Good morning. Welcome to the Hormel Foods conference callfor the fourth quarter of fiscal 2007.

We released our results this morningbefore the market opened around 6:30 a.m. Central Time.

If you did not receivethe copy of the release, you can find it on our website at www.hormelfoods.comunder the Investor section. I wanted to point out that our corporate website has changedto hormelfoods.com from previously hormel.com.

On our call today is Jeff Ettinger, Chairman of the Board,President and Chief Executive Officer. I hope you had a chance to catch Jeff onCNBC on this mornings' Squawk Box edition.

Jody Feragen, our Senior VicePresident and Chief Financial Officer is also on the call with us today. Jeffwill provide a review of the operating results and an outlook for the new year.Then, Jody will provide the detailed financial results for the quarter.

The line will be opened for questions following Jody'sremarks. An audio replay of this call will be available beginning at 11a.m.Central Time today, November 20th, 2007.

The dial-in number is 800-405-2236 andthe access code is 11102214. It will also be posted to our website and archivedfor one year.

Before we get started with the results for the quarter, Ifirst need to reference the Safe Harbor statement. Some ofthe comments made today will be forward-looking and are made under the PrivateSecurities Litigation Reform Act of 1995.

Actual results may differ materiallyfrom those expressed in or implied by the statements we will be making. Amongthe factors that may affect the operating results of the Company are thefluctuations in the cost and availability of raw materials and the marketconditions for finished products.

Please refer to pages 26 through 31 in the Company's Form10-Q for quarter ending July 29, 2007, for more details. It can be accessed onour website.

Now, I'll turn the call over to Jeff.

Good morning, everyone. We are pleased to end the year witha strong finish, allowing us to deliver respectable full year results in achallenging environment.

The combination of strong consumer demand for ourproducts and solid execution by our team members were the key drivers to thestrong finish. This momentum also positions us well, as we begin 2008.

Sales for the quarter were $1.7 billion, up 7% from theprior year and up 4% excluding acquisitions. Earnings per share for the quarterwere $0.73 compared to $0.64 last year, an increase of 14%.

Included in thisyear's Q4 results is a $0.02 per share gain from the sale of a company airplaneand $0.01 per share gain from the dissolution of our Patak's joint venture. For the full year, sales were $6.2 billion, up 8% andexceeding $6 billion for the first time.

Earnings per share for the full yearwere $2.17, up 6% or $2.14 without the plane sale and the Patak's divestiture. As I evaluate this year's performance, I am pleased that allfive segments reported topline growth and four out of five segments reportedoperating profit growth as well.

The one segment that reported lower operatingprofit, Jennie-O Turkey Store, was burdened with over $80 million in highergrain inputs for the year. This segment made good progress to offset thesehigher costs as evidenced by its solid Q4 results.

I believe 2007 provides another illustration of the value ofour balanced model. In a difficult environment like the first three quarters of2007, it created stability.

When conditions turned more favorable like thefirst quarter, it provides an upside. This morning, we announced a robust 23% increase to ourannual dividend rate, making the new rate $0.74 per share.

We have anexceptional history of returning profits to our shareholders through dividendincreases. Today's announcement is the 42nd consecutive year of increases andis the largest dividend increase in our company's history.

This moresignificant increase is based on our confidence to deliver improved cash flowin the future. Our consistent earnings history is similar to a packaged foodcompany.

Over time, we intend to move our dividend yield closer to a packagedfood company yield. I will now take you through each segment.

The Grocery Product segment reported a 2% increase in salesand a 9% decrease in segment profit for the quarter. There were both positivesand negatives in the quarter for Grocery Products.

First, the positive, verygood progress continues to be made building our HORMEL COMPLEATS microwave traybusiness. We are improving our shelf presence and gaining distribution.

Thetelevision advertising launch last quarter for this product line has proven tobe very effective. Sales for the quarter were up over 40%.

This level ofexplosive growth comes with its challenges, specifically in keeping up withdemand. We will continue to bring on more capacity in 2008 andbeyond to support this demand.

We also had very positive results from both our STAGGand HORMEL chili businesses. The STAGG brand benefited from new distributionduring the quarter.

Areas for Grocery Products reporting weaker results in thequarter were the SPAM family of products and VALLEY FRESH chunk meats. Thelower results for the SPAM family of products were related to a very strongthird quarter promotions that may have pulled some sales forward and also adifficult year ago comparison.

For the full year, SPAM volume was slightly above last year.Although it's kind of a roller coaster year for grocery products in 2007, theunit completed the year with top line growth of 4% and operating profit growthof 3%. The Refrigerated Foods segment capped off a great fiscal2007, with a strong fourth quarter, reporting 15% higher operating profit andan 8% increase in sales for the quarter.

For the year, operating profit forRefrigerated Foods was up 17% and sales were up 8%. We believe we are the industry leader in value-addedprotein, based on our ability to innovate our understanding of consumer andcustomer needs and our execution of our plans.

Products in the Retail Channelreporting strong growth include ALWAYS TENDER marinated meats, DiLUSSO DELI COMPANY products andHORMEL party trays. Food Service items reporting strong growth for the quarterincluded BREAD READY sliced meats, AUSTIN BLUES barbecue products and premiumfresh pork.

The Burke Corporation acquisition which was announced during thefourth quarter was accretive to the Refrigerated Foods results and strengthensour portfolio of products in the important pizza-topping category. Jennie-O Turkey Store reported a stronger than expectedfourth quarter with operating profit of 15% and sales of 7%.

Improved productmix, operational efficiencies and better recovery of higher costs throughpricing were the key drivers. The incremental burden of higher grain costs forJennie-O Turkey store were $29 million for the quarter.

For the year, operatingprofit was down 17%, while sales were up 5%. Despite the year of distractions caused by difficult inputcosts, our Jennie-O Turkey Store management team stayed focused on growingtheir value-added portfolio.

Value-added growth was up 10% for both the quarterand the year. Some of the items driving this growth include Jennie-O TurkeyStore Oven Ready Products, rotisserie products, premium deli products andturkey burgers in both the Retail and Food Service sections.

We anticipate grain markets to continue to be volatilethrough 2008. It is our expectation that grain markets will be somewhat higherin 2008, causing feed costs to overall be $40 million higher than 2007.

The Specialty Foods segment reported 5% top line growth inQ4. They finally ended their exceptional run of year-over-year improvement inoperating profits primarily due to a very difficult year ago comparison.

Over the last two years, this segment has grown very fastand has become a significant contributor to our total company top and bottomline. The three businesses that make up this segment; Hormel SpecialtyProducts, Century Foods and Diamond Crystal Brands, all delivered excellentfull year results which contributed to the segment's top line growth of 26% andoperating profit growth of 27% in total 2007.

As previously mentioned, we expect the long-term growth rateof this segment to be more in line with our total company goals of 5% top lineand 10% bottom line. In the All Other segment, our international business unithad another good quarter with sales up 22% and operating profits up 10%compared to last year.

Value-added export sale growth, worldwide demand for theSPAM family of products and strong results from our Purefoods-Hormel jointventure located in the Philippineswere the key drivers. For the year, sales for international were up 26% andoperating profit was up 34%.

Our SPAM export volume was up 14% for the year. As I look forward to 2008, I am confident we can return toour long-term growth objective of 10% earnings per share growth.

I anticipate acombination of external factors to impact our business. On the negative side,we do expect to see continued pressure from higher grain and energy costs.

Onthe positive side, we expect to see the benefit of lower protein and foodcosts. The demand for our products continues to be vibrant, both inthe retail and food service channel.

Our focus on innovation has never beenstronger, as evidenced by the achievement of our $1 billion challenge goal twoyears ahead of schedule. For those of you not familiar with $1 billion dollarchallenge, we set a target that by the end of 2009 we wanted $1 billion worthof sales from items introduced during the decade.

We surpassed the $1 billiongoal in 2007 sales alone. Now for the 2008 earnings guidance.

Effective with 2008, wehave changed our earnings guidance practice to only provide annual guidance. Wefeel this is consistent with the long-term view the company takes in makingbusiness decisions.

After assessing industry factors in our business plans andprospects for the upcoming year, we are setting our fiscal 2008 guidance rangeat $2.30 to $2.40 per share. At this time, I will turn the call over to Jody Feragen todiscuss our financial information.

Thank you, Jeff. Good morning, everyone.

Acquisitions added$40.4 million to the topline in the fourth quarter and about $100 million forthe year. Volume for the fourth quarter was 1.2 billion pounds, basically flatwith fiscal 2006 quarter.

Acquisitions added 25 million pounds to the quarter. Volumefor the full fiscal year was 4.5 billion pounds, up 3% from fiscal 2006.Acquisitions added 59 million pounds to the year.

Selling and delivery expenses in the fourth quarter were10.4% of sales this year, compared with 10.7% last year. For the full year,expenses were 10.6% of sales compared with 11.1% last year.

Freight cost waslower year-over-year due to the benefit of cost-saving measures we implementedthroughout the year. As we look ahead to 2008, some of these benefits arelikely to be offset by higher fuel costs.

We're expecting selling and deliveryexpenses to be closer to 11% of sales for next year. Our marketing investment in the fourth quarter was $18.9million or 1.1% of sales compared with $20.6 million or 1.3% of sales lastyear.

For fiscal 2007, marketing expense was 1.8% of sales compared to 2% lastyear. We are expecting about 2% for fiscal 2008.

Administrative and general expense was 2.3% of sales for thequarter compared to 2.9% last year. G&A expense for the full year was 2.6%compared to 3.2% last year.

The fourth quarter expense includes $4.8 milliongain from the sale of our company airplane in 2007. Full year expenses in 2006 include $9.2 million of stockoption expense related to executive retirements and the adoption of FAS 123R, a$5.8 million of non-qualified pension plan settlement charges and a $2.3million gain from the sale of the company plane.

We are expecting administrative and general expenses toaverage 2.7% of net sales in 2008. Interest expense for the quarter was $7.7million compared to $6.4 million last year.

Short-term debt balances mostlyrelated to the Burke acquisition were higher throughout the quarter this yearcompared to fiscal 2006. Year-to-date interest expense is $27.7 million compared to$25.6 million last year.

We expect interest expense to approximate $28 millionin fiscal 2008. Total long-term debt at the end of the quarter was $350 million,even with where we were at the end of 2006.

We also ended the year with $70million outstanding on our short-term line of credit related to the Burkeacquisition. Depreciation and amortization for the quarter was $33million compared to $31 million last year.

For the full year, depreciation andamortization was $127 million compared to $121 million last year. We expectdepreciation and amortization to be approximately $130 million in 2008.

Our effective tax rate in the fourth quarter was 34.9%versus 36.2% in the fourth quarter of last year. The year-to-date effective taxrate was 35.8% compared to 33.5% last year.

The full year tax rate was lower in2006 due primarily to discrete tax benefits recognized last year mostly relatedto the Medicare subsidy. Our initial projection for the effective tax rate in thefirst quarter of fiscal 2008 is a range of 36% to 37%.

We are currentlyfinalizing the work associated with the adoption of FIN 48 and we'll have morevisibility into our expected full year tax rate at the end of the firstquarter. Capital expenditures for the quarter totaled $29 millioncompared to $34 million last year.

For the full year, capital expenditurestotaled $126 million compared with $142 million last year. For 2008, we expectcapital expenditures to be approximately $145 million to $150 million.

Theincrease is the result of plant expansions to meet expected consumer demand forvalue-added products. The adoption of Statement of Financial Accounting StandardsNo.

158 required the company to recognize the funded status of our benefitplans on our balance sheet this quarter. While the adoption of this accountingstandard had no impact on earnings, it did reduce shareholders' investment,other comprehensive income by $100 million and increased pension liabilities bya similar amount.

It also increased our deferred tax assets, but that increasewas offset by a decrease in our net pension asset. The basic weighted average number of shares outstanding forthe fourth quarter was $136 million and for the full year was $137 million.

Thediluted weighted average number of shares outstanding for the fourth quarterwas $138 million, and for the year, it was $139 million. We repurchased 1.1million shares of common stock during the fourth quarter at an average price of$35.63.

For the full year, we repurchased 2.4 million sharescompared to 1.1 million shares repurchased during fiscal 2006. As I outlined at our Investor Day in October, we aretargeting share repurchases to be at level similar to our 2007 activity.

Wehave 4.2 million shares remaining to be purchased from the 10 million shareauthorization currently in place. We processed 2.4 million hogs in the fourthquarter, which is even with last year.

For the full year, we processed 9.4 million hogs compared to9.2 million last year. The actual live hog cost in the fourth quarter was $49per live hundred weight, in line with our forecasted market we provided in ourthird quarter conference call and basically the same as last year.

Weanticipate an average market of $41 per live hundred weight for the firstquarter of fiscal 2008 compared to a $46 live hundred weight for the firstquarter in 2007. We expect the hog supply to increase approximately 2% in 2008.

At this time, I would like to turn the call over to theoperator for the question-and-answer portion of the call. Operator?

Hi, good morning.

Hi, Farha.

Good morning.

Congratulations on a good quarter.

Thank you.

Thank you.

This morning hog prices are limited, on top the China is seeking to buy more U.S. pork, could you comment onyour expectations of international pork demand and your thoughts on how pricesare going in for the full year '08?

As I had indicated in my portion of the call, Farah, Iexpect that for the first quarter the live hog prices would be about $41. Weare fully expecting that prices for proteins to be lower across the board thanthey were in fiscal 2007.

I know there has been lots of speculation in aconjecture regarding demand coming out of China, but we just haven't seenthat so far.

Thank you. And when you talk about the $40 million increasein grain cost, at this point has your Turkey pricing that's in placeoffset the higher cost?

Yeah, lots of that's going to occur during the first half ofthe year because with the 22-week life cycle for the tom turkeys, even thoughgrain started going up last year in September, we weren't feeling that in ourproduct cost until mostly after the first quarter was over. And so, yes, thepricing activity we've been embarking on for the last couple of quarters is inplace to cover down as much as that we think is prudent.

Right. And if you look at what's assumed in terms of grainin that $40 million, could you just give us a ballpark of where you are seeingcorn and soybean meal is factored in there?

Corn's in the high $3.50 to $4.0 range and soy meal would bein the mid to upper mid 200 range.

Okay, great. Thank you very much.

Hi, this is actually [Shahzad] in for Bill. Good morning.

Hi, Shahzad.

Good morning.

So, recent pork packer margins are very strong. How shouldwe look at that as an impact on your Grocery Products business going forwardinto the first quarter and maybe in the second quarter?

We certainly would see a benefit from having those lowerprotein input costs to the Grocery Products segment, particularly our productutilizing pork such as SPAM.

For our total company model, the more significant area thatis going to show up would be Refrigerated Foods and Refrigerated Foods hasexcellent momentum now, I mean other 15% quarter and is in good shape headinginto early '08.

Okay. So, why do we expect a slow start in Grocery Products,I mean is that related to the VALLEY FRESH acquisition, that's been showingkind of softer results over the past few quarters?

That's one contributor. We've had a couple of quarters in arow.

Our Grocery Products has had negative segment profit, and so we think we aregoing to get back to at least a neutral position. We're still on somewhat of an investment mode in thatdivision, particularly in terms of that COMPLEATS line as we spend againstproducts slotting and again racking systems and other items related to thatlaunch.

And then, as we head into the second half of the year, we expect themto hit the stride and contribute at much more significant levels.

Looking at VALLEY FRESH though, what do we expect? I mean,are we going to see a turnaround maybe in the near future?

VALLEY FRESH, there has been two issues with it. One hasbeen a good segment of last year.

Chicken prices were quite a bit higher thanwhat we had expected. That's moderated quite a bit, and so that would be abenefit to that franchise.

And then secondly, as I think we discussed during InvestorDay somewhat, I mean we in retrospect feel there are promotional strategy onthat brand was not optimal and we kind of gone back to how VALLEY FRESH wassold prior to when we acquired it and we do expect that over time that thatwill benefit and get that franchise back where it belong.

Okay. And one last question here.

Just future uses of cash,I mean, is the dividend really the one thing we were kind of looking for or shouldwe look for more to come in terms use of cash?

Well, I guess I'll go back to our stated uses of cash that Ithink we have gone over many times, and we are going to look at investing inour business, either organically or through acquisitions. We're going to lookto return to our shareholders, either through dividend increases, which I thinkwe've made a good start in that front with the announcement today, and thenalso in the area of share repurchase where I fully expect that we'll be repurchasingat a level equal to 2007.

So, all in our attempt to try to take advantage ofthe capacity we have to improve our capital structure.

Sounds great. Congrats on the great quarter.

Thank you.

Thank you.

Hello. Good morning, everyone.

This is actually [John SanMarco] on behalf of Jonathan Feeney. Thanks for taking.

A couple of quickquestions.

Hi, John.

Just going back to pork cost, particularly in China, are you expecting to see any releasespecifically in Chinathere by the end of F '08 and are you anywhere closer to it? And are you seeingany improvements in the condition of the hog hood there?

It’s improving. Our costs have moderated in our Chinaventure.

They were up almost double during one stretch of the year, and theywill come back may be 40% to 50% off of that, but they are still on ahistorical basis high. We don't raise hogs in China, but obviously we have someconnection with the folks who do, and we are hearing it's improving.

But it's adifficult place to get complete information, but we are optimistic about thatunit's ability to deliver decent results even with these markets.

Great. And then sort of as a follow-up there, it seems likehere domestically, you've benefited from lower pork prices, particularly inrefrigerated.

Do you expect that the pricing increases you have taken in recentyears to be sticky there or would you expect to have to give some of thatpricing back if pork continued to be deflationary year-over-year?

The pork pricing really has two parts to it. I mean thereare market-based items like fresh pork and a lot of the mid-tier ham sales, theprogram bacon sales that frankly ride up and down more on a demand market thanthey do on what our cost of goods are.

I mean you get as much margin as you canout of those types of items. In terms of refrigerated items, we've been very strategicand methodical about where to take price increases, and it isn't just grain, itisn't just pork input that causes that equation.

We are looking at energy cost.We look at general price inflation. And so, we are comfortable about ourability to hold those prices.

Okay. That's great.

That's all I have. Thank you.

Thanks.

Good morning. This is actually Akshay on Pablo's behalf.

Howare you doing?

Good morning.

Good morning.

A couple of questions. First one is related to refrigeratedfruits and just a follow-up to some other questions.

You've said in the pastthat margins in refrigerated foods are pretty stable. I mean they can be stickyon the way down.

We’re just trying to get an idea of the upside to themargins in refrigerated foods, given the expectations for lower hog prices. Imean the highest margins we’ve seen over the years was about 6% in '04, andthis quarter matched that.

So, just trying to see how much of the upside inlower hog price can be sustained for '08 if you could us any guidance aroundthat or help us try to understand that a little better?

I think when we look at the refrigerated foods segment on anormalized year-over-year basis, we look at 5.5% to 6.5% return for thatbusiness unit segment to be in their normalized range.

So, as I understand, I mean in your investor event, you hadsaid 5% to 6% for '08 I believe for refrigerated foods. I mean, does youroutlook for hogs now change that?

I mean if you are at 5.5% to 6.5%, midpointof 6%, which is the high-end of your range. So, has that changed in terms ofyour expectations for '08?

I perhaps gave the rounding estimate, but I would say we'reoff to a good start so far this year, and it probably isn't unreasonable at thehigher end of the 5% to 6% that we'd given you on Investor Day.

Okay. And then just on Jennie-O Turkey, I mean I know you'vetalked about this in the past and you gave quite a bit of detail in yourinvestor packet, but if you could just remind us in terms of normalized marginsthere, maybe even what will be better is if you could tell us what EBIT perpound would be in that business in normalized terms.

I mean I know you said $80 million in grain cost increase.Most of that is probably related to Turkey, and I think the math that Idid based on price increases that you were expecting shows that you're going tomore than offset that. So if you -- sort of two questions, if you would answerthose, that would be great.

Okay. I don't know that I could help you on that EBIT bypound.

I just don't have that available. Our expectations for segment profitfor Jennie-O Turkey Store would be in the 9% to 10% range.

In terms of pricing,the larger number, the $80 million number was the full year feed impact for2007. It's hard to calculate because you have so many mix changesgoing on as well.

But our best estimate is that we covered down maybetwo-thirds to three-quarters of that. So, we don't believe we were able toprice to cover all of it.

But the unit did a nice job of attaining otheroperating efficiencies in their farm areas and their plant areas that coveredon the rest and allow us to have the momentum you saw heading into fourthquarter.

And just last one, if I may. If you could just also give ussome sense of the value-added opportunity in the Turkey business, I mean, again fromthe numbers that we have, value-added was about 42% of volume in '06 I believe.Where is that now and where do you see that going a year from now, two yearsfrom now?

That may be about the right number on volume because we tendto not count whole bird sales other than [urban ready] is being value-added. Interms of dollar sales, it's already at a 70% to 75% rate of our sales.

Butthere is lots of upside, I mean it's still of the four major proteins by farthe lowest per capital consumption. I think we're going to finally see an upnumber from the USTA this year in terms of Turkey consumption given themarkets we saw and given the supply situation.

And Jennie-O Turkey Store is really the kind of undisputedleader when it comes to the value-added portion of it. So, we have focusedgroups against retail, deli and foods service at Jennie-O and they are allgrowing at a high single-digit, even in some cases low double-digit rate andwe've seen that now from quite sometime.

Okay, great. Thank you very much.

Good morning, congratulations.

Hi, Tim.

You sighted the value-added business in Jennie-O TurkeyStore and that clearly was the upside surprise. But how did the whole birdbusiness do and how is sort of the holiday ham business coming through for you?

Hormel business, it did well. The market value this year isjust even on the more commodity side, the whole birds are higher than they werelast year and our OVEN READY franchise continues to grow, it's up another 40%or it's just a fourth year of that being in market and we just kind of keep nobowling it forward, so that's contributed nicely to margins.

Some of the Turkeyeffect comes through Q1, I mean particularly the fresh sales for theThanksgiving and any Christmas related sales and those are looking good, are ina decent clean up position in terms of our inventories. And same really can betrue on the ham side, we've been running our plans very hard, but they were ingood shape to fulfill our customers needs in those items and so we'reoptimistic and that's part of our encouraging thoughts towards the RefrigeratedFoods start of the year.

And, Jeff just clarify, I was little confused by the lastquestion. Did you say that the incremental cost of grain in '08 over '07 was$40 million or zero?

No, we gave two numbers and I am sorry if that caused someconfusion. The $80 million number is our best estimate for the total yeareffect in the fiscal year, that's now on the book.

The $40 million number isour estimate of grain cost increases yet to roll through '08 versus '07 andthat related to what I mentioned before about how first quarter, we still havesome catch up to do on cost versus '07.

Okay. So saying that in another way an incremental cost of$40 million next year, is that correct?

Yes.

Okay, terrific. Thank you.

Mostly in the first half of the year.

Terrific.

Good morning.

Good morning Diane.

Congratulations on your quarter.

Thank you.

Hey, I have a question on your stands on the quarterlyguidance. I appreciate getting people to look at your business from a long-termperspective, but the reality of the situation is street looks at things kind ofquarter-to-quarter and you are not a commodity company and your valuation isnot added kind of a commodity level versus some of your competitors in theprotein space.

So I guess my question is, I don't expect commoditycompanies to kind of give me guidance, but for a company that has a valuationlike yours and has a big skew of their business in kind of non-commodityrelated items, I guess I am just trying to understand the move away fromquarterly guidance?

We looked at our peer group and we look predominately atmore the package food peers, our information indicated that they were down toabout 25% to 30% that we are still giving quarterly guidance since that wassomething that our board looked at when we made a determination. We do believeour business over time with our balanced model provides a decent amount ofstability quarter-to-quarter.

I think our thrust is really in us not advancing and tryingat all times to hit against the quarter numbers. But to be more consistent withhow we run our company which is more on a full year or a longer term basis.Clearly, if we were to see some major than occurring business encompass by ourannual guidance, then we would be expecting to inform our investment communityof that type of thing, but absence that we think the transition should be fine.

Okay. All right.

I will appreciate a little bit more claritythere as to the reasoning behind it. I guess that kind of brings up fourthquarter kind of what the guidance you had reiterated at your Analyst Day at thebeginning of October.

Was October just that much better than you hadanticipated? Was that primarily what happened in the hog markets that causedyou to be above the end, the high end of your range?

And the big change is we're on the protein sides of ourbusiness, both Jennie-O Turkey Store and Refrigerated Foods. It's an importanttime of the year for both of those businesses.

And so, when we saw the kind ofsignificance in both, volume enhancement and margin enhancement in those areasthat really led to us ending up the year stronger than what we had expected asof early October.

And we started the quarter with the hog markets kind of in atopsy-turvy mode and didn't see that the impact of that would turn as quicklyas it did towards the end of the quarter.

Okay. Well, just the volatility is pretty extreme in thatspace right now.

And then I guess you had indicated in your commentary that theBurke acquisition was accretive. Could you give us an idea about to what levelit was?

I mean I know it's a sort of smaller business, but --?

It was maybe [in the] quarter.

Okay. Is that ahead where you thought it would be?

Just about what we thought. It's doing very nicely.

And we really only had two months of activity with thatbusiness on our book. So I would expect it to return refrigerated food typemargins on the higher end.

Okay. All right.

Well, that was really all I had. Have agreat Thanksgiving.

You too.

You too.

Okay.

Hi. Good afternoon.

Hi, Robert.

Hi. I was just wondering, so you gave guidance on cost ofwhat's inflation for fiscal '08 at 3% to 3.5%.

That sounded kind of lowcompared to other food companies that we are seeing. Maybe some of this is --the low number has to do with protein prices.

Do you have an updated number forus or have you seen anything different?

We really haven't updated that number. In fact, we areseeing that the protein markets are perhaps a little lower than what we hadoriginally estimated.

Now, that has been offset by some increase in energycosts. And I'll have to put the pen and paper and see if there is significantchange.

But right now, my plans still include that range.

Okay. Great.

And in turkey, you know, I am looking at freshprices and I know you have a great value-added business, but the freshcomponent does play in. Fresh [ham] breasts are down sequentially from itshighest, like 375 a pound and now tracking, I guess, closer to 295 a pound.

Andit was 295 a pound, maybe now at $2 now. Tender is down as well.

Are you seeingsimilar numbers flowing through for yourselves and how do you view that? Is ita function of a lower priced market or not?

Well, I mean, it's uneven a lot. For example, when we reallyget down to selling meat on a commodity basis, the dark meat parts of theturkey are much more significant for our business and the thigh market isreally quite strong now even on year-over-year basis.

There are some of whole bird and breast items that arelower. For this time of the year, the whole bird pricing, a lot of those pricesare set earlier in the year.

A lot of them are delivered even earlier in theyear. It really depends on what the retailer wants to do.

And so, whatever thecoated market ends up being at the very end of the year, there isn't a largepercentage of our volume that's actually sold on that basis.

Okay. And your chicken competitors, I guess they are kind ofcompetitors, I mean they've made some rather aggressive statements about howmuch they intend to dial-up production during the course of the year.Historically, have you seen any kind of reaction in the turkey markets whenchicken is doing sometime like that?

Not really. I mean the one year that would be the exceptionto that would be back when there was a foreign embargo on the early part of thedecade.

And at some point, if there is so much meat backing up into our system,it affects all proteins. But the chicken has much quicker turnaround.

We'veseen it up. We've seen it down over the last few years, and turkey seems to beable to be much more steady and not have a big reaction against that.

Again, if you look at it from a retailer standpoint, I meanchicken is the feature item that's a major ad driver for the retailer. Turkey,frankly is not.

It's a very nice niche item. We have very loyal consumers inour area.

But aside from Thanksgiving, Turkey is -- I mean we are not adriver of the feature item in most retail outlets.

Okay. Thank you very much.

Yes.

Good morning.

Hi, Christina.

Good morning.

Just taking a look at growth rate, I was surprised to seekind of negative price revelation, given the price increase that you took atthe end of the April. Why was that?

Why did that occur?

Pretty significant promotional spending, and that comes outof pricing. I mean we have often done the price increase as we did discuss arebeing reflected on the marketplace.

So we have eat up in some of the areasagainst certain items and that ultimately ended up not only contracting thesales price quoted, but margins for the whole division.

And so, Jeff, when you talk about a slow start to grocery,and following up on a previous question, do you mean in terms of top line orare you talking about operating profit because of the lag in realizing thelower raw material, the lower protein price there or is it the combination ofboth?

It’s more of the profit side that we are talking about. Imean, we are just trying to be cautious and realistic in relation that we havehad two quarters in a row of negative segment profit return year-over-year.

Ouroutlook would be able to flatten that out in the first half. We’ll see a little less growth on the top side than we wouldhave otherwise because of the divestiture we mentioned of Patak's.

And it wasnot a significant profit contributor, but it's about $6 million in sales overthe course of the year. And so, that will be out of the mix as well.

Okay. And then most of the packaged food companies are kindof their growth algorithm has changed, where you really see strong top linegrowth and then really no operating margin improvement.

So it's kind of thecritical top line growth leading to the same sort of operating profit growth,and then financial leverage. But you are guiding to your long-term targetswhere you do see operating leverage.

Can maybe you talk about your balancedmodel and how that enables to get that sort of operating leverage when a lot ofthe packaged foods peers are unable to?

I think it's really may be less the balanced model and morerelated to areas such as innovation. That when we bring out new products, weare always looking to really add elements of convenience, flavor whatever tothe consumer, but we are also looking to price it accordingly and expect tohave those margins (inaudible) items that have been in the market either a longtime or items that have a lot of competitors in the same space.

And one of the things we mentioned in our release was, I'vetalked about a $1 billion challenge. I mentioned a number of items, although wehaven't had any home runs in terms of new products, we have a lot of items thatare kicking in $20 million, $40 million, $80 million, $60 million in annualsales at very significant margin enhancement and so that's adding to ourability to leverage it down to bottom line.

Okay. And then just one last question.

I think at theInvestor Day, you had said that working capital would be, I think, neutral nextyear in terms of cash flow, but it looks like inventories finished a littlehigher than I would expect. I'm just curious if that's still your guidance interms of neutral working capital next year?

To the extent that we have acquisitions, you're probablygoing to see slightly more working capital in the inventory and accountsreceivable area booked at about $30 million to $35 million in the current assetside of things. Seen a little bit of higher inventories at Jennie-O because ofthe grain inputs into the Turkeys, but that sometimes is a cyclical thing aswell, so I would model it flat to up slightly.

Okay, thank you.

Yeah. Good morning.

Congratulation on a good quarter andyear everyone.

Thank you, Eric.

Jeff, one of the things that your organization made somepretty good strides on in 2007, are you selling delivery expenses, youradministrative general expenses as a percent on some of those, they are thelowest spend since prior to 2001. Also your marketing spending as a percent of sales was thefirst time below 2% that we've seen in a long time as well.

Can you talk aboutthe expenses, those expense ratios, are they sustainable? And then on the marketing side, I don't know if you got theabsolute dollars are sufficient, the dropping as a percent of sales.

But do youfeel you have sufficient stimulus against your brands to keep the marketing[progress] go on?

Let me take the marketing question first, and then, Jody Ithink, will talk to more of the SG&A side. We really would expect our marketingspend to be more back up to the 2% level.

We did defer a couple of programsthat we had originally anticipated running in fourth quarter. We deferred an ad campaign against SPAM once only becausewe're going to be rolling out SPAM singles on a national basis, and we wantedto give our sales force adequate time to gain the kind of distribution it needsto really make that spend worthwhile.

And we also deferred some of the Jennie-O Turkey Storeadvertising in part because of the year they have been having and in partbecause their early focus in advertising gone up and ready, and we found thatit really works just as well to have that advertising in the two to three weektimeframe right before Thanksgiving as oppose to kicking it off in September, Octoberas we did in prior years. So on that piece, you should see some moresignificant growth in the marketing side in 2008.

And then I guess if I were to address the selling anddelivery costs, we've made several acquisitions, we've launched many newproducts and we've done that with a pretty steady base of sales peopledelivering those same results, so certain leverage in that area. We've alsotaken advantage of some great programs in the logistics area to reduce ourcosts of delivering products to our customers, so certainly some great workinternally.

From the whole G&A aspect, last year certainly had someunusual costs and we've outlined those before for you. I would take advantageof leveraging those assets as we move forward and gain scale on the top line.And we are obviously always looking for ways we can cut costs.

Okay, thanks. And maybe I missed it, but Tim Ramey didn'tgive his wine picks this year for Thanksgiving unless I missed that.

Well, maybe there will be a follow-up e-mail.

All right, okay. Happy Turkey to everyone.

Thank you, Eric.

Great, thank you. Nice quarter.

Thanks, Oliver.

Thanks.

I feel like I'm kind of beating a dead horse here. But justgetting back to these live hog markets, it seems like currently there's, what Iwould characterize is way too many hogs out there, that margins are fairlyterrific on the packing side.

But given the size of the breeding herd, justtrying to understand how this market is going to rebalance?

I guess we are calling for the live prices to be under wherethey were for full year 2007. My visibility into the first quarter of 2008 putsit at about 41.

I am not sure that I am answering your question, but I wasn’tsure where it was going either.

Well, I am trying to get a sense for if there is just toomany breeders out there. Are we going to get balance from export marketspicking up or is there some sort of big regression that is to happen justwithin the actual mechanics of that market?

Well, from the breeder standpoint, they invested a lot ininfrastructure and that's something that you don't turn off, perhaps as fast aschicken producers can. So, I think they have had some several good years in arow of profits on the producing side, and my expectation is that they will planon hanging in there and the protein will have to be clear in the market beforethat changes.

So the market is in a better position to sustain losses?

I think from the producer standpoint, they have had severalgood years of profitability in raising it.

Well, sounds like good news for you guys. And then justwanted to clarify with guidance, does that include any benefit of acquisitionsor would that be incremental?

We typically don't include any acquisitions in our planningprocess and forecast. Long term, we'll say that we are going to grow the topline 5 and bottom line 10, and a portion of that will come from acquisitions.But our near-term guidance for 2008 does not include any acquisition.

Okay. Great.Thank you very much.

Thanks, Oliver.

Operator, we're coming to [wind up] here.

Well, by popular demand, I think the thing that you want tohave with your Jennie-O Turkey Store Oven Ready Turkey would be an organ keenon a war, both patriotic and luscious to have with that whole bird. So we willgive our guidance once a year only as well.

Thank you, Tim.

Well, this is Jeff, Andrew, I just want to thank you forjoining us on our call today. Hopefully by moving from Wednesday to Tuesday,that was beneficial for everyone in terms their holidays getaways, and we lookforward to working with you in the future.

Happy Thanksgiving.