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 ~~April 23,~~July 16, 2011

OR

¨
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
~~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):

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 ~~MAY 13,~~AUGUST 12, 2011
Common Stock, $.01 par value		136,417,936

FLOWERS FOODS, INC.

INDEX



~~Common Stock, $.01 par value~~		~~90,248,792~~

~~FLOWERS FOODS, INC.~~

~~INDEX~~

		PAGE NUMBER
	~~PAGE~~
	~~NUMBER~~
PART I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of ~~April 23,~~July 16, 2011 and January 1, 2011		3
Condensed Consolidated Statements of Income for the ~~Sixteen~~Twelve and Twenty-Eight Weeks Ended ~~April 23,~~July 16, 2011 and ~~April 24,~~July 17, 2010		4
Consolidated Statement of Changes in Stockholders’ Equity and Comprehensive Income for the ~~Sixteen~~Twenty-Eight Weeks Ended ~~April 23,~~July 16, 2011		5
Condensed Consolidated Statements of Cash Flows for the ~~Sixteen~~Twenty-Eight Weeks Ended ~~April 23,~~July 16, 2011 and ~~April 24,~~July 17, 2010		6
Notes to Condensed Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1925
Item 3. Quantitative and Qualitative Disclosures About Market Risk		2535
Item 4. Controls and Procedures		2536
PART II. Other Information		26
Item 1. Legal Proceedings		2636
Item 1A. Risk Factors		2637
Item ~~2. Unregistered Sales of Equity Securities and Use of Proceeds~~6. Exhibits		2737
~~Item 6. Exhibits~~Signatures		2738
~~SIGNATURES~~Exhibit index		2839
~~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~~

1

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 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.

2

FLOWERS FOODS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands except share data)

(Unaudited)

APRIL 23, 2011 JANUARY 1, 2011
ASSETS
Current Assets:
Cash and cash equivalents $ 8,667 $ 6,755

Accounts and notes receivable, net of allowances of $535 and $522, respectively 176,776 166,281

Inventories, net:
Raw materials 21,788 20,879
Packaging materials 12,506 12,125
Finished goods 32,309 27,570

66,603 60,574

Spare parts and supplies 36,945 37,085

Deferred taxes 4,918 1,095

Other 35,325 41,924

Total current assets 329,234 313,714

Property, Plant and Equipment, net of accumulated depreciation of $699,862 and $679,561, respectively 600,313 604,693

Notes Receivable 92,340 92,860

Assets Held for Sale — Distributor Routes 12,349 11,924

Other Assets 6,198 5,113

Goodwill 200,153 200,153

Other Intangible Assets, net 95,188 97,032

Total assets $ 1,335,775 $ 1,325,489

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt and capital leases $ 29,097 $ 28,432
Accounts payable 121,931 102,068
Other accrued liabilities 109,392 112,272

Total current liabilities 260,420 242,772

Long-Term Debt and Capital Leases 90,606 98,870

Other Liabilities:
Post-retirement/post-employment obligations 74,643 76,086
Deferred taxes 64,811 66,680
Other 47,091 45,291

Total other liabilities 186,545 188,057

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
Treasury stock — 11,413,083 shares and 11,011,494 shares, respectively (226,931 ) (214,683 )
Capital in excess of par value 535,400 539,476
Retained earnings 526,772 503,689
Accumulated other comprehensive loss (38,054 ) (33,709 )

Total stockholders’ equity 798,204 795,790

Total liabilities and stockholders’ equity $ 1,335,775 $ 1,325,489


	JULY 16, 2011			JANUARY 1, 2011
ASSETS
Current Assets:
Cash and cash equivalents	$	13,741		$	6,755

Accounts and notes receivable, net of allowances of $546 and $522, respectively		197,289			166,281

Inventories, net:
Raw materials		26,962			20,879
Packaging materials		16,073			12,125
Finished goods		33,004			27,570

		76,039			60,574

Spare parts and supplies		39,255			37,085

Deferred taxes		25,287			1,095

Other		39,317			41,924

Total current assets		390,928			313,714

Property, Plant and Equipment, net of accumulated depreciation of $714,001 and $679,561, respectively		701,331			604,693

Notes Receivable		100,563			92,860

Assets Held for Sale — Distributor Routes		15,377			11,924

Other Assets		15,942			5,113

Goodwill		220,475			200,153

Other Intangible Assets, net		145,062			97,032

Total assets	$	1,589,678		$	1,325,489

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt and capital leases	$	31,682		$	28,432
Accounts payable		130,403			102,068
Accrued taxes		11,391			4,271
Other accrued liabilities		124,413			108,001

Total current liabilities		297,889			242,772

Long-Term Debt and Capital Leases		287,171			98,870

Other Liabilities:
Post-retirement/post-employment obligations		99,787			76,086
Deferred taxes		52,329			66,680
Other		54,483			45,291

Total other liabilities		206,599			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 — $.001 and $.002 par value, respectively, 500,000,000 authorized shares, 152,488,008 shares and 101,659,924 shares issued, respectively		199			199
Treasury stock — 16,076,652 shares and 11,011,494 shares, respectively		(213,090	)		(214,683	)
Capital in excess of par value		539,069			540,294
Retained earnings		534,588			503,689
Accumulated other comprehensive loss		(62,747	)		(33,709	)

Total stockholders’ equity		798,019			795,790

Total liabilities and stockholders’ equity	$	1,589,678		$	1,325,489

(See Accompanying Notes to Condensed Consolidated Financial Statements)

3

FLOWERS FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands except per share data)

(Unaudited)

FOR THE SIXTEEN WEEKS ENDED
APRIL 23, 2011 APRIL 24, 2010

Sales $ 801,825 $ 795,026
Materials, supplies, labor and other production costs (exclusive of depreciation and amortization shown separately below) 412,258 414,798
Selling, distribution and administrative expenses 300,057 292,551
Depreciation and amortization 27,992 25,637

Income from operations 61,518 62,040
Interest expense (2,149 ) (2,784 )
Interest income 3,911 3,915

Income before income taxes 63,280 63,171
Income tax expense 22,119 22,484

Net income $ 41,161 $ 40,687

Net Income Per Common Share:
Basic:
Net income per common share $ 0.46 $ 0.44

Weighted average shares outstanding 90,214 91,517

Diluted:
Net income per common share $ 0.45 $ 0.44

Weighted average shares outstanding 90,987 92,204

Cash dividends paid per common share $ 0.200 $ 0.175


	FOR THE TWELVE WEEKS ENDED						FOR THE TWENTY-EIGHT WEEKS ENDED
	JULY 16, 2011			JULY 17, 2010			JULY 16, 2011			JULY 17, 2010
Sales	$	642,596		$	607,716		$	1,444,421		$	1,402,742
Materials, supplies, labor and other production costs (exclusive of depreciation and amortization shown separately below)		341,887			318,553			754,145			733,351
Selling, distribution and administrative expenses		236,700			217,906			536,757			510,457
Depreciation and amortization		20,898			20,021			48,890			45,658

Income from operations		43,111			51,236			104,629			113,276
Interest expense		(2,372	)		(1,984	)		(4,521	)		(4,768	)
Interest income		2,968			2,940			6,879			6,855

Income before income taxes		43,707			52,192			106,987			115,363
Income tax expense		15,497			18,436			37,616			40,920

Net income	$	28,210		$	33,756		$	69,371		$	74,443

Net Income Per Common Share:
Basic:
Net income per common share	$	0.21		$	0.25		$	0.51		$	0.54

Weighted average shares outstanding		135,299			137,404			135,284			137,330

Diluted:
Net income per common share	$	0.21		$	0.24		$	0.51		$	0.54

Weighted average shares outstanding		137,225			138,538			136,734			138,474

Cash dividends paid per common share	$	0.150		$	0.133		$	0.283		$	0.250

(See Accompanying Notes to Condensed Consolidated Financial Statements)

4

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
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


				Common Stock				Capital in Excess of Par Value						Accumulated Other Comprehensive Loss
				Number of Shares Issued		Par Value											Treasury Stock
	Comprehensive Income			Number of Shares Issued		Par Value					Retained Earnings						Number of Shares			Cost			Total
Balances at January 1, 2011					101,659,924	$	199	$	540,294		$	503,689		$	(33,709	)		(11,011,494	)	$	(214,683	)	$	795,790
Net income	$	69,371										69,371												69,371
Derivative transactions, net of tax		(29,839	)												(29,839	)								(29,839	)
Amortization of prior service credits, net of tax		(85	)												(85	)								(85	)
Amortization of actuarial loss, net of tax		886													886									886

Comprehensive income	$	40,333

Adjustment for 3 for 2 stock split (Note 1)					50,828,084							(39	)					(5,375,912	)					(39	)
Exercise of stock options									(2,571	)								773,015			15,042			12,471
Deferred stock issuance									(1,158	)								56,505			1,117			(41	)
Issuance of performance-contingent restricted stock									(4,213	)								216,050			4,213			—
Amortization of share-based payment compensation									8,043															8,043
Tax benefits related to share based payment awards									2,924															2,924
Performance-contingent restricted stock awards forfeitures and cancellations									865									(44,505	)		(865	)		—
Stock repurchases																		(695,403	)		(18,029	)		(18,029	)
Issuance of deferred compensation									(115	)								5,092			115
Contingent acquisition consideration									(5,000	)														(5,000	)
Dividends paid — $0.283 per common share												(38,433	)											(38,433	)

Balances at July 16, 2011					152,488,008	$	199	$	539,069		$	534,588		$	(62,747	)		(16,076,652	)	$	(213,090	)	$	798,019

(See Accompanying Notes to Condensed Consolidated Financial Statements)

5

FLOWERS FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

FOR THE SIXTEEN WEEKS ENDED
APRIL 23, 2011 APRIL 24, 2010
CASH FLOWS PROVIDED BY (DISBURSED FOR) OPERATING ACTIVITIES:
Net income $ 41,161 $ 40,687
Adjustments to reconcile net income to net cash provided by operating activities:
Stock based compensation 5,929 4,753
(Gain) loss reclassified from accumulated other comprehensive income to net income (22,919 ) 11,525
Depreciation and amortization 27,992 25,637
Deferred income taxes (3,268 ) (476 )
Provision for inventory obsolescence 410 358
Allowances for accounts receivable 270 564
Pension and postretirement plans expense 194 599
Other (644 ) (61 )
Pension contributions (580 ) (187 )
Changes in operating assets and liabilities:
Accounts and notes receivable, net (10,597 ) (2,468 )
Inventories, net (6,439 ) (3,350 )
Other assets 3,567 3,557
Accounts payable 19,863 7,152
Other accrued liabilities 17,615 (5,741 )

NET CASH PROVIDED BY OPERATING ACTIVITIES 72,554 82,549

CASH FLOWS PROVIDED BY (DISBURSED FOR) INVESTING ACTIVITIES:
Purchase of property, plant and equipment (22,058 ) (29,125 )
Proceeds from sale of property, plant and equipment 732 335
Issuance of notes receivable (3,477 ) (1,880 )
Proceeds from notes receivable 3,829 3,806
Contingent acquisition consideration payments (5,000 ) —
Deconsolidation of variable interest entity — (8,804 )

NET CASH DISBURSED FOR INVESTING ACTIVITIES (25,974 ) (35,668 )

CASH FLOWS PROVIDED BY (DISBURSED FOR) FINANCING ACTIVITIES:
Dividends paid (18,078 ) (16,020 )
Exercise of stock options 1,007 2,531
Income tax benefit related to stock awards 577 191
Stock repurchases (18,029 ) (2,115 )
Change in book overdraft (2,604 ) (2,698 )
Proceeds from debt borrowings 93,500 213,000
Debt and capital lease obligation payments (101,041 ) (252,297 )

NET CASH DISBURSED FOR FINANCING ACTIVITIES (44,668 ) (57,408 )

Net increase (decrease) in cash and cash equivalents 1,912 (10,527 )
Cash and cash equivalents at beginning of period 6,755 18,948

Cash and cash equivalents at end of period $ 8,667 $ 8,421


	FOR THE TWENTY-EIGHT WEEKS ENDED
	JULY 16, 2011			JULY 17, 2010
CASH FLOWS PROVIDED BY (DISBURSED FOR) OPERATING ACTIVITIES:
Net income	$	69,371		$	74,443
Adjustments to reconcile net income to net cash provided by operating activities:
Stock based compensation		9,387			7,482
(Gain) loss reclassified from accumulated other comprehensive income to net income		(36,118	)		19,293
Depreciation and amortization		48,890			45,658
Deferred income taxes		(5,719	)		(1,523	)
Provision for inventory obsolescence		762			589
Allowances for accounts receivable		557			832
Pension and postretirement plans expense		275			992
Other		(184	)		(315	)
Pension contributions		(3,322	)		(324	)
Changes in assets and liabilities:
Accounts and notes receivable, net		(12,546	)		(6,999	)
Inventories, net		(8,397	)		(2,004	)
Hedging activities, net		(13,589	)		5,986
Other assets		3,877			(4,109	)
Accounts payable		10,078			8,097
Other accrued liabilities		2,859			7,199

NET CASH PROVIDED BY OPERATING ACTIVITIES		66,181			155,297

CASH FLOWS (DISBURSED FOR) INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(43,425	)		(54,869	)
Proceeds from sale of property, plant and equipment		1,307			749
Issuance of notes receivable		(6,473	)		(5,086	)
Proceeds from notes receivable		6,714			6,713
Acquisitions, net of cash acquired		(164,485	)		—
Contingent acquisition consideration payments		(5,000	)		—
Deconsolidation of variable interest entity (See Note 9)		—			(8,804	)

NET CASH DISBURSED FOR INVESTING ACTIVITIES		(211,362	)		(61,297	)

CASH FLOWS PROVIDED BY (DISBURSED FOR) FINANCING ACTIVITIES:
Dividends paid		(38,433	)		(34,342	)
Exercise of stock options		12,471			4,495
Income tax benefit related to stock awards		3,060			770
Stock repurchases		(18,029	)		(2,115	)
Change in book overdraft		5,234			(578	)
Proceeds from debt borrowings		499,000			381,000
Debt and capital lease obligation payments		(308,948	)		(455,649	)
Payment of financing fees		(2,108	)		—
Other		(80	)		—

NET CASH PROVIDED BY (DISBURSED FOR) FINANCING ACTIVITIES		152,167			(106,419	)

Net increase (decrease) in cash and cash equivalents		6,986			(12,419	)
Cash and cash equivalents at beginning of period		6,755			18,948

Cash and cash equivalents at end of period	$	13,741		$	6,529

(See Accompanying Notes to Condensed Consolidated Financial Statements)

6

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”~~(the “company”, “us”, “we”, or “our”) 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~~audited 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 ~~state~~present fairly the company’s financial position, the results of its operations and its cash flows. The results of operations for the ~~sixteen~~twelve and twenty-eight week periods ended ~~April 23,~~July 16, 2011 and ~~April 24,~~July 17, 2010 are not necessarily indicative of the results to be expected for a full fiscal year. The balance sheet at January 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 1, 2011.

ESTIMATES — The preparation of financial statements in conformity with 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 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 1, 2011.

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

STOCK SPLIT — On May 25, 2011, the board of directors declared a 3-for-2 stock split of the company’s common stock. The record date for the split was June 10, 2011, and new shares were issued on June 24, 2011. All share and per share information has been restated for all prior periods presented giving retroactive effect to the stock split.

SEGMENTS — The company consists of ~~two~~the following 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, Northeast and Southwest as well as select markets in California and Nevada primarily through its DSD system. The warehouse delivery segment produces snack cakes for sale to retail, vending and co-pack customers as well as frozen bread, rolls and buns for sale to retail and foodservice customers primarily through warehouse distribution.

The company acquired Tasty Baking Company (“Tasty”) on May 20, 2011 and the results of Tasty’s operations are included in our DSD segment beginning on May 20, 2011. See Note 4,Acquisition, for more details.

SIGNIFICANT CUSTOMER — Following is the effect our largest customer, Wal-Mart/Sam’s Club, had on the company’s sales for the ~~sixteen~~twelve and twenty-eight weeks ended ~~April 23,~~July 16, 2011 and ~~April 24,~~July 17, 2010. ~~No other~~Wal-Mart is the only customer ~~accounted~~to account for 10% or more of the company’s sales.

FOR THE SIXTEEN WEEKS ENDED
APRIL 23, 2011 APRIL 24, 2010
(Percent of Sales)
DSD 17.9 % 18.3 %
Warehouse delivery 4.0 3.0

Total 21.9 % 21.3 %


	FOR THE TWELVE WEEKS ENDED						FOR THE TWENTY-EIGHT WEEKS ENDED
	JULY 16, 2011			JULY 17, 2010			JULY 16, 2011			JULY 17, 2010
	(Percent of Sales)						(Percent of Sales)
DSD		18.3	%		18.6	%		18.1	%		18.4	%
Warehouse delivery		3.8			3.5			3.9			3.2

Total		22.1	%		22.1	%		22.0	%		21.6	%

SIGNIFICANT ACCOUNTING POLICIES — There were no significant changes to our critical accounting policies from those disclosed in our Form 10-K filed for the year ended January 1, 2011.

7

2.In May 2011, the FASB issued an accounting standard that creates consistency between GAAP and International Financial Reporting Standards (“IFRS”) on the definition of fair value and on the guidance on how to measure fair value and on what to disclose about fair value measurements. This guidance is effective to the company beginning with the first quarter of our fiscal 2012. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In June 2011, the FASB issued guidance on the presentation of comprehensive income. This guidance requires companies to present items of net income and other comprehensive income in one continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. This guidance is effective for the company for the first annual reporting period beginning on or after December 15, 2011 with full retrospective application. This will apply to our first quarter Form 10-Q for fiscal 2012. The adoption of this guidance will not have a material impact on our consolidated financial statements but it will change the presentation of our consolidated financial statements.

3. 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, determined as net income adjusted by other comprehensive income, was ~~$36.8~~$3.5 million and ~~$43.2~~$40.3 million for the ~~sixteen~~twelve and twenty-eight weeks ended ~~April 23,~~July 16, 2011, respectively. Total comprehensive income was $43.3 million and ~~April 24,~~$86.5 million for the twelve and twenty-eight weeks ended July 17, 2010, respectively.

During the ~~sixteen~~twenty-eight weeks ended ~~April 23,~~July 16, 2011, changes to accumulated other comprehensive loss, net of income tax, were as follows (amounts in thousands):

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 )


Accumulated other comprehensive loss, January 1, 2011	$	(33,709	)
Derivative transactions:
Net deferred gains (losses) on closed contracts, net of income tax of $(6,485)		10,359
Reclassified to earnings, net of income tax of $13,166		(21,032	)
Effective portion of change in fair value of hedging instruments, net of income tax of $11,998		(19,166	)
Amortization of actuarial loss, net of income tax of $555		886
Amortization of prior service credits, net of income tax of $(54)		(85	)

Accumulated other comprehensive loss, July 16, 2011	$	(62,747	)

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.
4. ACQUISITION
On May 20, 2011, a wholly owned subsidiary of the company merged with Tasty Baking Company (“Tasty”). Tasty operates two bakeries in the Philadelphia, Pennsylvania area and serves customers primarily in the northeastern United States under theTastyKakesnack brand. The results of Tasty’s operations are included in the company’s consolidated financial statements as of May 20, 2011 and are included in the company’s DSD operating segment. As a result of the merger, the company has expanded into new geographic markets and has increased our manufacturing capacity. In addition, theTastyKake brand will increase our position in the snack cake branded products category.
The aggregate purchase price was $172.1 million, including the payoff of certain indebtedness, Tasty transaction expenses and change in control payments. The change in control payments have been accrued as they were not paid concurrent with closing. The merger was completed through a short-form merger following the company’s tender offer through a wholly owned subsidiary for all of the outstanding shares of common stock of Tasty for $4.00 per share in cash, without interest and less any applicable withholding tax. Each share of Tasty not accepted for payment in the tender offer was converted into the right to receive the $4.00 per share in cash as merger consideration, without interest and less any applicable withholding taxes, which is the same price in the tender offer.
The company incurred $4.5 million and $5.3 million of acquisition-related costs for the twelve and twenty-eight weeks ended July 16, 2011, respectively. These expenses are included in selling, distribution and administrative expense in the company’s Consolidated Statement of Income.
The following table summarizes the consideration transferred to acquire Tasty and the amounts of identified assets acquired and liabilities assumed based in the estimated fair value at the merger date (amounts in thousands):
Fair value of consideration transferred:

Total tender, merger consideration, debt cash payments and change in control payments
   $ 172,109


Recognized amounts of identifiable assets acquired and liabilities assumed:

Financial assets
   $ 44,078
Inventories
   7,830
Property, plant, and equipment
   99,796
Identifiable intangible assets
   51,419
Deferred income taxes
   14,856
Financial liabilities
   (66,192 )


Net recognized amounts of identifiable assets acquired
   $ 151,787


Goodwill
   $ 20,322


The following table presents the allocation of the intangible assets subject to amortization (amounts in thousands, except for amortization periods):
   Amount    Weighted average
Amortization years
Trademarks
   $ 36,409       40.0
Customer relationships
   13,487       25.0
Distributor relationships
   1,523       15.0




   $ 51,419       35.3




Goodwill of $20.3 million is allocated to the DSD operating segment. Goodwill is primarily attributable to the distribution ofTastyKake products throughout our distribution network andNature’s Own products throughout the legacy Tasty distribution network. None of the intangible assets, including goodwill, are deductible for tax purposes.
The fair value of the assets acquired includes trade receivables of $17.3 million. The gross amount due is $20.2 million, of which $2.9 million is expected to be uncollectible. The company did not acquire any other class of receivable as a result of the merger with Tasty.
Tasty contributed revenues of $20.2 million and income from operations of $0.2 million for the period from May 20, 2011 to July 16, 2011. The following unaudited pro forma consolidated results of operations have been prepared as if the acquisition of Tasty occurred at the beginning of fiscal 2010 (amounts in thousands, except per share data):
   For the twelve weeks ended    For the twenty-eight weeks ended
   July 16, 2011    July 17, 2010    July 16, 2011    July 17, 2010
Sales:

As reported
   $ 642,596       $ 607,716       $ 1,444,421       $ 1,402,742
Pro forma
   $ 677,506       $ 660,797       $ 1,496,036       $ 1,508,427
Net income:

As reported
   $ 28,210       $ 33,756       $ 69,371       $ 74,443
Pro forma
   $ 25,749       $ 34,254       $ 73,378       $ 79,885
Basic net income per common share:

As reported
   $ 0.21       $ 0.25       $ 0.51       $ 0.54
Pro forma
   $ 0.19       $ 0.25       $ 0.54       $ 0.58
Diluted net income per common share:

As reported
   $ 0.21       $ 0.24       $ 0.51       $ 0.54
Pro forma
   $ 0.19       $ 0.25       $ 0.54       $ 0.58
These amounts have been calculated after applying the company’s accounting policies and adjusting the results to reflect additional depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant, and equipment, and amortizable intangible assets have been applied. In addition, pro forma adjustments have been made for the interest incurred for financing the merger with our credit facility and to conform Tasty’s revenue recognition policies. The pro forma also reflects adjustments for our acquisition costs of $4.5 million and $5.3 million for the twelve and twenty-eight weeks ending July 16, 2011, respectively. Taxes have also been adjusted for the effect of the items discussed. These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the date indicated or that may result in the future.

5. GOODWILL AND OTHER INTANGIBLES

~~There were no~~

The changes in the carrying amount of goodwill for the ~~sixteen~~twenty-eight weeks ended ~~April 23, 2011. The balance as of April 23,~~July 16, 2011, isare as follows (amounts in thousands):

DSD $ 193,052
Warehouse delivery 7,101

Total $ 200,153


	DSD		Warehouse delivery		Total
Balance as of January 1, 2011	$	193,052	$	7,101	$	200,153
Increase in goodwill related to acquisition (Note 4,Acquisition)		20,322		—		20,322

Balance as of July 16, 2011	$	213,374	$	7,101	$	220,475

As of ~~April 23,~~July 16, 2011 and January 1, 2011, the company had the following amounts related to amortizable intangible assets (amounts in thousands):

April 23, 2011 January 1, 2011
Accumulated Accumulated
Asset Cost Amortization Net Value Cost Amortization Net Value
Trademarks $ 35,268 $ 5,161 $ 30,107 $ 35,268 $ 4,687 $ 30,581
Customer relationships 75,434 14,869 60,565 75,434 13,675 61,759
Non-compete agreements 1,874 1,367 507 1,874 1,353 521
Distributor relationships 2,600 467 2,133 2,600 413 2,187
Supply agreement 1,050 674 376 1,050 566 484

Total $ 116,226 $ 22,538 $ 93,688 $ 116,226 $ 20,694 $ 95,532


	July 16, 2011						January 1, 2011
Asset	Cost		Accumulated Amortization		Net Value		Cost		Accumulated Amortization		Net Value
Trademarks	$	71,677	$	5,612	$	66,065	$	35,268	$	4,687	$	30,581
Customer relationships		88,921		15,824		73,097		75,434		13,675		61,759
Non-compete agreements		1,874		1,377		497		1,874		1,353		521
Distributor relationships		4,123		516		3,607		2,600		413		2,187
Supply agreement		1,050		754		296		1,050		566		484

Total	$	167,645	$	24,083	$	143,562	$	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.

Aggregate amortization expense for the ~~sixteen~~twelve and twenty-eight weeks ending ~~April 23,~~July 16, 2011 and ~~April 24,~~July 17, 2010 were ~~$1.8 million and $1.9 million, respectively.~~

as follows (amounts in thousands):


	Amortization expense
For the twelve weeks ended July 16, 2011	$	1,535
For the twelve weeks ended July 17, 2010	$	1,395
For the twenty-eight weeks ended July 16, 2011	$	3,365
For the twenty-eight weeks ended July 17, 2010	$	3,256

Estimated net amortization of intangibles for ~~each~~the remainder of fiscal 2011 and the next ~~five~~four years is as follows (amounts in thousands):

Amortization of
Intangibles
Remainder of 2011 $ 4,118
2012 $ 5,677
2013 $ 5,488
2014 $ 5,389
2015 $ 5,237

8

4.6. 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 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 finances approximately ~~2,550~~2,775 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~~A portion of 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. A portion of the notes are financed bearing an interest rate of the Treasury or LIBOR yield plus a spread. The fair value of the company’s long-term debt at ~~April 23,~~July 16, 2011 approximates the carrying value. For fair value disclosures information about our derivative assets and liabilities see Note 5,7,Derivative Financial Instruments.

~~During the sixteen weeks ending April 23, 2011 and April 24, 2010, $3.9 million and $3.9 million, respectively, was recorded as interest~~

Interest income ~~relating to~~for the distributor ~~notes.~~

notes receivable was as follows (amounts in thousands):


	Interest Income
For the twelve weeks ended July 16, 2011	$	2,968
For the twelve weeks ended July 17, 2010	$	2,940
For the twenty-eight weeks ended July 16, 2011	$	6,879
For the twenty-eight weeks ended July 17, 2010	$	6,855

At ~~April 23,~~July 16, 2011 and January 1, 2011, respectively, the carrying ~~values~~value of the distributor notes ~~were~~was as follows (amounts in thousands):

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


	July 16, 2011		January 1, 2011
Distributor notes receivable	$	114,865	$	105,396
Current portion of distributor notes receivable recorded in accounts and notes receivable, net		14,302		12,536

Long-term portion of distributor notes receivable	$	100,563	$	92,860

At ~~April 23,~~July 16, 2011 and January 1, 2011, the company has evaluated the 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.

5.

7. DERIVATIVE FINANCIAL INSTRUMENTS

The company 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 ~~April 23,~~July 16, 2011, the company’s hedge portfolio contained commodity derivatives with a net fair value of ~~$23.0~~$(12.6) 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 $ 23.6 $ — $ — $ 23.6
Other long-term 1.1 — — 1.1

Total 24.7 — — 24.7

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

Total — (1.7 ) — (1.7 )

Net Fair Value $ 24.7 $ (1.7 ) $ — $ 23.0

9

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, ~~distribution~~marketing and administrative expenses. All of the company held commodity derivatives at ~~April 23,~~July 16, 2011 and January 1, 2011 qualified for hedge accounting.

INTEREST RATE RISK

The company entered into interest rate swaps with notional amounts of $85.0 million, and $65.0 million, respectively, to fix the interest rate on the $150.0 million term loan secured on August 1, ~~2008 to fund the acquisitions of ButterKrust Bakery and Holsum Bakery, Inc.~~

2008.

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, distribution and administrative expenses.

As of ~~April 23,~~July 16, 2011, the fair value of the interest rate swaps was ~~$(5.6)~~$(5.1) million, which is recorded in the following accounts with fair values measured as indicated (amounts in millions):

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

Total — (5.6 ) — (5.6 )

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

~~During the sixteen weeks ended April 23, 2011, interest expense of $1.3 million was recognized due to periodic settlements of the swap agreements.~~


	Level 1		Level 2			Level 3		Total
Liabilities:
Other current		—		(3.3	)		—		(3.3	)
Other long-term		—		(1.8	)		—		(1.8	)

Total		—		(5.1	)		—		(5.1	)

Net Fair Value	$	—	$	(5.1	)	$	—	$	(5.1	)

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
April 23, 2011 January 1, 2011 April 23, 2011 January 1, 2011
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
Interest rate contracts — $ — — $ — Other current liabilities $ 3,580 Other current liabilities $ 3,789
Interest rate contracts — — — — Other long term liabilities 2,059 Other long term liabilities 2,684
Commodity contracts 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 1,116 Other long term assets — Other long term liabilities 302 Other long term liabilities 371

Total $ 24,693 $ 22,380 $ 7,287 $ 8,876


	Derivative Assets								Derivative Liabilities
	July 16, 2011				January 1, 2011				July 16, 2011			January 1, 2011
Derivatives designated as hedging instruments	Balance Sheet location		Fair Value		Balance Sheet location		Fair Value		Balance Sheet location	Fair Value		Balance Sheet location	Fair Value
Interest rate contracts		—	$	—		—	$	—	Other current liabilities	$	3,295	Other current liabilities	$	3,789
Interest rate contracts		—		—		—		—	Other long term liabilities		1,812	Other long term liabilities		2,684
Commodity contracts		Other current assets		1,559		Other current assets		22,380	Other current liabilities		14,254	Other current liabilities		2,032
Commodity contracts		Other long term assets		365		Other long term assets		—	Other long term liabilities		223	Other long term liabilities		371

Total			$	1,924			$	22,380		$	19,584		$	8,876

The company has the following derivative instruments located on the condensed consolidated ~~statement~~statements 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
Recognized in OCI on from Accumulated OCI into Income
Derivatives in Derivative (Effective Portion)(Net of tax) Location of Gain or (Loss) (Effective Portion)(Net of tax)
Cash Flow Hedge For the sixteen weeks ended Reclassified from AOCI into Income For the sixteen weeks ended
Relationships April 23, 2011 April 24, 2010 (Effective Portion) April 23, 2011 April 24, 2010
Interest rate contracts $ (138 ) $ (891 ) Interest expense (income) $ (800 ) $ (942 )
Commodity contracts 8,630 (4,859 ) Production costs(1) 14,095 (7,088 )

Total $ 8,492 $ (5,750 ) $ 13,295 $ (8,030 )


Derivatives in Cash Flow Hedge Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) For the twelve weeks ended						Location of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) For the twelve weeks ended
Derivatives in Cash Flow Hedge Relationships	July 16, 2011			July 17, 2010				July 16, 2011			July 17, 2010
Interest rate contracts	$	(105	)	$	(1,319	)	Interest expense (income)	$	(380	)	$	(657	)
Commodity contracts		(17,195	)		5,096		Production costs(1)		8,117			(4,777	)

Total	$	(17,300	)	$	3,777			$	7,737		$	(5,434	)

Derivatives in
Cash Flow Hedge
Relationships
   Amount of Gain or (Loss)
Recognized in OCI on
Derivative (Effective Portion)
For the twenty-eight weeks ended
Location of Gain or (Loss)
Reclassified from AOCI into
Income
(Effective Portion)
   Amount of Gain or (Loss) Reclassified
from Accumulated OCI into Income
(Effective Portion)
For the twenty-eight weeks ended
   July 16, 2011 July 17, 2010    July 16, 2011 July 17, 2010
Interest rate contracts
   $ (242 ) $ (2,709 ) Interest expense (income)    $ 1,181    $ (2,857 )
Commodity contracts
   (8,565 ) 30,384    Production costs(1)    (22,213 ) (5,212 )




Total
   $ (8,807 ) $ 27,675       $ (21,032 ) $ (8,069 )


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

10

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 inover the next ~~four~~three years are as follows (amounts in millions and net of tax) at ~~April 23,~~July 16, 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


	Commodity price risk derivatives			Interest rate risk derivatives			Totals
Closed contracts	$	4.8		$	0.1		$	4.9
Expiring in 2011		(6.7	)		(1.0	)		(7.7	)
Expiring in 2012		(1.0	)		(1.7	)		(2.7	)
Expiring in 2013		—			(0.4	)		(0.4	)

Total	$	(2.9	)	$	(3.0	)	$	(5.9	)

As of ~~April 23,~~July 16, 2011, the company had the following outstanding financial contracts that were entered to hedge commodity and interest rate ~~risk:~~

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

Total $ 290.7

risk (amounts in millions):


	Notional amount
Interest rate contracts	$	103.1
Wheat contracts		138.6
Soybean Oil contracts		19.4
Natural gas contracts		9.3

Total	$	270.4

The interest rate contracts have multiple settlements to match the amortization of the term loan. The notional amount of $103.1 million represents the current settlement notional amount. Note 8,Debt and Other Obligations, below provides details on the term loan. The company’s derivative instruments contain no credit-risk-related contingent features at ~~April 23,~~July 16, 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.

6.

8. DEBT AND OTHER OBLIGATIONS

Long-term debt and capital leases consisted of the following at ~~April 23,~~July 16, 2011 and January 1, 2011 (amounts in thousands):

April 23, 2011 January 1, 2011
Unsecured credit facility $ — $ —
Unsecured term loan 108,750 114,375
Capital lease obligations 8,732 10,541
Other notes payable 2,221 2,386

119,703 127,302
Less current maturities 29,097 28,432

Total long-term debt and capital leases $ 90,606 $ 98,870


	JULY 16, 2011		JANUARY 1, 2011
Unsecured credit facility	$	204,000	$	—
Unsecured term loan		103,125		114,375
Capital lease obligations		9,610		10,541
Other notes payable		2,118		2,386

		318,853		127,302
Less current maturities		31,682		28,432

Total long-term debt and capital leases	$	287,171	$	98,870

On May 20, 2011, the company further amended and restated its credit facility (the “new credit facility”), which had been previously amended on October 5, 2007 (the “former credit facility”). The new credit facility is a five-year, $500.0 million senior unsecured revolving loan facility with two, one-year extension options. Further, the company may request to increase its borrowings under the new credit facility up to an aggregate of $700.0 million upon the satisfaction of certain conditions. Proceeds from the new credit facility may be used for working capital and general corporate purposes, including capital expenditures, acquisition financing, refinancing of indebtedness, dividends and share repurchases. The new 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 new credit facility and can meet presently foreseeable financial requirements.

Interest on the new credit facility is due quarterly in arrears on any outstanding borrowings at a customary Eurodollar rate or the base rate plus applicable margin. The underlying rate is defined as rates offered in the interbank Eurodollar market, or the higher of the prime lending rate or the federal funds rate plus 0.50%, with a floor rate defined by the one-month interbank Eurodollar market rate plus 1.00%. The applicable margin ranges from 0.30% to 1.25% for base rate loans and from 1.30% to 2.25% for Eurodollar loans. In addition, a facility fee ranging from 0.20% to 0.50% 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. The company paid additional financing costs of $2.1 million in connection with the amendment of the credit facility, which, in addition to the remaining balance of the original $0.9 million in financing costs, is being amortized over the life of the new credit facility. The company recognized financing costs of $0.1 million related to the former credit facility at the time of the amendment for the new credit facility. There were $204.0 million in outstanding borrowings under the new credit facility at July 16, 2011, and no outstanding borrowings under the former credit facility at January 1, 2011, approximately $166.7 million of which was utilized for the Tasty acquisition.

The former credit facility was a five-year, $250.0 million senior unsecured revolving loan facility, which would have expired October 5, 2012. Under the former credit facility, interest was due quarterly in arrears on any outstanding borrowings at a customary Eurodollar rate or the base rate plus the applicable margin. The underlying rate was 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 ranged 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% was due quarterly on all commitments under the credit facility. Both the interest margin and the facility fee were based on the company’s leverage ratio. Financial covenants and other restrictions under the former credit facility were similar to those under the new credit facility, with the exception of the maximum leverage ratio.

As of July 16, 2011 and January 1, 2011, the company was in compliance with all restrictive financial covenants under its former and new credit facilities.

On May 20, 2011, the company amended its credit agreement entered on August 1, 2008 ~~the company entered into a Credit Agreement~~ (the “term loan”) ~~with various lending parties for~~, to conform the ~~purpose of completing two acquisitions.~~terms to the new credit facility. The term loan provides for an amortizing $150.0 million of borrowings through the maturity date of August 1, 2013. 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 ~~April 23,~~July 16, 2011 and January 1, 2011, the company was in compliance with all restrictive financial covenants under the term loan.

Interest on the term loan 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 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 additional financing costs of ~~$0.8~~$0.1 million in connection with the amendment of the term loan, which, in addition to the remaining balance of the original $0.8 million in financing costs, is being amortized over the remaining life of the term loan.

The company has a five-year, $250.0 million senior unsecured revolving loan facility (the “credit facility”) 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 April 23, 2011 and January 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

11

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. 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 consolidated statements of cash flows. Book overdrafts are included in other current liabilities on our consolidated balance sheets. As of ~~April 23,~~July 16, 2011 and January 1, 2011, the book overdraft balance was ~~$7.0~~$14.9 million and $9.7 million, respectively.

7.

9. 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.~~variable interest entity (“VIE”). Under previous accounting guidance, we consolidated the VIE in our 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 at the beginning of our fiscal 2010, we determined that the company is no longer the primary beneficiary and we deconsolidated the VIE in our financial statements. 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. As of ~~April 23,~~July 16, 2011 and January 1, 2011, there was ~~$8.1~~$7.6 million and $9.7 million, respectively, in net property, plant and equipment and capital lease obligations associated with the right to use leases.

8.

10. 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~~We expect this case to proceed to trial in ~~2011.~~

late 2011 or 2012.

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.

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9.11. EARNINGS PER SHARE

On May 25, 2011, the board of directors declared a 3-for-2 stock split of the company’s common stock. The record date for the split was June 10, 2011, and new shares were issued on June 24, 2011. All share and per share information has been restated for all prior periods presented giving retroactive effect to the stock split.

The following is a reconciliation of net income and weighted average shares for calculating basic and diluted earnings per common share for the ~~sixteen~~twelve and twenty-eight weeks ended ~~April 23,~~July 16, 2011 and ~~April 24,~~July 17, 2010 (amounts and shares in thousands, except per share data):

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


	FOR THE TWELVE WEEKS ENDED				FOR THE TWENTY-EIGHT WEEKS ENDED
	JULY 16, 2011		JULY 17, 2010		JULY 16, 2011		JULY 17, 2010
Net income	$	28,210	$	33,756	$	69,371	$	74,443

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

Net income attributable to common and participating shareholders	$	28,210	$	33,756	$	69,371	$	74,443

Basic Earnings Per Common Share:
Weighted average shares outstanding for common stock		135,299		137,098		135,202		136,971
Weighted average shares outstanding for participating securities		—		306		82		359

Basic weighted average shares outstanding for common stock		135,299		137,404		135,284		137,330

Basic earnings per common share	$	0.21	$	0.25	$	0.51	$	0.54

Diluted Earnings Per Common Share:
Basic weighted average shares outstanding for common stock		135,299		137,404		135,284		137,330
Add: Shares of common stock assumed issued upon exercise of stock options and vesting of restricted stock		1,926		1,134		1,450		1,144

Diluted weighted average shares outstanding for common stock		137,225		138,538		136,734		138,474

Diluted earnings per common share	$	0.21	$	0.24	$	0.51	$	0.54


*		The company ~~expects~~expected all ~~participating securities~~restricted share awards outstanding at ~~April 24,~~July 17, 2010 to vest.

~~Stock options to purchase 2,249,667~~

The following shares ~~and 2,128,925 shares of common stock~~ were not included in the computation of diluted earnings per share for the ~~sixteen~~twelve and twenty-eighty weeks ended ~~April 23,~~July 16, 2011 and ~~April 24,~~July 17, 2010 ~~respectively,~~ because their effect would have been ~~anti-dilutive.~~

~~10.~~anti-dilutive (shares in thousands):
Common shares
For the twelve weeks ended July 16, 2011
—
For the twelve weeks ended July 17, 2010
1,130
For the twenty-eight weeks ended July 16, 2011
1,654
For the twenty-eight weeks ended July 17, 2010
2,118

12. 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 while selecting the form that is most appropriate for the company and 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~~27,937,500 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.

Non-Qualified Stock Options

The following non-qualified stock options (“~~NQSOs”~~NQSO”) 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 2/10/2011 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


Grant date	2/10/2011		2/9/2010		2/9/2009
Shares granted		2,142		1,703		1,490
Exercise price		16.31		16.67		15.89
Vesting date		2/10/2014		2/9/2013		2/9/2012
Fair value per share ($)		3.47		3.69		3.91
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 July 16, 2011		2,139		1,675		1,468


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~~— The 2009, 2010, and 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.

13

The ~~stock option~~summary of the shares granted and outstanding for NQSO activity for the ~~sixteen~~twenty-eight weeks ended ~~April 23,~~July 16, 2011 pursuant to the EPIP is set forth below (amounts in thousands, except price data):

Weighted
Weighted Average
Average Remaining Aggregate
Exercise Contractual Intrinsic
Options Price Term (Years) Value
Outstanding at January 1, 2011 4,365 $ 22.00
Granted 1,428 $ 24.47
Exercised (91 ) $ 11.07
Forfeited (20 ) $ 24.50

Outstanding at April 23, 2011 5,682 $ 22.78 4.77 $ 37,195

Exercisable at April 23, 2011 2,168 $ 20.06 2.87 $ 20,102


	NQSO			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2011		6,547		$	14.66
Granted		2,142		$	16.31
Exercised		(1,135	)	$	10.99
Forfeited		(33	)	$	16.33

Outstanding at July 16, 2011		7,521		$	15.68		4.84	$	54,764

Exercisable at July 16, 2011		2,253		$	14.21		2.84	$	19,716

As of ~~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,~~July 16, 2011, there was ~~$9.0~~$7.8 million of total unrecognized compensation expense related to ~~unnvested stock options.~~outstanding NQSO. This ~~expense~~cost is expected to be recognized on a straight-line basis over a weighted-average period of ~~2.2~~2.0 years.

The cash received, the ~~(shortfall)~~ windfall tax ~~(expense) benefit,~~benefits, and intrinsic value from ~~stock option~~NQSO exercises for the ~~sixteen~~twenty-eight weeks ended ~~April 23,~~July 16, 2011 and ~~April 24,~~July 17, 2010 were as follows (amounts in thousands):

April 23, April 24,
2011 2010
Cash received from option exercises $ 1,007 $ 2,531
Cash tax windfall (shortfall), net $ 489 $ (34 )
Intrinsic value of stock options exercised $ 1,520 $ 736


	July 16, 2011		July 17, 2010
Cash received from exercises	$	12,471	$	4,495
Cash tax windfall, net	$	3,030	$	570
Intrinsic value of NQSO exercised	$	11,494	$	2,796

Generally, if the employee dies, becomes disabled or retires at normal retirement age (age 65 or later), the ~~nonqualified stock options~~NQSO immediately vest and must be exercised within two years. In addition, ~~nonqualified stock options~~NQSO 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 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 performance condition requires the company’s “return on invested capital” to exceed its weighted average “cost of capital” by 3.75% (the “ROI Target”) 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:

if

If 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 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%.

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 the performance-contingent restricted stock granted in February 2009, during the ~~sixteen weeks ended April 23, 2011,~~applicable measurement period, the Company TSR rank was less than the 50^th50th percentile and the grant was reduced by 20% of the award or ~~40,280~~60,420 common shares. The total amount of shares that were issued to plan participants was ~~161,120.~~241,680. Because the company achieved the ROI Target the 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~~upon 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

14

a change in control. During the vesting period, the grantee is treated as a normal shareholder with respect to voting rights. Dividends declared during the vesting period will accrue and will be paid at 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 performance-contingent restricted stock awards have been granted under the EPIP since fiscal 2009 (amounts in thousands, except price data):

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


Grant date	2/10/2011		2/9/2010		2/9/2009
Shares granted		324		268		306
Approximate vesting date		2/10/2013		2/9/2012		2/9/2011
Fair value per share	$	15.93	$	17.59	$	16.64

A summary of the status of the company’s nonvested shares for performance-contingent restricted stock as of ~~April 23,~~July 16, 2011, and changes during the ~~quarter~~twenty-eight weeks ended ~~April 23,~~July 16, 2011, is presented below (amounts in thousands, except price data):

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


	Shares			Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term		Aggregate Current Intrinsic Value
Nonvested at January 1, 2011		568		$	17.08
Granted		324		$	15.93
Vested		(242	)	$	16.64
Canceled		(60	)	$	16.64
Forfeited		(7	)	$	16.96

Nonvested at July 16, 2011		583		$	16.67		1.26	$	13,396

As of ~~April 23,~~July 16, 2011, there was ~~$6.5~~$5.3 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 ~~1.5~~1.3 years. The total ~~intrinsic~~fair value of shares vested during the ~~period~~twenty-eight weeks ended ~~April 23,~~July 16, 2011 was $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 the~~Black-Scholesoption-pricing model.~~

~~The fair value of the rights at April 23, 2011 ranged from $12.02 to $27.39. The following assumptions were used to determine fair value of the rights discussed above using the~~~~Black-Scholes~~ ~~option-pricing model at April 23, 2011: dividend yield 3.1%; expected volatility 29.0%; risk-free interest rate 2.15% and expected life of 0.20 years to 2.55 years.~~

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

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

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~~twenty-eight weeks ending July 16, 2011, an aggregate of ~~16,040~~25,440 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 ~~sixteen~~twenty-eight weeks ending ~~April 23,~~July 16, 2011, a total of ~~20,950~~32,025 deferred shares were exercised for retainer conversions.

15

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,~~2011, non-employee directors were granted an aggregate of ~~44,220~~50,400 shares of deferred stock. 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 ~~sixteen weeks ending April 23,~~first and second quarter of fiscal 2011 a total of ~~7,015 deferred~~52,732 shares were exercised for ~~annual grant awards.~~

deferred shares issued under the fiscal 2010 grant.

The deferred stock activity for the ~~sixteen~~twenty-eight weeks ended ~~April 23,~~July 16, 2011 is set forth below (amounts in thousands, except price data):

Weighted
Weighted Average
Average Remaining Aggregate
Grant Contractual Intrinsic
Shares Price Term (Years) Value
Outstanding at January 1, 2011 160 $ 22.66
Deferred stock issued 16 $ 24.33
Deferred stock exercised (28 ) $ 22.29

Outstanding at April 23, 2011 148 $ 22.91 0.31 $ 4,343


	Shares			Weighted Average Grant Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at January 1, 2011		240		$	15.11
Deferred stock issued		76		$	19.35
Deferred stock exercised		(85	)	$	15.31

Outstanding at July 16, 2011		231		$	16.43		0.41	$	5,305

Stock Appreciation Rights

Prior to 2007, the company allowed non-employee directors to convert their retainers and committee chairman fees into stock appreciation rights (“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-Scholes option-pricing model.

The fair value of the rights at July 16, 2011 ranged from $10.68 to $21.61. The following assumptions were used to determine fair value of the rights discussed above using theBlack-Scholesoption-pricing model at July 17, 2010: dividend yield 3.0%; expected volatility 29.0%; risk-free interest rate 1.47% and expected life of 0.05 years to 2.45 years.

The rights activity for the twenty-eight weeks ended July 16, 2011 is set forth below (amounts in thousands except price data):


	Rights			Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term		Aggregate Current Intrinsic Value
Outstanding at January 1, 2011		348		$	11.76
Rights exercised		(161	)	$	12.62
Rights forfeited		—			—

Outstanding at July 16, 2011		187		$	11.02		2.94	$	2,775

The following table summarizes the company’s stock based compensation expense (income) for the ~~sixteen weeks~~twelve and twenty-eight week periods ended ~~April 23,~~July 16, 2011 and ~~April 24,~~July 17, 2010, respectively (amounts in thousands):

April 23, April 24,
2011 2010
Stock options $ 3,542 $ 2,410
Performance-contingent restricted stock 1,432 1,546
Stock appreciation rights 514 366
Deferred stock 441 431

Total stock based compensation $ 5,929 $ 4,753

~~11.~~
   FOR THE TWELVE WEEKS ENDED FOR THE TWENTY-EIGHT WEEKS ENDED
   JULY 16, 2011    JULY 17, 2010 JULY 16, 2011    JULY 17, 2010
Stock options
   $ 1,140       $ 1,544    $ 4,682       $ 3,954
Restricted stock
   1,117       1,123    2,549       2,669
Stock appreciation rights
   830       (259 ) 1,344       108
Deferred stock
   370       321    812       751






Total stock based compensation
   $ 3,457       $ 2,729    $ 9,387       $ 7,482

13. POST-RETIREMENT PLANS

The following summarizes the company’s balance sheet related pension and other postretirement benefit plan accounts at ~~April 23,~~July 16, 2011 as compared to accounts at January 1, 2011 (amounts in thousands):

AS OF
April 23, January 1,
2011 2011
Current benefit liability $ 1,011 $ 1,011
Noncurrent benefit liability $ 74,643 $ 76,086
Accumulated other comprehensive loss $ 57,157 $ 57,614

   AS OF
   JULY 16, 2011    JANUARY 1, 2011
Current benefit liability
   $ 1,460       $ 1,011
Noncurrent benefit liability
   $ 99,787       $ 76,086
Accumulated other comprehensive loss
   $ 56,814       $ 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 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 strategies and annuity contracts. Effective January 1, 2006, the company curtailed the defined benefit plan that ~~covers~~covered 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 ~~sixteen~~twenty-eight weeks ended ~~April 23,~~July 16, 2011 the company contributed ~~$0.6~~$3.3 million to company pension plans, of which $2.3 million related to a plan assumed in the Tasty acquisition.

On May 20, 2011, with the acquisition of Tasty, the company recorded assumed liabilities for the Tasty unfunded obligation for their defined benefit plans.

The total unfunded obligations were $23.8 million at the acquisition date.

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

FOR THE SIXTEEN WEEKS ENDED
APRIL 23, APRIL 24,
2011 2010
Service cost $ 147 $ 119
Interest cost 5,616 5,743
Expected return on plan assets (6,657 ) (6,358 )
Amortization of net loss 839 670

Total net periodic benefit cost $ (55 ) $ 174


	FOR THE TWELVE WEEKS ENDED						FOR THE TWENTY-EIGHT WEEKS ENDED
	JULY 16, 2011			JULY 17, 2010			JULY 16, 2011			JULY 17, 2010
Service cost	$	110		$	89		$	257		$	209
Interest cost		4,607			4,308			10,224			10,051
Expected return on plan assets		(5,474	)		(4,769	)		(12,130	)		(11,127	)
Amortization of net loss		629			503			1,467			1,173

Total net periodic benefit (income) cost	$	(128	)	$	131		$	(182	)	$	306

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.

16

Post-retirement Benefit Plan

The company provides certain medical and life insurance benefits for eligible retired employees. The ~~plans incorporate~~medical plan covers eligible retirees under the active medical plans. The plan incorporates 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.

On May 20, 2011, with the acquisition of Tasty, the company recorded assumed liabilities for the Tasty unfunded obligation for their Supplemental Executive Retirement Plans. The total unfunded obligations were $5.2 million at the acquisition date.

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

FOR THE SIXTEEN WEEKS ENDED
APRIL 23, APRIL 24,
2011 2010
Service cost $ 131 $ 198
Interest cost 212 271
Amortization of net (gain) loss (15 ) (13 )
Amortization of prior service (credit) cost (79 ) (31 )

Total net periodic benefit cost $ 249 $ 425

   FOR THE TWELVE WEEKS ENDED FOR THE TWENTY-EIGHT WEEKS ENDED
   JULY 16, 2011 JULY 17, 2010 JULY 16, 2011 JULY 17, 2010
Service cost
   $ 97    $ 143    $ 229    $ 340
Interest cost
   182    200    393    471
Amortization of prior service (credit) cost
   (59 ) (62 ) (139 ) (94 )
Amortization of net (gain) loss
   (11 ) (19 ) (26 ) (31 )


Total net periodic benefit cost
   $ 209    $ 262    $ 457    $ 686

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 ~~sixteen~~twelve weeks ended ~~April 23,~~July 16, 2011 and ~~April 24,~~July 17, 2010, the total cost and contributions were ~~$6.0~~$4.1 million and ~~$5.5~~$3.9 million, respectively.

During the twenty-eight weeks ended July 16, 2011 and July 17, 2010, the total cost and contributions were $10.1 million and $9.4 million, respectively.

The company also has a smaller 401(k) Plan associated with an acquisition that will be merged into the Flowers Foods 401(k) Retirement Savings Plan later this year.

~~12.~~ A 401(k) Plan was assumed with the Tasty acquisition and will be merged when we receive final determination letters.

14. INCOME TAXES

The company’s effective tax rate for the ~~first quarter of fiscal~~twelve and twenty-eight weeks ended July 16, 2011 was ~~35.0%. This~~35.5% and 35.2% respectively. The rate for the current quarter is slightly higher than fiscal the ~~2010 annual effective~~first quarter’s rate of ~~34.9%, which included the benefit of favorable discrete items.~~35.0% due to non-deductible transaction costs associated with Tasty. The ~~company’s current effective rate is favorably impacted by an increase in the Section 199 qualifying production activities deduction. The most significant differences~~difference in the effective rate and the statutory rate ~~are~~is primarily due to state income taxes, and the Section 199 qualifying production activities deduction.

The Tasty acquisition affected the deferred tax assets during the twelve and twenty-eight weeks ended July 16, 2011. Please see Note 4,Acquisition, for additional information.

During the ~~first quarter of fiscal~~twelve and twenty-eight weeks ended July 16, 2011, the company’s only material activity with respect to its ~~FIN 48 reserve and related interest expense accrual~~uncertain tax positions was ~~immaterial.~~an increase of $4.9 million due to the Tasty acquisition. At this time, we do not anticipate any other significant changes to the amount of gross unrecognized tax benefits over the next twelve months.

17

~~13.~~15. SEGMENT REPORTING

DSD produces fresh and frozen packaged bread, rolls and ~~rolls~~snack cakes and warehouse delivery produces frozen bread and rolls, tortillas and 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. The Tasty acquisition, discussed in Note 4,Acquisition, is included in the DSD segment because Tasty uses the direct store delivery method for product distribution which satisfies the aggregation criteria with our other DSD segment entities. Information regarding the operations in these reportable segments is as ~~follows:~~

FOR THE SIXTEEN WEEKS ENDED
APRIL 23, APRIL 24,
2011 2010
SALES:
DSD $ 654,231 $ 653,778
Warehouse delivery 191,802 184,945
Eliminations: Sales from warehouse delivery to DSD (36,827 ) (36,093 )
Sales from DSD to warehouse delivery (7,381 ) (7,604 )

$ 801,825 $ 795,026

DEPRECIATION AND AMORTIZATION:
DSD $ 21,867 $ 20,102
Warehouse delivery 6,056 5,536
Other 69 (1 )

$ 27,992 $ 25,637

INCOME (LOSS) FROM OPERATIONS:
DSD $ 64,219 $ 60,683
Warehouse delivery 11,331 13,533
Other (14,032 ) (12,176 )

$ 61,518 $ 62,040

NET INTEREST INCOME $ 1,762 $ 1,131

INCOME BEFORE INCOME TAXES $ 63,280 $ 63,171

follows (amounts in thousands):


	FOR THE TWELVE WEEKS ENDED						FOR THE TWENTY-EIGHT WEEKS ENDED
	JULY 16, 2011			JULY 17, 2010			JULY 16, 2011			JULY 17, 2010
SALES:
DSD	$	530,765		$	495,540		$	1,184,996		$	1,149,318
Warehouse delivery		142,346			143,590			334,148			328,535
Eliminations: Sales from warehouse delivery to DSD		(24,330	)		(25,793	)		(61,157	)		(61,886	)
Sales from DSD to warehouse delivery		(6,185	)		(5,621	)		(13,566	)		(13,225	)

	$	642,596		$	607,716		$	1,444,421		$	1,402,742

DEPRECIATION AND AMORTIZATION:
DSD	$	16,167		$	15,463		$	38,034		$	35,565
Warehouse delivery		4,593			4,533			10,649			10,069
Unallocated		138			25			207			24

	$	20,898		$	20,021		$	48,890		$	45,658

INCOME FROM OPERATIONS:
DSD	$	51,339		$	47,787		$	115,558		$	108,470
Warehouse delivery		5,117			11,841			16,448			25,374
Unallocated		(13,345	)		(8,392	)		(27,377	)		(20,568	)

	$	43,111		$	51,236		$	104,629		$	113,276

NET INTEREST INCOME	$	596		$	956		$	2,358		$	2,087

INCOME BEFORE INCOME TAXES	$	43,707		$	52,192		$	106,987		$	115,363

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

For the Sixteen Weeks Ended April 23, 2011 For the Sixteen Weeks Ended April 24, 2010
Warehouse Warehouse
DSD Delivery Total DSD Delivery Total
Branded Retail $ 379,748 $ 27,906 $ 407,654 $ 378,462 $ 40,978 $ 419,440
Store Branded Retail 102,044 39,281 141,325 99,531 21,336 120,867
Non-retail and Other 165,058 87,788 252,846 168,181 86,538 254,719

Total $ 646,850 $ 154,975 $ 801,825 $ 646,174 $ 148,852 $ 795,026

~~14.~~
   For the twelve weeks ended July 16, 2011    For the twelve weeks ended July 17, 2010
   DSD    Warehouse delivery    Total    DSD    Warehouse delivery    Total
Branded Retail
   $ 314,315       $ 23,521       $ 337,836       $ 288,606       $ 24,675       $ 313,281
Store Branded Retail
   91,560       29,294       120,854       81,239       25,404       106,643
Non-retail and Other
   118,705       65,201       183,906       120,074       67,718       187,792












Total
   $ 524,580       $ 118,016       $ 642,596       $ 489,919       $ 117,797       $ 607,716












   For the twenty-eight weeks ended July 16, 2011    For the twenty-eight weeks ended July 17, 2010
   DSD    Warehouse delivery    Total    DSD    Warehouse delivery    Total
Branded Retail
   $ 694,052       $ 51,427       $ 745,479       $ 667,057       $ 65,653       $ 732,710
Store Branded Retail
   193,605       68,575       262,180       180,770       46,740       227,510
Non-retail and Other
   283,773       152,989       436,762       288,266       154,256       442,522












Total
   $ 1,171,430       $ 272,991       $ 1,444,421       $ 1,136,093       $ 266,649       $ 1,402,742

16. SUBSEQUENT EVENTS

The company has evaluated subsequent events since ~~April 23,~~July 16, 2011, the date of these financial statements. There were no material events or transactions discovered during this evaluation that require recognition or disclosure in the financial statements.

18

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 ~~sixteen~~twelve and twenty-eight week ~~period~~periods ended ~~April 23,~~July 16, 2011 should be read in conjunction with the company’s Annual Report on Form 10-K for the fiscal year ended January 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, Northeast and Southwest as well as select markets in California and Nevada and frozen to customers nationwide. Our businesses are organized into two reportable segments: 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, Northeast and Southwest as well as select markets in California and 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,~~May 20, 2011, a wholly owned subsidiary of the company ~~announced~~merged with Tasty Baking Company (“Tasty”). Tasty operates two bakeries in the Philadelphia, Pennsylvania area and serves customers primarily in the northeastern United States under theTastyKakesnack brand. The results of Tasty’s operations are included in the company’s consolidated financial statements as of May 20, 2011 and are included in the company’s DSD operating segment. As a ~~definitive~~result of the merger, ~~agreement whereby we will acquire~~the company has expanded into new geographic markets.

The aggregate purchase price was $172.1 million, including the payoff of certain indebtedness, Tasty transaction expenses and change in control payments. The merger was completed through a short-form merger following the company’s tender offer through a wholly owned subsidiary for all of the outstanding shares of common stock 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 the~~Tastykake~~snack 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~~applicable withholding ~~taxes. The~~tax. Each share of Tasty not accepted for payment in the tender offer was ~~made~~converted into the right to receive the $4.00 per share in ~~connection with~~cash as merger consideration, without interest and less any applicable withholding taxes, which is 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.

same price in the tender offer.

The company ~~also closed a manufacturing facility during~~incurred $4.5 million and $5.3 million of acquisition-related costs for 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~~twelve and twenty-eight weeks ended July 16, 2011, respectively. These expenses are included in selling, distribution and administrative expense in the company’s Consolidated ~~and Segment Resultsdiscussion below.~~

Statement of Income.

Sales are principally affected by pricing, quality, 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 brand products to absorb overhead costs and maximize use of production capacity. ~~During~~Since the ~~first quarter~~middle of ~~2011,~~2010, our ~~results were~~sales have been negatively impacted by the competitive landscape and ~~high~~higher promotional activity within the baking industry. Sales for the quarter ended ~~April 23,~~July 16, 2011 increased ~~0.9%~~5.7% from the quarter ended ~~April 24,~~July 17, 2010. This increase was primarily due to ~~net~~ positive pricing and mix shifts of ~~2.1%~~4.5% and ~~a decrease in~~the Tasty merger that affected sales by 3.3%, both of which were partially offset by declining volume of ~~1.2%~~2.1%.

For the twenty-eight weeks ended July 17, 2011 sales increased 3.0% from the same period of fiscal 2010. The increase was primarily due to positive pricing and mix shifts of 3.2% and the Tasty merger which positively impacted sales 1.4%. These increases were partially offset by volume decreases of 1.6%.

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 ~~material~~materials prices. Any decrease in the availability of these agreements and instruments could increase the price of these raw materials and significantly affect our earnings.

Commodity costs increased during the second quarter of fiscal 2011 and we expect them to continue to rise during the remainder of the year.
For the twelve weeks ended July 16, 2011, diluted net income per share was $0.21 as compared to $0.24 per share for the twelve weeks ended July 17, 2010, a 12.5% decrease. For the twelve weeks ended July 16, 2011, net income was $28.2 million, an 16.4% decrease compared to $33.8 million reported for the twelve weeks ended July 17, 2010.
For the twenty-eight weeks ended July 16, 2011, diluted net income per share was $0.51 as compared to $0.54 per share for the twenty-eight weeks ended July 17, 2010, a 5.6% decrease. For the twenty-eight weeks ended July 16, 2011, net income was $69.4 million, a 6.8% decrease compared to $74.4 million reported for the twenty-eight weeks ended July 17, 2010.

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 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 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. 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 1, 2011.

19

Tasty Baking Company (“Tasty”) acquisition. On May 20, 2011, a wholly owned subsidiary of the company merged with Tasty. Tasty operates two bakeries in the Philadelphia, Pennsylvania area and serves customers primarily in the northeastern United States under theTastyKakesnack brand. The results of Tasty’s operations are included in the company’s consolidated financial statements as of May 20, 2011 and are included in the company’s DSD operating segment.
Stock Split.On May 25, 2011, the board of directors declared a 3-for-2 stock split of the company’s common stock. The record date for the split was June 10, 2011, and new shares were issued on June 24, 2011. All share and per share information has been restated for all prior periods presented giving retroactive effect to the stock split.

RESULTS OF OPERATIONS:

Results of operations, expressed as a percentage of sales and the dollar and percentage change from period to period, for the ~~sixteen~~twelve week periods ended ~~April 23,~~July 16, 2011 and ~~April 24,~~July 17, 2010, are set forth below ~~(Dollars~~(dollars in thousands):

For the sixteen weeks ended
Percentage of Sales Increase (Decrease)
April 23, 2011 April 24, 2010 April 23, 2011 April 24, 2010 Dollars %
Sales
DSD $ 646,850 $ 646,174 80.7 81.3 $ 676 0.1
Warehouse delivery 154,975 148,852 19.3 18.7 6,123 4.1

Total $ 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) $ 298,643 $ 308,830 46.2 47.8 $ (10,187 ) (3.3 )
Warehouse delivery(1) 113,615 105,968 73.3 71.2 7,647 7.2

Total $ 412,258 $ 414,798 51.4 52.2 $ (2,540 ) (0.6 )

Selling, distribution and administrative expenses

DSD(1) $ 262,121 $ 256,559 40.5 39.7 $ 5,562 2.2
Warehouse delivery(1) 23,973 23,815 15.5 16.0 158 0.7
Corporate(2) 13,963 12,177 — — 1,786 14.7

Total $ 300,057 $ 292,551 37.4 36.8 $ 7,506 2.6

Depreciation and Amortization

DSD(1) $ 21,867 $ 20,102 3.4 3.1 $ 1,765 8.8
Warehouse delivery(1) 6,056 5,536 3.9 3.7 520 9.4
Corporate(2) 69 (1 ) — — 70 NM

Total $ 27,992 $ 25,637 3.5 3.2 $ 2,355 9.2

Income from operations

DSD(1) $ 64,219 $ 60,683 9.9 9.4 $ 3,537 5.8
Warehouse delivery(1) 11,331 13,533 7.3 9.1 (2,202 ) (16.3 )
Corporate(2) (14,032 ) (12,176 ) — — (1,857 ) (15.3 )

Total $ 61,518 $ 62,040 7.7 7.8 $ (522 ) (0.8 )

Interest income, net
$ 1,762 $ 1,131 0.2 0.1 $ 631 55.8
Income taxes
$ 22,119 $ 22,484 2.8 2.8 $ (365 ) (1.6 )

Net income
$ 41,161 $ 40,687 5.1 5.1 $ 474 1.2


	For the twelve weeks ended
					Percentage of Sales				Increase (Decrease)
	July 16, 2011		July 17, 2010		July 16, 2011		July 17, 2010		Dollars		%
Sales
DSD	$	524,580	$	489,919		81.6		80.6	$	34,661		7.1
Warehouse delivery		118,016		117,797		18.4		19.4		219		0.2

Total	$	642,596	$	607,716		100.0		100.0	$	34,880		5.7

Materials, supplies, labor and other production costs (exclusive of depreciation and amortization shown separately below)
DSD (1)	$	251,435	$	234,612		47.9		47.9	$	16,823		7.2
Warehouse delivery(1)		90,452		83,941		76.6		71.3		6,511		7.8

Total	$	341,887	$	318,553		53.2		52.4	$	23,334		7.3

Selling, distribution and administrative expenses
DSD(1)
   $ 205,639    $ 192,057    39.2       39.2       $ 13,582    7.1
Warehouse delivery(1)
   17,854    17,482    15.1       14.8       372    2.1
Corporate(2)
   13,207    8,367    —         —         4,840    57.8




Total
   $ 236,700    $ 217,906    36.8       35.9       $ 18,794    8.6




Depreciation and amortization

DSD(1)
   $ 16,167    $ 15,463    3.1       3.2       $ 704    4.6
Warehouse delivery(1)
   4,593    4,533    3.9       3.8       60    1.3
Corporate(2)
   138    25    —         —         113    NM




Total
   $ 20,898    $ 20,021    3.3       3.3       $ 877    4.4




Income from operations

DSD(1)
   $ 51,339    $ 47,787    9.8       9.8       $ 3,552    7.4
Warehouse delivery(1)
   5,117    11,841    4.3       10.1       (6,724 ) (56.8 )
Corporate(2)
   (13,345 ) (8,392 ) —         —         (4,953 ) (59.0 )




Total
   $ 43,111    $ 51,236    6.7       8.4       $ (8,125 ) (15.9 )




Interest income, net
   $ 596    $ 956    0.1       0.2       $ (360 ) (37.7 )
Income taxes
   $ 15,497    $ 18,436    2.4       3.0       $ (2,939 ) (15.9 )




Net income
   $ 28,210    $ 33,756    4.4       5.6       $ (5,546 ) (16.4 )


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

2.

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

20

CONSOLIDATED AND SEGMENT RESULTS

~~SIXTEEN~~

TWELVE WEEKS ENDED ~~APRIL 23,~~JULY 16, 2011 COMPARED TO ~~SIXTEEN~~TWELVE WEEKS ENDED ~~APRIL 24,~~JULY 17, 2010

Consolidated Sales.

For the Sixteen Weeks Ended For the Sixteen Weeks Ended
April 23, 2011 April 24, 2010
$ % $ % % Increase
(Decrease)
(Amounts in (Amounts in
thousands) thousands)
Branded Retail $ 407,654 50.8 % $ 419,440 52.8 % (2.8 )%
Store Branded Retail 141,325 17.6 120,867 15.2 16.9 %
Non-retail and Other 252,846 31.6 254,719 32.0 (0.7 )%

Total $ 801,825 100.0 % $ 795,026 100.0 % 0.9 %


	For the Twelve Weeks Ended July 16, 2011					For the Twelve Weeks Ended July 17, 2010					% Increase (Decrease)
Sales category	$		%			$		%			% Increase (Decrease)
	(Amounts in thousands)					(Amounts in thousands)
Branded Retail	$	337,836		52.6	%	$	313,281		51.6	%		7.8	%
Store Branded Retail		120,854		18.8			106,643		17.5			13.3	%
Non-Retail and Other		183,906		28.6			187,792		30.9			(2.1	)%

Total	$	642,596		100.0	%	$	607,716		100.0	%		5.7	%

The ~~0.9%~~5.7% increase in sales was attributable to the ~~following:~~

following for all sales categories:


	~~Favorable~~
Percentage Point Change in Sales Attributed to:	Favorable (Unfavorable)
Pricing/Mix		~~2.1~~4.5	%
Volume		(~~1.2~~2.1	)%
Acquisition		3.3	%

Total ~~percentage change~~Percentage Change in ~~sales~~Sales		~~0.9~~5.7	%

Sales category discussion

The ~~decrease~~increase in branded retail sales was due primarily to ~~volume decreases, partially offset by net~~overall pricing/mix ~~increases. Declines in branded multi-pak cake~~increases and ~~branded white bread~~the Tasty acquisition. These were partially offset by ~~increases~~decreased volume in branded white bread, soft ~~variety.~~variety bread and cake, excluding the Tasty acquisition. The increase in store branded retail sales was due primarily to ~~volume~~ increases in store ~~branded~~brand cake ~~as some of the company’s customers introduced store branded cake programs~~and increased volume in the ~~prior year.~~store brand white bread category and positive pricing/mix. The decrease in non-retail and other sales was due primarily to overall volume declines.

Direct-Store-Delivery Sales.

For the Sixteen Weeks Ended For the Sixteen Weeks Ended
April 23, 2011 April 24, 2010
$ % $ % % Increase
(Decrease)
(Amounts in (Amounts in
thousands) thousands)
Branded Retail $ 379,748 58.7 % $ 378,462 58.6 % 0.3 %
Store Branded Retail 102,044 15.8 99,531 15.4 2.5 %
Non-retail and Other 165,058 25.5 168,181 26.0 (1.9 )%

Total $ 646,850 100.0 % $ 646,174 100.0 % 0.1 %


	For the Twelve Weeks Ended July 16, 2011					For the Twelve Weeks Ended July 17, 2010					% Increase (Decrease)
Sales Category	$		%			$		%			% Increase (Decrease)
	(Amounts in thousands)					(Amounts in thousands)
Branded Retail	$	314,315		59.9	%	$	288,606		58.9	%		8.9	%
Store Branded Retail		91,560		17.5			81,239		16.6			12.7	%
Non-Retail and Other		118,705		22.6			120,074		24.5			(1.1	)%

Total	$	524,580		100.0	%	$	489,919		100.0	%		7.1	%

The ~~0.1%~~7.1% increase in sales was attributable to the ~~following:~~

following for all sales categories:


	~~Favorable~~
Percentage Point Change in Sales Attributed to:	Favorable (Unfavorable)
Pricing/Mix		~~1.9~~4.2	%
Volume		(~~1.8~~1.2	)%
Acquisition		4.1	%

Total ~~percentage change~~Percentage Change in ~~sales~~Sales		~~0.1~~7.1	%

Sales category discussion

The increase in branded retail sales was due ~~primarily~~ to ~~net~~ pricing/mix increases and the Tasty acquisition partially offset by volume ~~decreases. Growth in branded soft variety and branded cake were partially offset by decreases~~declines in branded white ~~bread.~~bread and cake, excluding the Tasty acquisition. The increase in store branded retail sales was due to ~~volume~~ increases in ~~store branded~~ white bread and ~~store branded~~ buns/rolls/~~tortillas.~~tortillas and the Tasty acquisition. The decrease in non-retail and other sales was due to volume ~~declines, partially offset by price/mix increases.~~

21declines.

Warehouse Delivery Sales.

For the Sixteen Weeks Ended For the Sixteen Weeks Ended
April 23, 2011 April 24, 2010 % Increase
$ % $ % (Decrease)
(Amounts in (Amounts in
thousands) thousands)
Branded Retail $ 27,906 18.0 % $ 40,978 27.5 % (31.9 )%
Store Branded Retail 39,281 25.3 21,336 14.3 84.1 %
Non-retail and Other 87,788 56.7 86,538 58.2 1.4 %

Total $ 154,975 100.0 % $ 148,852 100.0 % 4.1 %


	For the Twelve Weeks Ended July 16, 2011					For the Twelve Weeks Ended July 17, 2010					% Increase (Decrease)
Sales Category	$		%			$		%			% Increase (Decrease)
	(Amounts in thousands)					(Amounts in thousands)
Branded Retail	$	23,521		19.9	%	$	24,675		20.9	%		(4.7	)%
Store Branded Retail		29,294		24.8			25,404		21.6			15.3	%
Non-Retail and Other		65,201		55.3			67,718		57.5			3.7	%

Total	$	118,016		100.0	%	$	117,797		100.0	%		0.2	%

The ~~4.1%~~0.2% increase in sales was attributable to the ~~following:~~

following for all sales categories:


Percentage Point Change in Sales Attributed to:	Favorable (Unfavorable)
Pricing/Mix		~~4.1~~4.5	%
Volume		—(4.3	)%

Total Percentage Change in Sales		0.2	%
~~Total percentage change in sales~~		~~4.1~~	%

Sales category discussion

The decrease in branded retail sales was primarily the result of ~~decreased~~lower branded multi-pak and snack cake ~~volume. The~~volume as a result of new store brand cake programs introduced by certain of the company’s customers, which resulted in an increase in store branded retail ~~sales was due to volume increases in store branded cake as some of the company’s customers introduced store branded cake programs in the prior year.~~sales. The ~~increase~~decrease in non-retail and other sales, which include contract production and vending, was primarily due to lower volume.

Materials, Supplies, Labor and Other Production Costs (exclusive of depreciation and amortization shown separately).The increase as a percent of sales was primarily due to significant increases in ingredient costs, particularly flour, sweeteners, shortening oil and cocoa, partially offset by lower workforce-related costs as a percent of sales. In addition, the acquisition has higher costs as a percent of sales.

The DSD segment was consistent with prior year. Sales increases, improved efficiency and lower workforce-related costs as a percentage of sales were offset by higher ingredient costs and higher costs for the Tasty acquisition.

The warehouse delivery segment increase as a percent of sales was primarily the result of higher ingredient costs, primarily shortening oil, sugar and cocoa and repairs and maintenance costs, partially offset by lower workforce-related and packaging costs as a percent of sales. Costs associated with the closure of a mix plant in the current year and insurance proceeds in the prior year also contributed to the increased costs.

Selling, Distribution and Administrative Expenses.The increase as a percent of sales was due to the Tasty acquisition and higher distribution costs as a percent of sales. These were partially offset by sales increases. The acquisition related costs were $4.5 million for the quarter and are included in unallocated corporate expenses.

The DSD segment’s selling, distribution and administrative expenses were consistent with the prior year.

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

Depreciation and Amortization.Depreciation and amortization increased primarily due to the Tasty acquisition.

The DSD segment’s depreciation and amortization expense increase was due to the Tasty acquisition. The warehouse delivery segment’s depreciation and amortization expense increase was due to assets placed in service subsequent to the second quarter of fiscal 2010.

Income from Operations.The increase in the DSD segment income from operations was attributable to higher sales, partially offset by increases in input costs. During the quarter, the acquisition was neutral to operating income. The decrease in the warehouse delivery segment income from operations was primarily a result of a lag in pricing compared to ingredient cost increases and by an unforeseen shift to the back half of certain planned volume. The increase in unallocated corporate expenses was primarily due to the Tasty acquisition related costs discussed above.

Net Interest Income.The decrease was related to higher interest expense due to higher debt outstanding under the new credit facility due to the Tasty acquisition. The credit facility and term loan had outstanding borrowings of $25.0 million and $123.8 million, respectively, at July 17, 2010. The new credit facility and term loan had outstanding borrowings of $204.0 million and $103.1 million, respectively at July 16, 2011.

Income Taxes.The effective tax rate for the second quarter of fiscal 2011 was 35.5% compared to 35.3% in the second quarter of the prior year. The increase in the rate is due mainly to the non-deductible transaction costs associated with Tasty. 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.

TWENTY-EIGHT WEEKS ENDED JULY 16, 2011 COMPARED TO TWENTY-EIGHT WEEKS ENDED JULY 17, 2010

Consolidated Sales.


	For the Twenty-Eight Weeks Ended July 16, 2011					For the Twenty-Eight Weeks Ended July 17, 2010					% Increase (Decrease)
Sales category	$		%			$		%			% Increase (Decrease)
	(Amounts in thousands)					(Amounts in thousands)
Branded Retail	$	745,479		51.6	%	$	732,710		52.2	%		1.7	%
Store Branded Retail		262,180		18.2			227,510		16.2			15.2	%
Non-Retail and Other		436,762		30.2			442,522		31.6			(1.3	)%

Total	$	1,444,421		100.0	%	$	1,402,742		100.0	%		3.0	%

The 3.0% increase in sales was attributable to the following for all sales categories:


Percentage Point Change in Sales Attributed to:	Favorable (Unfavorable)
Pricing/Mix		3.2	%
Volume		(1.6	)%
Acquisitions		1.4	%

Total Percentage Change in Sales		3.0	%

Sales category discussion

The increase in branded retail sales was due primarily to positive net pricing/mix ~~increases.~~

and the acquisition, partially offset by volume declines in cake, excluding the Tasty acquisition, and white bread and soft variety bread. The increase in store branded retail sales was primarily due to increases in store branded cake. The decrease in non-retail and other sales was due primarily to decreases in fast foods and institutional.

Direct-Store-Delivery Sales.


	For the Twenty-Eight Weeks Ended July 16, 2011					For the Twenty-Eight Weeks Ended July 17, 2010					% Increase (Decrease)
Sales category	$		%			$		%			% Increase (Decrease)
	(Amounts in thousands)					(Amounts in thousands)
Branded Retail	$	694,052		59.2	%	$	667,057		58.7	%		4.0	%
Store Branded Retail		193,605		16.5			180,770		15.9			7.1	%
Non-Retail and Other		283,773		24.3			288,266		25.4			(1.6	)%

Total	$	1,171,430		100.0	%	$	1,136,093		100.0	%		3.1	%

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


Percentage Point Change in Sales Attributed to:	Favorable (Unfavorable)
Pricing/Mix		2.8	%
Volume		(1.5	)%
Acquisitions		1.8	%

Total Percentage Change in Sales		3.1	%

Sales category discussion

The increase in branded retail sales was due primarily to positive net pricing/mix and the acquisition, partially offset by volume declines in white bread and soft variety bread. The increase in store branded retail was primarily from volume growth in store brand white bread and store brand buns/rolls/tortillas. The decrease in non-retail and other sales was primarily due to declines in foodservice channel sales.

Warehouse Delivery Sales.


	For the Twenty-Eight Weeks Ended July 16, 2011					For the Twenty-Eight Weeks Ended July 17, 2010					% Increase (Decrease)
Sales category	$		%			$		%			% Increase (Decrease)
	(Amounts in thousands)					(Amounts in thousands)
Branded Retail	$	51,427		18.8	%	$	65,653		24.6	%		(21.7	)%
Store Branded Retail		68,575		25.1			46,740		17.5			46.7	%
Non-Retail and Other		152,989		56.1			154,256		57.9			(0.8	)%

Total	$	272,991		100.0	%	$	266,649		100.0	%		2.4	%

The 2.4% increase in sales was attributable to the following for all sales categories:


Percentage Point Change in Sales Attributed to:	Favorable (Unfavorable)
Pricing/Mix		4.3	%
Volume		(1.9	)%

Total Percentage Change in Sales		2.4	%

Sales category discussion

The decrease in branded retail sales was primarily the result of lower multi-pak cake volume as a result of store brand cake programs introduced by certain of the company’s customers during the third quarter of fiscal 2010, which resulted in the increase in store branded retail sales. The decrease in non-retail and other sales, which include contract production and vending, was due primarily to lower mix plants sales.

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 ~~decreases in ingredient costs and sales increases.~~higher sales. These were partially offset by higher workforce-related costs ~~associated with the manufacturing facility closure during the quarter, discussed in the~~~~Overview~~~~above, which impacted costs $2.8 million, or 30 basis points~~ as a percent of sales ~~net of operational savings.~~

~~The DSD segment’s decrease~~and higher costs as a percent of sales ~~was primarily~~for the ~~result~~acquisition. Costs of ~~significant decreases in ingredient costs, partially offset by costs~~$2.8 million were incurred during the first quarter of fiscal 2011 associated with the closure of a manufacturing ~~facility closure during the quarter of $2.8 million, or 40 basis points as a percent of sales, net of operational savings.~~

facility.

The ~~warehouse delivery segment’s~~DSD segment increase as a percent of sales was primarily a result of decreases in ingredient costs. These were partially offset by higher ~~ingredient~~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 ingredient and repairs and maintenance costs ~~were driven by increases in sweeteners, palm oil and cocoa.~~

as a percent of sales.

Selling, Distribution and Administrative Expenses.The increase as a percent of sales was due to ~~costs from closing the manufacturing facility which, net of operational savings, impacted it $2.4 million, or 30 basis points, as well as~~ higher ~~employee-related and distribution~~workforce-related costs as a percent of ~~sales.~~sales and $5.3 million of acquisition related costs. Costs of $2.4 million were incurred during the first quarter of fiscal 2011 associated with the ~~impending acquisition~~closure 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 higher sales.~~

manufacturing facility.

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

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

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

2010.

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

acquisition. The warehouse delivery segment’s depreciation and amortization expense increased primarily ~~due to~~as a result of assets placed ininto service subsequent to the ~~first~~second quarter of fiscal 2010.

Income ~~From~~from Operations.The increase in the DSD ~~segment’s~~segment income from operations was ~~primarily~~ attributable to sales increases and lower ~~ingredient~~input costs as a percent of sales, partially offset by costs associated with the closure of a manufacturing facility ~~closure costs~~in the first quarter of ~~$5.7 million, net of operational savings.~~this year. The decrease in the warehouse delivery ~~segment’s~~segment income from operations was primarily a result of higher ingredient ~~costs.~~costs as a percent of sales and a lag in pricing compared to ingredient cost increases and by an unforeseen shift to the back half of certain planned volume. The increase in unallocated corporate expenses was primarily due to ~~higher share-based payment expenses.~~

22

Net Interest Income.The increase was related to lower interest expense ondue to lower debt outstanding under the former and new credit facilities and 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 also contributed~~most part of fiscal 2011 when compared to ~~the increase.~~

fiscal 2010.

Income Taxes.The effective tax rate for the ~~first quarter of fiscal~~twenty-eight weeks ended July 16, 2011 and July 17, 2010 was 35.0% compared to 35.6% in the 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.35.2% and 35.5%, respectively. 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 stock repurchases. The company’s strategy for use of its cash flow includes paying dividends to shareholders, making acquisitions, growing internally and repurchasing shares of its common stock when appropriate.

Cash Flows

Flowers Foods’ cash and cash equivalents increased to ~~$8.7~~$13.7 million at ~~April 23,~~July 16, 2011 from $6.8 million at January 1, 2011. The increase resulted from ~~$72.6~~$66.2 million provided by operating activities and $152.2 provided by financing activities, offset by ~~$26.0 million and $44.7~~$211.4 million disbursed for investing ~~activities and financing activities, respectively.~~

activities.

Cash Flows Provided by Operating Activities.Net cash of ~~$72.6~~$66.2 million provided by operating activities during the ~~sixteen~~twenty-eight weeks ended ~~April 23,~~July 16, 2011 consisted primarily of ~~$41.2~~$69.4 million in net income, adjusted for the following non-cash items (amounts in thousands):

Depreciation and amortization $ 27,992
Gain reclassified from accumulated other comprehensive income to net income (22,919 )
Stock-based compensation 5,929
Deferred income taxes (3,268 )
Provision for inventory obsolescence 410
Allowances for accounts receivable 270
Pension and postretirement plans expense 194
Other (644 )

Total $ 7,964


Depreciation and amortization	$	48,890
Gain reclassified from accumulated other comprehensive income to net income		(36,118	)
Stock-based compensation		9,387
Deferred income taxes		(5,719	)
Provision for inventory obsolescence		762
Allowances for accounts receivable		557
Pension and postretirement plans expense		275
Other		(184	)

Total	$	17,850

Cash ~~provided by~~used for working capital and other activities was ~~$23.4~~$21.1 million. As of ~~April 23,~~July 16, 2011, the company had ~~$10.9~~$20.8 million recorded in other current ~~liabilities~~assets representing collateral ~~from counterparties~~ for hedged positions. As of January 1, 2011, the company had $11.5 million recorded in other accrued liabilities representing collateral ~~from counterparties~~ for hedged positions.

Cash Flows Disbursed for Investing Activities.Net cash disbursed for investing activities during the ~~sixteen~~twenty-eight weeks ended ~~April 23,~~July 16, 2011 of ~~$26.0~~$211.4 million consisted primarily of cash used for the Tasty acquisition of $164.5 million (net of $2.2 million acquired) and capital expenditures of ~~$22.1~~$43.4 million. Capital expenditures in the DSD segment and the warehouse delivery segment were ~~$17.1~~$33.8 million and ~~$4.3~~$8.4 million, respectively. The company estimates capital expenditures of approximately ~~$90.0~~$85.0 million to ~~$100.0~~$90.0 million during fiscal 2011. The company also leases certain production machinery and equipment through various operating leases.

Cash Flows ~~Disbursed for~~Provided by Financing Activities.Net cash ~~disbursed for~~provided by financing activities of ~~$44.7~~$152.2 million during the ~~sixteen~~twenty-eight weeks ended ~~April 23,~~July 16, 2011 consisted primarily of dividends paid of ~~$18.1~~$38.4 million, stock repurchases of $18.0 million, and the payment of financing fees related to the credit facility amendment and restatement of $2.1 million. These were offset by net debt ~~repayments~~issuances of ~~$7.5~~$190.1 million ~~partially offset by proceeds of $1.0~~and $12.5 million from the exercise of stock options and the related share-based payments income tax benefit of ~~$0.6~~$3.1 million.

Credit Facility and Term Loan

Credit ~~Facility.~~Facility. On May 20, 2011, the company further amended and restated its credit facility (the “new credit facility”), which was previously amended on October 5, 2007 (the “former credit facility”). The ~~company has~~new credit facility is a five-year, ~~$250.0~~$500.0 million senior unsecured revolving loan facility ~~(the “credit facility”) that expires October 5, 2012. The~~with two, one-year extension options. Further, the company may request to increase its borrowings under the new credit facility up to an aggregate of ~~$350.0~~$700.0 million upon the satisfaction of certain conditions. Proceeds from the new credit facility may be used for working capital and general corporate purposes, including capital expenditures, acquisition financing, refinancing of indebtedness, dividends and share repurchases. The new 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

23

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 new credit facility and can meet presently foreseeable financial requirements. As

Interest on the new credit facility is due quarterly in arrears on any outstanding borrowings at a customary Eurodollar rate or the base rate plus applicable margin. The underlying rate is defined as rates offered in the interbank Eurodollar market, or the higher of ~~April 23, 2011~~the prime lending rate or the federal funds rate plus 0.50%, with a floor rate defined by the one-month interbank Eurodollar market rate plus 1.00%. The applicable margin ranges from 0.30% to 1.25% for base rate loans and ~~January 1, 2011,~~from 1.30% to 2.25% for Eurodollar loans. In addition, a facility fee ranging from 0.20% to 0.50% is due quarterly on all commitments under the ~~company was in compliance with all restrictive financial covenants under its~~ credit facility.

~~Interest~~ Both the interest margin and the facility fee are based on the company’s leverage ratio. The company paid additional financing costs of $2.1 million in connection with the amendment of the credit facility, which, in addition to the remaining balance of the original $0.9 million in financing costs, is being amortized over the remaining life of the term loan.

The former credit facility was a five-year, $250.0 million senior unsecured revolving loan facility, which would have expired October 5, 2012. Under the former credit facility, interest was due quarterly in arrears on any outstanding borrowings at a customary Eurodollar rate or the base rate plus the applicable margin. The underlying rate iswas defined as ~~the rate~~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~~ranged from ~~0.00%~~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% iswas due quarterly on all commitments under the credit facility. Both the interest margin and the facility fee ~~are~~were based on the company’s leverage ratio.

~~Amounts outstanding~~ Financial covenants and other restrictions under the former credit facility ~~vary daily. Changes in~~were similar to those under 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 partnew credit facility, with the exception of the ~~company’s overall risk management strategy as discussed in Note 5,~~~~Derivative Financial Instruments~~~~, of this Form 10-Q. For the sixteen weeks ended April 23, 2011, the company borrowed $78.5~~maximum leverage ratio. There were $204.0 million in ~~revolving borrowings and repaid $78.5 million in revolving~~outstanding borrowings under the new credit ~~facility. There were~~facility at July 16, 2011, and no outstanding borrowings under the former credit facility at ~~April 23, 2011 or~~ January 1, ~~2011.~~

2011, approximately $166.7 million of which was utilized for the Tasty acquisition.

As of July 16, 2011 and January 1, 2011, the company was in compliance with all restrictive financial covenants under its former and new credit facilities.

Term ~~Loan.~~Loan. On May 20, 2011, the company amended its credit agreement entered on August 1, 2008 (the “term loan”), to conform the ~~company entered into a~~terms to the new credit ~~agreement (“term loan”) with various lending parties for the purpose of completing acquisitions.~~facility. The term loan provides for an amortizing $150.0 million of borrowings through the maturity date of August 1, 2013. 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 ~~April 23,~~July 16, 2011 and January 1, 2011, the company was in compliance with all restrictive financial covenants under the term loan. As of ~~April 23,~~July 16, 2011 and January 1, 2011, the amounts outstanding under the term loan were ~~$108.8~~$103.1 million and $114.4 million, respectively.

Interest on the term loan 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 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 additional financing costs of ~~$0.8~~$0.1 million in connection with the amendment of the term loan, which, in addition to the original $0.8 million in financing costs, is being amortized over the remaining 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 new credit facility or term loan, but could affect future credit availability.

Uses of Cash

On February 17, 2011, the Board of Directors declared a dividend of ~~$0.20~~$0.13 per share on the company’s common stock that was paid on March 17, 2011 to shareholders of record on March 3, 2011. This dividend payment was $18.1 million.

On May 25, 2011, the Board of Directors declared a dividend of $0.15 per share on the company’s common stock that was paid on June 24,

Our Board of Directors has approved a plan that authorizes share repurchases of up to ~~30.0~~45.0 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 2011, ~~695,403~~1,043,105 shares (split adjusted), at a cost of $18.0 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 2011. From the inception of the plan through ~~April 23,~~July 16, 2011, ~~24.9~~37.4 million shares, at a cost of $422.2 million, have been purchased.

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

~~As discussed in the~~~~Overview~~~~above,~~

On May 20, 2011, a wholly owned subsidiary of the company ~~expects~~merged with Tasty Baking Company (“Tasty”). Tasty operates two bakeries in the Philadelphia, Pennsylvania area and serves customers primarily in the northeastern United States under theTastyKakesnack brand. The results of Tasty’s operations are included in the company’s consolidated financial statements as of May 20, 2011 and are included in the company’s DSD operating segment. As a result of the merger, the company has expanded into new geographic markets in the Northeast United States.

Cash of $166.7 million has been paid of the aggregate purchase price of $171.2 million, including the payoff of certain indebtedness and Tasty transaction expenses. There are change in control payments that have been accrued as they were not paid concurrent with closing. The merger was completed through a short-form merger following the company’s tender offer through a wholly owned subsidiary for all of the outstanding shares of common stock of Tasty for $4.00 per share in cash, without interest and less any applicable withholding tax. Each share of Tasty not accepted for payment in the tender offer was converted into the right to ~~close on~~receive the $4.00 per share in cash as merger consideration, without interest and less any applicable withholding taxes, which is the same price in the tender offer.

The company incurred $5.3 million of acquisition-related costs during the twenty-eight weeks ended July 16, 2011. These expenses are included in selling, distribution and administrative expense in the company’s Consolidated Statement of Income for the twelve and twenty-eight weeks ended July 16, 2011.

The company contributed $2.3 million to the Tasty ~~acquisition during~~defined benefit plan assumed with the ~~second quarter~~acquisition. An additional $5.8 million will be paid through the remainder of fiscal ~~2011. The total estimated cash payments~~2011 for ~~the acquisition are approximately $165.0 million. We expect to use cash on hand as well as cash available under our credit facility to complete the transaction.~~

this plan.

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

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 ~~April 23,~~July 16, 2011, the company’s hedge portfolio contained commodity derivatives with a net fair value of ~~$23.0~~$(12.6) million. Of this net fair value, ~~$24.7~~$(11.1) million is based on quoted market prices and ~~$(1.7)~~$(1.5) million is based on models and other valuation methods. Approximately ~~$18.8~~$(11.0) million and ~~$4.2~~$(1.6) million of this net fair value relates to instruments that will be utilized in fiscal 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 ~~April 23,~~July 16, 2011, a hypothetical ten percent increase (decrease) in commodity prices would increase (decrease) the net fair value of the derivative portfolio by ~~$20.5~~$15.5 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 ~~entered into~~has interest rate swaps with notional amounts of $85.0 million, and $65.0 million, respectively, to fix the interest rate on the $150.0 million term loan ~~secured~~entered into on August 1, ~~2008 to fund the acquisitions of ButterKrust Bakery and Holsum Bakery, Inc.~~2008. As of ~~April 23,~~July 16, 2011, the net fair value of these interest rate swaps was ~~$(5.6)~~$(5.1) million. All of this net fair value is based on valuation models and ~~$(2.6)~~$(1.7) million, ~~$(2.5)~~$(2.7) million and ~~$(0.5)~~$(0.7) million of this net fair value is related to instruments expiring in 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 ~~April 23,~~July 16, 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 are 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.

25

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 ~~April 23,~~July 16, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In making its assessment of changes in internal control over financial reporting as of July 16, 2011, management has excluded the Tasty acquisition as we are currently assessing their control environment. Tasty’s revenues for the twelve and twenty-eight weeks ended July 16, 2011 of $20.2 million represents approximately 3.1% and 1.4% of our consolidated revenue for the twelve and twenty-eight weeks ended July 16, 2011, respectively. Tasty’s assets, including intangible assets, represent approximately 4.8% of our consolidated assets at July 16, 2011.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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~~We expect this case to proceed to trial in ~~2011.~~

late 2011 or 2012.

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.

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 1, 2011 for information regarding factors that could affect the company’s results of operations, financial condition and liquidity. The following changes have been made 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 results of operations.

We may be adversely impacted by the failure to execute acquisitions successfully.

The company from time to time undertakes acquisitions or divestitures. The success of 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.

26

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

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. The following chart sets forth the amounts of our common stock purchased by the company during the first quarter of fiscal 2011 under the stock repurchase plan.

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.

27

~~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.

By:		/s/ GEORGE E. DEESE
Name:		George E. Deese
Title:		*Chairman of the Board and* *Chief Executive Officer*

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

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

Date: August 17, 2011

EXHIBIT INDEX


Exhibit No				Name of Exhibit

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


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


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

~~Date: May 19, 2011~~

28

~~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 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	—	Form of Indenture (Incorporated by reference to Flowers Foods’ Registration Statement on Form S-3, dated 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 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 (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 (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 (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 to the Flowers Foods, Inc. Retirement Plan No. 1, dated November 7, 2005, as amended and restated effective as of March 26, 2001 (Incorporated by reference to Flowers Foods’ Quarterly Report on Form 10-Q dated November 17, 2005, File No. 1-16247).

10.9	—	Amended and Restated Credit Agreement, dated as of ~~June 6, 2006,~~May 20, 2011, by and among, Flowers Foods, Inc., the Lenders ~~Party~~party thereto from time to time, Bank of America N.A., Harris N.A. and 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.~~agent, Bank of America, N.A., as syndication agent, and Cooperative Centrale Raiffeisen-Boerenleen Bank, B.A., “Rabobank International,” New York Branch, Branch Banking & Trust Company and Regions Bank, as co-documentation agents (Incorporated by reference to Flowers Foods’ Current Report on Form 8-K dated ~~June 7, 2006,~~May 26, 2011, File No. 1-16247).

10.10 — 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).
10.11 — 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).

29


~~Exhibit~~
No		~~Name of Exhibit~~
10.12	—	First ~~Amendment and Waiver,~~Amendement to the Credit Agreement, dated ~~October 5, 2007,~~May 20, 2011, among Flowers Foods, Inc., ~~a Georgia corporation,~~ the lenders party to the Credit Agreement and Deutsche Bank AG, New York Branch, as ~~Administrative Agent.~~administrative agent (Incorporated by reference to Flowers Foods’ Current Report on Form 8-K dated ~~October 11, 2007,~~May 26, 2011, File No. 1-16247).

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).

10.14	—	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).

10.15	—	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).

10.16	—	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 February 23, 2011, File No. 1-16247).

10.17	—	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 21	—	Subsidiaries of Flowers Foods, Inc.

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

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

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

32 32	—	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 ~~April 23,~~July 16, 2011.


*101.INS	—	XBRL Instance Document.

*101.SCH	—	XBRL Taxonomy Extension Schema Linkbase.

*101.CAL	—	XBRL Taxonomy Extension Calculation Linkbase.

*101.DEF	—	XBRL Taxonomy Extension Definition Linkbase.

*101.LAB	—	XBRL Taxonomy Extension Label Linkbase.

*101.PRE	—	XBRL Taxonomy Extension Presentation Linkbase.

*	Filed herewith

30


	Amortization of Intangibles, net
Remainder of 2011	$	3,811
2012	$	7,702
2013	$	7,471
2014	$	7,331
2015	$	7,138


	APRIL 23, 2011			JANUARY 1, 2011
ASSETS
Current Assets:
Cash and cash equivalents	$	8,667		$	6,755

Accounts and notes receivable, net of allowances of $535 and $522, respectively		176,776			166,281

Inventories, net:
Raw materials		21,788			20,879
Packaging materials		12,506			12,125
Finished goods		32,309			27,570

		66,603			60,574

Spare parts and supplies		36,945			37,085

Deferred taxes		4,918			1,095

Other		35,325			41,924

Total current assets		329,234			313,714

Property, Plant and Equipment, net of accumulated depreciation of $699,862 and $679,561, respectively		600,313			604,693

Notes Receivable		92,340			92,860

Assets Held for Sale — Distributor Routes		12,349			11,924

Other Assets		6,198			5,113

Goodwill		200,153			200,153

Other Intangible Assets, net		95,188			97,032

Total assets	$	1,335,775		$	1,325,489

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term debt and capital leases	$	29,097		$	28,432
Accounts payable		121,931			102,068
Other accrued liabilities		109,392			112,272

Total current liabilities		260,420			242,772

Long-Term Debt and Capital Leases		90,606			98,870

Other Liabilities:
Post-retirement/post-employment obligations		74,643			76,086
Deferred taxes		64,811			66,680
Other		47,091			45,291

Total other liabilities		186,545			188,057

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
Treasury stock — 11,413,083 shares and 11,011,494 shares, respectively		(226,931	)		(214,683	)
Capital in excess of par value		535,400			539,476
Retained earnings		526,772			503,689
Accumulated other comprehensive loss		(38,054	)		(33,709	)

Total stockholders’ equity		798,204			795,790

Total liabilities and stockholders’ equity	$	1,335,775		$	1,325,489


	FOR THE SIXTEEN WEEKS ENDED
	APRIL 23, 2011			APRIL 24, 2010

Sales	$	801,825		$	795,026
Materials, supplies, labor and other production costs (exclusive of depreciation and amortization shown separately below)		412,258			414,798
Selling, distribution and administrative expenses		300,057			292,551
Depreciation and amortization		27,992			25,637

Income from operations		61,518			62,040
Interest expense		(2,149	)		(2,784	)
Interest income		3,911			3,915

Income before income taxes		63,280			63,171
Income tax expense		22,119			22,484

Net income	$	41,161		$	40,687

Net Income Per Common Share:
Basic:
Net income per common share	$	0.46		$	0.44

Weighted average shares outstanding		90,214			91,517

Diluted:
Net income per common share	$	0.45		$	0.44

Weighted average shares outstanding		90,987			92,204

Cash dividends paid per common share	$	0.200		$	0.175


								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


	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	)


Fair value of consideration transferred:
Total tender, merger consideration, debt cash payments and change in control payments	$	172,109

Recognized amounts of identifiable assets acquired and liabilities assumed:
Financial assets	$	44,078
Inventories		7,830
Property, plant, and equipment		99,796
Identifiable intangible assets		51,419
Deferred income taxes		14,856
Financial liabilities		(66,192	)

Net recognized amounts of identifiable assets acquired	$	151,787

Goodwill	$	20,322


	Amount		Weighted average Amortization years
Trademarks	$	36,409		40.0
Customer relationships		13,487		25.0
Distributor relationships		1,523		15.0

	$	51,419		35.3


	Amortization of
	Intangibles
Remainder of 2011	$	4,118
2012	$	5,677
2013	$	5,488
2014	$	5,389
2015	$	5,237


	Amount of Gain or (Loss)							Amount of Gain or (Loss) Reclassified
	Recognized in OCI on							from Accumulated OCI into Income
Derivatives in	Derivative (Effective Portion)(Net of tax)						Location of Gain or (Loss)	(Effective Portion)(Net of tax)
Cash Flow Hedge	For the sixteen weeks ended						Reclassified from AOCI into Income	For the sixteen weeks ended
Relationships	April 23, 2011			April 24, 2010			(Effective Portion)	April 23, 2011			April 24, 2010
Interest rate contracts	$	(138	)	$	(891	)	Interest expense (income)	$	(800	)	$	(942	)
Commodity contracts		8,630			(4,859	)	Production costs(1)		14,095			(7,088	)

Total	$	8,492		$	(5,750	)		$	13,295		$	(8,030	)


	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


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

Total	$	290.7


	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


	Common shares
For the twelve weeks ended July 16, 2011		—
For the twelve weeks ended July 17, 2010		1,130
For the twenty-eight weeks ended July 16, 2011		1,654
For the twenty-eight weeks ended July 17, 2010		2,118


						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Options			Price		Term (Years)		Value
Outstanding at January 1, 2011		4,365		$	22.00
Granted		1,428		$	24.47
Exercised		(91	)	$	11.07
Forfeited		(20	)	$	24.50

Outstanding at April 23, 2011		5,682		$	22.78		4.77	$	37,195

Exercisable at April 23, 2011		2,168		$	20.06		2.87	$	20,102


	AS OF
	April 23,		January 1,
	2011		2011
Current benefit liability	$	1,011	$	1,011
Noncurrent benefit liability	$	74,643	$	76,086
Accumulated other comprehensive loss	$	57,157	$	57,614


	For the Sixteen Weeks Ended April 23, 2011						For the Sixteen Weeks Ended April 24, 2010
			Warehouse						Warehouse
	DSD		Delivery		Total		DSD		Delivery		Total
Branded Retail	$	379,748	$	27,906	$	407,654	$	378,462	$	40,978	$	419,440
Store Branded Retail		102,044		39,281		141,325		99,531		21,336		120,867
Non-retail and Other		165,058		87,788		252,846		168,181		86,538		254,719

Total	$	646,850	$	154,975	$	801,825	$	646,174	$	148,852	$	795,026


Selling, distribution and administrative expenses
DSD(1)	$	205,639		$	192,057		39.2	39.2	$	13,582		7.1
Warehouse delivery(1)		17,854			17,482		15.1	14.8		372		2.1
Corporate(2)		13,207			8,367		—	—		4,840		57.8

Total	$	236,700		$	217,906		36.8	35.9	$	18,794		8.6

Depreciation and amortization
DSD(1)	$	16,167		$	15,463		3.1	3.2	$	704		4.6
Warehouse delivery(1)		4,593			4,533		3.9	3.8		60		1.3
Corporate(2)		138			25		—	—		113		NM

Total	$	20,898		$	20,021		3.3	3.3	$	877		4.4

Income from operations
DSD(1)	$	51,339		$	47,787		9.8	9.8	$	3,552		7.4
Warehouse delivery(1)		5,117			11,841		4.3	10.1		(6,724	)	(56.8	)
Corporate(2)		(13,345	)		(8,392	)	—	—		(4,953	)	(59.0	)

Total	$	43,111		$	51,236		6.7	8.4	$	(8,125	)	(15.9	)

Interest income, net	$	596		$	956		0.1	0.2	$	(360	)	(37.7	)
Income taxes	$	15,497		$	18,436		2.4	3.0	$	(2,939	)	(15.9	)

Net income	$	28,210		$	33,756		4.4	5.6	$	(5,546	)	(16.4	)


					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

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