            621.4          440.8
       Cumulative effect of changes in accounting                                           43.9            -              -
       Other noncash items (includes nonpension postretirement benefits)                   175.5           49.9           87.8
       Change in assets and liabilities before effects from business combinations
         Receivables                                                                      (410.8)          69.9         (176.9)
         Inventories and prepaid expenses                                                 (597.3)        (325.3)        (149.5)
         Accounts payable and accrued liabilities                                         (318.2)        (643.7)         147.3
- -------------------------------------------------------------------------------------------------------------------------------
           NET CASH FLOWS FROM OPERATING ACTIVITIES                                        124.6          691.0        1,179.5
- -------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
   Additions to property, plant and equipment                                             (559.7)        (539.3)        (662.3)
   Payment for business acquisitions                                                    (1,107.2)        (390.1)        (421.9)
   Sale of businesses and property, plant and equipment                                    125.3          154.6           48.5
   Notes receivable and other items                                                        (26.5)         (36.6)          25.5
- -------------------------------------------------------------------------------------------------------------------------------
           NET CASH FLOWS FROM INVESTING ACTIVITIES                                     (1,568.1)        (811.4)      (1,010.2)
- -------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
   Net short-term borrowings                                                             1,421.5          402.7          (22.7)
   Proceeds from issuance of long-term debt                                              1,663.7           33.1          595.2
   Repayment of long-term debt                                                             (21.7)         (32.6)        (602.5)
   Changes in amounts sold under the accounts receivable securitization, net               (77.0)         165.0          125.5
   Cash dividends paid                                                                    (452.4)        (375.0)        (312.4)
   Repayment of acquired company's debt                                                 (1,114.3)           -              -
   Other items                                                                              64.2           22.0            2.0
- -------------------------------------------------------------------------------------------------------------------------------
           NET CASH FLOWS FROM FINANCING ACTIVITIES                                      1,484.0          215.2         (214.9)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                        40.5           94.8          (45.6)
Cash and cash equivalents at beginning of year                                             157.6           62.8          108.4
- -------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                              $    198.1      $   157.6     $     62.8
- -------------------------------------------------------------------------------------------------------------------------------


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

ConAgra Foods 2001 Annual Report 44


                                       94



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ConAgra Foods, Inc. and Subsidiaries


Years ended May 27, 2001, May 28, 2000, and May 30, 1999
COLUMNAR AMOUNTS IN MILLIONS EXCEPT PER-SHARE AMOUNTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR - The fiscal year of ConAgra Foods, Inc. ("ConAgra Foods" or the
"company") ends the last Sunday in May. The fiscal years for the consolidated
financial statements presented consist of 52-week periods for fiscal years 2001,
2000 and 1999.

The accounts of two wholly-owned subsidiaries, ConAgra Fertilizer Company and
United Agri Products, Inc., have been consolidated on the basis of a year ending
in February. Such fiscal period corresponds with those companies' natural
business year.

BASIS OF CONSOLIDATION - The consolidated financial statements include the
accounts of ConAgra Foods, Inc. and all majority-owned subsidiaries. The
investments in and the operating results of 50%-or-less-owned entities are
included in the financial statements on the basis of the equity method of
accounting. All significant intercompany investments, accounts and transactions
have been eliminated.

INVENTORIES - Grain, flour and major feed ingredient inventories are hedged to
the extent practicable and are generally stated at market, including adjustment
to market of open contracts for purchases and sales. Short-term interest expense
incurred to finance hedged inventories is included in cost of goods sold in
order to properly reflect gross profits on hedged transactions. Inventories not
hedged are priced at the lower of average cost (first-in, first-out) or market.

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

     Buildings                          15 - 40 years
     Machinery and equipment             5 - 20 years
     Other fixed assets                  5 - 15 years

Goodwill, brands and trademarks are amortized using the straight-line method,
principally over a period of 40 years.

The company assesses the recoverability of long-lived assets and associated
goodwill, as well as certain identifiable intangibles, whenever events or
changes in circumstances indicate the carrying amount of an asset may not be
recoverable. The company considers continued operating losses, or significant
and long-term changes in business conditions, to be its primary indicators of
potential impairment. When future undiscounted cash flows of assets are
estimated to be insufficient to recover their related carrying value, an
impairment loss is recognized based on the difference between the fair value and
carrying value of the assets.

Recoverability of goodwill not associated with long-lived assets is evaluated
based on management's estimates of future undiscounted operating income
associated with the acquired business.

DERIVATIVE INSTRUMENTS - The company uses derivatives for the purpose of hedging
commodity price and, to a lesser extent, interest rate exposure, that exist as a
part of its ongoing business operations.

INTEREST RATE SWAP AGREEMENTS - The company utilizes interest rate swap
agreements to reduce the risk of changes in interest rates. Interest
differentials to be paid or received on such swaps are recognized in the
statement of earnings as incurred, as a component of interest expense.

COMMODITY CONTRACTS - The company uses commodity futures and option contracts,
swaps and forward contracts to reduce the risk of price fluctuations in various
commodities traded or used in its businesses. In the trading businesses,
commodity contracts are marked-to-market and the related gains or losses are
recorded in the statement of earnings. The company's processing businesses
reflect commodity contract gains and losses as adjustments to the basis of
underlying hedged commodities purchased; gains or losses are recognized in the
statement of earnings as a component of cost of goods sold upon sale of the
hedged commodity.

In general, derivatives used as hedges must be effective at reducing the risk
associated with the exposure being hedged and must be designated as a hedge at
the inception of the contract. Changes in market values of derivative
instruments must be highly correlated with changes in market values of
underlying hedged items both at inception of the hedge and over the life of the
hedge contract. Deferred gains or losses related to any instrument 1) designated
but ineffective as a hedge of existing assets, liabilities or firm commitments,
or 2) designated as a hedge of an anticipated transaction which is no longer
likely to occur, are recognized immediately in the statement of earnings.

Cash flows related to derivative financial instruments are classified in the
statements of cash flows in a manner consistent with those of transactions being
hedged.

FAIR VALUES OF FINANCIAL INSTRUMENTS - Unless otherwise specified, the company
believes the carrying value of financial instruments approximates their fair
value.

                                           ConAgra Foods 2001 Annual Report 45

                                       95



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

NET SALES - Gross profits earned from commodity trading activities, which are
included in net sales, total $278.6 million, $148.0 million and $147.3 million
for fiscal 2001, 2000 and 1999, respectively.

Sales and cost of sales, if reported on a gross basis for these activities,
would be increased by $12.0 billion, $7.7 billion and $4.9 billion for fiscal
2001, 2000 and 1999, respectively.

COMPREHENSIVE INCOME - Comprehensive income for all periods presented consists
of net income and foreign currency translation adjustments. ConAgra Foods deems
its foreign investments to be permanent in nature and does not provide for taxes
on currency translation adjustments arising from converting the investment in a
foreign currency to U.S. dollars. There are no reclassification adjustments to
be reported in periods presented.

ACCOUNTING CHANGES - In the fourth quarter of fiscal 2001, in connection with
the company's assessment of the guidance in Staff Accounting Bulletin (SAB)
No. 101, REVENUE RECOGNITION IN FINANCIAL STATEMENTS, and its consideration
of recent Financial Accounting Standards Board (FASB) Emerging Issues Task
Force (EITF) issues, the company changed its methods of accounting for
revenue recognition relating to the shipping terms for certain of its product
sales, recognition of sales incentives granted to retailers and recognition
of consumer sales incentives.

The company's method of accounting for revenue recognition, relating to the
shipping terms for certain of its product sales, was changed from recognition
when title and risk of loss to finished product passed upon shipment to
customers, to recognition of revenue for these sales when title and risk of loss
transfer to customers upon delivery. Previously, the company had recognized
revenue in accordance with its interpretation of Statement of Financial
Accounting Concepts No. 5, RECOGNITION AND MEASUREMENT IN FINANCIAL STATEMENTS
OF BUSINESS ENTERPRISES.

The company's method of accounting for sales incentives provided to retailers
was changed from recognition of expense over the period of expected future
benefit to recognition of the costs at the later of the date the related sale is
recorded or the sales incentive is offered to the retailer.

The company's method of accounting for coupons and related consumer sales
incentives was changed from recognition of expense over the expected redemption
period of the sales incentive to recognition of the costs as a reduction in net
sales at the later of the date the related sale is recorded or the sales
incentive is offered. The effect of the change in accounting for revenue
recognition, recognition of sales incentives granted to retailers and
recognition of consumer sales incentives is described in Note 3.

Statement of Financial Accounting Standards (SFAS) No. 133, ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, as amended, is effective for
the company in the first quarter of fiscal 2002. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including
certain derivatives embedded in other contracts, and for hedging activities.
Under SFAS No. 133, certain contracts that were not formerly considered
derivatives may now meet the definition of a derivative. The standard
requires that all derivatives be recorded on the balance sheet at fair value.
Changes in the fair value of derivatives are recorded in earnings or other
comprehensive income, depending on whether the derivative is designated as
part of a hedge transaction and, if so designated, the type of hedge
transaction. The company estimates the adoption impact of this new standard
will be a reduction of net income of $2 million and a reduction of other
comprehensive income of $25 million. The adoption impact of the standard will
be presented as a cumulative effect of change in accounting principle.
Subsequent to adoption in fiscal 2002, the impact of the standard on the
company's results will depend on the fair values of the company's derivatives
and may result in increased volatility in the company's reported earnings.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - In accordance with the guidance
provided in EITF 00-25, ACCOUNTING FOR CONSIDERATION FROM A VENDOR TO A RETAILER
IN CONNECTION WITH THE PURCHASE OR PROMOTION OF THE VENDOR'S PRODUCTS, beginning
in the first quarter of fiscal 2002, the company will classify the costs
associated with sales incentives provided to retailers as a reduction in net
sales. These costs are currently included in selling, general and administrative
expenses. This reclassification will have no impact on reported income before
income taxes and cumulative effect of changes in accounting, net income or
income per share amounts.

In June 2001, the FASB approved the issuance of SFAS No. 141, BUSINESS
COMBINATIONS, and SFAS No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. These
standards, issued in July 2001, establish accounting and reporting for business
combinations. SFAS No. 141 requires all business combinations entered into
subsequent to June 30, 2001, to be accounted for using the purchase method of
accounting. SFAS No. 142 provides that goodwill and other intangible assets with
indefinite lives will not be amortized, but will be tested for impairment on an
annual basis. These standards are effective for fiscal years beginning after
December 15, 2001; however, early adoption is permitted. The company has not yet
determined when it will adopt these standards. The company also has not
quantified the impact resulting from the adoption of these standards.

USE OF ESTIMATES - Preparation of financial statements in conformity with
generally accepted accounting principles requires management to

Conagra Foods 2001 Annual Report 46


                                       96



make estimates and assumptions. These estimates and assumptions affect
reported amounts of assets, liabilities, revenue and expenses as reflected in
the financial statements. Actual results could differ from estimates.

RECLASSIFICATIONS - Certain reclassifications have been made to prior year
amounts to conform to current year classifications. The principal effects of
these include reclassification of shipping and handling costs from a reduction
in net sales to cost of goods sold and reclassification of consumer sales
incentives costs from selling, general and administrative expenses to a
reduction in net sales.

2. BUSINESS COMBINATIONS
On August 24, 2000, the company acquired all of the outstanding shares of common
stock and stock options of International Home Foods (IHF) in a transaction
accounted for as a purchase business combination. IHF is a manufacturer,
distributor and marketer of food products with brands such as Chef Boyardee,
Gulden's mustard, Bumble Bee tuna, Libby's, PAM, Louis Kemp and others. As part
of the acquisition, the company issued approximately 41 million shares of
company common stock and assumed options to acquire approximately 5 million
post-acquisition shares of company common stock, having an aggregate fair value
of approximately $850 million. In addition, the company paid approximately $875
million in cash to the IHF shareholders and assumed approximately $1.1 billion
of debt.

The company has preliminarily allocated the excess of the purchase price over
the net assets acquired to brands, trademarks and goodwill. The purchase price
allocation will be completed upon finalization of asset and liability
valuations. In connection with this acquisition, the company expects to
consolidate certain facilities and will include the associated costs as part of
the purchase price allocation. The costs assigned to intangible assets arising
from the transaction are being amortized on a straight-line basis over a period
not exceeding 40 years.

On September 15, 2000, the company issued $1.65 billion of senior notes,
comprised of $600 million of 7.5% senior notes, due September 15, 2005, $750
million of 7.875% senior notes, due September 15, 2010, and $300 million of
8.25% senior notes, due September 15, 2030. The net proceeds were used to reduce
outstanding borrowings under short-term credit facilities accessed to finance a
portion of the IHF acquisition. The short-term credit facilities had maturities
with less than six months and carried interest rates between 6.7% and 6.8% per
annum. In addition, as part of the IHF acquisition, the company assumed $385
million of IHF 10.375% senior secured notes due in 2006 and redeemed the notes
on October 6, 2000.

The company's unaudited pro forma results of operations for the fiscal years
ended May 27, 2001, and May 28, 2000, assuming the acquisition of IHF occurred
as of the beginning of the periods presented are as follows:



- ------------------------------------------------------------------------------
                                                         2001           2000
- ------------------------------------------------------------------------------
                                                             
Net sales                                            $ 27,632.3    $ 27,368.7
Income before cumulative effect of
  changes in accounting                                   690.3         397.8
Net income                                                646.4         397.8
Income before cumulative effect of
  changes in accounting per share - diluted          $     1.31    $      .76
Net income per share - diluted                       $     1.23    $      .76
- ------------------------------------------------------------------------------


The pro forma results above are not necessarily indicative of the operating
results that would have actually occured if the acquisition had been in effect
on the dates indicated, nor is it necessarily indicative of future operating
results of the combined companies.

In the third quarter of fiscal 2000, ConAgra Foods acquired the assets of
Seaboard Farms, the poultry division of Seaboard Corporation, for approximately
$360 million. Seaboard Farms produces and markets value-added poultry products
primarily to foodservice customers and has annual sales of approximately $480
million. The acquisition was accounted for as a purchase, with the business
acquired being included in the financial statements subsequent to the date of
acquisition.

In the first quarter of fiscal 1999, ConAgra Foods acquired the tablespreads and
Egg Beaters business from Nabisco, Inc., for $400 million. The tablespreads
business manufactures and markets margarine under Parkay, Blue Bonnet,
Fleischmann's, Touch of Butter, Chiffon and Move Over Butter brand names. Egg
Beaters is an egg alternative product. Annual sales of the combined businesses
are approximately $480 million. The acquisition was accounted for as a purchase.
The results of operations of the businesses acquired are included in the
financial statements subsequent to the date of acquisition.

3. CHANGES IN ACCOUNTING POLICY
As indicated in Note 1, in the fourth quarter of fiscal 2001 the company changed
its methods of accounting for revenue recognition relating to the shipping terms
for certain of its product sales, recognition of sales incentives granted to
retailers and recognition of consumer sales incentives effective the beginning
of fiscal 2001.

The individual components of the cumulative effect of changes in accounting, net
of tax, as of the beginning of fiscal 2001 are as follows:



- ------------------------------------------------------------------------
                                              
Revenue recognition - shipping terms             $  15.6
Retailer sales incentives                           17.5
Consumer sales incentives                           10.8
- ------------------------------------------------------------------------
                                                 $  43.9
- ------------------------------------------------------------------------


The $43.9 million cumulative effect of the changes in accounting for prior years
(after reduction for income taxes of $26.9 million) is

                                           ConAgra Foods 2001 Annual Report 47


                                       97



included as a reduction in income for fiscal year ended May 27, 2001. Other
than such cumulative effect, the effect of the changes on fiscal 2001 was not
material.

The following pro forma amounts reflect the effect of retroactive application of
the changes in methods of accounting had the new methods been in effect for the
fiscal years presented, including the related income tax impact:




- -------------------------------------------------------------------------
                                 2001     2000      1999
- -------------------------------------------------------------------------
                                        
Net income                   $  638.6  $  376.2  $  326.8
Income per share - diluted   $   1.24  $    .79  $    .69
- -------------------------------------------------------------------------


Basic income per share is calculated on the basis of weighted average
outstanding common shares. Diluted income per share is computed on the basis of
weighted average outstanding common shares plus equivalent shares, assuming
exercise of stock options and conversion of outstanding convertible securities,
where dilutive.

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



- -----------------------------------------------------------------------------
                                           2001          2000         1999
- -----------------------------------------------------------------------------
                                                          
NET INCOME
   Income before cumulative effect
     of changes in accounting           $  682.5      $  382.3     $  330.2
   Cumulative effect of changes in
     accounting                            (43.9)            -            -
   Net income                           $  638.6      $  382.3     $  330.2

INCOME PER SHARE - BASIC
   Weighted average shares
     outstanding                           511.6         475.7        470.0

INCOME PER SHARE - DILUTED
   Weighted average shares
     outstanding - basic                   511.6         475.7        470.0
   Add shares contingently issuable
     upon exercise of stock options          2.7           2.9          6.7
   Weighted average shares
     outstanding                           514.3         478.6        476.7


At the ends of fiscal years 2001, 2000 and 1999, there were 16.7 million, 16.2
million and 8.9 million options outstanding, respectively, with exercise prices
exceeding the market value of common stock that were therefore excluded from the
computation of shares contingently issuable upon exercise of the options.

The company has agreements to sell interests in pools of receivables, in an
amount not to exceed $900 million at any one time. Participation interests in
new receivables may be sold, as collections reduce previously sold participation
interests. The participation interests are sold at a discount that is included
in selling, general and administrative expenses in the consolidated statements
of earnings. During fiscal 2001, the company sold interests in net new
receivables worth approximately $162 million and used $239 million of net
additional collections to reduce the facilities from $814 million at fiscal
year-end 2000 to $737 million at fiscal year-end 2001.

The major classes of inventories are as follows:



- ------------------------------------------------------------------------------------
                                                          2001             2000
- ------------------------------------------------------------------------------------
                                                                  
Hedged commodities                                    $  1,499.0        $  1,305.7
Food products and livestock                              1,919.5           1,350.7
Agricultural chemicals, fertilizer, and feed             1,108.8             940.6
Other, principally ingredients and supplies                544.1             459.0

                                                      $  5,071.4        $  4,056.0
- ------------------------------------------------------------------------------------


At May 27, 2001, the company has credit lines from banks which total
approximately $5.1 billion, including: $1.8 billion of long-term revolving
credit facilities maturing in September 2003; $2.2 billion of short-term
revolving credit facilities maturing in September 2001; and uncompensated
bankers' acceptance and money market loan facilities approximating $1.1 billion.
From August 24, 2000, to September 18, 2000, the company utilized an additional
$1.5 billion revolving credit facility to facilitate the acquisition of
International Home Foods. Borrowings under the revolver agreements are at or
below prime rate and may be prepaid without penalty. The company pays fees for
its revolving credit facilities.

The company finances its short-term needs with bank borrowings, commercial paper
borrowings and bankers' acceptances. The average consolidated short-term
borrowings outstanding under these facilities for the 2001 fiscal year were
$3,363.4 million. This excludes an average of $173.7 million of short-term
borrowings that were classified as long-term throughout the fiscal year (see
Note 8). The highest period-end short-term indebtedness during fiscal 2001 was
$4,585.7 million. Short-term borrowings were at rates below prime. The weighted
average interest rate was 6.02% and 5.85%, respectively, for fiscal 2001 and
2000.

At May 27, 2001, and May 28, 2000, the company had no interest rate swap
agreements in effect. At May 30, 1999, the company had outstanding interest rate
swap agreements effectively changing the interest rate exposure on $650 million
of short-term borrowings from variable to a 5.8% fixed rate. The swap agreements
matured in fiscal 2000. The fiscal 2000 and 1999 financial statement impact of
these agreements was not material.

ConAgra Foods 2001 Annual Report 48


                                       98



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



- --------------------------------------------------------------------------------
                                                       2001              2000
- --------------------------------------------------------------------------------
                                                             
Senior Debt
   Commercial paper backed by long-term
     revolving credit agreement                  $    175.3        $    164.5
   8.25% senior debt due in 2030                      297.6               -
   7.00% senior debt due in 2028                      396.7             396.5
   6.70% senior debt due in 2027
     (redeemable at option of holders in 2009)        300.0             300.0
   7.125% senior debt due in 2026
     (redeemable at option of holders in 2006)        397.9             397.8
   7.875% senior debt due in 2010                     747.5                 -
   9.875% senior debt due in 2006                     100.0             100.0
   7.5% senior debt due in 2005                       598.9                 -
   5.50% senior debt due in 2002                      199.6             199.3
   9.87% to 9.95% unsecured senior notes
     due in various amounts through 2009               30.5              39.4
   8.1% to 9.0% publicly issued unsecured
     medium-term notes due in various
     amounts through 2004                              12.0             117.0
   5.75% to 9.28% Industrial Development
     Revenue Bonds (collateralized by plant
     and equipment) due on various dates
     through 2017                                      39.5              46.2
   Miscellaneous unsecured                             64.0              56.1
- --------------------------------------------------------------------------------
         Total senior debt                       $  3,359.5        $  1,816.8
- --------------------------------------------------------------------------------
Subordinated Debt
   9.75% subordinated debt due in 2021                400.0             400.0
   7.375% to 7.4% subordinated debt due
     through 2005                                     350.0             350.0
- --------------------------------------------------------------------------------
         Total subordinated debt                 $    750.0        $    750.0
- --------------------------------------------------------------------------------
Total long-term debt, excluding
  current installments                           $  4,109.5        $  2,566.8
- --------------------------------------------------------------------------------


The aggregate minimum principal maturities of the long-term debt for each of the
five fiscal years following May 27, 2001, are as follows:


- --------------------------------------------------------------------------
                                         
     2002                                   $   123.1
     2003                                       209.2
     2004                                       188.0
     2005                                       370.2
     2006                                       708.5
- --------------------------------------------------------------------------

Under the long-term credit facility referenced in Note 7, the company has
agreements that allow it to borrow up to $1.8 billion through September 2003.

The most restrictive note agreements (the revolving credit facilities and
certain privately placed long-term debt) require the company to repay the debt
if consolidated funded debt exceeds 60% of consolidated capital base or if fixed
charges coverage is less than 1.75 to 1.0 as such terms are defined in
applicable agreements.

Net interest expense consists of:



- --------------------------------------------------------------------
                                 2001      2000      1999
- --------------------------------------------------------------------
                                         
Long-term debt               $  284.8  $  198.4   $  194.6
Short-term debt                 182.1     139.5      166.5
Interest income                 (38.5)    (28.6)     (37.6)
Interest capitalized             (5.1)     (5.5)      (6.9)
- --------------------------------------------------------------------
                             $  423.3  $  303.8   $  316.6
- --------------------------------------------------------------------


Net interest paid was $392.7 million, $299.9 million and $308.5 million in
fiscal 2001, 2000 and 1999, respectively.

Short-term debt interest expense of $35.0 million, $31.4 million and $20.0
million in fiscal 2001, 2000 and 1999, respectively, incurred to finance hedged
inventories, has been charged to cost of goods sold.

The carrying amount of long-term debt (including current installments) was
$4,232.6 million and $2,587.4 million as of May 27, 2001, and May 28, 2000,
respectively. Based on current market rates primarily provided by outside
investment bankers, the fair value of this debt at May 27, 2001, and May 28,
2000, was estimated at $4,324.7 million and $2,417.0 million, respectively. The
company's long-term debt is generally not callable until maturity.

9. OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities consist of:



- -------------------------------------------------------------------------
                                                  2001      2000
- -------------------------------------------------------------------------
                                                     
Legal and environmental liabilities primarily
  associated with the company's acquisition
  of Beatrice Company (acquired in
  fiscal 1991)                                  $  140.1   $  165.2
Postretirement health care
  and pensions                                     631.6      596.7
Deferred taxes                                     150.2          -
Other                                               71.5       52.7
- --------------------------------------------------------------------
                                                   993.4      814.6
Less current portion                                65.9       63.9
- --------------------------------------------------------------------
                                                $  927.5   $  750.7
- --------------------------------------------------------------------



                                           ConAgra Foods 2001 Annual Report 49


                                      99



10. PREFERRED SECURITIES OF SUBSIDIARY COMPANY

ConAgra Capital, L.C., an indirectly controlled subsidiary of the company
(ConAgra Foods indirectly owns 100% of the voting securities.), has the
following Preferred Securities outstanding:

   4 MILLION SHARES OF 9% SERIES A CUMULATIVE PREFERRED ("SERIES A SECURITIES")
     Distributions are payable monthly.
   7 MILLION SHARES OF SERIES B ADJUSTABLE RATE CUMULATIVE PREFERRED ("SERIES B
     SECURITIES")
     Distributions are payable monthly at a rate per annum, which is adjusted
     quarterly to 95% of the highest of three U.S. Treasury security indices,
     subject to a floor of 5.0% and a ceiling of 10.5% per annum. The
     distribution rate in fiscal 2001 ranged from 5.2% to 6.2%.
  10 MILLION SHARES OF 9.35% SERIES C CUMULATIVE PREFERRED ("SERIES C
     SECURITIES")
     Distributions are payable monthly.

For financial statement purposes, distributions on these Securities are included
in selling, general and administrative expenses in the company's consolidated
statements of earnings as such amounts represent minority interests.

The above Securities were issued at a price of $25 per share. All such
Securities are non-voting (except in certain limited circumstances), and are
fully and unconditionally guaranteed (as provided in the guarantee documents) by
ConAgra Foods and, in certain limited circumstances, are exchangeable for debt
securities of ConAgra Foods. The Securities are redeemable at the option of
ConAgra Capital, L.C. (with ConAgra Foods' consent) in whole or in part, at $25
per security plus accumulated and unpaid distributions to the date fixed for
redemption.

11. CAPITAL STOCK
The company has authorized shares of preferred stock as follows:

     Class B--$50 par value; 150,000 shares
     Class C--$100 par value; 250,000 shares
     Class D--without par value; 1,100,000 shares
     Class E--without par value; 16,550,000 shares

There were no preferred shares issued or outstanding as of May 27, 2001.

12. EMPLOYEE EQUITY FUND
In fiscal 1993, the company established a $700 million Employee Equity Fund
(EEF), a grantor trust, to pre-fund future stock-related obligations of the
company's compensation and benefit plans. The EEF supports existing, previously
approved employee plans that use ConAgra Foods' common stock.

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

Following is a summary of shares held by the EEF:



- ----------------------------------------------------------------
                                          2001       2000
- ----------------------------------------------------------------
                                             
Shares held (in millions)                  12.6         15.2
Cost - per share                     $   14.552    $  14.552
Cost - total                              183.9        221.9
Fair market value - per share        $    20.27    $ 22.9375
Fair market value - total                 256.1        349.7
- ----------------------------------------------------------------


13. STOCK OPTIONS AND RIGHTS
Stock option plans approved by the stockholders provide for granting of options
to employees for purchase of common stock generally at prices equal to fair
market value at the time of grant, and for issuance of restricted or bonus stock
without direct cost to the employee. During fiscal 2001, 2000 and 1999,
respectively, 175,000 shares, 126,000 shares and 195,825 shares of restricted
stock (including stock issued under incentive plans) were issued. The value of
the restricted stock, equal to fair market value at the time of grant, is being
amortized as compensation expense over the vesting period. This compensation
expense was not significant for fiscal 2001, 2000 and 1999. Options become
exercisable under various vesting schedules and generally expire 10 years after
the date of grant. Option shares and prices are adjusted for common stock splits
and changes in capitalization.

The changes in the outstanding stock options during the three years ended May
27, 2001, are summarized below:



- ---------------------------------------------------------------------------------------
                                     2001               2000                   1999
- ---------------------------------------------------------------------------------------
                                   Weighted             Weighted            Weighted
                                   Average               Average             Average
                                  Exercise              Exercise             Exercise
                     Options        Price  Options       Price    Options     Price
- --------------------------------------------------------------------------------------
                                                        
Beginning of year       25.6    $   23.30    23.5    $   22.86    23.6    $   20.91
Granted                 11.6        15.76     6.0        23.35     4.8        28.15
Exercised               (6.1)       10.89    (1.8)       13.41    (3.3)       14.70
Canceled                (2.3)       24.27    (2.1)       27.20    (1.6)       26.76
End of year             28.8    $   22.80    25.6    $   23.30    23.5    $   22.86
Exercisable
  at end of year        18.7    $   22.63    16.2    $   21.56    14.4    $   19.58
- --------------------------------------------------------------------------------------


Options granted for fiscal 2001 include approximately 5 million options at an
average exercise price of $10.00 issued in conjunction with the acquisition of
IHF.

50 ConAgra Foods 2001 Annual Report


                                       100



The following summarizes information about stock options outstanding as of May
27, 2001:



- -------------------------------------------------------------------------------
                                   Options Outstanding   Options Exercisable
- -------------------------------------------------------------------------------
                                   Weighted     Weighted            Weighted
                                    Average     Average              Average
                                   Remaining   Exercise              Exercise
Range of Exercise Price    Options   Life       Price    Options      Price
- -------------------------------------------------------------------------------
                                                    
   $  4.87  -  $12.69        1.1      2.7      $ 11.47     1.1     $ 11.47
     13.00  -   20.00       10.0      6.0        18.21     6.8       17.46
     20.06  -   23.50        7.2      8.4        22.28     2.9       22.52
     24.19  -   29.00        7.1      6.7        26.38     5.2       26.00
     29.50  -   36.81        3.4      6.4        33.69     2.7       33.71
   $  4.87  -  $36.81       28.8      6.7      $ 22.80    18.7     $ 22.63
- -------------------------------------------------------------------------------


The company has elected to account for its employee stock option plans using the
intrinsic value method of accounting. Accordingly, no compensation expense is
recognized for stock options as the exercise price of the stock options equals
the market price of the underlying stock on the date of the grant.

Pro forma information regarding net income and income per share is required by
SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, assuming the company
accounted for its employee stock options using the fair value method. The fair
value of options was estimated at the date of the grant using the Black-Scholes
option pricing model with the following weighted average assumptions for 2001,
2000 and 1999, respectively: risk-free interest rate of 5.17%, 6.33% and 4.29%;
a dividend yield of 2.4%, 2.2% and 2.2%; expected volatility of 29.0%, 20.6% and
20.0%; and an expected option life of six years. The weighted average fair value
of options granted in fiscal 2001, 2000 and 1999 was $5.75, $6.21 and $6.12,
respectively. Pro forma net income and income per share are as follows (because
SFAS No. 123 is applicable only to options granted subsequent to fiscal 1995,
its pro forma effect was not fully reflected until fiscal 2000):



- ------------------------------------------------------------------------------
                                               2001        2000        1999
- ------------------------------------------------------------------------------
                                                          
Pro forma net income                       $   621.1   $   362.7   $   316.1
Pro forma basic income per share                1.21         .76         .67
Basic income per share - as reported            1.24         .80         .70
Pro forma diluted income per share              1.21         .76         .66
Diluted income per share - as reported          1.24         .80         .69
- ------------------------------------------------------------------------------


At May 27, 2001, approximately 28.0 million shares were reserved for granting
additional options and restricted or bonus stock awards.

Each share of common stock carries with it one-half preferred stock purchase
right ("Right"). The Rights become exercisable 10 days after a person (an
"Acquiring Person") acquires or commences a tender offer for 15% or more of the
company's common stock. Each Right entitles the holder to purchase one
one-thousandth of a share of a new series of Class E Preferred Stock at an
exercise price of $200, subject to adjustment. The Rights expire on July 12,
2006, and may be redeemed at the option of the company at $.01 per Right,
subject to adjustment. Under certain circumstances, if (i) any person becomes an
Acquiring Person or (ii) the company is acquired in a merger or other business
combination after a person becomes an Acquiring Person, each holder of a Right
(other than the Acquiring Person) will have the right to receive, upon exercise
of the Right, shares of common stock (of the company under (i) and of the
acquiring company under (ii)) having a value of twice the exercise price of the
Right. The Rights were issued pursuant to a dividend declared by the company's
Board of Directors on July 12, 1996, payable to stockholders of record on July
24, 1996. The one Right for each outstanding share was adjusted to one-half
Right for each share effective October 1, 1997, as a result of the two-for-one
stock split. At May 27, 2001, the company has reserved one million Class E
preferred shares for exercise of the Rights.

14. OPERATION OVERDRIVE
During the fourth quarter of fiscal 1999, the company approved a restructuring
plan spanning three fiscal years in connection with its previously announced
initiative, "Operation Overdrive." However, the restructuring plan was completed
within two fiscal years as the plan's initiatives were completed in the fourth
quarter of fiscal 2000. The restructuring plan was aimed at eliminating
overcapacity, streamlining operations and improving future profitability through
margin improvement and expense reductions. The pre-tax charge of the plan
totaled $1,062.2 million with $621.4 million and $440.8 million recognized in
fiscal 2000 and 1999, respectively.

Fiscal 2000 charges are as follows:



- --------------------------------------------------------------------------------------
                                       Packaged  Refrigerated   Agricultural
                                        Foods       Foods         Products     Total
- --------------------------------------------------------------------------------------
                                                                 
Accelerated depreciation                $  128.2   $   10.9       $      -   $  139.1
Inventory markdowns                         46.2       11.2           57.1      114.5
Restructuring plan
  implementation costs                      25.2       14.6            5.8       45.6
Restructuring/Impairment
  charges                                  109.9      131.3           81.0      322.2

     Total                              $  309.5   $  168.0       $  143.9   $  621.4

Fiscal 1999 charges are as follows:
Restructuring/Impairment
  charges                               $   39.0   $  358.6       $   43.2   $  440.8
- --------------------------------------------------------------------------------------


The fiscal 2000 charges are reflected in the company's consolidated statements
of earnings as follows: accelerated depreciation of $108.3 million and $30.8
million is included in cost of goods sold and selling, general and
administrative expenses, respectively; inventory markdowns are included in cost
of goods sold; plan implementation costs (primarily

                                           ConAgra Foods 2001 Annual Report 51


                                     101



third-party consulting costs) are also included in selling, general and
administrative expenses. For fiscal 2000 and fiscal 1999,
restructuring/impairment charges are reflected as such and result from asset
impairments, employee-related costs and contractual termination costs.

Included in fiscal 2000 and 1999 consolidated statements of earnings are asset
impairment charges of approximately $213.5 million and $388.4 million,
respectively. Fiscal 2000 asset impairment charges include $171.4 million in
write-downs of property, plant and equipment and $42.1 million in reductions of
intangible and other assets. The fiscal 2000 property, plant and equipment
write-downs occurred primarily in the Refrigerated Foods segment as a result of
management's decision to reorganize certain protein businesses. Fiscal 1999
asset impairment charges include $183.5 million in write-downs of property,
plant and equipment and $204.9 million in reductions of intangible and other
assets. The fiscal 1999 intangible and other asset write-downs occurred
primarily in the Refrigerated Foods segment as a result of management's decision
to consolidate and reorganize its turkey businesses.

Accelerated depreciation is a result of not immediately removing from operations
certain assets to be disposed of and depreciating these assets over their
revised remaining estimated useful lives. Inventory markdowns represent losses
on the carrying value of non-strategic inventory resulting from the closure of
facilities and discontinuation of certain products.

In association with the restructuring plan, the company closed a total of 31
production facilities, 106 non-production locations (e.g., storage,
distribution, administrative, etc.) and sold 18 non-core businesses. The
historical operating results and gains/losses associated with sold businesses or
facilities were not material.

Approximately 8,450 employees received notification of their termination as a
result of the restructuring plan, primarily in manufacturing and operating
facilities. This total represents an increase of approximately 1,750 individuals
from the original estimate, and resulted primarily from updated estimates
associated with existing restructuring initiatives. In addition, other exit
costs (consisting of lease termination and other contractual termination costs)
occurred as a result of the restructuring plan. Such activity is as follows:



- ----------------------------------------------------------------------------
                                        Severance          Other Exit
IN MILLIONS, EXCEPT HEADCOUNT      Amount   Headcount         Costs
- ----------------------------------------------------------------------------
                                                  
Fiscal 1999 activity:
   Charges to income              $  45.1       3,160      $   7.3
   Utilized                          (6.1)       (260)           -
- ----------------------------------------------------------------------------
   Balance, May 30, 1999          $  39.0       2,900      $   7.3
Fiscal 2000 activity:
   Charges to income              $  57.8       5,290      $  50.9
   Utilized                         (44.3)     (4,990)       (21.5)
- ----------------------------------------------------------------------------
   Balance, May 28, 2000          $  52.5       3,200      $  36.7
Fiscal 2001 activity:
   Utilized                         (31.0)     (2,800)       (28.1)
- ----------------------------------------------------------------------------
   Balance, May 27, 2001          $  21.5         400      $   8.6
- ----------------------------------------------------------------------------


Included in the May 27, 2001, severance reserve balance are amounts owed to
individuals who have been severed but are receiving their severance payments
over a period of time rather than in the form of a lump-sum.

15. PRE-TAX INCOME AND INCOME TAXES
Income before income taxes and cumulative effect of changes in accounting
consisted of the following:



- -----------------------------------------------------------------
                                2001       2000     1999
- -----------------------------------------------------------------
                                        
United States              $  1,010.6  $  541.5  $   524.1
Foreign                          93.5      76.1      111.5
- -----------------------------------------------------------------
                           $  1,104.1  $  617.6  $   635.6
- -----------------------------------------------------------------


The provision for income taxes includes the following:



- -----------------------------------------------------------------
                                2001       2000     1999
- -----------------------------------------------------------------
                                         
Current
   Federal                   $  299.3  $  255.6   $  264.4
   State                         30.9      22.5       49.9
   Foreign                       40.4      33.3       24.5
- -----------------------------------------------------------------
                             $  370.6  $  311.4   $  338.8
- -----------------------------------------------------------------
Deferred
   Federal                       46.4     (70.1)     (30.0)
   State                          4.6      (6.0)      (3.4)
   Foreign                          -         -          -
- -----------------------------------------------------------------
                                 51.0     (76.1)     (33.4)
- -----------------------------------------------------------------
                             $  421.6  $  235.3   $  305.4
- -----------------------------------------------------------------


52 ConAgra Foods 2001 Annual Report


                                      102



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



- --------------------------------------------------------------------------------
                                            2001         2000        1999
- --------------------------------------------------------------------------------
                                                         
Computed U.S. federal
  income taxes                            $  386.4    $  216.2    $  222.5
State income taxes, net of
  U.S. federal tax benefit                    23.1        11.0        29.4
Nondeductible amortization of
  goodwill and other intangibles              24.7        18.1        21.5
Export and jobs tax credits                  (20.4)      (19.2)      (12.2)
Permanent differences due to
  restructuring/impairment charges               -           -        57.3
Other                                          7.8         9.2       (13.1)
- --------------------------------------------------------------------------------
                                          $  421.6    $  235.3    $  305.4
- --------------------------------------------------------------------------------


Income taxes paid were $268.4 million, $441.5 million and $344.5 million in
fiscal 2001, 2000 and 1999, respectively. The Internal Revenue Service has
closed examinations of the company's tax returns through fiscal 1995. Certain
tax authorities have proposed adjustments for later years, some of which are
being contested by the company. The company believes that it has made adequate
provisions for income taxes payable.

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



- ----------------------------------------------------------------------------------
                                        2001                         2000
- ----------------------------------------------------------------------------------
                                   Assets     Liabilities   Assets   Liabilities
- ----------------------------------------------------------------------------------
                                                         
Depreciation and
  amortization                      $      -   $  532.7   $      -   $  462.3
Pension and other
  postretirement benefits              208.1          -      157.9          -
Other noncurrent liabilities
  which will give rise to
  future tax deductions                148.4          -      185.7          -
Accrued expenses                        58.5          -      141.4          -
Restructuring/Impairment
  and restructuring-related
  charges                              262.4          -      304.7          -
Other                                   76.0       28.8       83.1      136.2
- -------------------------------------------------------------------------------
                                    $  753.4   $  561.5   $  872.8   $  598.5
- -------------------------------------------------------------------------------


16. COMMITMENTS
The company leases certain facilities and transportation equipment under
agreements that expire at various dates. Management expects that in the normal
course of business, leases that expire will be renewed or replaced by other
leases. Substantially all leases require payment of property taxes, insurance
and maintenance costs in addition to rental payments.

A summary of rent expense charged to operations follows:



- ------------------------------------------------------------------------
                                2001      2000       1999
- ------------------------------------------------------------------------
                                         
Cancelable                   $  167.3  $  189.4   $  154.8
Noncancelable                   119.6      97.5      117.9
- ------------------------------------------------------------------------
                             $  286.9  $  286.9   $  272.7
- ------------------------------------------------------------------------


A summary of noncancelable operating lease commitments for fiscal years
following May 27, 2001, is as follows:



                                   Type of property
- --------------------------------------------------------------
                            Real and Other   Transportation
                               Property         Equipment
- --------------------------------------------------------------
                                       
2002                         $   97.9        $   10.1
2003                             78.8             5.9
2004                             66.2             3.2
2005                             52.6             2.8
2006                             34.7             2.4
Later years                     124.1             1.2
- --------------------------------------------------------------
                             $  454.3        $   25.6
- --------------------------------------------------------------


The company had letters of credit, performance bonds and other commitments and
guarantees outstanding at May 27, 2001, aggregating to approximately $251
million.

17. CONTINGENCIES
In fiscal 1991, the company acquired Beatrice Company ("Beatrice"). As a result
of the acquisition and the significant pre-acquisition contingencies of the
Beatrice businesses and its former subsidiaries, the consolidated
post-acquisition financial statements of the company reflect significant
liabilities associated with the estimated resolution of these contingencies.
These include various litigation and environmental proceedings related to
businesses divested by Beatrice prior to its acquisition by the company. The
environmental proceedings include litigation and administrative proceedings
involving Beatrice's status as a potentially responsible party at 41 Superfund,
proposed Superfund or state-equivalent sites. Beatrice has paid or is in the
process of paying its liability share at 35 of these sites. Substantial reserves
for these matters have been established based on the company's best estimate of
its undiscounted remediation liabilities, which estimates include evaluation of
investigatory studies, extent of required cleanup, the known volumetric
contribution of Beatrice and other potentially responsible parties and its
experience in remediating sites.

                                          ConAgra Foods 2001 Annual Report  53


                                     103



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

18. DERIVATIVE FINANCIAL INSTRUMENTS
The company may use interest rate swaps to reduce the risk of changes in
interest rates, as outlined in Note 7. In addition, the company's energy
subsidiary uses derivative financial instruments in its trading activities in
energy markets. At May 27, 2001, the company's energy subsidiary was party to
natural gas price swaps with a net notional amount of $57.3 million. The swap
agreements are settled in cash based on the difference between a fixed and
floating (index-based) price for the underlying commodity. All swaps expire
within five years, while most have a duration of no more than two years. At May
28, 2000, the net notional amount of these financial instruments was $43.1
million. All contracts are marked-to-market, with gains and losses recorded in
the consolidated statements of earnings, consistent with all trading business
activity within the company.

The company performs credit assessments on all counterparties and obtains
additional guarantees of financial performance, if deemed necessary. The
predominance of these trades are swaps, where the company pays or receives only
the difference between the contract value and the market value. The amount at
risk is therefore limited to the gain on the swap. The company does not
anticipate any material loss because of nonperformance by a counterparty.

Certain of the company's operations use foreign exchange derivative instruments
to hedge fixed purchase and sales commitments denominated in a foreign currency.
The fair value of these foreign exchange positions was not material.

19. PENSION AND POSTRETIREMENT BENEFITS
RETIREMENT PENSION PLANS
The company and its subsidiaries have defined benefit retirement plans ("Plan")
for eligible salaried and hourly employees. Benefits are based on years of
credited service and average compensation or stated amounts for each year of
service. The company funds these plans in accordance with the minimum and
maximum limits established by law.

Components of pension benefit costs and weighted average actuarial assumptions
are:



- --------------------------------------------------------------------------------
                                          2001            2000            1999
- --------------------------------------------------------------------------------
                                                            
PENSION BENEFIT COST
Service cost                         $    52.3       $    55.7       $    48.5
Interest cost                            109.7           103.2            97.7
Expected return on plan assets          (126.3)         (114.6)         (101.4)
Amortization of prior
  service costs                            4.3             4.3             3.8
Amortization of transition
  obligation                              (2.7)           (2.7)           (2.7)
Recognized net actuarial loss             (0.1)            3.4             1.9
Curtailment (gain) loss and
  special benefits                         0.3             3.3               -
- --------------------------------------------------------------------------------
Pension benefit cost -
  company plans                           37.5            52.6            47.8
Pension benefit cost -
  multi-employer plans                     8.9             9.4             9.1
- --------------------------------------------------------------------------------
Total pension benefit cost           $    46.4       $    62.0       $    56.9
- --------------------------------------------------------------------------------
ACTUARIAL ASSUMPTIONS
Discount rate                             7.50%           6.75%           7.25%
Long-term rate of return on
  plan assets                             9.25%           9.25%           8.75%
Long-term rate of compensation
  increase                                5.50%           5.50%           5.50%
- --------------------------------------------------------------------------------


The change in projected benefit obligation, change in plan assets and funded
status of the plans at February 28, 2001, and February 29, 2000:




- -----------------------------------------------------------------
                                            2001        2000
- -----------------------------------------------------------------
                                              
CHANGE IN PROJECTED BENEFIT OBLIGATION
Projected benefit obligation at
  beginning of year                     $ 1,489.2    $ 1,561.2
Service cost                                 52.3         55.7
Interest cost                               109.7        103.2
Plan participants' contributions              0.1          0.1
Amendments                                    3.1          3.2
Actuarial loss (gain)                       (11.0)      (156.4)
Curtailment/Settlement loss                   0.3          2.4
Acquisitions                                 19.3            -
Other                                           -          0.5
Benefits paid                               (87.2)       (80.7)
- -----------------------------------------------------------------
Projected benefit obligation at
  end of year                           $ 1,575.8    $ 1,489.2
- -----------------------------------------------------------------


54  ConAgra Foods 2001 Annual Report


                                      104





- ------------------------------------------------------------------------------
                                                     2001              2000
- ------------------------------------------------------------------------------
                                                           
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning
  of year                                      $   1,652.1       $   1,535.8
Actual return on plan assets                          49.7             189.2
Employer contributions                                20.9              16.9
Plan participants' contributions                       0.1               0.1
Investment and administrative expenses               (10.3)             (9.4)
Acquisitions                                          18.5                 -
Other                                                 (0.1)              0.2
Benefits paid                                        (87.2)            (80.7)
- ------------------------------------------------------------------------------
Fair value of plan assets at end of year           1,643.7           1,652.1
- ------------------------------------------------------------------------------
FUNDED STATUS                                         67.9             162.9
Unrecognized actuarial gain                         (279.5)           (355.3)
Unrecognized prior service cost                       21.6              22.9
Unrecognized transition amount                        (3.8)             (6.6)
- ------------------------------------------------------------------------------
Accrued benefit cost                           $    (193.8)      $    (176.1)
- ------------------------------------------------------------------------------
ACTUARIAL ASSUMPTIONS
Discount rate                                         7.50%             7.50%
Long-term rate of compensation increase               5.50%             5.50%
- ------------------------------------------------------------------------------


The projected benefit obligation, accumulated benefit obligation and fair value
of plan assets for pension plans with accumulated benefit obligations in excess
of plan assets at February 28, 2001, and February 29, 2000, were:



- ------------------------------------------------------------
                                         2001       2000
- ------------------------------------------------------------
                                           
Projected benefit obligation          $  142.2   $  192.9
Accumulated benefit obligation           131.5      182.7
Fair value of plan assets                 65.0      116.8
- ------------------------------------------------------------


Plan assets are primarily invested in equity securities, corporate and
government debt securities and common trust funds. Included in plan assets are
5.1 million shares of the company's common stock at a fair market value of
$100.0 million and $83.2 million at February 28, 2001, and February 29, 2000,
respectively.

Certain employees of the company are covered under defined contribution plans.
The expense related to these plans was $30.2 million, $31.1 million and $29.7
million in fiscal 2001, 2000 and 1999, respectively.

POSTRETIREMENT BENEFITS
The company's postretirement plans provide certain medical and dental benefits
to qualifying U.S. employees.

Components of postretirement benefit costs and weighted average actuarial
assumptions are:



- -------------------------------------------------------------------------------
                                                2001        2000        1999
- -------------------------------------------------------------------------------
                                                            
POSTRETIREMENT BENEFIT COST
Service cost                                $    2.8     $   2.8     $  2.8
Interest cost                                   24.1        22.1       24.7
Expected return on plan assets                  (0.6)       (0.5)      (0.6)
Amortization of prior service cost              (1.7)       (2.1)      (0.1)
Amortization of transition obligation            0.1         0.1        0.1
Recognized net actuarial (gain) loss            (5.5)       (3.8)      (3.0)
Curtailment (gain) loss                            -        (9.3)         -
- -------------------------------------------------------------------------------
                                            $   19.2     $   9.3     $ 23.9
- -------------------------------------------------------------------------------
ACTUARIAL ASSUMPTIONS
Discount rate                                   7.50%       6.75%      7.25%
Long-term rate of return on
  plan assets                                  13.70%      13.70%     13.70%
- -------------------------------------------------------------------------------


The change in accumulated benefit obligation, change in plan assets and funded
status of the plans at February 28, 2001, and February 29, 2000, were:



- --------------------------------------------------------------------------------
                                                          2001            2000
- --------------------------------------------------------------------------------
                                                               
CHANGE IN ACCUMULATED BENEFIT OBLIGATION
Accumulated benefit obligation at
  beginning of year                                  $   315.3       $   350.7
Service cost                                               2.8             2.8
Interest cost                                             24.1            22.1
Plan participants' contributions                           2.4             2.1
Actuarial (gain) loss                                     19.8           (15.7)
Acquisition                                               26.1               -
Benefits paid                                            (37.5)          (35.5)
Plan amendments                                           (1.3)          (11.2)
- --------------------------------------------------------------------------------
Accumulated benefit obligation at end
  of year                                            $   351.7       $   315.3
- --------------------------------------------------------------------------------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year       $     5.1       $     5.3
Actual return on plan assets                               0.6             0.7
Employer contributions                                    34.5            32.5
Plan participants' contributions                           2.4             2.1
Benefits paid                                            (37.5)          (35.5)
- --------------------------------------------------------------------------------
Fair value of plan assets at end of year                   5.1             5.1
- --------------------------------------------------------------------------------
FUNDED STATUS                                           (346.6)         (310.2)
Unrecognized net gain                                    (78.9)         (104.6)
Unrecognized transition amount                               -             0.6
Unrecognized prior service cost                           (0.2)           (1.2)
- --------------------------------------------------------------------------------
Accrued benefit cost                                 $  (425.7)      $  (415.4)
- --------------------------------------------------------------------------------
ACTUARIAL ASSUMPTIONS
Discount rate                                             7.50%           7.50%
- --------------------------------------------------------------------------------



                                             ConAgra Foods 2001 Annual Rate 55


                                      105



Benefit costs were generally estimated assuming retiree health care costs would
increase at a 5.5% annual rate.

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



- --------------------------------------------------------------------------------
                                                One Percent      One Percent
                                                 Increase         Decrease
- --------------------------------------------------------------------------------
                                                           
Total service and interest
  cost components                                $  2.8          $  (2.4)
Postretirement benefit obligation                  32.2            (28.2)
- --------------------------------------------------------------------------------


The company generally intends to fund claims as reported.

20. BUSINESS SEGMENTS AND RELATED INFORMATION
The company's business segments are aggregated into three reportable segments
based upon similar economic characteristics, nature of products and services
offered, nature of production processes, the type or class of customer and
distribution methods. Packaged Foods includes companies that produce
shelf-stable and frozen foods. Refrigerated Foods includes companies that
produce and market branded processed meats, beef, pork, chicken and turkey. Both
the Packaged Foods and Refrigerated Foods segments market food products in
retail and foodservice channels. Agricultural Products includes companies
involved in distribution of agricultural inputs and procurement, processing,
trading and distribution of commodity food ingredients and agricultural
commodities.

Intersegment sales have been recorded at amounts approximating market. Operating
profit for each segment is based on net sales less all identifiable operating
expenses and includes the related equity in earnings of companies included on
the basis of the equity method of accounting. General corporate expense,
goodwill amortization, interest expense and income taxes have been excluded from
segment operations.

56 ConAgra Foods 2001 Annual Report


                                      106





- --------------------------------------------------------------------------------------------------------------------------
                                                                                   2001           2000            1999
- --------------------------------------------------------------------------------------------------------------------------
                                                                                                     
Sales to unaffiliated customers
   Packaged Foods                                                               $ 8,681.7      $  7,610.9     $  7,395.3
   Refrigerated Foods                                                            13,212.1        12,880.8       11,881.7
   Agricultural Products                                                          5,300.4         5,042.9        5,567.4
- --------------------------------------------------------------------------------------------------------------------------
   Total                                                                        $27,194.2      $ 25,534.6     $ 24,844.4
- --------------------------------------------------------------------------------------------------------------------------
Intersegment sales
   Packaged Foods                                                               $    52.5      $     48.6     $     38.2
   Refrigerated Foods                                                               385.0           341.4          213.1
   Agricultural Products                                                            293.3           272.9          288.0
- --------------------------------------------------------------------------------------------------------------------------
                                                                                    730.8           662.9          539.3
   Intersegment elimination                                                        (730.8)         (662.9)        (539.3)
- --------------------------------------------------------------------------------------------------------------------------
   Total                                                                        $       -      $        -     $        -
- --------------------------------------------------------------------------------------------------------------------------
Net sales
   Packaged Foods                                                               $ 8,734.2      $  7,659.5     $  7,433.5
   Refrigerated Foods                                                            13,597.1        13,222.2       12,094.8
   Agricultural Products                                                          5,593.7         5,315.8        5,855.4
   Intersegment elimination                                                        (730.8)         (662.9)        (539.3)
- --------------------------------------------------------------------------------------------------------------------------
   Total                                                                        $27,194.2      $ 25,534.6     $ 24,844.4
- --------------------------------------------------------------------------------------------------------------------------
Operating profit (Note a)
   Packaged Foods                                                               $ 1,139.2      $    777.4     $    940.2
   Refrigerated Foods                                                               437.8           322.9           10.6
   Agricultural Products                                                            281.0           138.7          267.8
- --------------------------------------------------------------------------------------------------------------------------
   Total operating profit                                                         1,858.0         1,239.0        1,218.6
   Interest expense                                                                 423.3           303.8          316.6
   General corporate expenses                                                       236.4           254.2          197.0
   Goodwill amortization                                                             94.2            63.4           69.4
- --------------------------------------------------------------------------------------------------------------------------
   Income before income taxes and cumulative effect of changes in accounting    $ 1,104.1      $    617.6     $    635.6
- --------------------------------------------------------------------------------------------------------------------------
Identifiable assets
   Packaged Foods                                                               $ 7,740.5      $  4,621.2     $  4,758.9
   Refrigerated Foods                                                             3,945.0         3,665.7        3,407.3
   Agricultural Products                                                          3,745.1         3,152.3        3,515.7
   Corporate                                                                      1,050.2           757.4          399.6
- --------------------------------------------------------------------------------------------------------------------------
   Total                                                                        $16,480.8      $ 12,196.6     $ 12,081.5
- --------------------------------------------------------------------------------------------------------------------------
Additions to property, plant and equipment -- including businesses acquired
   Packaged Foods                                                               $   496.7      $    227.2     $    375.4
   Refrigerated Foods                                                               211.0           459.6          226.0
   Agricultural Products                                                            117.2            81.8          136.1
   Corporate                                                                         65.1            59.9           25.7
- --------------------------------------------------------------------------------------------------------------------------
   Total                                                                        $   890.0      $    828.5     $    763.2
- --------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization
   Packaged Foods                                                               $   309.7      $    263.0     $    241.1
   Refrigerated Foods                                                               189.8           184.7          193.7
   Agricultural Products                                                             75.2            73.3           63.2
   Corporate                                                                         18.2            15.5            1.8
- --------------------------------------------------------------------------------------------------------------------------
   Total                                                                        $   592.9      $    536.5     $    499.8
- --------------------------------------------------------------------------------------------------------------------------


Note a: Fiscal 2000 includes before-tax restructuring and restructuring-related
charges of $621.4 million (Note 14). These charges were included in operating
profit as follows: $309.5 million in Packaged Foods, $168.0 million in
Refrigerated Foods, and $143.9 million in Agricultural Products. Fiscal 1999
includes before-tax restructuring charges of $440.8 million (Note 14). The
fiscal 1999 charges were included in operating profit as follows: $39.0 million
in Packaged Foods, $358.6 million in Refrigerated Foods, and $43.2 million in
Agricultural Products.

                                           ConAgra Foods 2001 Annual Report 57


                                      107



The operations of the company are principally in the United States. Operations
outside the United States are worldwide with no single foreign country or
geographic region being significant to the consolidated operations. Foreign net
sales were $4.0 billion in fiscal year 2001 and $3.6 billion in fiscal years
2000 and 1999. Net sales are attributed to countries based on location of
customer. The company's long-lived assets located outside of the United States
are not significant.

21. QUARTERLY RESULTS (UNAUDITED)



- ----------------------------------------------------------------------------------------------------------------------
                                               Net           Income(Loss)                                   Dividends
                   Net          Gross        Income           Per Share*            Stock Market Price      Declared
                  Sales        Profit        (Loss)       Basic       Diluted       High          Low       Per Share
- ----------------------------------------------------------------------------------------------------------------------
                                                                                    
2001
   First       $ 7,076.7     $  878.7      $ 120.2      $   .25      $    .25      $  23.69     $  18.25      $.20350
   Second        7,281.9      1,153.9        281.2          .54           .54         26.19        18.06       .22500
   Third         6,398.0        941.0        115.8          .22           .22         26.19        18.75       .22500
   Fourth        6,437.6        908.9        121.4          .23           .23         21.69        17.50       .22500
- ----------------------------------------------------------------------------------------------------------------------
YEAR           $27,194.2     $3,882.5      $ 638.6      $  1.24      $   1.24      $  26.19     $  17.50      $.87850
- ----------------------------------------------------------------------------------------------------------------------

2000
   First       $ 6,795.0     $  836.0      $ 130.4      $  .28 (1)     $   .27 (1) $  28.13     $  24.06      $.17850
   Second        6,713.8        911.8        171.3         .36 (2)         .36 (2)    26.50        21.50       .20350
   Third         5,876.0        790.2        124.4         .26 (3)         .26 (3)    24.63        15.88       .20350
   Fourth        6,149.8        813.7        (43.8)       (.09)(4)        (.09)(4)    23.25        15.06       .20350
- ----------------------------------------------------------------------------------------------------------------------
YEAR           $25,534.6     $3,351.7     $  382.3      $  .80 (5)     $   .80 (5) $  28.13     $  15.06      $.78900
- ----------------------------------------------------------------------------------------------------------------------


* The sum of the income per share reported for a fiscal year's quarters may not
  equal the income per share reported for the full fiscal year due to rounding.

(1) Includes after-tax restructuring and related charges of $29.2 million, or
    $.06 for both basic and diluted earnings per share (Note 14).
(2) Includes after-tax restructuring and related charges of $64.7 million, or
    $.14 for both basic and diluted earnings per share (Note 14).
(3) Includes after-tax restructuring and related charges of $52.5 million, or
    $.11 for both basic and diluted earnings per share (Note 14).
(4) Includes after-tax restructuring and related charges of $238.9 million, or
    $.50 for both basic and diluted earnings per share (Note 14).
(5) Includes after-tax restructuring and related charges of $385.3 million, or
    $.81 for both basic and diluted earnings per share (Note 14).

58 ConAgra Foods 2001 Annual Report


                                      108



INDEPENDENT AUDITOR'S REPORT

THE STOCKHOLDERS AND BOARD OF DIRECTORS
CONAGRA FOODS, INC.

We have audited the accompanying consolidated balance sheets of ConAgra Foods,
Inc. (the "company") and subsidiaries as of May 27, 2001, and May 28, 2000, and
the related consolidated statements of earnings, comprehensive income, common
stockholders' equity and cash flows for each of the three years in the period
ended May 27, 2001. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of ConAgra Foods, Inc. and
subsidiaries as of May 27, 2001, and May 28, 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
May 27, 2001, in conformity with accounting principles generally accepted in the
United States of America.

As discussed in Note 1 to the financial statements, in 2001 the company changed
its methods of accounting for revenue recognition relating to the shipping terms
for certain of its product sales, retailer sales incentives and consumer sales
incentives.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
July 13, 2001
Omaha, Nebraska

                                            ConAgra Foods 2001 Annual Report 59


                                      109

EX-21

                                                                      EXHIBIT 21


                          SUBSIDIARIES OF CONAGRA FOODS

ConAgra Foods is the parent corporation owning 100% (unless otherwise noted) of
the voting securities of the following subsidiaries as of May 27, 2001:




                                                                                                 Jurisdiction of
Subsidiary                                                                                       Incorporation
- ----------                                                                                       ---------------
                                                                                              
A.M. Gilardi & Sons, Inc.                                                                        Ohio

Alabama Processors, Inc. (owns 100% of the voting securities of one
       domestic corporation)                                                                     Alabama

Armour Food Co. - Iowa                                                                           Iowa

Banquet Foods (Canada) Corporation                                                               Canada

BCF, Inc.                                                                                        Texas

CAG 31, Inc.                                                                                     Delaware

CAG 45, Inc.                                                                                     Delaware

CAGRE, Inc.                                                                                      Nebraska

CGRT, Inc.                                                                                       Nebraska

Choice One Foods, Inc.                                                                           California

ConAgra Brands, Inc.                                                                             Nebraska

ConAgra Capital L.C.                                                                             Iowa

ConAgra Caribbean Distributors, Inc.                                                             Puerto Rico

ConAgra Energy Services, Inc.                                                                    Delaware

ConAgra Feeding  Children Better Foundation                                                      Nebraska

ConAgra Fertilizer Company                                                                       Nebraska

ConAgra Finance Company Pty. Limited                                                             Australia

ConAgra Foreign Sales Corporation, Inc.                                                          Guam

ConAgra Foundation                                                                               Nebraska

ConAgra Functional Foods, Inc.                                                                   Nebraska

ConAgra Grocery Products Company (owns 100% of the voting securities
       of 15 domestic corporations, 70% of one foreign corporation, 50% of
       one foreign  corporation and 100% of three foreign corporations,
       all engaged principally in the production and marketing of retail, foodservice
       and industrial food products)                                                             Delaware

ConAgra International (Far East) Limited (owns 100% of the
       voting securities of four foreign corporations and 50% of one foreign
       corporation engaged principally in the worldwide commodities trading business)            Hong Kong


                                     110





                                                                                                 Jurisdiction of
Subsidiary                                                                                       Incorporation
- ----------                                                                                       ---------------
                                                                                              

ConAgra International Fertilizer Company                                                         Delaware

ConAgra International, Inc. (owns 100% of the voting securities
       of 23 foreign corporations, 99% of four foreign corporations,
       98% of one foreign corporation, 50% of two foreign corporations and
       30% of one foreign corporation, all engaged principally in the worldwide
       commodities trading business and the processing of beef and malt)                         Delaware

ConAgra International, S.A.                                                                      Spain

ConAgra Lonergan Corporation                                                                     Nebraska

ConAgra Poultry Company (owns 100% of three domestic corporations
       engaged principally in poultry operations and 50% of one domestic limited
       liability company engaged principally in waste conversion)                                Delaware

ConAgra Relocation Services, Inc.                                                                Delaware

ConAgra Shared Purchasing, Inc.                                                                  Delaware

ConAgra Trade Group, Inc. (owns 100% of the voting securities of two
       domestic corporations)                                                                    Delaware

ConAgra Transportation, Inc.                                                                     Delaware

E-ConAgra.com, Inc.                                                                              Delaware

Fernando's Foods Corporation                                                                     California

Golden Valley Microwave Foods, Ltd.                                                              United Kingdom

GoodMark Foods, Inc. (owns 100% of the voting securities of two domestic
       corporations)                                                                             North Carolina

Hester Industries, Inc.                                                                          West Virginia

Investment Resource Services, Inc.                                                               Delaware

J.R.R.W. Transport, Inc.                                                                         Iowa

Lamb Weston, Inc. (owns 100% of the voting securities of three domestic
       corporations; 15% of one foreign corporation and 85% of one domestic
       limited liability corporation engaged in the potato products business)                    Delaware

Managed Receivables, Inc.                                                                        Delaware

Meridian Seafood Products, Inc. (owns 100% of the voting securities of
       one domestic corporation)                                                                 Delaware


                                      111




                                                                                                 Jurisdiction of
Subsidiary                                                                                       Incorporation
- ----------                                                                                       ---------------
                                                                                              

MHC, Inc.                                                                                        Oregon

Miller Bros. Company, Inc.                                                                       Utah

Molinos de Puerto Rico, Inc.                                                                     Nebraska

ConAgra Beef Company (owns 100% of the voting securities of six domestic
       corporations, 50% of two domestic limited liability corporations, and
       100% of one foreign corporation, all engaged principally in the livestock
       feeding and processing business)                                                          Delaware

Northern Colorado Resources, Inc.                                                                Colorado

Oat Ventures, Inc.                                                                               Delaware

Sergeant's Pet Products, Inc.                                                                    Delaware

Swift & Company                                                                                  Delaware

To-Ricos, Inc.                                                                                   Nebraska

Transquip Resources, Inc.                                                                        Oklahoma

United Agri Products, Inc. (owns 100% of the voting securities of 29 domestic
       corporations and 50% of two limited liability companies, all engaged
       principally in the agricultural chemicals business)                                       Delaware

USFI-Gilroy, Inc.                                                                                Delaware

Weld Insurance Company, Inc.                                                                     Colorado

Zoll Foods Corporation                                                                           Illinois




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


                                    112

EX-23

                                                                      EXHIBIT 23

                          INDEPENDENT AUDITORS' CONSENT



         We consent to the incorporation by reference in Registration Statements
Nos. 333-49296, 333-42420, 333-87937 and 333-68715 on Form S-3 and Nos.
333-46962, 333-46960, 333-44426, 333-78063, 333-64633, 33-50113, 33-48295,
33-28079, 2-81244, 2-96891, 33-15815, 333-17573, 33-52330, 333-17549, 33-63061,
and 33-37293 on Form S-8 of ConAgra Foods, Inc. and subsidiaries of our reports
dated July 13, 2001 (which reports express an unqualified opinion and include an
explanatory paragraph relating to change in methods of accounting for revenue
recognition relating to the shipping terms for certain of its product sales,
retailer sales incentives, and consumer sales incentives), appearing in and
incorporated by reference in this Annual Report on Form 10-K of ConAgra Foods,
Inc. and subsidiaries for the year ended May 27, 2001.


/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Omaha, Nebraska
August 24, 2001


                                      114

EX-24

                                                                      EXHIBIT 24


                                POWER OF ATTORNEY


         The undersigned Director of ConAgra Foods, Inc., a Delaware
corporation, hereby constitutes and appoints Bruce C. Rohde as Attorney-in-Fact
in his name, place and stead to execute ConAgra Foods' Annual Report on Form
10-K for the fiscal year ended May 27, 2001, together with any and all
subsequent amendments thereof, in his capacity as a Director and hereby ratifies
all that said Attorney-in-Fact may do by virtue thereof.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
this 13th day of July, 2001.



                                   /s/   Mogens C. Bay
                                  ---------------------------
                                  Mogens C. Bay


                                      115



                                POWER OF ATTORNEY


         The undersigned Director of ConAgra Foods, Inc., a Delaware
corporation, hereby constitutes and appoints Bruce C. Rohde as Attorney-in-Fact
in his name, place and stead to execute ConAgra Foods' Annual Report on Form
10-K for the fiscal year ended May 27, 2001, together with any and all
subsequent amendments thereof, in his capacity as a Director and hereby ratifies
all that said Attorney-in-Fact may do by virtue thereof.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
this 13th day of July, 2001.



                                   /s/   John T. Chain, Jr.
                                  ---------------------------
                                  John T. Chain, Jr.


                                      116



                                POWER OF ATTORNEY


         The undersigned Director of ConAgra Foods, Inc., a Delaware
corporation, hereby constitutes and appoints Bruce C. Rohde as Attorney-in-Fact
in his name, place and stead to execute ConAgra Foods' Annual Report on Form
10-K for the fiscal year ended May 27, 2001, together with any and all
subsequent amendments thereof, in his capacity as a Director and hereby ratifies
all that said Attorney-in-Fact may do by virtue thereof.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
this 13th day of July, 2001.



                                   /s/   Charles M. Harper
                                  ---------------------------
                                  Charles M. Harper


                                   117



                                POWER OF ATTORNEY


         The undersigned Director of ConAgra Foods, Inc., a Delaware
corporation, hereby constitutes and appoints Bruce C. Rohde as Attorney-in-Fact
in his name, place and stead to execute ConAgra Foods' Annual Report on Form
10-K for the fiscal year ended May 27, 2001, together with any and all
subsequent amendments thereof, in his capacity as a Director and hereby ratifies
all that said Attorney-in-Fact may do by virtue thereof.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
this 13th day of July, 2001.



                                   /s/   Robert A. Krane
                                  ---------------------------
                                  Robert A. Krane


                                      118



                                POWER OF ATTORNEY


         The undersigned Director of ConAgra Foods, Inc., a Delaware
corporation, hereby constitutes and appoints Bruce C. Rohde as Attorney-in-Fact
in his name, place and stead to execute ConAgra Foods' Annual Report on Form
10-K for the fiscal year ended May 27, 2001, together with any and all
subsequent amendments thereof, in his capacity as a Director and hereby ratifies
all that said Attorney-in-Fact may do by virtue thereof.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
this 13th day of July, 2001.



                                   /s/   Mark Rauenhorst
                                  ---------------------------
                                  Mark Rauenhorst


                                     119



                                POWER OF ATTORNEY


         The undersigned Director of ConAgra Foods, Inc., a Delaware
corporation, hereby constitutes and appoints Bruce C. Rohde as Attorney-in-Fact
in his name, place and stead to execute ConAgra Foods' Annual Report on Form
10-K for the fiscal year ended May 27, 2001, together with any and all
subsequent amendments thereof, in his capacity as a Director and hereby ratifies
all that said Attorney-in-Fact may do by virtue thereof.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
this 13th day of July, 2001.



                                   /s/   Carl E. Reichardt
                                  ---------------------------
                                  Carl E. Reichardt


                                     120




                                POWER OF ATTORNEY


         The undersigned Director of ConAgra Foods, Inc., a Delaware
corporation, hereby constitutes and appoints Bruce C. Rohde as Attorney-in-Fact
in his name, place and stead to execute ConAgra Foods' Annual Report on Form
10-K for the fiscal year ended May 27, 2001, together with any and all
subsequent amendments thereof, in his capacity as a Director and hereby ratifies
all that said Attorney-in-Fact may do by virtue thereof.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
this 13th day of July, 2001.



                                   /s/   Ronald W. Roskens
                                  ---------------------------
                                  Ronald W. Roskens


                                       121



                                POWER OF ATTORNEY


         The undersigned Director of ConAgra Foods, Inc., a Delaware
corporation, hereby constitutes and appoints Bruce C. Rohde as Attorney-in-Fact
in his name, place and stead to execute ConAgra Foods' Annual Report on Form
10-K for the fiscal year ended May 27, 2001, together with any and all
subsequent amendments thereof, in his capacity as a Director and hereby ratifies
all that said Attorney-in-Fact may do by virtue thereof.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
this 13th day of July, 2001.



                                   /s/   Marjorie M. Scardino
                                  ---------------------------
                                  Marjorie M. Scardino


                                      122



                                POWER OF ATTORNEY


         The undersigned Director of ConAgra Foods, Inc., a Delaware
corporation, hereby constitutes and appoints Bruce C. Rohde as Attorney-in-Fact
in his name, place and stead to execute ConAgra Foods' Annual Report on Form
10-K for the fiscal year ended May 27, 2001, together with any and all
subsequent amendments thereof, in his capacity as a Director and hereby ratifies
all that said Attorney-in-Fact may do by virtue thereof.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
this 13th day of July, 2001.



                                   /s/   Walter Scott, Jr.
                                  ---------------------------
                                  Walter Scott, Jr.


                                      123



                                POWER OF ATTORNEY


         The undersigned Director of ConAgra Foods, Inc., a Delaware
corporation, hereby constitutes and appoints Bruce C. Rohde as Attorney-in-Fact
in his name, place and stead to execute ConAgra Foods' Annual Report on Form
10-K for the fiscal year ended May 27, 2001, together with any and all
subsequent amendments thereof, in his capacity as a Director and hereby ratifies
all that said Attorney-in-Fact may do by virtue thereof.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
this 13th day of July, 2001.



                                   /s/   Kenneth E. Stinson
                                  ---------------------------
                                  Kenneth E. Stinson


                                      124



                                POWER OF ATTORNEY


         The undersigned Director of ConAgra Foods, Inc., a Delaware
corporation, hereby constitutes and appoints Bruce C. Rohde as Attorney-in-Fact
in his name, place and stead to execute ConAgra Foods' Annual Report on Form
10-K for the fiscal year ended May 27, 2001, together with any and all
subsequent amendments thereof, in his capacity as a Director and hereby ratifies
all that said Attorney-in-Fact may do by virtue thereof.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
this 13th day of July, 2001.



                                   /s/   Clayton K. Yeutter
                                  ---------------------------
                                  Clayton K. Yeutter


                                      125