UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~October 9, 2010~~April 23, 2011


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

For the transition period from ___________ to ___________

Commission file number 1-16247

FLOWERS FOODS, INC.

(Exact name of registrant as specified in its charter)


GEORGIA		58-2582379

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

1919 FLOWERS CIRCLE, THOMASVILLE, GEORGIA

(Address of principal executive offices)

31757

(Zip Code)

229/226-9110

(Registrant’s telephone number, including area code)

N/A

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or15(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. Yesþ Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesþ Noo

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


Large accelerated filerþ		Accelerated filero		Non-accelerated filero (Do not check if a smaller reporting company)		Smaller reporting companyo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



TITLE OF EACH CLASS		OUTSTANDING AT ~~NOVEMBER 12, 2010~~MAY 13, 2011

	Common Stock, $.01 par value ~~with~~ ~~Preferred Share Purchase Rights~~		~~91,275,331~~	90,248,792

FLOWERS FOODS, INC.

INDEX

PAGE

NUMBER

PART I. Financial Information

Item 1. Financial Statements (unaudited)

Condensed Consolidated Balance Sheets as of ~~October 9, 2010~~April 23, 2011 and January ~~2, 2010~~1, 2011

Condensed Consolidated Statements of Income for the ~~Twelve and Forty~~Sixteen Weeks Ended ~~October 9,~~April 23, 2011 and April 24, 2010 ~~and October 10, 2009~~

Consolidated Statement of Changes in Stockholders’ Equity and Comprehensive Income for the ~~Forty~~Sixteen Weeks Ended ~~October 9, 2010~~April 23, 2011

Condensed Consolidated Statements of Cash Flows for the ~~Forty~~Sixteen Weeks Ended ~~October 9,~~April 23, 2011 and April 24, 2010 ~~and October 10, 2009~~

Notes to Condensed Consolidated Financial Statements

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

2319

Item 3. Quantitative and Qualitative Disclosures About Market Risk

3325

Item 4. Controls and Procedures

3425

PART II. Other Information

Item 1. Legal Proceedings

3426

Item 1A. Risk Factors

3526

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

3527

Item 6. Exhibits

3527

~~Signatures~~SIGNATURES

3628

~~Exhibit index~~EX-21

EX-31.1

EX-31.2

EX-31.3

EX-32

EX-101 INSTANCE DOCUMENT

EX-101 SCHEMA DOCUMENT

EX-101 CALCULATION LINKBASE DOCUMENT

EX-101 LABELS LINKBASE DOCUMENT

EX-101 PRESENTATION LINKBASE DOCUMENT

EX-101 DEFINITION LINKBASE DOCUMENT

Forward-Looking Statements

Statements contained in this filing and certain other written or oral statements made from time to time by the company and its representatives that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to current expectations regarding our future financial condition and results of operations and are often identified by the use of words and phrases such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,” “would,” “is likely to,” “is expected to” or “will continue,” or the negative of these terms or other comparable terminology. These forward-looking statements are based upon assumptions we believe are reasonable.

Forward-looking statements are based on current information and are subject to risks and uncertainties that could cause our actual results to differ materially from those projected. Certain factors that may cause actual results, performance, and achievements to differ materially from those projected are discussed in this report and may include, but are not limited to:

unexpected changes in any of the following: (i) general economic and business conditions; (ii) the competitive setting in which we operate, including, advertising or promotional strategies by us or our competitors, as well as changes in consumer demand; (iii) interest rates and other terms available to us on our borrowings; (iv) energy and raw materials costs and availability and hedging counter-party risks; (v) relationships with our employees, independent distributors and third party service providers; and (vi) laws and regulations (including environmental and health-related issues), accounting standards or tax rates in the markets in which we operate;

the loss or financial instability of any significant customer(s);

our ability to execute our business strategy, which may involve integration of recent acquisitions or the acquisition or disposition of assets at presently targeted values;

our ability to operate existing, and any new, manufacturing lines according to schedule;

the level of success we achieve in developing and introducing new products and entering new markets;

changes in consumer behavior, trends and preferences, including health and whole grain trends, and the movement toward more inexpensive store-branded products;

our ability to implement new technology as required;

the credit and business risks associated with our independent distributors and customers which operate in the highly competitive retail food and foodservice industries, including the amount of consolidation in these industries;

changes in pricing, customer and consumer reaction to pricing actions, and the pricing environment among competitors within the industry;

consolidation within the baking industry;

any business disruptions due to political instability, armed hostilities, incidents of terrorism, natural disasters or the responses to or repercussions from any of these or similar events or conditions and our ability to insure against such events; and

regulation and legislation related to climate change that could affect our ability to procure our commodity needs or that necessitate additional unplanned capital expenditures.

The foregoing list of important factors does not include all such factors, nor necessarily present them in order of importance. In addition, you should consult other disclosures made by the company (such as in our other filings with the Securities and Exchange Commission (“SEC”) or in company press releases) for other factors that may cause actual results to differ materially from those projected by the company. Please refer to Part I, Item 1A.,Risk Factors, of the company’s Form 10-K filed on ~~March 3, 2010~~February 23, 2011 and Part II, Item 1A.,Risk Factors,of this Form 10-Q for additional information regarding factors that could affect the company’s results of operations, financial condition and liquidity.

We caution you not to place undue reliance on forward-looking statements, as they speak only as of the date made and are inherently uncertain. The company undertakes no obligation to publicly revise or update such statements, except as required by law. You are advised, however, to consult any further public disclosures by the company (such as in our filings with the SEC or in company press releases) on related subjects.

FLOWERS FOODS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share data)
(Unaudited)


	OCTOBER 9, 2010			JANUARY 2, 2010			APRIL 23, 2011			JANUARY 1, 2011
ASSETS
Current Assets:
Cash and cash equivalents	$	7,107		$	18,948		$	8,667		$	6,755

Accounts and notes receivable, net of allowances of $1,636 and $469, respectively		177,143			178,708
Accounts and notes receivable, net of allowances of $535 and $522, respectively								176,776			166,281

Inventories, net:
Raw materials		20,468			20,952			21,788			20,879
Packaging materials		13,961			12,065			12,506			12,125
Finished goods		31,865			27,979			32,309			27,570

		66,294			60,996			66,603			60,574

Spare parts and supplies		36,542			35,437			36,945			37,085

Deferred taxes		1,107			20,714			4,918			1,095

Other		42,959			24,152			35,325			41,924

Total current assets		331,152			338,955			329,234			313,714

Property, Plant and Equipment, net of accumulated depreciation of $677,126 and $652,587, respectively		599,106			602,576
Property, Plant and Equipment, net of accumulated depreciation of $699,862 and $679,561, respectively								600,313			604,693

Notes Receivable		91,888			94,457			92,340			92,860

Assets Held for Sale — Distributor Routes		10,457			6,535			12,349			11,924

Other Assets		5,612			4,157			6,198			5,113

Goodwill		200,153			201,682			200,153			200,153

Other Intangible Assets, net		98,428			103,080			95,188			97,032

Total assets	$	1,336,796		$	1,351,442		$	1,335,775		$	1,325,489

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt and capital leases	$	26,817		$	25,763		$	29,097		$	28,432
Accounts payable		107,280			92,692			121,931			102,068
Other accrued liabilities		115,670			103,317			109,392			112,272

Total current liabilities		249,767			221,772			260,420			242,772

Long-Term Debt and Capital Leases		116,545			225,905			90,606			98,870

Other Liabilities:
Post-retirement/post-employment obligations		66,515			68,140			74,643			76,086
Deferred taxes		61,319			63,748			64,811			66,680
Other		44,948			43,851			47,091			45,291

Total other liabilities		172,782			175,739			186,545			188,057

Commitments and Contingencies
Flowers Foods, Inc. Stockholders’ Equity:
Preferred stock — $100 par value, 100,000 authorized and none issued		—			—			—			—
Preferred stock — $.01 par value, 900,000 authorized and none issued		—			—			—			—
Common stock — $.01 par value, 500,000,000 authorized shares, 101,659,924 shares and 101,659,924 shares issued, respectively		1,017			1,017			1,017			1,017
Treasury stock — 10,386,436 shares and 10,200,387 shares, respectively		(198,538	)		(189,250	)
Treasury stock — 11,413,083 shares and 11,011,494 shares, respectively								(226,931	)		(214,683	)
Capital in excess of par value		536,514			531,326			535,400			539,476
Retained earnings		490,435			437,524			526,772			503,689
Accumulated other comprehensive loss		(31,726	)		(64,672	)		(38,054	)		(33,709	)

Total Flowers Foods, Inc. stockholders’ equity		797,702			715,945
Noncontrolling interest		—			12,081

Total stockholders’ equity		797,702			728,026			798,204			795,790

Total liabilities and stockholders’ equity	$	1,336,796		$	1,351,442		$	1,335,775		$	1,325,489

(See Accompanying Notes to Condensed Consolidated Financial Statements)

FLOWERS FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands except per share data)
(Unaudited)


													FOR THE SIXTEEN WEEKS ENDED
	FOR THE TWELVE WEEKS ENDED						FOR THE FORTY WEEKS ENDED						APRIL 23, 2011			APRIL 24, 2010
	OCTOBER 9, 2010			OCTOBER 10, 2009			OCTOBER 9, 2010			OCTOBER 10, 2009
Sales	$	597,894		$	602,570		$	2,000,636		$	2,024,025		$	801,825		$	795,026
Materials, supplies, labor and other production costs (exclusive of depreciation and amortization shown separately below)		316,141			322,245			1,049,492			1,085,046			412,258			414,798
Selling, distribution and administrative expenses		215,222			210,185			725,679			720,809			300,057			292,551
Depreciation and amortization		19,778			19,064			65,436			61,997			27,992			25,637
Gain on acquisition		—			—			—			3,013

Income from operations		46,753			51,076			160,029			159,186			61,518			62,040
Interest expense		(1,791	)		(2,858	)		(6,559	)		(9,258	)		(2,149	)		(2,784	)
Interest income		2,918			2,956			9,773			9,995			3,911			3,915

Income before income taxes		47,880			51,174			163,243			159,923			63,280			63,171
Income tax expense		16,714			18,150			57,634			57,969			22,119			22,484

Net income		31,166			33,024			105,609			101,954		$	41,161		$	40,687
Less: net income attributable to noncontrolling interest		—			(1,098	)		—			(2,306	)

Net income attributable to Flowers Foods, Inc.	$	31,166		$	31,926		$	105,609		$	99,648

Net Income Per Common Share:
Basic:
Net income attributable to Flowers Foods, Inc. common shareholders	$	0.34		$	0.35		$	1.15		$	1.08
Net income per common share													$	0.46		$	0.44

Weighted average shares outstanding		91,629			91,995			91,576			92,330			90,214			91,517

Diluted:
Net income attributable to Flowers Foods, Inc. common shareholders	$	0.34		$	0.34		$	1.14		$	1.07
Net income per common share													$	0.45		$	0.44

Weighted average shares outstanding		92,276			92,597			92,241			92,827			90,987			92,204

Cash dividends paid per common share	$	0.200		$	0.175		$	0.575		$	0.50		$	0.200		$	0.175

(See Accompanying Notes to Condensed Consolidated Financial Statements)

FLOWERS FOODS, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME
(Amounts in thousands, except share data)
(Unaudited)

Capital
Common Stock in Accumulated
Number of Excess Other Treasury Stock
Comprehensive Shares Par of Par Retained Comprehensive Number of Noncontrolling
Income Issued Value Value Earnings Loss Shares Cost interest Total
Balances at January 2, 2010 101,659,924 $ 1,017 $ 531,326 $ 437,524 $ (64,672 ) (10,200,387 ) $ (189,250 ) $ 12,081 $ 728,026
Deconsolidation of Variable Interest Entity (Note 8) (12,081 ) (12,081 )
Net income $ 105,609 105,609 105,609
Derivative transactions, net 31,958 31,958 31,958
Amortization of prior service credit (82 ) (82 ) (82 )
Reduction in minimum pension liability 68 68 68
Amortization of actuarial loss 1,002 1,002 1,002

Comprehensive income $ 138,555

Exercise of stock options (1,202 ) 472,637 8,811 7,609
Deferred stock vesting (631 ) 33,920 631 —
Issuance of restricted stock award (4,102 ) 220,640 4,102 —
Amortization of share-based payment compensation 10,035 10,035
Tax benefits related to share based payment awards 1,018 1,018
Share-based payment forfeitures 70 (3,775 ) (70 ) —
Stock repurchases (909,471 ) (22,762 ) (22,762 )
Dividends paid — $0.575 per common share (52,698 ) (52,698 )

Balances at October 9, 2010 101,659,924 $ 1,017 $ 536,514 $ 490,435 $ (31,726 ) (10,386,436 ) $ (198,538 ) $ — $ 797,702


								Capital
				Common Stock				in						Accumulated
				Number of				Excess						Other			Treasury Stock
	Comprehensive			shares		Par		of Par			Retained			Comprehensive			Number of
	Income (Loss)			issued		Value		Value			Earnings			Income (Loss)			shares			Cost			Total
Balances at January 1, 2011					101,659,924	$	1,017	$	539,476		$	503,689		$	(33,709	)		(11,011,494	)	$	(214,683	)	$	795,790
Net income	$	41,161										41,161												41,161
Derivative instruments, net of tax		(4,803	)												(4,803	)								(4,803	)
Amortization of prior service credits, net of tax		(49	)												(49	)								(49	)
Amortization of actuarial loss, net of tax		507													507									507

Comprehensive income	$	36,816

Exercise of stock options									(802	)								91,000			1,809			1,007
Deferred stock issuance									(551	)								27,965			551			—
Issuance of restricted stock award									(4,213	)								216,050			4,213			—
Amortization of share-based payment compensation									5,415															5,415
Tax benefits related to share based payment awards									283															283
Performance share awards forfeitures and cancellations									860									(44,055	)		(860	)		—
Stock repurchases																		(695,403	)		(18,029	)		(18,029	)
Issuance of deferred compensation									(68	)								2,854			68			¯
Contingent acquisition consideration									(5,000	)														(5,000	)
Dividends paid — $0.200 per common share												(18,078	)											(18,078	)

Balances at April 23, 2011					101,659,924	$	1,017	$	535,400		$	526,772		$	(38,054	)		(11,413,083	)	$	(226,931	)	$	798,204

(See Accompanying Notes to Condensed Consolidated Financial Statements)

FLOWERS FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)


	FOR THE FORTY WEEKS ENDED						FOR THE SIXTEEN WEEKS ENDED
	OCTOBER 9, 2010			OCTOBER 10, 2009			APRIL 23, 2011			APRIL 24, 2010
CASH FLOWS PROVIDED BY (DISBURSED FOR) OPERATING ACTIVITIES:
Net income	$	105,609		$	101,954		$	41,161		$	40,687
Adjustments to reconcile net income to net cash provided by operating activities:
Stock based compensation		10,343			9,207			5,929			4,753
Loss reclassified from accumulated other comprehensive income to net income		22,589			44,707
(Gain) loss reclassified from accumulated other comprehensive income to net income								(22,919	)		11,525
Depreciation and amortization		65,436			61,997			27,992			25,637
Gain on acquisition		—			(3,013	)
Deferred income taxes		(2,637	)		(3,675	)		(3,268	)		(476	)
Provision for inventory obsolescence		967			652			410			358
Allowances for accounts receivable		1,093			2,614			270			564
Pension and postretirement plans expense		1,417			3,932			194			599
Other		(89	)		224			(644	)		(61	)
Changes in assets and liabilities:
Pension contributions								(580	)		(187	)
Changes in operating assets and liabilities:
Accounts and notes receivable, net		121			(359	)		(10,597	)		(2,468	)
Pension contributions		(772	)		(450	)
Inventories, net		(6,576	)		(8,655	)		(6,439	)		(3,350	)
Other assets		20,807			(5,755	)		3,567			3,557
Accounts payable and other accrued liabilities		10,499			(37,149	)
Accounts payable								19,863			7,152
Other accrued liabilities								17,615			(5,741	)

NET CASH PROVIDED BY OPERATING ACTIVITIES		228,807			166,231			72,554			82,549

CASH FLOWS PROVIDED BY (DISBURSED FOR) INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(74,239	)		(47,276	)		(22,058	)		(29,125	)
Proceeds from sale of property, plant and equipment		719			3,040			732			335
Issuance of notes receivable		(7,023	)		(8,350	)		(3,477	)		(1,880	)
Proceeds from notes receivable		9,618			9,282			3,829			3,806
Acquisitions, net of cash acquired		—			(8,842	)
Deconsolidation of variable interest entity (See Note 8)		(8,804	)		—
Other		—			(208	)
Contingent acquisition consideration payments								(5,000	)		—
Deconsolidation of variable interest entity								—			(8,804	)

NET CASH DISBURSED FOR INVESTING ACTIVITIES		(79,729	)		(52,354	)		(25,974	)		(35,668	)

CASH FLOWS PROVIDED BY (DISBURSED FOR) FINANCING ACTIVITIES:
Dividends paid		(52,698	)		(46,157	)		(18,078	)		(16,020	)
Exercise of stock options		7,609			2,560			1,007			2,531
Income tax benefit related to stock awards		974			1,386			577			191
Stock repurchases		(22,762	)		(27,625	)		(18,029	)		(2,115	)
Change in book overdraft		1,236			(7,904	)		(2,604	)		(2,698	)
Proceeds from debt borrowings		409,000			650,600			93,500			213,000
Debt and capital lease obligation payments		(504,278	)		(689,937	)		(101,041	)		(252,297	)
Other		—			(670	)

NET CASH DISBURSED FOR FINANCING ACTIVITIES		(160,919	)		(117,747	)		(44,668	)		(57,408	)

Net decrease in cash and cash equivalents		(11,841	)		(3,870	)
Net increase (decrease) in cash and cash equivalents								1,912			(10,527	)
Cash and cash equivalents at beginning of period		18,948			19,964			6,755			18,948

Cash and cash equivalents at end of period	$	7,107		$	16,094		$	8,667		$	8,421

(See Accompanying Notes to Condensed Consolidated Financial Statements)

FLOWERS FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION

INTERIM FINANCIAL STATEMENTS — The accompanying unaudited condensed consolidated financial statements of Flowers Foods, Inc. (“the company”) have been prepared by the company’s management in accordance with generally accepted accounting principles ~~in the United States of America~~ (“GAAP”) for interim financial information and applicable rules and regulations of the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements. In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments (consisting of only normal recurring accruals) necessary to ~~present~~state fairly the company’s financial position, the results of its operations and its cash flows. The results of operations for the ~~twelve and forty~~sixteen week periods ended ~~October 9,~~April 23, 2011 and April 24, 2010 ~~and October 10, 2009~~ are not necessarily indicative of the results to be expected for a full ~~fiscal~~ year. The balance sheet at January ~~2, 2010~~1, 2011 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the company’s Annual Report on Form 10-K for the fiscal year ended January ~~2, 2010.~~1, 2011.

ESTIMATES — The preparation of financial statements in conformity with ~~GAAP~~accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The company believes the following critical accounting estimates affect its more significant judgments and estimates used in the preparation of its ~~condensed~~ consolidated financial statements: revenue recognition, derivative instruments, valuation of long-lived assets, goodwill and other intangibles, self-insurance reserves, income tax expense and accruals and pension obligations. These estimates are summarized in the company’s Annual Report on Form 10-K for the fiscal year ended January ~~2, 2010.~~1, 2011.

REPORTING PERIODS — The company operates on a 52-53 week fiscal year ending the Saturday nearest December 31. Fiscal ~~2010~~2011 consists of 52 weeks, with the company’s quarterly reporting periods as follows: first quarter ended April ~~24, 2010~~23, 2011 (sixteen weeks), second quarter ~~ended~~ending July ~~17, 2010~~16, 2011 (twelve weeks), third quarter ~~ended~~ending October ~~9, 2010~~8, 2011 (twelve weeks) and fourth quarter ending ~~January 1,~~December 31, 2011 (twelve weeks).

SEGMENTS — The company consists of two business segments: direct-store-delivery (“DSD”) and warehouse delivery. The DSD segment focuses on producing and marketing bakery products to U.S. customers in the Southeast, Mid-Atlantic, and Southwest as well as ~~selected~~select markets in California and ~~Nevada.~~Nevada primarily through its DSD system. The warehouse delivery segment produces snack cakes for sale to retail, vending and co-pack customers ~~nationwide~~ as well as frozen bread, rolls and buns for sale to retail and foodservice customers primarily through warehouse distribution.

SIGNIFICANT CUSTOMER — Following is the effect our largest customer, Wal-Mart/Sam’s Club, had on the company’s sales for the ~~twelve and forty~~sixteen weeks ended ~~October 9, 2010~~April 23, 2011 and ~~October 10, 2009.~~April 24, 2010. No other customer accounted for 10% or more of the company’s sales.


	FOR THE TWELVE WEEKS ENDED						FOR THE FORTY WEEKS ENDED						FOR THE SIXTEEN WEEKS ENDED
	OCTOBER 9, 2010			OCTOBER 10, 2009			OCTOBER 9, 2010			OCTOBER 10, 2009			APRIL 23, 2011			APRIL 24, 2010
	(Percent of Sales)						(Percent of Sales)						(Percent of Sales)
DSD		18.1	%		17.8	%		18.4	%		18.1	%		17.9	%		18.3	%
Warehouse delivery		4.2			3.0			3.5			2.9			4.0			3.0

Total		22.3	%		20.8	%		21.9	%		21.0	%		21.9	%		21.3	%

SIGNIFICANT ACCOUNTING POLICIES — ~~The following discussion provides the~~There were no significant changes to our ~~significant~~critical accounting policies from those disclosed in our Form 10-K filed for the year ended January ~~2, 2010.~~

~~Variable Interest Entities.~~In 2009, the Financial Accounting Standards Board (“FASB”) amended the consolidation principles associated with variable interest entities (“VIE”). The new accounting guidance caused a change in our accounting policy effective January 3, 2010. Generally, the new qualitative approach replaced the quantitative-based risks and rewards calculation for determining1, 2011.

which enterprise, if any, has a controlling financial interest in the VIE. The qualitative approach is focused on identifying which company has both the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses of the entity or the right to receive benefits from the entity. As a result of applying this qualitative analysis, effective January 3, 2010, the company is no longer required to consolidate the VIE that delivers a significant portion of its fresh bakery products from the company’s production facilities to outlying distribution centers under a transportation agreement. The company has elected to prospectively deconsolidate the VIE. Please see Note 8,~~Variable Interest Entity~~~~, for additional disclosure.~~

2. COMPREHENSIVE INCOME ~~(LOSS)~~

The company’s total comprehensive income presently consists of net income, adjustments for our derivative financial instruments accounted for as cash flow hedges, and various pension and other postretirement benefit related items. Total comprehensive income, ~~attributable to Flowers Foods, Inc.,~~ determined as net income adjusted by other comprehensive income, ~~and net income attributable to noncontrolling interest,~~ was ~~$52.0~~$36.8 million and ~~$138.6~~$43.2 million for the ~~twelve and forty~~sixteen weeks ended ~~October 9,~~April 23, 2011 and April 24, 2010, ~~respectively. Total comprehensive income attributable to Flowers Foods, Inc. was $26.2 million and $111.8 million for the twelve and forty weeks ended October 10, 2009,~~ respectively.

During the ~~forty~~sixteen weeks ended ~~October 9, 2010,~~April 23, 2011, changes to accumulated other comprehensive loss, net of income tax, were as follows (amounts in thousands):

Accumulated other comprehensive loss, January 2, 2010 $ (64,672 )
Derivative transactions:
Net deferred gains (losses) on closed contracts, net of income tax of $(417) (667 )
Reclassified to earnings, net of income tax of $10,085 16,110
Effective portion of change in fair value of hedging instruments, net of income tax of $10,338 16,515
Amortization of actuarial loss, net of income tax of $628 1,002
Minimum pension liability, net of income tax of $42 68
Amortization of prior service credits, net of income tax of $(52) (82 )

Accumulated other comprehensive loss, October 9, 2010 $ (31,726 )


	2011
Accumulated other comprehensive loss, January 1, 2011	$	(33,709	)
Derivative transactions:
Net deferred gain on closed contracts, net of income tax of $3,815		6,093
Reclassified to earnings, net of income tax of $(8,323)		(13,295	)
Effective portion of change in fair value of hedging instruments, net of income tax of $1,502		2,399
Amortization of prior service credits, net of income tax of $(30)		(49	)
Amortization of actuarial loss, net of income tax of $317		507

Accumulated other comprehensive loss, April 23, 2011	$	(38,054	)

Amounts reclassified out of accumulated other comprehensive loss to net income that relate to commodity contracts are presented as an adjustment to reconcile net income to net cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows.

3. ~~ACQUISITIONS~~

On October 17, 2009, the company acquired 100% of the outstanding shares of capital stock of Leo’s Foods, Inc. (“Leo’s”). Leo’s operates one tortilla facility in Ft. Worth, Texas and makes an extensive line of flour and corn tortillas and tortilla chips that are sold to foodservice and institutional customers nationwide. This acquisition is recorded in the company’s warehouse delivery segment and resulted in goodwill of $2.6 million, none of which is deductible for tax purposes.

On May 15, 2009, the company acquired substantially all the assets of a bakery mix operation in Cedar Rapids, Iowa. Based on the purchase price allocation, the fair value of the identifiable assets acquired and liabilities assumed exceeded the fair value of the consideration paid. As a result, we recognized a gain of $3.0 million in the second quarter of fiscal 2009, which is included in the line item “Gain on acquisition” within income from operations in the condensed consolidated statement of income for the forty weeks ended October 10, 2009. We believe the gain on acquisition resulted from the seller’s strategic intent to exit a non-core business operation. This acquisition is recorded in the company’s warehouse delivery segment.

4. GOODWILL AND OTHER INTANGIBLES

~~The~~There were no changes in the carrying amount of goodwill for the ~~forty~~sixteen weeks ended ~~October 9, 2010, are~~April 23, 2011. The balance as of April 23, 2011 is as follows (amounts in thousands):

DSD Warehouse delivery Total
Balance as of January 2, 2010 $ 194,581 $ 7,101 $ 201,682
Adjustment for deconsolidation of VIE (Note 8) (1,529 ) — (1,529 )

Balance as of October 9, 2010 $ 193,052 $ 7,101 $ 200,153


DSD	$	193,052
Warehouse delivery		7,101

Total	$	200,153

As of ~~October 9, 2010~~April 23, 2011 and January ~~2, 2010,~~1, 2011, the company had the following amounts related to amortizable intangible assets (amounts in thousands):


	October 9, 2010						January 2, 2010						April 23, 2011						January 1, 2011
			Accumulated						Accumulated						Accumulated						Accumulated
Asset	Cost		Amortization		Net Value		Cost		Amortization		Net Value		Cost		Amortization		Net Value		Cost		Amortization		Net Value
Trademarks	$	35,268	$	4,331	$	30,937	$	35,268	$	3,144	$	32,124	$	35,268	$	5,161	$	30,107	$	35,268	$	4,687	$	30,581
Customer relationships		75,434		12,766		62,668		75,434		9,738		65,696		75,434		14,869		60,565		75,434		13,675		61,759
Non-compete agreements		1,874		1,343		531		1,874		1,309		565		1,874		1,367		507		1,874		1,353		521
Distributor relationships		2,600		373		2,227		2,600		240		2,360		2,600		467		2,133		2,600		413		2,187
Supply agreement		1,050		485		565		1,050		215		835		1,050		674		376		1,050		566		484

Total	$	116,226	$	19,298	$	96,928	$	116,226	$	14,646	$	101,580	$	116,226	$	22,538	$	93,688	$	116,226	$	20,694	$	95,532

There is an additional $1.5 million indefinite life intangible asset, which is not being amortized, separately identified from goodwill.

~~Net~~Aggregate amortization expense for the ~~twelve~~sixteen weeks ending April 23, 2011 and ~~forty weeks ended October 9,~~April 24, 2010 were $1.8 million and ~~October 10, 2009 were as follows (amounts in thousands):~~

FOR THE TWELVE WEEKS ENDED FOR THE FORTY WEEKS ENDED
OCTOBER 9, 2010 OCTOBER 10, 2009 OCTOBER 9, 2010 OCTOBER 10, 2009
Amortizable intangible assets expense $ 1,396 $ 1,404 $ 4,652 $ 4,509
Amortizable intangible liabilities (income) (10 ) (10 ) (34 ) (34 )

Total, net $ 1,386 $ 1,394 $ 4,618 $ 4,475

$1.9 million, respectively.

Estimated ~~net~~ amortization of intangibles for ~~the remainder~~each of ~~fiscal 2010 and~~ the next ~~four~~five years is as follows (amounts in thousands):


	Amortization of		Amortization of
	Intangibles, net		Intangibles
Remainder of 2010	$	1,385
2011	$	5,948
Remainder of 2011			$	4,118
2012	$	5,677	$	5,677
2013	$	5,488	$	5,488
2014	$	5,389	$	5,389
2015			$	5,237

5.4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash and cash equivalents, accounts receivable and short-term debt approximates fair value because of the short-term maturity of the instruments. Notes receivable are entered into in connection with the purchase of distributors’ territories by independent distributors. These notes receivable are recorded in the ~~condensed~~ consolidated balance sheet at carrying value which represents the closest approximation of fair value. In accordance with GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As a result, the appropriate interest rate that should be used to estimate the fair value of the distributor notes is the prevailing market rate at which similar loans would be made to distributors with similar credit ratings and for the same maturities. However, the company ~~utilizes~~finances approximately ~~3,600~~2,550 independent distributors all with varied financial histories and credit risks. Considering the diversity of credit risks among the independent distributors, the company has no method to accurately determine a market interest rate to apply to the notes. The territories are generally financed over ten years bearing an interest rate of 12% and the distributor notes are collateralized by the independent distributors’ territories. The fair value of the company’s long-term debt at April 23, 2011 approximates the carrying value. For fair value disclosures information about our derivative assets and liabilities see Note 5,Derivative Financial Instruments.

~~Interest~~During the sixteen weeks ending April 23, 2011 and April 24, 2010, $3.9 million and $3.9 million, respectively, was recorded as interest income ~~for~~relating to the distributor notes.

At April 23, 2011 and January 1, 2011, respectively, the carrying values of the distributor notes ~~receivable was~~were as follows (amounts in thousands):

Interest Income
For the twelve weeks ended October 9, 2010 $ 2,918
For the twelve weeks ended October 10, 2009 $ 2,956
For the forty weeks ended October 9, 2010 $ 9,773
For the forty weeks ended October 10, 2009 $ 9,996


	April 23, 2011		January 1, 2011
Distributor notes receivable	$	105,044	$	105,396
Current portion of distributor notes receivable recorded in accounts and notes receivable, net		12,704		12,536

Long-term portion of distributor notes receivable	$	92,340	$	92,860

At ~~October 9, 2010~~April 23, 2011 and January ~~2, 2010, respectively, the carrying value of the distributor notes was as follows (amounts in thousands):~~

October 9, 2010 January 2, 2010
Distributor notes receivable $ 104,471 $ 107,067
Current portion of distributor notes receivable recorded in accounts and notes receivable, net 12,583 12,610

Long-term portion of distributor notes receivable $ 91,888 $ 94,457

~~At October 9, 2010 and January 2, 2010,~~1, 2011, the company has evaluated the ~~collectibility~~collectability of the distributor notes and determined that a reserve is not necessary. Payments on these distributor notes are collected by the company weekly in the distributor settlement process.

6.5. DERIVATIVE FINANCIAL INSTRUMENTS

~~In the first fiscal quarter of fiscal 2008, the~~The company ~~began measuring~~measures the fair value of its derivative portfolio using the fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal market for that asset or liability. These measurements are classified into a hierarchy by the inputs used to perform the fair value calculation as follows:

Level 1: Fair value based on unadjusted quoted prices for identical assets or liabilities in active markets

Level 2: Modeled fair value with model inputs that are all observable market values

Level 3: Modeled fair value with at least one model input that is not an observable market value

This change in measurement technique had no material impact on the reported value of our derivative portfolio.

COMMODITY PRICE RISK

The company enters into commodity derivatives, designated as cash-flow hedges of existing or future exposure to changes in commodity prices. The company’s primary raw materials are flour, sweeteners and shortening, along with pulp, paper and petroleum-based packaging products. Natural gas, which is used as oven fuel, is also an important commodity input to production.

As of ~~October 9, 2010,~~April 23, 2011, the company’s hedge portfolio contained commodity derivatives with a net fair value of ~~$24.5~~$23.0 million, which is recorded in the following accounts with fair values measured as indicated (amounts in millions):


	Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3		Total
Assets:
Other current	$	23.0	$	4.3		$	—	$	27.3		$	23.6	$	—		$	—	$	23.6
Other long-term		0.4		—			—		0.4			1.1		—			—		1.1

Total		23.4		4.3			—		27.7			24.7		—			—		24.7

Liabilities:
Other current		—		(2.6	)		—		(2.6	)		—		(1.4	)		—		(1.4	)
Other long-term		—		(0.6	)		—		(0.6	)		—		(0.3	)		—		(0.3	)

Total		—		(3.2	)		—		(3.2	)		—		(1.7	)		—		(1.7	)

Net Fair Value	$	23.4	$	1.1		$	—	$	24.5		$	24.7	$	(1.7	)	$	—	$	23.0

The positions held in the portfolio are used to hedge economic exposure to changes in various raw material prices and effectively fix the price, or limit increases in prices, for a period of time extending into fiscal 2012. These instruments are designated as cash-flow hedges. The effective portion of changes in fair value for these derivatives is recorded each period in other comprehensive income (loss),

and any ineffective portion of the change in fair value is recorded to current period earnings in selling, ~~marketing~~distribution and administrative expenses. ~~The~~All of the company held no commodity derivatives at ~~October 9, 2010 or~~April 23, 2011 and January ~~2, 2010 that did not qualify~~1, 2011 qualified for hedge accounting.

As of October 9, 2010, the balance in accumulated other comprehensive loss related to commodity derivative transactions was $(25.1) million. Of this total, approximately $(2.2) million, $(13.1) million and $0.2 million were related to instruments expiring in 2010, 2011 and 2012, respectively, and $(10.0) million was related to deferred losses on cash flow hedge positions.

INTEREST RATE RISK

The company entered into interest rate swaps with ~~initial~~ notional amounts of $85.0 million, and $65.0 million, respectively, to fix the interest rate on the $150.0 million term loan ~~entered into~~secured on August 1, 2008 to fund the acquisitions of ButterKrust Bakery and Holsum. The notional amounts match the scheduled quarterly principal payments on the $150.0 million term loan so that the remaining outstanding term loan balance at any reporting date is fully covered by the swap arrangements through the August 2013 maturity of the term loan. In addition, on October 27, 2008, the company entered an interest rate swap with a notional amount of $50.0 million to fix the interest rate through September 30, 2009 on $50.0 million of borrowings outstanding under the company’s unsecured credit facility.Holsum Bakery, Inc.

The interest rate swap agreements result in the company paying or receiving the difference between the fixed and floating rates at specified intervals calculated based on the notional amount. The interest rate differential to be paid or received will be recorded as interest expense. These swap transactions are designated as cash-flow hedges. Accordingly, the effective portion of changes in the fair value of the swaps is recorded each period in other comprehensive income. Any ineffective portions of changes in fair value are recorded to current period earnings in selling, ~~marketing~~distribution and administrative expenses.

As of ~~October 9, 2010,~~April 23, 2011, the fair value of the interest rate swaps was ~~$(8.1)~~$(5.6) million, which is recorded in the following accounts with fair values measured as indicated (amounts in millions):


	Level 1		Level 2			Level 3		Total
Assets:
Other current	$	—	$	—		$	—	$	—
Other long-term		—		—			—		—

Total		—		—			—		—
											Level 1		Level 2			Level 3		Total
Liabilities:
Other current		—		(4.1	)		—		(4.1	)	$	—	$	(3.6	)	$	—	$	(3.6	)
Other long-term		—		(4.0	)		—		(4.0	)		—		(2.0	)		—		(2.0	)

Total		—		(8.1	)		—		(8.1	)		—		(5.6	)		—		(5.6	)

Net Fair Value	$	—	$	(8.1	)	$	—	$	(8.1	)	$	—	$	(5.6	)	$	—	$	(5.6	)

During the ~~twelve~~sixteen weeks ended ~~October 9, 2010 and October 10, 2009,~~April 23, 2011, interest expense of ~~$1.0 million and~~ $1.3 million ~~respectively,~~ was recognized due to periodic settlements of the ~~swaps. During the forty weeks ended October 9, 2010 and October 10, 2009, interest expense of $3.6 million and $4.0 million, respectively, was recognized due to periodic settlements of the swaps.~~

As of October 9, 2010, the balance in accumulated other comprehensive loss related to interest rate derivative transactions was $4.9 million. Of this total, approximately $0.6 million, $2.3 million, $1.6 million, and $0.4 million were related to instruments expiring in fiscal 2010 through 2013, respectively.swap agreements.

The company has the following derivative instruments located on the ~~condensed~~ consolidated balance sheet, utilized for risk management purposes detailed above (amounts in thousands):


	Derivative Assets						Derivative Liabilities						Derivative Assets								Derivative Liabilities
	October 9, 2010			January 2, 2010			October 9, 2010			January 2, 2010			April 23, 2011				January 1, 2011				April 23, 2011			January 1, 2011
Derivatives designated as	Balance			Balance			Balance			Balance
hedging	Sheet	Fair		Sheet	Fair		Sheet	Fair		Sheet	Fair
													Balance				Balance				Balance			Balance
Derivatives designated as hedging													Sheet		Fair		Sheet		Fair		Sheet	Fair		Sheet	Fair
instruments	location	Value		location	Value		location	Value		location	Value		location		Value		location		Value		location	Value		location	Value
Interest rate contracts	—	$	—	—	$	—	Other current liabilities	$	4,085	Other current liabilities	$	4,271		—	$	—		—	$	—	Other current liabilities	$	3,580	Other current liabilities	$	3,789
Interest rate contracts	—		—	—		—	Other long term liabilities		4,017	Other long term liabilities		2,459		—		—		—		—	Other long term liabilities		2,059	Other long term liabilities		2,684
Commodity contracts	Other current assets		27,274	Other current assets		2,501	Other current liabilities		2,627	Other current liabilities		6,143	Other current assets			23,577	Other current assets			22,380	Other current liabilities		1,346	Other current liabilities		2,032
Commodity contracts	Other long term assets		393	Other long term assets		—	Other long term liabilities		535	Other long term liabilities		78	Other long term assets			1,116	Other long term assets			—	Other long term liabilities		302	Other long term liabilities		371

Total		$	27,667		$	2,501		$	11,264		$	12,951			$	24,693			$	22,380		$	7,287		$	8,876

The company has the following derivative instruments located on the ~~condensed~~ consolidated ~~statements~~statement of income, utilized for risk management purposes detailed above (amounts in thousands and net of tax):


	Amount of Gain or (Loss)							Amount of Gain or (Loss) Reclassified						Amount of Gain or (Loss)							Amount of Gain or (Loss) Reclassified
	Recognized in OCI on						Location of Gain or (Loss)	from Accumulated OCI into Income						Recognized in OCI on							from Accumulated OCI into Income
Derivatives in	Derivative (Effective Portion)						Reclassified from AOCI into	(Effective Portion)						Derivative (Effective Portion)(Net of tax)						Location of Gain or (Loss)	(Effective Portion)(Net of tax)
Cash Flow Hedge	For the twelve weeks ended						Income	For the twelve weeks ended						For the sixteen weeks ended						Reclassified from AOCI into Income	For the sixteen weeks ended
Relationships	October 9, 2010			October 10, 2009			(Effective Portion)	October 9, 2010			October 10, 2009			April 23, 2011			April 24, 2010			(Effective Portion)	April 23, 2011			April 24, 2010
Interest rate contracts	$	852		$	(1,061	)	Interest expense	$	(619	)	$	(817	)	$	(138	)	$	(891	)	Interest expense (income)	$	(800	)	$	(942	)
Commodity contracts		—			—		Selling, distribution and administrative		—			(325	)		8,630			(4,859	)	Production costs(1)		14,095			(7,088	)
Commodity contracts		(18,672	)		(13,113	)	Production costs(1)		(2,027	)		(6,878	)

Total	$	(17,820	)	$	(14,174	)		$	(2,646	)	$	(8,020	)	$	8,492		$	(5,750	)		$	13,295		$	(8,030	)


	Amount of Gain or (Loss)							Amount of Gain or (Loss) Reclassified
	Recognized in OCI on						Location of Gain or (Loss)	from Accumulated OCI into Income
Derivatives in	Derivative (Effective Portion)						Reclassified from AOCI into	(Effective Portion)
Cash Flow Hedge	For the forty weeks ended						Income	For the forty weeks ended
Relationships	October 9, 2010			October 10, 2009			(Effective Portion)	October 9, 2010			October 10, 2009
Interest rate contracts	$	3,061		$	(1,248	)	Interest expense	$	(2,218	)	$	(2,462	)
Commodity contracts		—			—		Selling, distribution and administrative		—			(1,200	)
Commodity contracts		(18,909	)		(18,050	)	Production costs(1)		(13,892	)		(26,295	)

Total	$	(15,848	)	$	(19,298	)		$	(16,110	)	$	(29,957	)


1.		Included in ~~materials,~~Materials, supplies, labor and other production costs (exclusive of depreciation and amortization shown separately).

Amount of Gain or (Loss)
Recognized in Income on
Derivative (Ineffective Portion
Location of Gain or (Loss) Recognized and Amount Excluded from
in Income on Derivative (Ineffective Effectiveness Testing)(net of tax)
Derivatives in Cash Portion and Amount Excluded from For the forty weeks ended
Flow Hedge Relationships Effectiveness Testing) October 9, 2010 October 10, 2009
Interest rate contracts Selling, distribution and administrative expenses $ — $ —
Commodity contracts Selling, distribution and administrative expenses — (617 )

Total $ — $ (617 )

The balance in accumulated other comprehensive income (loss) related to commodity price risk and interest rate risk derivative transactions that are closed or will expire in the next four years are as follows (amounts in millions and net of tax) at April 23, 2011:


	Commodity price		Interest rate risk
	risk derivatives		derivatives			Totals
Closed contracts	$	8.2	$	0.2		$	8.4
Expiring in 2011		11.6		(1.6	)		10.0
Expiring in 2012		2.6		(1.6	)		1.0
Expiring in 2013		—		(0.3	)		(0.3	)

Total	$	22.4	$	(3.3	)	$	19.1

As of ~~October 9, 2010,~~April 23, 2011, the company had the following outstanding financial contracts that were entered to hedge commodity and interest rate risk:


	Notional amount
Derivative in Cash Flow Hedge Relationship	(millions)
Derivatives in Cash Flow Hedge Relationship			Notional amount (millions)
Interest rate contracts	$	120.0	$	108.8
Wheat contracts		139.2		152.3
Soybean oil contracts		14.8		18.3
Natural gas contracts		14.2		11.3

Total	$	288.2	$	290.7

~~The interest rate contracts have multiple settlements to match the amortization of the term loan. The notional amount of $120.0 million represents the current settlement notional amount. Note 7,~~~~Debt and Other Obligations~~~~, below provides details on the term loan.~~ The company’s derivative instruments contain no credit-risk-related contingent features at ~~October 9, 2010.~~April 23, 2011. As of April 23, 2011 and January 1, 2011, the company had $10.9 million and $11.5 million, respectively, in other accrued liabilities representing collateral from counterparties for hedged positions.

7.6. DEBT AND OTHER OBLIGATIONS

Long-term debt and capital leases consisted of the following at ~~October 9, 2010~~April 23, 2011 and January ~~2, 2010~~1, 2011 (amounts in thousands):


	OCTOBER 9, 2010		JANUARY 2, 2010		April 23, 2011		January 1, 2011
Unsecured credit facility	$	9,500	$	89,000	$	—	$	—
Unsecured term loan		120,000		131,250		108,750		114,375
Capital lease obligations		11,376		26,555		8,732		10,541
Other notes payable		2,486		4,863		2,221		2,386

		143,362		251,668		119,703		127,302
Less current maturities		26,817		25,763		29,097		28,432

Total long-term debt and capital leases	$	116,545	$	225,905	$	90,606	$	98,870

On August 1, 2008, the company entered into a Credit Agreement ~~(“term~~(the “term loan”) with various lending parties for the purpose of completing two acquisitions. The term loan provides for an amortizing $150.0 million of borrowings through the maturity date of August 4,1, 2013. Principal payments are due quarterly under the term loan beginning on December 31, 2008 at an annual amortization of 10% of the principal balance for the first two years, 15% during the third year, 20% during the fourth year, and 45% during the fifth year. The term loan includes certain customary restrictions, which, among other things, require maintenance of financial covenants and limit encumbrance of assets and creation of indebtedness. Restrictive financial covenants include such ratios as a minimum interest coverage ratio and a maximum leverage ratio. The company believes that, given its current cash position, its cash flow from operating activities and its available credit capacity, it can comply with the current terms of the term loan and can meet presently foreseeable financial requirements. As of ~~October 9, 2010~~April 23, 2011 and January ~~2, 2010,~~1, 2011, the company was in compliance with all restrictive financial covenants under the term loan.

Interest is due quarterly in arrears on outstanding borrowings at a customary Eurodollar rate or the base rate plus the applicable margin. The underlying rate is defined as the rate offered in the interbank Eurodollar market or the higher of the prime lending rate or federal funds rate plus 0.5%. The applicable margin ranges from 0.0% to 1.375% for base rate loans and from 0.875% to 2.375% for Eurodollar loans and is based on the company’s leverage ratio. Principal payments began on December 31, 2008 and are due quarterly under the term loan at an annual amortization of 10% of the principal balance for the first two years, 15% during the third year, 20% during the fourth year, and 45% during the fifth year. The company paid financing costs of $0.8 million in connection with the term loan, which is being amortized over the life of the term loan.

The company has a five-year, $250.0 million senior unsecured revolving loan facility (the “credit facility”) ~~expiring~~which expires October 5, 2012. The company may request to increase its borrowings under the credit facility up to an aggregate of $350.0 million upon the satisfaction of certain conditions. Proceeds from the credit facility may be used for working capital and general corporate purposes, including acquisition financing, refinancing of indebtedness and share repurchases. The credit facility includes certain customary restrictions, which, among other things, require maintenance of financial covenants and limit encumbrance of assets and creation of indebtedness. Restrictive financial covenants include such ratios as a minimum interest coverage ratio and a maximum leverage ratio. The company believes that, given its current cash position, its cash flow from operating activities and its available credit capacity, it can comply with the current terms of the credit facility and can meet presently foreseeable financial requirements. As of ~~October 9, 2010~~April 23, 2011 and January ~~2, 2010,~~1, 2011, the company was in compliance with all restrictive financial covenants under its credit facility.

Interest is due quarterly in arrears on any outstanding borrowings at a customary Eurodollar rate or the base rate plus the applicable margin. The underlying rate is defined as rates offered in the interbank Eurodollar market or the higher of the prime lending rate or federal

funds rate plus 0.5%. The applicable margin ranges from 0.0% to 0.30% for base rate loans and from 0.40% to 1.275% for Eurodollar loans. In addition, a facility fee ranging from 0.10% to 0.35% is due quarterly on all commitments under the credit facility. Both the interest margin and the facility fee are based on the company’s leverage ratio. Financing costs of $0.9 million were deferred and are being amortized over the term of the credit facility.

Book overdrafts occur when checks have been issued but have not been presented to the bank for payment. These bank accounts allow us to delay funding of issued checks until the checks are presented for payment. ~~The~~A delay in funding results in a temporary source of financing from the bank. The activity related to book overdrafts is shown as a financing activity in our ~~condensed~~ consolidated statements of cash flows. Book overdrafts are included in other current liabilities on our ~~condensed~~ consolidated balance sheets. As of ~~October 9, 2010~~April 23, 2011 and January ~~2, 2010,~~1, 2011, the book overdraft balance was ~~$12.3~~$7.0 million and ~~$11.1~~$9.7 million, respectively.

8.7. VARIABLE INTEREST ENTITY

The company maintains a transportation agreement with an entity that transports a significant portion of the company’s fresh bakery products from the company’s production facilities to outlying distribution centers. The company represents a significant portion of the entity’s revenue. This entity qualifies as a VIE. Under previous accounting guidance, we consolidated the VIE in our ~~condensed~~ consolidated financial statements from the first quarter of 2004 through the fourth quarter of 2009 because during that time the company was considered to be the primary beneficiary. Under the revised principles, which became effective ~~January 3,~~at the beginning of our fiscal 2010, we ~~have~~ determined that the company is no longer the primary beneficiary and we deconsolidated the VIE in our financial statements. ~~The VIE does not affect the line item~~~~Net income attributable to Flowers Foods, Inc.~~ ~~since the company has no interest in any net earnings or losses of the VIE through equity participation.~~ The VIE has collateral that is sufficient to meet its capital lease and other debt obligations and the owner of the VIE personally guarantees the obligations of the VIE. The VIE’s creditors have no recourse against the general credit of the company.

The company has no exposure to gains or losses of the VIE in reporting its net income. In addition, the company does not have explicit or implied power over any of the significant activities to operate the VIE. The primary beneficiary of the VIE realizes the economic benefits and losses incurred and has the power to direct most of the significant activities. The VIE is permitted to pass along increases in their costs, with company approval, at a capped increase of 2% per year. The company and the VIE also agree on a rebate paid or credited to the company depending on the profitability of the VIE in the preceding year. We do not guarantee the VIE’s specific returns or performance benchmarks. In addition, if a manufacturing facility closes or there is a loss of market share causing the VIE to have to move their equipment the company will make an effort to move the equipment to another manufacturing facility. If the company is unable to do so, we will reimburse the VIE for any losses incurred in the disposal of the equipment and will pay the cost to transfer the equipment. The company’s maximum loss exposure for the truck disposals is the difference in the estimated fair value of the trucks from the book value.

As part of the deconsolidation of the VIE, the company concluded that certain of the trucks and trailers the VIE uses for distributing our products from the manufacturing facilities to the distribution centers qualify as right to use leases. ~~The amount for property, plant and equipment and capital lease obligations was $11.9 million at January 3, 2010.~~ As of ~~October 9, 2010,~~April 23, 2011 and January 1, 2011, there was ~~$10.4~~$8.1 million and $9.7 million, respectively, in net property, plant and equipment and capital lease obligations associated with the right to use leases.

~~Following is the effect of the VIE during the twelve and forty weeks ended October 10, 2009:~~

TWELVE WEEKS ENDED FORTY WEEKS ENDED
OCTOBER 10, 2009 OCTOBER 10, 2009
% OF % OF
VIE TOTAL VIE TOTAL
(Dollars in thousands)
Assets as of respective period ends $ 33,715 2.5 % $ 33,715 2.5 %
Sales $ 3,851 0.6 % $ 8,466 0.4 %
Income before income taxes $ 1,098 2.1 % $ 2,306 1.4 %

~~The assets consisted primarily of $22.9 million of transportation equipment on October 10, 2009 recorded as capital lease obligations.~~

9.8. LITIGATION

The company and its subsidiaries from time to time are parties to, or targets of, lawsuits, claims, investigations and proceedings, which are being handled and defended in the ordinary course of business. While the company is unable to predict the outcome of these matters, it believes, based upon currently available facts, that it is remote that the ultimate resolution of any such pending matters will have a material adverse effect on its overall financial condition, results of operations or cash flows in the future. However, adverse developments could negatively impact earnings in a particular future fiscal period.

On July 23, 2008, a wholly-owned subsidiary of the company filed a lawsuit against Hostess Brands, Inc. (“Hostess”) (formerly Interstate Bakeries Corporation) in the United States District Court for the Northern District of Georgia. The complaint alleges that Hostess is infringing upon Flowers’Nature’s Owntrademarks by using or intending to use theNature’s Pridetrademark. Flowers asserts that Hostess’ sale or intended sale of baked goods under theNature’s Pridetrademark is likely to cause confusion with, and likely to

dilute the distinctiveness of, theNature’s Ownmark and constitutes unfair competition and deceptive trade practices. Flowers is seeking actual damages, an accounting of Hostess’ profits from its sales ofNature’s Prideproducts, and injunctive relief. Flowers sought summary judgment for its claims, which was denied by the court. Unless our motion for reconsideration is granted and changes that ruling, we expect this case to proceed to trial in 2011.

The company’s facilities are subject to various federal, state and local laws and regulations regarding the discharge of material into the environment and the protection of the environment in other ways. The company is not a party to any material proceedings arising under these regulations. The company believes that compliance with existing environmental laws and regulations will not materially affect the consolidated financial condition or the competitive position of the company. The company is currently in substantial compliance with all material environmental regulations affecting the company and its properties.

~~10.~~9. EARNINGS PER SHARE

The following is a reconciliation of net income ~~attributable to Flowers Foods, Inc.~~ and weighted average shares for calculating basic and diluted earnings per common share for the ~~twelve and forty~~sixteen weeks ended ~~October 9,~~April 23, 2011 and April 24, 2010 ~~and October 10, 2009~~ (amounts in thousands, except per share data):

FOR THE TWELVE WEEKS ENDED FOR THE FORTY WEEKS ENDED
OCTOBER 9, 2010 OCTOBER 10, 2009 OCTOBER 9, 2010 OCTOBER 10, 2009
Net income attributable to Flowers Foods, Inc. $ 31,166 $ 31,926 $ 105,609 $ 99,648

Dividends on restricted shares not expected to vest* — — — —

Net income attributable to common and participating shareholders $ 31,166 $ 31,926 $ 105,609 $ 99,648

Basic Earnings Per Common Share:

Weighted average shares outstanding for common stock 91,426 91,581 91,348 91,917
Weighted average shares outstanding for participating securities 203 414 228 413

Basic weighted average shares outstanding per common share 91,629 91,995 91,576 92,330

Basic earnings per common share attributable to Flowers Foods, Inc. common shareholders $ 0.34 $ 0.35 $ 1.15 $ 1.08

Diluted Earnings Per Common Share:

Basic weighted average shares outstanding per common share 91,629 91,995 91,576 92,330
Add: Shares of common stock assumed issued upon exercise of stock options and vesting of restricted stock 647 602 665 497

Diluted weighted average shares outstanding per common share 92,276 92,597 92,241 92,827

Diluted earnings per common share attributable to Flowers Foods, Inc. common shareholders $ 0.34 $ 0.34 $ 1.14 $ 1.07


	For the Sixteen Weeks Ended
	April 23,		April 24,
	2011		2010
Net income	$	41,161	$	40,687
Dividends on participating securities not expected to vest*		—		—

Net income attributable to common and participating shareholders	$	41,161	$	40,687

Basic Earnings Per Common Share:
Weighted average shares outstanding for common stock		90,118		91,251
Weighted average shares outstanding for participating securities		96		266

Basic weighted average shares outstanding for common stock		90,214		91,517

Basic earnings per common share	$	0.46	$	0.44

Diluted Earnings Per Common Share:
Basic weighted average shares outstanding for common stock		90,214		91,517
Add: Shares of common stock assumed issued upon exercise of stock options and vesting of restricted stock		773		687

Diluted weighted average shares outstanding for common stock		90,987		92,204

Diluted earnings per common share	$	0.45	$	0.44


*		The company expects all ~~restricted~~participating securities share awards outstanding at ~~October 9,~~April 24, 2010 ~~and October 10, 2009~~ to vest.

Stock options to purchase ~~1,129,817~~2,249,667 shares and ~~1,841,417~~2,128,925 shares of common stock were not included in the computation of diluted earnings per share for the ~~twelve~~sixteen weeks ended ~~October 9,~~April 23, 2011 and April 24, 2010, and October 10, 2009, respectively, because their effect would have been anti-dilutive. Stock options to purchase 2,119,163 shares and 1,841,417 shares of common stock were not included in the computation of diluted earnings per share for the forty weeks ended October 9, 2010 and October 10, 2009, respectively, because their effect would have been anti-dilutive.

~~11.~~10. STOCK BASED COMPENSATION

Our 2001 Equity and Performance Incentive Plan, as amended and restated as of April 1, 2009, (“EPIP”) was approved by our shareholders and authorizes the compensation committee of the Board of Directors to make a variety of stock-based awards ~~of options to purchase our common stock, restricted stock,~~

~~performance stock~~while selecting the form that is most appropriate for the company and ~~units and deferred stock.~~eligible recipients. Our officers, key employees and non-employee directors (whose grants are generally approved by the full Board of Directors) are eligible to receive awards under the EPIP. The aggregate number of shares that may be issued or transferred under the EPIP is 18,625,000 shares. Over the life of the EPIP, the company has only issued options, restricted stock and deferred stock. The following is a summary of stock options, restricted stock, and deferred stock outstanding under the EPIP. Information relating to the company’s stock appreciation rights which are not issued under the EPIP is also disclosed below.

Stock Options

The following non-qualified stock options (“NQSOs”) have been granted under the EPIP with service period remaining. The Black-Scholes option-pricing model was used to estimate the grant date fair value (amounts in thousands, except price data and as indicated):

Grant date 2/9/2010 2/9/2009 2/4/2008
Shares granted 1,136 993 850
Exercise price 25.01 23.84 24.75
Vesting date 2/9/2013 2/9/2012 2/4/2011
Fair value per share ($) 5.54 5.87 5.80
Dividend yield (%)(1) 3.00 2.20 1.90
Expected volatility (%)(2) 30.60 31.80 27.30
Risk-free interest rate (%)(3) 2.35 2.00 2.79
Expected option life (years)(4) 5.00 5.00 5.00
Outstanding at October 9, 2010 1,130 989 844


Grant date	2/10/2011		2/9/2010		2/9/2009
Shares granted		1,428		1,136		993
Exercise price($)		24.47		25.01		23.84
Vesting date		2/10/2014		2/9/2013		2/9/2012
Fair value per share($)		5.20		5.54		5.87
Dividend yield(%)(1)		3.00		3.00		2.20
Expected volatility(%)(2)		29.20		30.60		31.80
Risk-free interest rate(%)(3)		2.44		2.35		2.00
Expected option life (years)(4)		5.00		5.00		5.00
Outstanding at April 23, 2011		1,428		1,117		979


1.		Dividend yield — estimated yield based on the historical dividend payment for the four most recent dividend payments prior to the grant date.

2.		Expected volatility — based on historical volatility over the expected term using daily stock prices.

3.		Risk-free interest rate — United States Treasury Constant Maturity rates as of the grant date over the expected term.

4.		Expected option life ~~— The 2008,~~—The 2009, 2010, and ~~2010~~2011 grant assumptions are based on the simplified formula determined in accordance with Staff Accounting Bulletin No. 110. The company does not have sufficient historical exercise behavior data to reasonably estimate the expected option life.

The stock option activity for the ~~forty~~sixteen weeks ended ~~October 9, 2010~~April 23, 2011 pursuant to the EPIP is set forth below (amounts in thousands, except price data):


				Weighted		Weighted Average									Weighted
				Average		Remaining		Aggregate					Weighted		Average
	Options			Exercise Price		Contractual Term		Intrinsic Value					Average		Remaining		Aggregate
Outstanding at January 2, 2010		3,734		$	20.34
													Exercise		Contractual		Intrinsic
										Options			Price		Term (Years)		Value
Outstanding at January 1, 2011											4,365		$	22.00
Granted		1,136		$	25.01						1,428		$	24.47
Exercised		(473	)	$	16.10						(91	)	$	11.07
Forfeited		(13	)	$	24.58						(20	)	$	24.50

Outstanding at October 9, 2010		4,384		$	21.99		4.57	$	15,169
Outstanding at April 23, 2011											5,682		$	22.78		4.77	$	37,195

Exercisable at October 9, 2010		1,420		$	16.66		2.77	$	12,488
Exercisable at April 23, 2011											2,168		$	20.06		2.87	$	20,102

As of ~~October 9, 2010,~~April 23, 2011, all options outstanding under the EPIP had an average exercise price of $22.78 and a weighted average remaining contractual life of 4.77 years.

As of April 23, 2011, there was ~~$6.7~~$9.0 million of total unrecognized compensation expense related to ~~outstanding~~unnvested stock options. This ~~cost~~expense is expected to be recognized ~~on a straight-line basis~~ over a weighted-average period of ~~1.7~~2.2 years.

The cash received, the (shortfall) windfall tax ~~benefits,~~(expense) benefit, and intrinsic value from stock option exercises for the ~~forty~~sixteen weeks ended ~~October 9,~~April 23, 2011 and April 24, 2010 ~~and October 10, 2009~~ were as follows (amounts in thousands):


					April 23,		April 24,
	OCTOBER 9, 2010		OCTOBER 10, 2009		2011		2010
Cash received from option exercises	$	7,609	$	2,560	$	1,007	$	2,531
Cash tax windfall, net	$	777	$	910
Cash tax windfall (shortfall), net					$	489	$	(34	)
Intrinsic value of stock options exercised	$	4,311	$	2,933	$	1,520	$	736

Generally, if the employee dies, becomes disabled or retires at normal retirement age (age 65 or later), the nonqualified stock options immediately vest and must be exercised within two years. In addition, nonqualified stock options will vest if the company undergoes a change in control.

Performance-Contingent Restricted Stock

Certain key employees have been granted performance-contingent restricted stock. The ~~2009 and 2010~~ awards generally vest approximately two years from the date of grant (after the filing of the company’s Annual Report on Form 10-K) and the ~~2009 award~~performance condition requires the company’s “return on invested capital” to exceed ~~the~~its weighted average “cost of capital” by ~~2.5%~~3.75% (the “ROI Target”) ~~over the two fiscal years immediately preceding the vesting date. The 2010 award requires the ROI target to be 3.75%~~ over the two fiscal years immediately preceding the vesting date. If the ROI Target is not met the awards are forfeited. Furthermore, each grant of performance-contingent restricted stock will be adjusted as set forth in the market condition described below:

Ifif the ROI Target is satisfied, then the performance-contingent restricted stock grant may be adjusted based on the company’s total return to shareholders (“Company TSR”) percent rank as compared to the total return to shareholders of the S&P Packaged Food & Meat Index (“S&P TSR”) in the manner set forth below:

	•		If the Company TSR rank is equal to the 50th percentile of the S&P TSR, then no adjustment;

	•		If the Company TSR rank is less than the 50th percentile of the S&P TSR, the grant shall be reduced by 1.3% for each percentile below the 50th percentile that the Company TSR is less than the 50th percentile of S&P TSR, but in no event shall such reduction exceed 20%; or

	•		If the Company TSR rank is greater than the 50th percentile of the S&P TSR, the grant shall be increased by 1.3% for each percentile above the 50th percentile that Company TSR is greater than the 50th percentile of S&P TSR, but in no event shall such increase exceed 20%.

In connection with the vesting of ~~209,950 shares of~~the performance-contingent restricted stock granted in February ~~2008,~~2009, during the ~~forty~~sixteen weeks ended ~~October 9, 2010, an additional 41,990~~April 23, 2011, the Company TSR rank was less than the 50^th percentile and the grant was reduced by 20% of the award or 40,280 common shares. The total amount of shares that were issued ~~in the aggregate~~ to ~~these certain key employees because~~plan participants was 161,120. Because the company ~~exceeded~~achieved the ~~S&P TSR by~~ROI Target the ~~maximum amount.~~total cost for the award was not reversed for the portion of shares that did not vest.

The performance-contingent restricted stock generally vests immediately if the grantee dies or becomes disabled. However, at normal retirement the grantee will receive a pro-rata number of shares through the grantee’s retirement date at the normal vesting date. In addition, the performance-contingent restricted stock will immediately vest at the grant date award level without adjustment if the company undergoes

a change in control. During the vesting period, the grantee is treated as a normal shareholder with respect to ~~dividend and~~ voting ~~rights on the restricted shares for the 2009 grant. The 2010 grant does not include the right to receive dividends until vesting.~~rights. Dividends declared ~~and paid~~ during the vesting period will accrue and will be paid at ~~vesting.~~vesting for the shares that ultimately vest but will not exceed 100% of the award. The fair value estimate was determined using aMonte Carlosimulation model, which utilizes multiple input variables to determine the probability of the company achieving the market condition discussed above. Inputs into the model included the following for the company and comparator companies: (i) total stockholder return from the beginning of the performance cycle through the measurement date; (ii) volatility; (iii) risk-free interest rates; and (iv) the correlation of the comparator companies’ total stockholder return. The inputs are based on historical capital market data.

The following restricted stock awards have been granted under the EPIP since fiscal ~~2007~~2009 (amounts in thousands, except price data):


Grant date	2/9/2010		2/9/2009		2/4/2008		2/10/2011		2/9/2010		2/9/2009
Shares granted		179		204		210		216		179		204
Vesting date		2/9/2012		2/9/2011		2/4/2010
Approximate vesting date								2/10/2013		2/9/2012		2/9/2011
Fair value per share	$	26.38	$	24.96	$	27.03	$	23.90	$	26.38	$	24.96

A summary of the status of the company’s nonvested shares as of ~~October 9, 2010,~~April 23, 2011, and changes during the ~~forty weeks~~quarter ended ~~October 9, 2010,~~April 23, 2011, is presented below (amounts in thousands, except price data):

Weighted
Average
Grant Date
Shares Fair Value
Nonvested at January 2, 2010 414 $ 26.01
Granted* 221 $ 21.36
Vested* (252 ) $ 22.53
Forfeited (4 ) $ 25.92

Nonvested at October 9, 2010 379 $ 25.62


				Weighted
				Average
				Grant Date
	Shares			Fair Value
Nonvested at January 1, 2011		379		$	25.62
Granted		216		$	23.90
Vested		(161	)	$	24.96
Canceled		(40	)	$	24.96
Forfeited		(5	)	$	25.57

Nonvested at April 23, 2011		389		$	25.00


*		~~Includes 41,990 additional shares for the 2008 grant that exceeded the S&P TSR by the maximum amount as discussed above.~~

As of ~~October 9, 2010,~~April 23, 2011, there was ~~$4.0~~$6.5 million of total unrecognized compensation cost related to nonvested restricted stock granted by the EPIP. That cost is expected to be recognized over a weighted-average period of ~~0.8~~1.5 years. The total ~~fair~~intrinsic value of shares vested during the ~~forty weeks~~period ended ~~October 9, 2010~~April 23, 2011 was ~~$6.1 million which includes the incremental shares issued when the 2008 award exceeded the S&P TSR maximum amount discussed above.~~$3.4 million.

Stock Appreciation Rights

Prior to 2007, the company allowed non-employee directors to convert their retainers and committee chairman fees into rights. These rights vest after one year and can be exercised over nine years. The company records compensation expense for these rights at a measurement date based on changes between the grant price and an estimated fair value of the rights using theBlack-Scholesoption-pricing model.

The fair value of the rights at ~~October 9, 2010~~April 23, 2011 ranged from ~~$8.95~~$12.02 to ~~$21.55.~~$27.39. The following assumptions were used to determine fair value of the rights discussed above using theBlack-Scholes option-pricing model at ~~October 9, 2010:~~April 23, 2011: dividend yield ~~3.0%~~3.1%; expected volatility ~~30.0%~~29.0%; risk-free interest rate ~~1.14%~~2.15% and expected life of ~~0.45~~0.20 years to ~~2.85~~2.55 years. During the twelve weeks ended October 9, 2010 and October 10, 2009 the company recorded expense of $0.2 million and $0.4 million, respectively, related to these rights. During the forty weeks ended October 9, 2010 and October 10, 2009 the company recorded expense of $0.3 million and $0.2 million, respectively, related to these rights.

The rights activity for the ~~forty~~sixteen weeks ended ~~October 9, 2010~~April 23, 2011 is set forth below (amounts in thousands except price data):


					Weighted									Weighted
			Weighted		Average		Aggregate					Weighted		Average
			Average		Remaining		Current					Average		Remaining		Aggregate
			Grant Date		Contractual		Intrinsic					Exercise		Contractual		Intrinsic
	Rights		Fair Value		Term		Value		Rights			Price		Term (Years)		Value
Outstanding at January 2, 2010		231	$	11.14
Outstanding at January 1, 2011										231		$	11.14
Rights exercised		—		—						(24	)		12.71
Rights forfeited		—		—						—			—

Outstanding at October 9, 2010		231	$	11.14		3.15	$	3,326
Outstanding at April 23, 2011										207		$	10.94		2.62	$	3,807

Deferred Stock

Pursuant to the EPIP, the company allows non-employee directors to convert their annual board retainers into deferred stock. The deferred stock has a minimum two year vesting period and will be distributed to the individual (along with accumulated dividends) at a time designated by the individual at the date of conversion. During the first quarter of fiscal ~~2010~~2011 an aggregate of ~~17,960~~16,040 shares were converted. The company records compensation expense for this deferred stock over the two-year minimum vesting period based on the closing price of the company’s common stock on the date of conversion. During the ~~first and second quarter of fiscal 2010~~sixteen weeks ending April 23, 2011, a total of ~~5,540~~20,950 deferred shares were exercised for ~~non-employee~~ retainer ~~conversions granted in 2008.~~conversions.

Pursuant to the EPIP non-employee directors also receive annual grants of deferred stock. This deferred stock vests over one year from the grant date. During the second quarter of fiscal 2010, non-employee directors were granted an aggregate of 44,220 shares of deferred stock. ~~There was an additional grant of 1,860 shares during the first quarter of fiscal 2010 based on a pro-rated share amount for a new director whose term began on January 1, 2010.~~ The deferred stock will be distributed to the grantee at a time designated by the grantee at the date of grant. Compensation expense is recorded on this deferred stock over the one year minimum vesting period. During the ~~first and second quarter of fiscal 2010~~sixteen weeks ending April 23, 2011, a total of ~~28,380~~7,015 deferred shares were exercised for ~~deferred shares issued under the fiscal 2009 grant.~~annual grant awards.

The deferred stock activity for the ~~forty~~sixteen weeks ended ~~October 9, 2010~~April 23, 2011 is set forth below (amounts in thousands, except price data):


				Weighted		Weighted Average									Weighted
				Average		Remaining		Aggregate					Weighted		Average
	Shares			Grant Price		Contractual Term (Years)		Intrinsic Value					Average		Remaining		Aggregate
Outstanding at January 2, 2010		130		$	21.90
													Grant		Contractual		Intrinsic
										Shares			Price		Term (Years)		Value
Outstanding at January 1, 2011											160		$	22.66
Deferred stock issued		64		$	23.11						16		$	24.33
Deferred stock exercised		(34	)	$	20.57						(28	)	$	22.29

Outstanding at October 9, 2010		160		$	22.66		0.36	$	4,072
Outstanding at April 23, 2011											148		$	22.91		0.31	$	4,343

The following table summarizes the company’s stock based compensation expense ~~(income)~~ for the ~~twelve~~sixteen weeks ended April 23, 2011 and ~~forty week periods ended October 9,~~April 24, 2010 ~~and October 10, 2009, respectively~~ (amounts in thousands):


	FOR THE TWELVE WEEKS ENDED				FOR THE FORTY WEEKS ENDED				April 23,		April 24,
	OCTOBER 9, 2010		OCTOBER 10, 2009		OCTOBER 9, 2010		OCTOBER 10, 2009		2011		2010
Stock options	$	1,447	$	1,205	$	5,401	$	3,866	$	3,542	$	2,410
Performance-contingent restricted stock		955		1,243		3,624		4,117		1,432		1,546
Stock appreciation rights		200		407		308		173		514		366
Deferred stock		258		311		1,010		1,051		441		431

Total stock based compensation	$	2,860	$	3,166	$	10,343	$	9,207	$	5,929	$	4,753

~~12.~~11. POST-RETIREMENT PLANS

The following summarizes the company’s balance sheet related pension and other postretirement benefit plan accounts at ~~October 9, 2010~~April 23, 2011 as compared to accounts at January ~~2, 2010~~1, 2011 (amounts in thousands):


	AS OF				AS OF
	OCTOBER 9,		JANUARY 2,		April 23,		January 1,
	2010		2010		2011		2011
Noncurrent benefit asset	$	—	$	—
Current benefit liability	$	841	$	841	$	1,011	$	1,011
Noncurrent benefit liability	$	66,515	$	68,140	$	74,643	$	76,086
Accumulated other comprehensive loss	$	51,821	$	52,808	$	57,157	$	57,614

Defined Benefit Plans

The company has trusteed, noncontributory defined benefit pension plans covering certain employees. The benefits are based on years of service and the employees’ career earnings. The plans are funded at amounts deductible for income tax purposes but not less than the minimum funding required by the Employee Retirement Income Security Act of 1974 (“ERISA”). As of ~~October 9,~~April 24, 2010, the assets of the plans included certificates of deposit, marketable equity securities, mutual funds, corporate and government debt securities, private and public real estate partnerships, other diversifying ~~investments (e.g. absolute return strategy funds and hedged equity funds)~~strategies and annuity contracts. Effective January 1, 2006, the company

curtailed the defined benefit plan that ~~covered~~covers the majority of its workforce. Benefits under this plan were frozen, and no future benefits will accrue under this plan. The company continues to maintain a plan that covers a small number of certain union employees. During the ~~forty~~sixteen weeks ended ~~October 9, 2010~~April 23, 2011 the company contributed ~~$0.8~~$0.6 million to company pension plans.

The net periodic pension (benefit) cost ~~(income)~~ for the company’s plans include the following components (amounts in thousands):


													FOR THE SIXTEEN WEEKS ENDED
	FOR THE TWELVE WEEKS ENDED						FOR THE FORTY WEEKS ENDED						APRIL 23,			APRIL 24,
	OCTOBER 9, 2010			OCTOBER 10, 2009			OCTOBER 9, 2010			OCTOBER 10, 2009			2011			2010
Service cost	$	89		$	72		$	298		$	240		$	147		$	119
Interest cost		4,308			4,309			14,359			14,359			5,616			5,743
Expected return on plan assets		(4,769	)		(4,370	)		(15,895	)		(14,565	)		(6,657	)		(6,358	)
Amortization of net loss		503			629			1,675			2,098			839			670

Total net periodic benefit cost	$	131		$	640		$	437		$	2,132		$	(55	)	$	174

The company also has several smaller ~~defined benefit plans~~Defined Benefit Plans associated with recent acquisitions that will be merged into the Flowers Foods ~~defined benefit plans~~Defined Benefit Plans after receipt of final determination letters. ~~The benefits under these plans were frozen with no future benefit accruals.~~

Post-retirement Benefit Plan

The company provides certain medical and life insurance benefits for eligible retired employees. The ~~medical plan covers eligible retirees under the active medical plans. The plan incorporates~~plans incorporate an up-front deductible, coinsurance payments and retiree contributions at various premium levels. Eligibility and maximum period of coverage is based on age and length of service.

The net periodic postretirement benefit cost for the company includes the following components (amounts in thousands):


											FOR THE SIXTEEN WEEKS ENDED
	FOR THE TWELVE WEEKS ENDED					FOR THE FORTY WEEKS ENDED					APRIL 23,			APRIL 24,
	OCTOBER 9, 2010			OCTOBER 10, 2009		OCTOBER 9, 2010			OCTOBER 10, 2009		2011			2010
Service cost	$	146		$	198	$	486		$	662	$	131		$	198
Interest cost		202			257		673			856		212			271
Amortization of net (gain) loss												(15	)		(13	)
Amortization of prior service (credit) cost		(40	)		77		(134	)		256		(79	)		(31	)
Amortization of net (gain) loss		(14	)		8		(45	)		26

Total net periodic benefit cost	$	294		$	540	$	980		$	1,800	$	249		$	425

401(k) Retirement Savings Plan

The Flowers Foods 401(k) Retirement Savings Plan (“the Plan”) covers substantially all of the company’s employees who have completed certain service requirements. The cost and contributions for those employees who also participate in the defined benefit pension plan is 25% of the first $400 contributed by the employee. Prior to January 1, 2006, the costs and contributions for employees who do not participate in the defined benefit pension plan was 2% of compensation and 50% of the employees’ contributions, up to 6% of compensation. Effective January 1, 2006, the costs and contributions for employees who do not participate in the defined benefit pension plan increased to 3% of compensation and 50% of the employees’ contributions, up to 6% of compensation. During the ~~twelve~~sixteen weeks ended ~~October 9,~~April 23, 2011 and April 24, 2010, ~~and October 10, 2009,~~ the total cost and contributions were ~~$4.0~~$6.0 million and ~~$3.3 million, respectively. During the forty weeks ended October 9, 2010 and October 10, 2009, the total cost and contributions were $13.4 million and $12.0~~$5.5 million, respectively.

The company also has ~~several~~a smaller 401(k) ~~Plans~~Plan associated with ~~recent acquisitions~~an acquisition that will be merged into the Flowers Foods 401(k) Retirement Savings Plan ~~after receipt of final determination letters.~~later this year.

~~13.~~12. INCOME TAXES

The company’s effective tax rate for the ~~twelve and forty weeks ended October 9, 2010~~first quarter of fiscal 2011 was ~~34.9% and 35.3% respectively.~~35.0%. This rate is ~~lower~~slightly higher than the ~~fiscal 2009~~2010 annual effective ~~tax~~ rate of ~~35.6%~~34.9%, which included the benefit of favorable discrete ~~items and the non-taxable earnings of the previously consolidated variable interest entity.~~items. The company’s current effective rate is favorably impacted by ~~the~~an increase in the Section 199 qualifying production activities deduction. The ~~difference~~most significant differences in the effective rate and the statutory rate ~~is primarily due to~~are state income taxes and the Section 199 qualifying production activities deduction.

During the ~~twelve and forty weeks ended October 9, 2010,~~first quarter of fiscal 2011, the company’s activity with respect to its ~~uncertain tax positions~~FIN 48 reserve and ~~the~~ related interest expense accrual was immaterial. At this time, we do not anticipate significant changes to the amount of gross unrecognized tax benefits over the next twelve months.

~~14.~~13. SEGMENT REPORTING

~~The~~ DSD ~~segment~~ produces fresh and frozen packaged bread and rolls and ~~the~~ warehouse delivery ~~segment~~ produces frozen bread and rolls, tortillas and ~~fresh and frozen~~ snack products. The company evaluates each segment’s performance based on income or loss before interest and income taxes, excluding unallocated expenses and charges which the company’s management deems to be an overall corporate cost or a cost not reflective of the segments’ core operating businesses. Information regarding the operations in these reportable segments is as ~~follows (amounts in thousands):~~follows:


													FOR THE SIXTEEN WEEKS ENDED
	FOR THE TWELVE WEEKS ENDED						FOR THE FORTY WEEKS ENDED						APRIL 23,			APRIL 24,
	OCTOBER 9, 2010			OCTOBER 10, 2009			OCTOBER 9, 2010			OCTOBER 10, 2009			2011			2010
SALES:
DSD	$	482,639		$	495,224		$	1,631,956		$	1,682,510		$	654,231		$	653,778
Warehouse delivery		146,633			139,220			475,168			446,663			191,802			184,945
Eliminations: Sales from warehouse delivery to DSD		(25,016	)		(24,994	)		(86,902	)		(86,732	)		(36,827	)		(36,093	)
Sales from DSD to warehouse delivery		(6,362	)		(6,880	)		(19,586	)		(18,416	)		(7,381	)		(7,604	)

	$	597,894		$	602,570		$	2,000,636		$	2,024,025		$	801,825		$	795,026

DEPRECIATION AND AMORTIZATION:
DSD	$	15,314		$	15,189		$	50,879		$	49,678		$	21,867		$	20,102
Warehouse delivery		4,421			3,738			14,490			12,045			6,056			5,536
Unallocated		43			137			67			274
Other														69			(1	)

	$	19,778		$	19,064		$	65,436		$	61,997		$	27,992		$	25,637

INCOME FROM OPERATIONS:
INCOME (LOSS) FROM OPERATIONS:
DSD	$	42,245		$	46,789		$	150,715		$	149,412		$	64,219		$	60,683
Warehouse delivery		12,216			12,858			37,590			39,190			11,331			13,533
Unallocated		(7,708	)		(8,571	)		(28,276	)		(29,416	)
Other														(14,032	)		(12,176	)

	$	46,753		$	51,076		$	160,029		$	159,186		$	61,518		$	62,040

NET INTEREST INCOME	$	1,127		$	98		$	3,214		$	737		$	1,762		$	1,131

INCOME BEFORE INCOME TAXES	$	47,880		$	51,174		$	163,243		$	159,923		$	63,280		$	63,171

Sales by product category in each reportable segment are as follows (amounts in thousands):


	For the twelve weeks ended October 9, 2010						For the twelve weeks ended October 10, 2009
	DSD		Warehouse delivery		Total		DSD		Warehouse delivery		Total
Branded Retail	$	282,539	$	23,636	$	306,175	$	280,034	$	33,818	$	313,852
Store Branded Retail		75,853		30,467		106,320		80,033		13,071		93,104
Non-retail and Other		117,885		67,514		185,399		128,277		67,337		195,614

Total	$	476,277	$	121,617	$	597,894	$	488,344	$	114,226	$	602,570

	For the Sixteen Weeks Ended April 23, 2011						For the Sixteen Weeks Ended April 24, 2010
	For the forty weeks ended October 9, 2010						For the forty weeks ended October 10, 2009								Warehouse						Warehouse
	DSD		Warehouse delivery		Total		DSD		Warehouse delivery		Total		DSD		Delivery		Total		DSD		Delivery		Total
Branded Retail	$	952,409	$	89,289	$	1,041,698	$	946,415	$	105,221	$	1,051,636	$	379,748	$	27,906	$	407,654	$	378,462	$	40,978	$	419,440
Store Branded Retail		256,871		77,659		334,530		279,633		45,083		324,716		102,044		39,281		141,325		99,531		21,336		120,867
Non-retail and Other		403,090		221,318		624,408		438,046		209,627		647,673		165,058		87,788		252,846		168,181		86,538		254,719

Total	$	1,612,370	$	388,266	$	2,000,636	$	1,664,094	$	359,931	$	2,024,025	$	646,850	$	154,975	$	801,825	$	646,174	$	148,852	$	795,026

~~15.~~14. SUBSEQUENT EVENTS

The company has evaluated subsequent events since ~~October 9, 2010,~~April 23, 2011, the date of these financial statements. There were no events or transactions discovered during this evaluation that require recognition or disclosure in the financial statements.

2218

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

The following discussion of the financial condition and results of operations of the company as of and for the ~~twelve and forty~~sixteen week ~~periods~~period ended ~~October 9, 2010~~April 23, 2011 should be read in conjunction with the company’s Annual Report on Form 10-K for the fiscal year ended January ~~2, 2010.~~1, 2011.

OVERVIEW:

Flowers Foods is one of the nation’s leading producers and marketers of packaged bakery foods for retail and foodservice customers. The company produces breads, buns, rolls, tortillas, snack cakes and pastries that are distributed fresh to U.S. customers in the Southeast, Mid-Atlantic, and Southwest as well as select markets in California and Nevada and frozen to customers nationwide. Our businesses are organized into two reportable segments: ~~direct-store-delivery (“DSD”)~~DSD and warehouse delivery. The DSD segment focuses on the production and marketing of bakery products to U.S. customers in the Southeast, Mid-Atlantic, and Southwest as well as select markets in California and ~~Nevada.~~Nevada primarily through its DSD system. The warehouse delivery segment produces snack cakes for sale to co-pack, retail and vending customers nationwide as well as frozen bread, rolls and buns and tortillas for sale to retail and foodservice customers nationwide primarily through warehouse distribution.

We aim to achieve consistent and sustainable growth in sales and earnings by focusing on improvement in the operating results of our existing businesses and, after detailed analysis, acquiring businesses and properties that add value to the company. We believe this consistent and sustainable growth will build value for our shareholders.

On April 11, 2011 the company announced a definitive merger agreement whereby we will acquire all the outstanding shares of Tasty Baking Company (“Tasty”) for $4.00 per share in cash for a total purchase price of approximately $165.0 million, including Tasty’s indebtedness. The acquisition is expected to strengthen the company’s snack cake business through the addition of theTastykakesnack cake brand. In addition, the company will expand our geographic reach and add two highly efficient bakeries with additional capacity to support growth. We also expect to generate operating synergies through additional revenue and cost-saving opportunities. On April 21, 2011, the company announced its tender offer for all outstanding shares of Tasty’s common stock at $4.00 per share, net to the seller in cash, without interest and less any required withholding taxes. The tender offer was made in connection with the definitive merger agreement and is scheduled to expire at midnight Philadelphia, PA time on May 19, 2011, unless extended. It is expected that this transaction will close during our fiscal second quarter.

The company also closed a manufacturing facility during the first quarter of fiscal 2011. The costs associated with closing the facility were approximately $5.7 million, net of operational savings. Additional information is included in theConsolidated and Segment Resultsdiscussion below.

Sales are principally affected by pricing, quality, ~~branded~~brand recognition, new product introductions and product line extensions, marketing and service. The company manages these factors to achieve a sales mix favoring its higher-margin branded products, while using store ~~branded~~brand products to absorb overhead costs and maximize use of production capacity. ~~Throughout 2010,~~During the first quarter of 2011, our ~~sales have been negatively~~results were impacted by the competitive landscape and ~~higher~~high promotional activity within the baking industry. Sales for the quarter ended ~~October 9, 2010 decreased 0.8%~~April 23, 2011 increased 0.9% from the quarter ended ~~October 10, 2009.~~April 24, 2010. This ~~decrease~~increase was primarily due to ~~negative~~net positive pricing and mix shifts of ~~2.4%~~2.1% and ~~the effect~~a decrease in volume of ~~the variable interest entity (“VIE”) deconsolidation, which negatively impacted sales by 0.6%~~1.2%. Acquisitions contributed 0.8% and volume increased 1.4%, partially offsetting these decreases. For the forty weeks ended October 9, 2010 sales decreased 1.2% from the same period of fiscal 2009. The decrease was primarily due to negative pricing and mix shifts of 2.7% and the effect of the VIE deconsolidation which negatively impacted sales 0.4%. These decreases were partially offset by acquisition sales and volume increases of 1.2% and 0.7%, respectively.

Commodities, such as our baking ingredients, periodically experience price fluctuations, and, for that reason, we continually monitor the market for these commodities. The cost of these inputs may fluctuate widely due to government policy and regulation, weather conditions, domestic and international demand or other unforeseen circumstances. Agricultural commodity prices reached all time high levels during 2007 and the first half of 2008 before declining during 2009. Commodity prices began to rise in the second half of 2010 and are expected to continue rising during 2011. We enter into forward purchase agreements and other derivative financial instruments qualifying for hedge accounting to reduce the impact of such volatility in raw ~~materials~~material prices. Any decrease in the availability of these agreements and instruments could increase the price of these raw materials and significantly affect our earnings.

For the twelve weeks ended October 9, 2010, diluted net income per share was $0.34 as compared to $0.34 per share for the twelve weeks ended October 10, 2009. For the twelve weeks ended October 9, 2010, net income attributable to Flowers Foods, Inc. was $31.2 million, a 2.4% decrease from the $31.9 million reported for the twelve weeks ended October 10, 2009.

For the forty weeks ended October 9, 2010, diluted net income per share was $1.14 as compared to $1.07 per share for the forty weeks ended October 10, 2009, a 6.5% increase. For the forty weeks ended October 9, 2010, net income attributable to Flowers Foods, Inc. was $105.6 million, a 6.0% increase over $99.6 million reported for the forty weeks ended October 10, 2009.

CRITICAL ACCOUNTING POLICIES:

Our financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”). These principles are numerous and complex. Our significant accounting policies are summarized in the company’s Annual Report on Form 10-K for the fiscal year ended January ~~2, 2010.~~1, 2011. In many instances, the application of GAAP requires management to make estimates or to apply subjective principles to particular facts and circumstances. A variance in the estimates used or a variance in the application or interpretation of GAAP could yield a materially different accounting result. Please see our Form 10-K for the fiscal year ended January

~~2, 2010,~~ 1, 2011, for a discussion of the areas where we believe that the estimates, judgments or interpretations that we have made, if different, could yield the most significant differences in our financial statements. ~~The following discussion provides the~~There have been no significant changes to our critical accounting policies from those disclosed in our Form 10-K filed for the year ended January ~~2, 2010.~~1, 2011.

~~Variable Interest Entities.~~In 2009, the Financial Accounting Standards Board (“FASB”) amended the consolidation principles associated with VIE. The new accounting principles resulted in a change in our accounting policy effective January 3, 2010. The new qualitative approach, generally, replaced the quantitative-based risks and rewards calculation for determining which enterprise, if any, has a controlling financial interest in the VIE. The qualitative approach is focused on identifying which company has both the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses of the entity or the right to receive benefits from the entity. As a result of this qualitative analysis, the company is no longer required to consolidate the VIE that delivers a significant portion of its fresh bakery products from the company’s production facilities to outlying distribution centers under a transportation agreement. The company has elected to prospectively deconsolidate the VIE. Please see Note 8,~~Variable Interest Entity~~~~, of Notes to Condensed Consolidated Financial Statements of this Form 10-Q for additional disclosure.~~

RESULTS OF OPERATIONS:

Results of operations, expressed as a percentage of sales and the dollar and percentage change from period to period, for the ~~twelve~~sixteen week periods ended ~~October 9,~~April 23, 2011 and April 24, 2010, ~~and October 10, 2009,~~ are set forth below ~~(dollars~~(Dollars in thousands):


	For the twelve weeks ended																	For the sixteen weeks ended
							Percentage of Sales					Increase (Decrease)												Percentage of Sales				Increase (Decrease)
	October 9, 2010			October 10, 2009			October 9, 2010		October 10, 2009			Dollars			%			April 23, 2011			April 24, 2010			April 23, 2011		April 24, 2010		Dollars			%
Sales
DSD	$	476,277		$	488,344			79.7		81.0		$	(12,067	)		(2.5	)	$	646,850		$	646,174			80.7		81.3	$	676			0.1
Warehouse delivery		121,617			114,226			20.3		19.0			7,391			6.5			154,975			148,852			19.3		18.7		6,123			4.1

Total	$	597,894		$	602,570			100.0		100.0		$	(4,676	)		(0.8	)	$	801,825		$	795,026			100.0		100.0	$	6,799			0.9

Materials, supplies, labor and other production costs (exclusive of depreciation and amortization shown separately below)
DSD (1)	$	228,445		$	241,305			48.0		49.4		$	(12,860	)		(5.3	)	$	298,643		$	308,830			46.2		47.8	$	(10,187	)		(3.3	)
Warehouse delivery(1)		87,696			80,940			72.1		70.9			6,756			8.3			113,615			105,968			73.3		71.2		7,647			7.2

Total	$	316,141		$	322,245			52.9		53.5		$	(6,104	)		(1.9	)	$	412,258		$	414,798			51.4		52.2	$	(2,540	)		(0.6	)

Selling, distribution and administrative expenses
DSD(1)	$	190,273		$	185,061			40.0		37.9		$	5,212			2.8		$	262,121		$	256,559			40.5		39.7	$	5,562			2.2
Warehouse delivery(1)		17,284			16,690			14.2		14.6			594			3.6			23,973			23,815			15.5		16.0		158			0.7
Corporate(2)		7,665			8,434			—		—			(769	)		(9.1	)		13,963			12,177			—		—		1,786			14.7

Total	$	215,222		$	210,185			36.0		34.9		$	5,037			2.4		$	300,057		$	292,551			37.4		36.8	$	7,506			2.6

Depreciation and amortization
Depreciation and Amortization
DSD(1)	$	15,314		$	15,189			3.2		3.1		$	125			0.8		$	21,867		$	20,102			3.4		3.1	$	1,765			8.8
Warehouse delivery(1)		4,421			3,738			3.6		3.3			683			18.3			6,056			5,536			3.9		3.7		520			9.4
Corporate(2)		43			137			—		—			(94	)	NM				69			(1	)		—		—		70		NM

Total	$	19,778		$	19,064			3.3		3.2		$	714			3.7		$	27,992		$	25,637			3.5		3.2	$	2,355			9.2

Income from operations
DSD(1)	$	42,245		$	46,789			8.9		9.6		$	(4,544	)		(9.7	)	$	64,219		$	60,683			9.9		9.4	$	3,537			5.8
Warehouse delivery(1)		12,216			12,858			10.0		11.3			(642	)		(5.0	)		11,331			13,533			7.3		9.1		(2,202	)		(16.3	)
Corporate(2)		(7,708	)		(8,571	)		—		—			863			10.1			(14,032	)		(12,176	)		—		—		(1,857	)		(15.3	)

Total	$	46,753		$	51,076			7.8		8.5		$	(4,323	)		(8.5	)	$	61,518		$	62,040			7.7		7.8	$	(522	)		(0.8	)

Interest income, net	$	1,127		$	98			0.2		0.0		$	1,029		NM			$	1,762		$	1,131			0.2		0.1	$	631			55.8
Income taxes	$	16,714		$	18,150			2.8		3.0		$	(1,436	)		(7.9	)	$	22,119		$	22,484			2.8		2.8	$	(365	)		(1.6	)

Net income	$	31,166		$	33,024			5.2		5.5		$	(1,858	)		(5.6	)	$	41,161		$	40,687			5.1		5.1	$	474			1.2
Net income attributable to noncontrolling interest	$	—		$	(1,098	)		—		(0.2	)	$	1,098			—

Net income attributable to Flowers Foods, Inc.	$	31,166		$	31,926			5.2		5.3		$	(760	)		(2.4	)


1.		As a percentage of revenue within the reporting ~~segment.~~segment

2.		The corporate segment has no ~~revenues.~~revenues

Results of operations, expressed as a percentage of sales and the dollar and percentage change from period to period, for the forty week periods ended October 9, 2010 and October 10, 2009, are set forth below (dollars in thousands):

For the forty weeks ended
Percentage of Sales Increase (Decrease)
October 9, 2010 October 10, 2009 October 9, 2010 October 10, 2009 Dollars %
Sales

DSD $ 1,612,370 $ 1,664,094 80.6 82.2 $ (51,724 ) (3.1 )
Warehouse delivery 388,266 359,931 19.4 17.8 28,335 7.9

Total $ 2,000,636 $ 2,024,025 100.0 100.0 $ (23,389 ) (1.2 )

Materials, supplies, labor and other production costs (exclusive of depreciation and amortization shown separately below)

DSD (1) $ 771,887 $ 829,954 47.9 49.9 $ (58,067 ) (7.0 )
Warehouse delivery(1) 277,605 255,092 71.5 70.9 22,513 8.8

Total $ 1,049,492 $ 1,085,046 52.5 53.6 $ (35,554 ) (3.3 )

Selling, distribution and administrative expenses

DSD(1) $ 638,889 $ 635,050 39.6 38.2 $ 3,839 0.6
Warehouse delivery(1) 58,581 56,617 15.1 15.7 1,964 3.5
Corporate(2) 28,209 29,142 — — (933 ) (3.2 )

Total $ 725,679 $ 720,809 36.3 35.6 $ 4,870 0.7

Depreciation and amortization

DSD(1) $ 50,879 $ 49,678 3.2 3.0 $ 1,201 2.4
Warehouse delivery(1) 14,490 12,045 3.7 3.3 2,445 20.3
Corporate(2) 67 274 — — (207 ) NM

Total $ 65,436 $ 61,997 3.3 3.1 $ 3,439 5.5

Gain on acquisition

DSD(1) $ — $ — — — $ — —
Warehouse delivery (1) — 3,013 — 0.8 3,013 —
Corporate (2) — — — — — —

Total $ — $ 3,013 — 0.1 $ 3,013 —

Income from operations

DSD(1) $ 150,715 $ 149,412 9.3 9.0 $ 1,303 0.9
Warehouse delivery(1) 37,590 39,190 9.7 10.9 (1,600 ) (4.1 )
Corporate(2) (28,276 ) (29,416 ) — — 1,140 3.9

Total $ 160,029 $ 159,186 8.0 7.9 $ 843 0.5

Interest income, net
$ 3,214 $ 737 0.2 0.0 $ 2,477 NM
Income taxes
$ 57,634 $ 57,969 2.9 2.9 $ (335 ) (0.6 )
Net income
$ 105,609 $ 101,954 5.3 5.0 $ 3,655 3.6
Net income attributable to noncontrolling interest
$ — $ (2,306 ) — (0.1 ) $ 2,306 —

Net income attributable to Flowers Foods, Inc.
$ 105,609 $ 99,648 5.3 4.9 $ 5,961 6.0


1.		~~As a percentage of revenue within the reporting segment.~~

2.		~~The corporate segment has no revenues.~~

2520

CONSOLIDATED AND SEGMENT RESULTS

~~TWELVE~~SIXTEEN WEEKS ENDED ~~OCTOBER 9, 2010~~APRIL 23, 2011 COMPARED TO ~~TWELVE~~SIXTEEN WEEKS ENDED ~~OCTOBER 10, 2009~~APRIL 24, 2010

Consolidated Sales.


	For the Twelve Weeks Ended					For the Twelve Weeks Ended								For the Sixteen Weeks Ended					For the Sixteen Weeks Ended
	October 9, 2010					October 10, 2009					% Increase			April 23, 2011					April 24, 2010
Sales category	$		%			$		%			(Decrease)
														$		%			$		%			% Increase (Decrease)
	(Amounts in					(Amounts in								(Amounts in					(Amounts in
	thousands)					thousands)								thousands)					thousands)
Branded Retail	$	306,175		51.2	%	$	313,852		52.1	%		(2.4	)%	$	407,654		50.8	%	$	419,440		52.8	%		(2.8	)%
Store Branded Retail		106,320		17.8			93,104		15.5			14.2	%		141,325		17.6			120,867		15.2			16.9	%
Non-retail and Other		185,399		31.0			195,614		32.4			(5.2	)%		252,846		31.6			254,719		32.0			(0.7	)%

Total	$	597,894		100.0	%	$	602,570		100.0	%		(0.8	)%	$	801,825		100.0	%	$	795,026		100.0	%		0.9	%

The ~~0.8% decrease~~0.9% increase in sales was attributable to the ~~following for all sales categories:~~following:


	Favorable
Percentage Point Change in Sales Attributed to:	(Unfavorable)
Pricing/Mix		~~(2.4~~2.1	)%
Volume		~~1.4~~	%
~~VIE deconsolidation~~		(~~0.6~~1.2	)%
~~Acquisitions~~		~~0.8~~	%

Total ~~Percentage Change~~percentage change in ~~Sales~~sales		~~(0.8~~0.9	)%

Sales category discussion

~~Branded~~The decrease in branded retail sales ~~declined~~was due primarily ~~due~~ to volume ~~decreases. Volume declines~~decreases, partially offset by net pricing/mix increases. Declines in branded multi-pak cake and branded white bread were partially offset by increases in branded soft ~~variety and branded sandwich rounds.~~variety. The increase in store branded retail sales was ~~largely~~ due to volume increases in store branded cake as some of the ~~companies’~~company’s customers introduced store branded cake programs ~~earlier~~ in ~~this fiscal~~the prior year. The decrease in non-retail and other sales was due primarily to ~~the deconsolidation of the VIE and declines in food service and contract manufacturing, partially offset by the 2009 acquisition contribution.~~volume declines.

Direct-Store-Delivery Sales.


	For the Twelve Weeks Ended					For the Twelve Weeks Ended								For the Sixteen Weeks Ended					For the Sixteen Weeks Ended
	October 9, 2010					October 10, 2009								April 23, 2011					April 24, 2010
Sales Category	$		%			$		%			% (Decrease)
														$		%			$		%			% Increase (Decrease)
	(Amounts in					(Amounts in								(Amounts in					(Amounts in
	thousands)					thousands)								thousands)					thousands)
Branded Retail	$	282,539		59.3	%	$	280,034		57.3	%		0.9	%	$	379,748		58.7	%	$	378,462		58.6	%		0.3	%
Store Branded Retail		75,853		15.9			80,033		16.4			(5.2	)%		102,044		15.8			99,531		15.4			2.5	%
Non-retail and Other		117,885		24.8			128,277		26.3			(8.1	)%		165,058		25.5			168,181		26.0			(1.9	)%

Total	$	476,277		100.0	%	$	488,344		100.0	%		(2.5	)%	$	646,850		100.0	%	$	646,174		100.0	%		0.1	%

The ~~2.5% decrease~~0.1% increase in sales was attributable to the ~~following for all sales categories:~~following:


	Favorable
Percentage Point Change in Sales Attributed to:	(Unfavorable)
Pricing/Mix		~~(3.4~~1.9	)%
Volume		~~1.7~~	%
~~VIE deconsolidation~~		(~~0.8~~1.8	)%

Total ~~Percentage Change~~percentage change in ~~Sales~~sales		~~(2.5~~0.1	)%

Sales category discussion

~~Branded~~The increase in branded retail sales ~~increased~~was due primarily to ~~volume~~net pricing/mix increases, partially offset by ~~price/mix declines. Increases~~volume decreases. Growth in branded soft variety and branded ~~sandwich rounds~~cake were partially offset by decreases in branded white bread. The increase in store branded retail sales was due to volume increases in store branded white bread and ~~breakfast bread. Store~~store branded ~~retail declined primarily~~buns/rolls/tortillas. The decrease in non-retail and other sales was due to ~~decreases in pricing/mix. Non-retail and other declined primarily due to the deconsolidation of the VIE and pricing/~~volume declines, partially offset by price/mix ~~decreases.~~increases.

Warehouse Delivery Sales.


	For the Twelve Weeks Ended					For the Twelve Weeks Ended								For the Sixteen Weeks Ended					For the Sixteen Weeks Ended
	October 9, 2010					October 10, 2009					% Increase			April 23, 2011					April 24, 2010					% Increase
Sales Category	$		%			$		%			(Decrease)
														$		%			$		%			(Decrease)
	(Amounts in					(Amounts in								(Amounts in					(Amounts in
	thousands)					thousands)								thousands)					thousands)
Branded Retail	$	23,636		19.4	%	$	33,818		29.6	%		(30.1	)%	$	27,906		18.0	%	$	40,978		27.5	%		(31.9	)%
Store Branded Retail		30,467		25.1			13,071		11.4			133.1	%		39,281		25.3			21,336		14.3			84.1	%
Non-retail and Other		67,514		55.5			67,337		59.0			0.3	%		87,788		56.7			86,538		58.2			1.4	%

Total	$	121,617		100.0	%	$	114,226		100.0	%		6.5	%	$	154,975		100.0	%	$	148,852		100.0	%		4.1	%

The ~~6.5%~~4.1% increase in sales was attributable to the ~~following for all sales categories:~~following:


	~~Favorable~~
Percentage Point Change in Sales Attributed to:	~~(Unfavorable)~~Favorable
Pricing/Mix		~~2.2~~4.1	%
Volume		~~0.2~~—	%
~~Acquisition~~
Total percentage change in sales		4.1	%

~~Total Percentage Change in Sales~~		~~6.5~~	%

Sales category discussion

The decrease in branded retail sales was primarily the result of ~~lower branded~~decreased multi-pak cake volume. The increase in store branded retail sales was due to volume ~~as a result of~~increases in store branded cake ~~programs introduced earlier in the year by~~as some of the company’s customers ~~which resulted~~introduced store branded cake programs in the ~~increase in store branded retail sales.~~prior year. The increase in non-retail and other sales, which include contract production and vending, was primarily due to ~~an acquisition. The acquisition was cycled at the end of the third quarter of fiscal 2010.~~net pricing/mix increases.

Materials, Supplies, Labor and Other Production Costs (exclusive of depreciation and amortization shown separately).The decrease as a percent of sales was primarily due to ~~significant~~ decreases in ingredient costs and sales increases. These were partially offset by ~~lower sales and higher packaging and workforce-related~~ costs associated with the manufacturing facility closure during the quarter, discussed in theOverviewabove, which impacted costs $2.8 million, or 30 basis points as a percent of ~~sales. In addition, an acquisition during the fourth quarter~~sales, net of ~~fiscal 2009 has higher costs as a percent of sales. Start-up costs for new production lines at several of our manufacturing facilities also contributed to the increase in workforce-related costs.~~operational savings.

The DSD ~~segment~~segment’s decrease as a percent of sales was primarily the result of significant decreases in ingredient ~~costs. These were~~costs, partially offset by ~~sales declines and higher workforce-related and packaging~~ costs associated with the manufacturing facility closure during the quarter of $2.8 million, or 40 basis points as a percent of ~~sales.~~sales, net of operational savings.

The warehouse delivery ~~segment~~segment’s increase as a percent of sales was primarily ~~the~~a result of higher ~~workforce-related costs, as well as, higher packaging and~~ ingredient costs as a percent of sales. ~~Ingredient~~The higher ingredient costs were ~~the result of higher cocoa and sugar costs, partially offset~~driven by ~~lower flour costs as a percent of sales. Start-up costs for new production lines at several of our manufacturing facilities also contributed to the~~ increases in ~~workforce-related costs.~~sweeteners, palm oil and cocoa.

Selling, Distribution and Administrative Expenses.The increase as a percent of sales was due to ~~lower sales and~~costs from closing the manufacturing facility which, net of operational savings, impacted it $2.4 million, or 30 basis points, as well as higher ~~workforce-related~~employee-related and distribution costs as a percent of sales. Costs associated with the impending acquisition of Tasty affected selling, distribution and administrative costs $0.8 million, or 10 basis points as a percentage of sales. These increases were partially offset by ~~lower costs from the acquisition as a percent of~~higher sales.

The DSD segment’s selling, distribution and administrative expenses increased as a percent of sales primarily due to ~~lower sales~~the manufacturing facility closure costs which, net of operational savings, impacted it $2.4 million, or 40 basis points and higher ~~workforce-related,~~employee-related and distribution ~~and rent expenses~~costs as a percent of sales.

The warehouse delivery segment’s selling, distribution and administrative expenses decreased as a percent of sales primarily due to lower ~~advertising costs~~broker commissions as a percent of sales.

Depreciation and Amortization.Depreciation and amortization increased primarily due to increased depreciation expense related to ~~assets placed in service~~capital expenditures subsequent to the ~~third~~first quarter of fiscal ~~2009~~2010 and accelerated depreciation of certain assets at the ~~2009 acquisition.~~closed facility.

The DSD segment’s depreciation and amortization expense ~~increase was~~increased primarily due to assets placed in service subsequent to the ~~third~~first quarter of fiscal ~~2009.~~2010 and accelerated depreciation of certain assets at the closed facility.

The warehouse delivery segment’s depreciation and amortization expense ~~increase was~~increased primarily due to assets placed in service subsequent to the ~~acquisitions.~~first quarter of fiscal 2010.

Income ~~from~~From Operations.The ~~decrease~~increase in the DSD ~~segment~~segment’s income from operations was primarily attributable to lower ~~sales and higher workforce-related~~ingredient costs, partially offset by ~~lower ingredient costs.~~the manufacturing facility closure costs of $5.7 million, net of operational savings. The decrease in the warehouse delivery ~~segment~~segment’s income from operations was primarily a result of higher ~~workforce-related~~ingredient costs. The ~~decrease~~increase in unallocated corporate expenses was primarily due to ~~lower pension and postretirement plan costs.~~higher share-based payment expenses.

Net Interest Income.The increase was related to lower interest expense ~~due to lower debt~~on the term loan because principal payments have been made quarterly since the fourth quarter of 2008. As this loan is amortized through August 4, 2013, interest expense will decrease for the term loan. Lower amounts outstanding under the company’s unsecured credit facility ~~and~~also contributed to the term loan used for acquisitions during fiscal 2008. The credit facility and term loan had outstanding borrowings of $84.6 million and $135.0 million, respectively, at October 10, 2009 and $9.5 million and $120.0 million, respectively at October 9, 2010.increase.

Income Taxes.The effective tax rate for the ~~third~~first quarter of fiscal ~~2010~~2011 was ~~34.9%~~35.0% compared to ~~35.5%~~35.6% in the ~~third~~first quarter of the prior year. The decrease in the rate is due mainly to the increase in the Section 199 qualifying production activities deduction in the current quarter compared to the prior year quarter. The difference in the effective rate and the statutory rate is primarily due to state income taxes and the Section 199 qualifying production activities deduction.

~~Net Income Attributable to Noncontrolling Interest.~~The company maintains a transportation agreement with an entity that transports a significant portion of the company’s fresh bakery products from the company’s production facilities to outlying distribution centers. The company represents a significant portion of the entity’s revenue. This entity qualified as a VIE for reporting periods prior to January 3, 2010 under previous accounting guidance and all the earnings of the VIE were eliminated through noncontrolling interest because the company did not have an equity ownership interest in the VIE. In 2009, the FASB amended the consolidation principles associated with VIE accounting by replacing the quantitative-based risks and rewards calculation for determining which enterprise, if any, has a controlling financial interest in the VIE with a qualitative approach. The qualitative approach is focused on identifying which company has both the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses of the entity or the right to receive benefits from the entity. As a result of this qualitative analysis, the company is no longer required to consolidate the VIE beginning on January 3, 2010 at adoption. Please see Note 8,~~Variable Interest Entity~~~~, of this Form 10-Q for additional disclosure.~~

~~FORTY WEEKS ENDED OCTOBER 9, 2010 COMPARED TO FORTY WEEKS ENDED OCTOBER 10, 2009~~

~~Consolidated Sales.~~

For the Forty Weeks Ended For the Forty Weeks Ended
October 9, 2010 October 10, 2009
Sales category $ % $ % % (Decrease)
(Amounts in (Amounts in
thousands) thousands)
Branded Retail $ 1,041,698 52.1 % $ 1,051,636 52.0 % (0.9 )%
Store Branded Retail 334,530 16.7 324,716 16.0 3.0 %
Non-retail and Other 624,408 31.2 647,673 32.0 (3.6 )%

Total $ 2,000,636 100.0 % $ 2,024,025 100.0 % (1.2 )%

~~The 1.2% decrease in sales was attributable to the following for all sales categories:~~


	~~Favorable~~
~~Percentage Point Change in Sales Attributed to:~~	~~(Unfavorable)~~
~~Pricing/Mix~~		~~(2.7~~	)%
~~Volume~~		~~0.7~~	%
~~VIE deconsolidation~~		~~(0.4~~	)%
~~Acquisitions~~		~~1.2~~	%

~~Total Percentage Change in Sales~~		~~(1.2~~	)%

~~Sales category discussion~~

Branded retail sales declined due to pricing/mix and volume decreases. Declines in branded multi-pak cake and branded white bread were partially offset by increases in branded soft variety and branded sandwich rounds introduced early in this fiscal year. Competitive pricing and heavy promotional activity continued to impact the category. The increase in store branded retail was primarily due to volume increases in store branded cake as some of the company’s customers introduced store branded cake programs earlier in this fiscal year. Decreases in store branded white bread and store branded variety bread partially offset the increase. The decrease in non-retail and other sales was due to declines in food service and the deconsolidation of the VIE, partially offset by contributions from the 2009 acquisitions.

~~Direct-Store-Delivery Sales.~~

For the Forty Weeks Ended For the Forty Weeks Ended
October 9, 2010 October 10, 2009 % Increase
Sales category $ % $ % (Decrease)
(Amounts in (Amounts in
thousands) thousands)
Branded Retail $ 952,409 59.1 % $ 946,415 56.9 % 0.6 %
Store Branded Retail 256,871 15.9 279,633 16.8 (8.1 )%
Non-retail and Other 403,090 25.0 438,046 26.3 (8.0 )%

Total $ 1,612,370 100.0 % $ 1,664,094 100.0 % (3.1 )%

~~The 3.1% decrease in sales was attributable to the following for all sales categories:~~


	~~Favorable~~
~~Percentage Point Change in Sales Attributed to:~~	~~(Unfavorable)~~
~~Pricing/Mix~~		~~(3.1~~	)%
~~Volume~~		~~0.5~~	%
~~VIE deconsolidation~~		~~(0.5~~	)%

~~Total Percentage Change in Sales~~		~~(3.1~~	)%

~~Sales category discussion~~

Branded retail sales increased due to volume increases, partially offset by price/mix declines. Increases in branded soft variety and branded sandwich rounds were partially offset by decreases in branded white bread. Competitive pricing and heavy promotional activity continued to impact the category. Store branded retail declined due to decreases in pricing/mix, and to a lesser extent, volume declines. Non-retail and other declined primarily due to the deconsolidation of the VIE, pricing/mix decreases and, to a lesser extent, volume decreases.

~~Warehouse Delivery Sales.~~

For the Forty Weeks Ended For the Forty Weeks Ended
October 9, 2010 October 10, 2009% Increase
Sales category $ % $ % (Decrease)
(Amounts in (Amounts in
thousands) thousands)
Branded Retail $ 89,289 23.0 % $ 105,221 29.2 % (15.1 )%
Store Branded Retail 77,659 20.0 45,083 12.5 72.3 %
Non-retail and Other 221,318 57.0 209,627 58.3 5.6 %

Total $ 388,266 100.0 % $ 359,931 100.0 % 7.9 %

~~The 7.9% increase in sales was attributable to the following for all sales categories:~~


	~~Favorable~~
~~Percentage Point Change in Sales Attributed to:~~	~~(Unfavorable)~~
~~Pricing/Mix~~		~~(0.3~~	)%
~~Volume~~		~~1.1~~	%
~~Acquisition~~		~~7.1~~	%

~~Total Percentage Change in Sales~~		~~7.9~~	%

~~Sales category discussion~~

The decrease in branded retail sales was primarily the result of lower multi-pak cake volume as a result of store branded cake programs introduced earlier in the year by some of the company’s customers, which resulted in the increase in store branded retail sales. The increase in non-retail and other sales, which include contract production and vending, was due primarily to the acquisitions. The acquisitions were cycled at the end of the third quarter of fiscal 2010.

~~Materials, Supplies, Labor and Other Production Costs (exclusive of depreciation and amortization shown separately).~~The decrease as a percent of sales was primarily due to significant decreases in ingredient costs. These were partially offset by sales declines and higher workforce-related costs as a percent of sales and higher costs as a percent of sales for the companies acquired in 2009.

The DSD segment decrease as a percent of sales was primarily a result of significant decreases in ingredient costs. These were partially offset by sales declines and higher workforce-related costs as a percent of sales.

The warehouse delivery segment increase as a percent of sales was primarily as a result of higher workforce-related and ingredients costs as a percent of sales. The higher ingredient costs are partially due to the acquisitions.

~~Selling, Distribution and Administrative Expenses.~~The increase as a percent of sales was due to lower sales and higher workforce- related, distribution, and advertising costs as a percent of sales, partially offset by lower costs for the companies acquired in 2009.

The DSD segment’s selling, distribution and administrative expenses increased as a percent of sales primarily due to lower sales and higher workforce-related, advertising and distribution expenses as a percent of sales.

~~The warehouse delivery segment’s selling, distribution and administrative expenses decreased as a percent of sales primarily due to lower distribution costs as a percent of sales.~~

~~Gain on Acquisition.~~On May 15, 2009, the company acquired substantially all the assets of a bakery mix operation in Cedar Rapids, Iowa. Based on the purchase price allocation, the fair value of the identifiable assets acquired and liabilities assumed exceeded the fair value of the consideration paid. As a result, we recognized a gain of $3.0 million, which is included in the line item “Gain on acquisition” to derive income from operations in the condensed consolidated statement of income for the forty weeks ended October 10, 2009. The gain on acquisition resulted due to the seller’s strategic intent to exit a non-core business operation. This acquisition is recorded in the warehouse delivery segment.

~~Depreciation and Amortization.~~~~Depreciation and amortization increased primarily due to assets placed into service after the third quarter of fiscal 2009 and, to a lesser extent, the acquisitions.~~

The DSD segment’s depreciation and amortization expense increased primarily due to assets placed into service subsequent to the third quarter of fiscal 2009. The warehouse delivery segment’s depreciation and amortization expense increased primarily as a result of the 2009 acquisitions.

~~Income from Operations.~~The increase in the DSD segment income from operations was attributable to significantly lower ingredient costs, partially offset by sales declines. The decrease in the warehouse delivery segment income from operations was primarily a result of the gain on acquisition recorded in 2009 discussed above. The decrease in unallocated corporate expenses was primarily due to lower pension and postretirement plan costs.

~~Net Interest Income.~~~~The increase was related to lower interest expense due to lower debt outstanding under the credit facility and term loan used for the acquisitions during fiscal 2008.~~

~~Income Taxes.~~The effective tax rate for the forty weeks ended October 9, 2010 was 35.3% compared to 36.2% for the forty weeks ended October 10, 2009. The decrease in the rate is due mainly to the increase in the Section 199 qualifying production activities deduction in the current period compared to the prior year period. The difference in the effective rate and the statutory rate is primarily due to state income taxes, and the Section 199 qualifying production activities deduction.

LIQUIDITY AND CAPITAL RESOURCES:

Liquidity represents our ability to generate sufficient cash flows from operating activities to meet our obligations and commitments as well as our ability to obtain appropriate financing and convert into cash those assets that are no longer required to meet existing strategic and financing objectives. Therefore, liquidity cannot be considered separately from capital resources that consist primarily of current and potentially available funds for use in achieving long-range business objectives. Currently, the company’s liquidity needs arise primarily from working capital requirements, capital expenditures and ~~capital expenditures.~~stock repurchases. The company’s strategy for use of its cash flow ~~also~~ includes paying dividends to shareholders, making acquisitions, growing internally and repurchasing shares of its common stock when appropriate. The company has generated the cash flow necessary for these purposes primarily from operations during fiscal 2009 and currently in fiscal 2010. Additional liquidity is available from our credit facility, discussed below, for working capital and general corporate purposes.

Cash Flows

Flowers Foods’ cash and cash equivalents ~~decreased~~increased to ~~$7.1~~$8.7 million at ~~October 9, 2010~~April 23, 2011 from ~~$18.9~~$6.8 million at January ~~2, 2010.~~1, 2011. The ~~decrease~~increase resulted from ~~$228.8~~$72.6 million provided by operating activities, offset by ~~$79.7~~$26.0 million and ~~$160.9~~$44.7 million disbursed for investing activities and financing activities, respectively. Included in cash and cash equivalents at January 2, 2010 was $8.8 million related to the company’s VIE which was not available for use by the company. The company deconsolidated the VIE on January 3, 2010 as discussed in Note 8,~~Variable Interest Entity,~~ ~~of this Form 10-Q.~~

Cash Flows Provided by Operating Activities.Net cash of ~~$228.8~~$72.6 million provided by operating activities during the ~~forty~~sixteen weeks ended ~~October 9, 2010~~April 23, 2011 consisted primarily of ~~$105.6~~$41.2 million in net income, adjusted for the following non-cash items (amounts in thousands):


Depreciation and amortization	$	65,436		$	27,992
Non cash effect of derivative activity		22,589
Gain reclassified from accumulated other comprehensive income to net income					(22,919	)
Stock-based compensation		10,343			5,929
Deferred income taxes		(2,637	)		(3,268	)
Provision for inventory obsolescence		967			410
Allowances for accounts receivable		1,093			270
Pension and postretirement plans expense		1,417			194
Other		(89	)		(644	)

Total	$	99,119		$	7,964

Cash provided by working capital and other activities was ~~$24.1~~$23.4 million. As of ~~October 9, 2010,~~April 23, 2011, the company had ~~$4.2~~$10.9 million recorded in other current liabilities representing collateral from counterparties for hedged positions. As of January ~~2, 2010,~~1, 2011, the company had ~~$7.0~~$11.5 million recorded in other ~~current assets~~accrued liabilities representing collateral from counterparties for hedged positions.

Cash Flows Disbursed for Investing Activities.Net cash disbursed for investing activities during the ~~forty~~sixteen weeks ended ~~October 9, 2010~~April 23, 2011 of ~~$79.7~~$26.0 million consisted primarily of capital expenditures of ~~$74.2~~$22.1 million. Capital expenditures in the DSD segment and the warehouse delivery segment were ~~$49.8~~$17.1 million and ~~$20.7~~$4.3 million, respectively. The company estimates capital expenditures of approximately ~~$95.0~~$90.0 million to $100.0 million during fiscal ~~2010.~~2011. The company also leases certain production machinery and equipment through various operating leases.

Cash Flows Disbursed for Financing Activities.Net cash disbursed for financing activities of ~~$160.9~~$44.7 million during the ~~forty~~sixteen weeks ended ~~October 9, 2010~~April 23, 2011 consisted primarily of dividends paid of ~~$52.7~~$18.1 million, stock repurchases of ~~$22.8~~$18.0 million, and net debt repayments of ~~$95.3~~$7.5 million, partially offset by proceeds of ~~$7.6~~$1.0 million from the exercise of stock options and the ~~related~~ share-based payments income tax benefit of ~~$1.0~~$0.6 million.

Credit Facility and Term Loan

Credit Facility.The company has a five-year, $250.0 million unsecured revolving loan facility (the “credit facility”) that expires October 5, 2012. The company may request to increase its borrowings under the credit facility up to an aggregate of $350.0 million upon the satisfaction of certain conditions. Proceeds from the credit facility may be used for working capital and general corporate purposes, including acquisition financing, refinancing of indebtedness and share repurchases. The credit facility includes certain customary restrictions, which, among other things, require maintenance of financial covenants and limit encumbrance of assets and creation of indebtedness. Restrictive financial covenants include such ratios as a minimum interest coverage ratio and a maximum leverage ratio. The company

believes that, given its current cash position, its cash flow from operating activities and its available credit capacity, it can comply with the current terms of the credit facility and can meet presently foreseeable financial requirements. As of ~~October 9, 2010~~April 23, 2011 and January ~~2, 2010,~~1, 2011, the company was in compliance with all restrictive financial covenants under its credit facility.

Interest is due quarterly in arrears on any outstanding borrowings at a customary Eurodollar rate or the base rate plus the applicable margin. The underlying rate is defined as the rate offered in the interbank Eurodollar market or the higher of the prime lending rate or federal funds rate plus 0.5%. The applicable margin ranges from 0.00% to 0.30% for base rate loans and from 0.40% to 1.275% for Eurodollar loans. In addition, a facility fee ranging from 0.10% to 0.35% is due quarterly on all commitments under the credit facility. Both the interest margin and the facility fee are based on the company’s leverage ratio. ~~There were $9.5 million and $89.0 million in outstanding borrowings under the credit facility at October 9, 2010 and January 2, 2010, respectively.~~

Amounts outstanding under the credit facility vary daily. Changes in the gross borrowings and repayments can be caused by cash flow activity from operations, capital expenditures, acquisitions, dividends, share repurchases, tax payments, as well as derivative transactions which are part of the company’s overall risk management strategy as discussed in Note 6, 5,Derivative Financial Instruments, of this Form 10-Q. For the ~~forty~~sixteen weeks ended ~~October 9, 2010,~~April 23, 2011, the company borrowed ~~$409.0~~$78.5 million in revolving borrowings and repaid $78.5 million in revolving borrowings under the credit ~~facility and repaid $488.5 million in revolving borrowings. On October 9, 2010, the company had $235.7 million available~~facility. There were no outstanding borrowings under the credit facility ~~for working capital and general corporate purposes.~~at April 23, 2011 or January 1, 2011.

Term Loan.On August 1, 2008, the company entered into a credit agreement (“term loan”) with various lending parties for the purpose of completing acquisitions. The term loan provides for an amortizing $150.0 million of borrowings through the maturity date of August 4,1, 2013. Principal payments are due quarterly under the term loan beginning on December 31, 2008 at an annual amortization of 10% of the principal balance for each of the first two years, 15% during the third year, 20% during the fourth year, and 45% during the fifth year. The term loan includes certain customary restrictions, which, among other things, require maintenance of financial covenants and limit encumbrance of assets and creation of indebtedness. Restrictive financial covenants include such ratios as a minimum interest coverage ratio and a maximum leverage ratio. The company believes that, given its current cash position, its cash flow from operating activities and its available credit capacity, it can comply with the current terms of the term loan and can meet presently foreseeable financial requirements. As of ~~October 9, 2010~~April 23, 2011 and January ~~2, 2010,~~1, 2011, the company was in compliance with all restrictive financial covenants under the term loan. As of ~~October 9, 2010~~April 23, 2011 and January ~~2, 2010,~~1, 2011, the amounts outstanding under the term loan were ~~$120.0~~$108.8 million and ~~$131.3~~$114.4 million, respectively.

Eurodollar loans and is based on the company’s leverage ratio. Principal payments began on December 31, 2008 and are due quarterly under the term loan at an annual amortization of 10% of the principal balance for each of the first two years, 15% during the third year, 20% during the fourth year, and 45% during the fifth year. The company paid financing costs of $0.8 million in connection with the term loan, which is being amortized over the life of the term loan.

Shelf registration. On February 8, 2011, the company filed a universal shelf registration statement on Form S-3 with the Securities and Exchange Commission (“SEC”), which will allow the company to sell, from time to time, certain securities, including common stock, preferred stock, debt securities and/or warrants, either individually or in units, in one or more offerings. The company has no specific plans to offer the securities covered by the registration statement and is not required to offer the securities in the future pursuant to the registration statement.

Currently, the company’s credit ratings by Fitch Ratings, Moody’s, and Standard & Poor’s are BBB, Baa2, and BBB-, respectively. Changes in the company’s credit ratings do not trigger a change in the company’s available borrowings or costs under the credit facility or term loan, but could affect future credit availability.

Uses of Cash

On February 16, 2010, the Board of Directors declared a dividend of $0.175 per share on the company’s common stock that was paid on March 16, 2010 to shareholders of record on March 2, 2010. This dividend payment was $16.0 million. On June 4, 2010,17, 2011, the Board of Directors declared a dividend of $0.20 per share on the company’s common stock that was paid on ~~July 2, 2010~~March 17, 2011 to shareholders of record on ~~June 18, 2010.~~March 3, 2011. This dividend payment was ~~$18.3~~$18.1 million. ~~On August~~

24 2010, the Board of Directors declared a dividend of $0.20 per share on the company’s common stock that was paid on September 21, 2010 to shareholders of record on September 7, 2010. This dividend payment was $18.4 million.

Our Board of Directors has approved a plan that authorizes share repurchases of up to 30.0 million shares of the company’s common stock. Under the plan, the company may repurchase its common stock in open market or privately negotiated transactions at such times and at such prices as determined to be in the company’s best interest. These purchases may be commenced or suspended without prior notice depending on then-existing business or market conditions and other factors. During the first quarter of fiscal ~~2010, 87,271~~2011, 695,403 shares, at a cost of $2.1 million of the company’s common stock were purchased under the plan. No repurchases were made by the company during the second quarter of fiscal 2010. During the third quarter of fiscal 2010, 822,200 shares, at a cost of $20.6$18.0 million of the company’s common stock were purchased under the plan. From the inception of the plan through ~~October 9, 2010, 23.6~~April 23, 2011, 24.9 million shares, at a cost of ~~$387.8~~$422.2 million, have been purchased.

During the first quarter of fiscal ~~2010,~~2011, the company paid ~~$16.2~~$18.8 million, including our share of employment taxes, in performance-based cash awards under the company’s bonus plan.

~~During fiscal 2010,~~As discussed in theOverviewabove, the company ~~paid $0.8 million as contributions~~expects to ~~company sponsored pension plans. It is expected an additional $0.1 million will be contributed in~~close on the ~~fourth~~Tasty acquisition during the second quarter of fiscal ~~2010; however,~~2011. The total estimated cash payments for the ~~company may decide~~acquisition are approximately $165.0 million. We expect to ~~make additional discretionary contributions.~~

~~In addition, during~~use cash on hand as well as cash available under our credit facility to complete the first quarter of fiscal 2011, the company may be required to make a contingent consideration payment of up to $5.0 million for an acquisition that occurred during fiscal 2008 if the company’s stock price does not trade over a target price for ten consecutive trading days during the two year period that began on February 11, 2009. Any potential contingent payment made will affect the company’s equity and not goodwill.transaction.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET ~~RISK~~RISKS

The company uses derivative financial instruments as part of an overall strategy to manage market risk. The company uses forward, futures, swap and option contracts to hedge existing or future exposure to changes in interest rates and commodity prices. The company does not enter into these derivative financial instruments for trading or speculative purposes. If actual market conditions are less favorable than those anticipated, raw material prices could increase significantly, adversely affecting the margins from the sale of our products.

COMMODITY PRICE RISK

The company enters into commodity forward, futures and option contracts and swap agreements for wheat and, to a lesser extent, other commodities in an effort to provide a predictable and consistent commodity price and thereby reduce the impact of market volatility in its raw material and packaging prices. As of ~~October 9, 2010,~~April 23, 2011, the company’s hedge portfolio contained commodity derivatives with a ~~net~~ fair value of ~~$24.5~~$23.0 million. Of this ~~net~~ fair value, ~~$23.4~~$24.7 million is based on quoted market prices and ~~$1.1~~$(1.7) million is based on models and other valuation methods. Approximately ~~$3.6 million, $21.2~~$18.8 million and ~~$(0.3)~~$4.2 million of this ~~net~~ fair value relates to instruments that will be utilized in fiscal ~~2010,~~ 2011 and fiscal 2012, respectively.

A sensitivity analysis has been prepared to quantify the company’s potential exposure to commodity price risk with respect to the derivative portfolio. Based on the company’s derivative portfolio as of ~~October 9, 2010,~~April 23, 2011, a hypothetical ten percent increase (decrease) in commodity prices would increase (decrease) the ~~net~~ fair value of the derivative portfolio by ~~$19.2~~$20.5 million. The analysis disregards changes in the exposures inherent in the underlying hedged items; however, the company expects that any increase (decrease) in ~~the net~~ fair value of the portfolio would be substantially offset by increases (decreases) in raw material and packaging prices.

INTEREST RATE RISK

The company ~~has~~entered into interest rate swaps with ~~initial~~ notional amounts of $85.0 million, and $65.0 million, respectively, to fix the interest rate on the $150.0 million term loan ~~entered into~~secured on August 1, 2008 to fund the acquisitions of ButterKrust Bakery and ~~Holsum.~~Holsum Bakery, Inc. As of ~~October 9, 2010,~~April 23, 2011, the ~~net~~ fair value of these interest rate swaps was ~~$(8.1)~~$(5.6) million. All of this ~~net~~ fair value is based on valuation models and ~~$(1.0) million, $(3.9) million,~~ $(2.6) million, $(2.5) million, and ~~$(0.6)~~$(0.5) million of this ~~net~~ fair value is related to instruments expiring in ~~2010~~2011 through 2013, respectively.

A sensitivity analysis has been prepared to quantify the company’s potential exposure to interest rate risk with respect to the interest rate swaps. As of ~~October 9, 2010,~~April 23, 2011, a hypothetical ten percent increase (decrease) in interest rates would increase (decrease) the ~~net~~ fair value of the interest rate swap by $0.1 million. The analysis disregards changes in the exposures inherent in the underlying debt; however, the company expects that any increase (decrease) in payments under the interest rate swap would be substantially offset by increases (decreases) in interest expense.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures

We have established and maintain a system of disclosure controls and procedures that isare designed to ensure that material information relating to the company, which is required to be timely disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is accumulated and communicated to management in a timely fashion and is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) was performed as of the end of the period covered by this quarterly report. This evaluation was performed under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and Chief Accounting Officer (“CAO”). Based upon that evaluation, our CEO, CFO and CAO have concluded that these disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter ended ~~October 9, 2010~~April 23, 2011 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Nature’s Prideproducts, and injunctive relief. Flowers sought summary judgment for its claims, which was denied by the court. Unless our motion for reconsideration is granted and changes that ruling, we expect this case to proceed to trial in 2011.

ITEM 1A. RISK FACTORS

Please refer to Part I, Item 1A.,Risk Factors, in the company’s Form 10-K for the year ended January ~~2, 2010~~1, 2011 for information regarding factors that could affect the company’s results of operations, financial condition and liquidity. ~~There~~The following changes have been nomade to ourRisk Factordisclosures subsequent to the filing of the Form 10-K.

Increases in employee and employee-related costs could have adverse effects on our profitability.

Pension, health care and workers’ compensation costs have been increasing and will likely continue to increase. Any substantial increase in pension, health care or workers’ compensation costs may have an adverse impact on our profitability. The company records pension costs and the liabilities related to its benefit plans based on actuarial valuations, which include key assumptions determined by management. Material changes in pension costs may occur in the future due to changes in these assumptions. Future annual amounts could be impacted by various factors, such as changes in the number of plan participants, changes in the discount rate, changes in the expected long-term rate of return, changes in the level of contributions to the plan and other factors.

In addition, legislation or regulations regarding areas such as labor and employment and employee benefit plans (including employee health care benefits and costs) may impact our ~~risk factors during~~results of operations.

We may be adversely impacted by the ~~first three quarters~~failure to execute acquisitions successfully.

The company from time to time undertakes acquisitions or divestitures. The success of ~~fiscal 2010.~~any acquisition or divestiture depends on the company’s ability to identify opportunities that help us meet our strategic objectives, consummate a transaction on favorable contractual terms and achieve expected returns and other financial benefits. Acquisitions require us to efficiently integrate the acquired business to achieve the expected returns. Divestitures present operational risks to execute the transaction and may require impairment charges. Acquisition or divestiture transactions present unique financial and operational risks, including diversion of management attention from the existing core business, integrating or separating personnel and financial and other systems, and adverse affects on exiting business relationships with suppliers and customers. In situations where acquisitions or divestitures are not successfully implemented or completed, the company’s business or financial results could be negatively impacted.

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

Total Number of Maximum Number
Shares Purchased of Shares that
Weighted as Part of May Yet Be
Total Number Average Price Publicly Announced Purchased Under the
Period of Shares Purchased Per Share Plan or Programs Plan or Programs
(Amounts in thousands, except price data)
July 18, 2010 — August 14, 2010 — $ — — 7,262
August 15, 2010 — September 11, 2010 130 $ 25.72 130 7,132
September 12, 2010 — October 9, 2010 692 $ 25.00 692 6,440

Total 822 $ 25.11 822


					Total Number of		Maximum Number
					Shares Purchased		of Shares that
			Weighted		as Part of		May Yet Be
	Total Number		Average Price		Publicly Announced		Purchased Under the
Period	of Shares Purchased		Per Share		Plan or Programs		Plan or Programs
			(Amounts in thousands, except price data)
January 2, 2011 — January 29, 2011		—		—		—		5,801
January 30, 2011 — February 26, 2011		60	$	26.31		60		5,741
February 27, 2011 — March 26, 2011		636	$	25.89		636		5,105
March 27, 2011 — April 23, 2011		—		—		—		5,105

Total		696	$	25.93		696

ITEM 6. EXHIBITS

Exhibits filed as part of this report are listed in the Exhibit Index attached hereto.

3527

SIGNATURES

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


	~~FLOWERS FOODS, INC.~~

FLOWERS FOODS, INC.			~~By:~~ ~~Name:~~
By:	/s/ GEORGE E. DEESE
	Name:	George E. Deese
	Title:		Chairman of the Board and Chief Executive Officer
					~~Chief Executive Officer~~

	By: ~~Name:~~		/s/ R. STEVE KINSEY
	Name:	R. Steve Kinsey
	Title:		Executive Vice President and Chief Financial Officer
					~~Chief Financial Officer~~

	By: ~~Name:~~		/s/ KARYL H. LAUDER ~~Karyl H. Lauder~~
	~~Title:~~Name:		~~Senior Vice President and~~	Karyl H. Lauder
	Title:		Senior Vice President and Chief Accounting Officer

Date: ~~November 18, 2010~~May 19, 2011

3628

EXHIBIT INDEX


Exhibit
No		Name of Exhibit
2.1	—	Distribution Agreement by and between Flowers Industries, Inc. and Flowers Foods, Inc., dated as of October 26, 2000 (Incorporated by reference to Flowers Foods’ Registration Statement on Form 10, dated December 1, 2000, File No. 1-16247).

2.2	—	Amendment No. 1 to Distribution Agreement, dated as of March 12, 2001, between Flowers Industries, Inc. and Flowers Foods, Inc. (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K, dated March 30, 2001, File No. 1-16247).

3.1	—	Restated Articles of Incorporation of Flowers Foods, Inc. as amended on May 30, 2008 (Incorporated by reference to Flowers Foods’ Quarterly Report on Form 10-Q, dated June 4, 2009, File No. 1-16247).

3.2	—	Amended and Restated Bylaws of Flowers Foods, Inc., as amended and restated on November 14, 2008 ~~(Incorporated~~(incorporated by reference to Flowers Foods’ Current Report on Form 8-K dated November 18, 2008, File No. 1-16247).

4.1	—	Share Certificate of Common Stock of Flowers Foods, Inc. (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K, dated March 30, 2001, File No. 1-16247).

4.2	—	~~Rights Agreement between Flowers Foods, Inc. and First Union National Bank, as Rights Agent, dated March 23, 2001 (Incorporated by reference to Flowers Foods’ Annual Report on~~ Form ~~10-K, dated March 30, 2001, File No. 1-16247).~~

~~4.3~~	—	Amendment No. 1, dated November 15, 2002, to Rights Agreement between Flowers Foods, Inc. and Wachovia Bank, N.A. (as successor in interest to First Union National Bank), as rights agent, dated March 23, 2001.of Indenture (Incorporated by reference to Flowers Foods’ Registration Statement on Form ~~8-A,~~S-3, dated ~~November 18, 2002,~~February 8, 2011, File No. 1-16247).

10.1	—	Flowers Foods, Inc. Retirement Plan No. 1, as amended and restated effective March 26, 2001 (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K, dated March 30, 2001, File No. 1-16247).

10.2	—	Flowers Foods, Inc. 2001 Equity and Performance Incentive Plan, as amended and restated as of April 1, 2009 ~~(Incorporated~~(incorporated by reference to Flowers Foods’ Proxy Statement on Schedule 14A, dated April 24, 2009, File No. 1-16247).

10.3	—	Flowers Foods, Inc. Stock Appreciation Rights ~~Plan.~~Plan (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K, dated March 29, 2002, File No. 1-16247).

10.4	—	Flowers Foods, Inc. Annual Executive Bonus ~~Plan.~~Plan (Incorporated by reference to Flowers Foods’ Proxy Statement on Schedule 14A, dated April 24, 2009, File No. 1-16247).

10.5	—	Flowers Foods, Inc. Supplemental Executive Retirement ~~Plan.~~Plan (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K, dated March 29, 2002, File No. 1-16247).

10.6	—	Form of Indemnification Agreement, by and between Flowers Foods, Inc., certain executive officers and the directors of Flowers Foods, Inc. (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K, dated March 28, 2003, File No. 1-16247).

10.7	—	Form of Continuation of Employment Agreement, by and between Flowers Foods, Inc. and certain executive officers of Flowers Foods, Inc. (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K dated March 4, 2009, File No. 1016247).

10.8	—	Ninth Amendment ~~dated November 7, 2005~~ to the Flowers Foods, Inc. Retirement Plan No. 1, dated November 7, 2005, as ~~Amended~~amended and restated effective as of March 26, ~~2001.~~2001 (Incorporated by reference to Flowers Foods’ Quarterly Report on Form 10-Q dated November 17, 2005, File No. 1-16247).

10.9	—	~~Form~~Amended and Restated Credit Agreement, dated as of ~~Nonqualified Stock Option Agreement, by and between~~June 6, 2006, among Flowers Foods, Inc., the Lenders Party thereto from time to time, Bank of America N.A., Harris N.A. and ~~certain executive officers of Flowers Foods, Inc.~~Cooperative Centrale Raiffeisen-Boerenleen Bank, B.A., “Rabsbank International”, New York Branch, as co-documentation agents, Suntrust Bank, as syndication agent, and Deutsche Bank AG, New York Branch, as administrative agent. (Incorporated by reference to Flowers Foods’ ~~Annual~~Current Report on Form ~~10-K~~8-K dated ~~March 1,~~June 7, 2006, File No. 1-16247).

10.10	—	Form of 2008 Nonqualified Stock Option Agreement, by and between Flowers Foods, Inc. and certain executive officers of Flowers Foods, Inc. (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K dated February 27, 2008, File No. 1-16247).

~~10.11~~	—	First Amendment and Waiver, dated October 5, 2007, among Flowers Foods, Inc., a Georgia corporation, the lenders party to the Credit Agreement and Deutsche Bank AG New York Branch, as Administrative Agent. (Incorporated by reference to Flowers Foods’ Current Report on Form 8-K dated October 11, 2007, File No. 1-16247).


~~Exhibit~~
No		~~Name of Exhibit~~
~~10.12~~	—	Agreement and Plan of Merger, dated June 23, 2008, by and among, Flowers Foods, Inc., Peachtree Acquisition Co., LLC, Holsum Bakery, Inc., Lloyd Edward Eisele, Jr. and The Lloyd Edward Eisele, Jr. Revocable Trust (Incorporated by reference to Flowers Foods’ Current Report on Form 8-K/A dated June 25, 2008, File No. 1-16247).

~~10.13~~10.11	—	Credit Agreement, dated as of August 1, 2008, among Flowers Foods, Inc., the Lenders Party thereto from time to time, Bank of America N.A., Cooperative Centrale Raiffeisen-Boerenleen Bank, B.A., “Rabobank International”, New York Branch, and Branch Banking & Trust Company as co-documentation agents, SunTrust Bank, as syndication agent, and Deutsche Bank AG, New York Branch, as administrative agent (Incorporated by reference to Flowers Foods’ Current Report on Form 8-K dated August 6, 2008, File No. 1-16247).


~~10.14~~Exhibit
No		Name of Exhibit
10.12	—	~~Form of 2009 Restricted Stock Agreement, by~~First Amendment and ~~between~~Waiver, dated October 5, 2007, among Flowers Foods, Inc., a Georgia corporation, the lenders party to the Credit Agreement and ~~certain executive officers of Flowers Foods, Inc.~~Deutsche Bank AG New York Branch, as Administrative Agent. (Incorporated by reference to Flowers Foods’ ~~Annual~~Current Report on Form ~~10-K~~8-K dated ~~March 4, 2009,~~October 11, 2007, File No. 1-16247).

~~10.15~~10.13	—	Form of 2009 Nonqualified Stock Option Agreement, by and between Flowers Foods, Inc. and certain executive officers of Flowers Foods, Inc. (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K dated March 4, 2009, File No. 1-16247).

~~10.16~~	—	Form of 2009 Deferred Shares Agreement, by and between Flowers Foods, Inc. and certain members of the Board of Directors of Flowers Foods, Inc. (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K dated March 4, 2009, File No. 1-16247).

~~10.17~~10.14	—	Form of 2010 Restricted Stock Agreement, by and between Flowers Foods, Inc. and certain executive officers of Flowers Foods, Inc. (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K dated March 3, 2010, File No. 1-16247).

~~10.18~~10.15	—	Form of 2010 Nonqualified Stock Option Agreement, by and between Flowers Foods, Inc. and certain executive officers of Flowers Foods, Inc. (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K dated March 3, 2010, File No. 1-16247).

2110.16	—	~~Subsidiaries~~Form of 2010 Deferred Shares Agreement, by and between Flowers Foods, Inc. and certain members of the Board of Directors of Flowers Foods, Inc. (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K dated ~~March 3, 2010,~~February 23, 2011, File No. 1-16247).

*31.110.17	—	Form of 2011 Restricted Stock Agreement, by and between Flowers Foods, Inc. and certain executive officers of Flowers Foods, Inc. (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K dated February 23, 2011, File No. 1-16247).

10.18	—	Form of 2011 Nonqualified Stock Option Agreement, by and between Flowers Foods, Inc. and certain executive officers of Flowers Foods, Inc. (Incorporated by reference to Flowers Foods’ Annual Report on Form 10-K dated February 23, 2011, File No. 1-16247).

*21	—	Subsidiaries of Flowers Foods, Inc.

*31.1	—	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.231.2	—	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.331.3	—	Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

3232	—	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by George E. Deese, Chief Executive Officer, R. Steve Kinsey, Chief Financial Officer and Karyl H. Lauder, Chief Accounting Officer for the Quarter Ended ~~October 9, 2010.~~

*101.CAL	—	~~XBRL Taxonomy Extension Calculation Linkbase.~~

*101.DEF	—	~~XBRL Taxonomy Extension Definition Linkbase.~~

*101.INS	—	~~XBRL Instance Document.~~

*101.LAB	—	~~XBRL Taxonomy Extension Label Linkbase.~~

*101.PRE	—	~~XBRL Taxonomy Extension Presentation Linkbase.~~

*101.SCH	—	~~XBRL Taxonomy Extension Schema Linkbase.~~April 23, 2011.


*		Filed herewith

3830


	DSD			Warehouse delivery		Total
Balance as of January 2, 2010	$	194,581		$	7,101	$	201,682
Adjustment for deconsolidation of VIE (Note 8)		(1,529	)		—		(1,529	)

Balance as of October 9, 2010	$	193,052		$	7,101	$	200,153


		Amount of Gain or (Loss)
		Recognized in Income on
		Derivative (Ineffective Portion
	Location of Gain or (Loss) Recognized	and Amount Excluded from
	in Income on Derivative (Ineffective	Effectiveness Testing)(net of tax)
Derivatives in Cash	Portion and Amount Excluded from	For the forty weeks ended
Flow Hedge Relationships	Effectiveness Testing)	October 9, 2010		October 10, 2009
Interest rate contracts	Selling, distribution and administrative expenses	$	—	$	—
Commodity contracts	Selling, distribution and administrative expenses		—		(617	)

Total		$	—	$	(617	)


	TWELVE WEEKS ENDED					FORTY WEEKS ENDED
	OCTOBER 10, 2009					OCTOBER 10, 2009
			% OF					% OF
	VIE		TOTAL			VIE		TOTAL
	(Dollars in thousands)
Assets as of respective period ends	$	33,715		2.5	%	$	33,715		2.5	%
Sales	$	3,851		0.6	%	$	8,466		0.4	%
Income before income taxes	$	1,098		2.1	%	$	2,306		1.4	%