Jones Turner – EVP, Corporate Relations George Deese – Chairman, President & CEO Steve Kinsey – EVP & CFO

Brad [ph] – BB&T Capital Markets Alton Stump – Longbow Research Farha Aslam – Stevens Inc. Mitchell Pinheiro – Janney Montgomery Scott Eric Katzman – Deutsche Bank Bill Chappell – SunTrust David Vidor [ph] – Farasid Assets [ph] Lars Munson [ph] – Pico Capital [ph]

Greetings and welcome to the Flowers Foods fourth quarter and fiscal year 2008 conference call and webcast. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions). As a reminder, this conference is being recorded. It's my pleasure to introduce your host Ms. Marta Turner, Executive VP of Corporate Relations Thank you. Ms. Jones Turner, you may begin.

Thanks, Operator, and good morning, everyone. Our fourth quarter and full year earnings were released this morning. If you don't have that release, of course you can find it on the Flower Foods Web site. Before we get started I need to point out that our presentation today may include forward-looking statements about our company's performance. These comments could include discussions about future performance, such as earnings per share, net sales, margin, operating profit, interest, expense, cash flow, taxes and such items. The segments that we will make today are based on our view of things as they stand today. However, they may contain some degree of uncertainty. We believe our statements to be reasonable. They are subject to risk and uncertainties that could cause actual results to differ materially. In addition to matters we'll discuss during the call, important factors relating to our business are detailed fully in our filings with the SEC. With me on the call this morning are George Deese, Chairman of the Board, Chief Executive Officer and President, and Steve Kinsey, Executive Vice President and Chief Financial Officer. George and Steve will discuss our fourth quarter 2008 results as well as our revised and upgraded 2009 guidance. Then of course, we'll open the call for your questions. Now it's my pleasure to turn the call over to our Chairman, CEO and President, George Deese.

Thank you, Marta. Good morning and thank you for joining our call this morning. As you all know it is a time of uncertainty for many companies. Flowers Foods continues to deliver consistent and sustainable performance. This is not a circumstance that occurs by chance. We achieved good results for 2008 through continued focus on our operating strategies and the determination of our team. We have invested in our bakeries, our products, and brands, our distribution and information systems and in developing our team. These investments and the refinement of our operating strategies have occurred over many decades. Our 2008 results reflect the strengths of our company and our business model. Today, our team is working to further execute our strategies, to outperform in the marketplace and to continue delivering value to our customers, consumers and shareholders. In the fourth quarter, which was a 13-week quarter, in the full 53-week year, we delivered strong sales in earnings growth. Sales were up 31.2% for the quarter, 18.6% for the full year. We achieved a 49.7% increase in net income in the quarter and 26% increase in the earnings for the year. Our EBITDA margin was 11.1% for the quarter and 10.6% for the year. Our brands, our bakeries, and our team performed well as we continued to improve efficiencies and reduce operating cost. I want to once again thank our bakery team for exceptional work in the fourth quarter and for all of 2008. They achieved a 3% improvement in manufacturing and efficiencies and also reduced wage, our damage products by a significant measure. As we discussed on our third quarter call, we put pricing in place by October 1st, '08 to address our increased calls in 2009. So our fourth quarter results reflect the higher pricing and the market reaction. Our products and brands performed well in the marketplace during the fourth quarter. We are monitoring the sales trend of our products and brands very carefully. We're very attuned to possible competitive and economic circumstances that could impact our sales. Our sales at warehouse allows us to track sales in individual markets which is important because this business must be managed market to market. If necessary, we'll adjust promotional activities based on individual market data to be certain we hold and build our market share. However, through the fourth quarter and to-date in 2009, our brand have performed well. In the quarter, our branded retail sales were up 28.6%. For the year, branded retail sales increased 19.3%. Across all product categories, our branded products achieved solid growth, showing the strength of our brands in particular, Nature's Own and Whitewheat. Information from our sales market shows that our brands gained about 10th of a point in the fourth quarter. And for the full year, we gained about one share point. Our internal sales data shows our products and brands performed well in the fresh packaged bread category. As I mentioned, our brands delivered across all categories. Our branded white breads, led by Whitewheat and regional brands were up strong double digits well ahead of category. In the soft order category our Nature's Own brand again achieved strong growth for the quarter and for the full year. Nature's Own, all natural super premium bread delivered double-digit growth in the quarter and for the year. Our breakfast items new under Nature's Own experienced strong growth in the quarter and for the year. Our branded bun role and our snack cake brands also were up double-digits for the quarter and for the year. Sales of store brand, our private label bread, buns and rolls also were up for the quarter. Looking closer at private label, in the south market, according to IRI, private label units have about a 40% share, which is basically maintaining the level it had held for many years. The same holds true for private label dollar sales. For the quarter, private label had between 25% and 26% share. It's maintaining where it's been for quite some time. In the fourth quarter, our food service sales experienced good growth, driven primarily by increased sales to quick service, restaurants and our acquisitions. As expected, we lost unit volume in sales of snack cakes to contract production customers. You will remember that over several years we have been reducing our contract reduction business and in 2008 that continued. Our strategy has been to grow our branded snack cake business which has higher margins. Sales of our Mrs. Freshley snack cake grew 16% in the fourth quarter, which shows our strategies converted to branded sales is working. The fourth quarter was a busy one for us. Let's look at where we are with the integration of the wholesome and the ButterKrust acquisition. First, it is important to note that sales and earnings from these acquisitions are tracking better than are planned. We are already capturing synergies particularly at ButterKrust and in the State of Florida. We are bringing most companies into our information system. ButterKrust came in line with SAP in the fourth quarter, and Wholesome will be in line in the spring. Consumers in Arizona, the Las Vegas area, and parts of southern California can now find Nature's Own breads in their market. Wholesome distributors introduced the brand across their territories in November and December. We are pleased with the success Nature's Own is gaining in those markets. With the synergies already in place of ButterKrust and with the added sales of Nature's Own and Wholesome, the acquisitions performed well in the fourth quarter and as I said better than expected. You remember that we entered new markets in St. Louis and Wichita in the third quarter. We're pleased with our results to-date. Now we're focused on adding other customer counts to our footprint. Our market expansions overtime have contributed about 1% a year to our DSD sales. We continue to work to strengthen sales in the expansion markets we have entered over the last few years and we will continue to push our boundaries to reach new markets with Nature's Own and Whitewheat as well as other brands in the future. Our newest bakery in Bardstown, Kentucky will begin production on the bread line in the spring of 2009, relieving some production capacity in our northern most bakeries and serving the needs of some of our expansion markets. Our team remains focused on executing our strategies through all these opportunities. Now I'll ask Steve Kinsey to give you the more detailed report of the quarter and for the year. Steve?

Thank you, George. Thank you all for joining our call today. This morning I'll discuss our fourth quarter and full year 2008 financial performance and then I'll provide you some update on our fiscal 2009 guidance. So George has mentioned it, I just want to remind you that 2008 is a 53-week year, providing an extra week of sales and earnings. This is important to note as you look at our year-over-year comps and model 2009. As George said upfront, our fourth quarter and full year 2008 performance was strong. We are very pleased with where we ended the year. We had outstanding sales growth in our margins both in dollars and percent of sales compared well in the quarter and for the full year 2008. Net income for the quarter improved almost 50% quarter-over-quarter to $32 million. The operating margins or EBIT as a percent of sales improved 140 basis points for the quarter to 8% of sales compared to 6.6% last year. The full year EBIT margin as a percent of sales also improved likely to 7.6% compared to 7.1% over the same period last year. Excluding the effect of week 53, the acquisition, and the asset impairment, the EBIT margin was 9.1% of sales for the quarter. For the full year if you exclude these items as well as the gain on asset sales on the insurance proceed, the full year EBIT margin was 7.9% compared to 7.1%, again a non-improvement. This EBIT margin improvement is the result of our increased sales as George mentioned, our continued focus on operating efficiencies and a significant reduction in SG&A as a percent of sales. Diluted earnings per share for the quarter grew approximately 48% to $0.34 per share from $0.23 in the prior year. This is just above the guidance we provided. This upside was the result of the acquisitions performing better in the quarter than expected as well as our week 53 earnings (inaudible) stronger than better originally projected. The quarter was negatively impacted by the impairment charge on the closed facilities. Excluding these items for competitive purposes, EPS would have been $0.33 per share for the quarter, up almost 43.5%. Earnings per share for the year was up 25.5% over the prior year to $1.28 per share compared to $1.02. This also exceeded our full year guidance. Again, we are pleased with where the year ended. Sales were strong. We had efficiency gains. Selling, marketing and admin as a percent of sales decreased significantly and the acquisitions integration was better than anticipated. As you may recall, we had originally planned for the acquisitions to be diluted, but they ended the year slightly accretive to earnings. Our brands did performed well in the marketplace. Our consolidated sales growth for the quarter was 31.2% with price and mix contributing roughly 11.8% of the growth and volume representing about 19.4%. Looking at the volume growth, acquisitions provided 12.5% of the growth. Week 53 contributed 8.5% for the quarter and excluding the acquisitions in week 53, the volume did declined roughly 1.6%. As George mentioned, this was primarily the result of exiting contract production in the snack cake category. Taking a look at the segments briefly, both the direct store delivery group and the warehouse delivery group posted strong sales gains in the quarter. The DSD group sales were up 34.9% with price and mix contributing 9.9% of that segment's growth and DSD volume was up 25% on acquisition volume of 15.2%, again, week 53, additional 8.4%, with good volume growth in the core and expansion market of approximately 1.4%. Our warehouse delivery group sales were also up in the quarter, 14.6%, with price and mix contributing 12.2% and volume in the warehouse group was up 2.4%. Week 53 added about 9.3% of the volume. If you exclude the extra week, the warehouse delivery group sales volume was down roughly 6.9% again for the reasons we just discussed in our snack cake category. Full year 2008 sales were up 18.6% and in the year with sales of $2.415 billion over the same period in 2007. The year-to-date increase was achieved through favorable pricing and mix of 10.6% and volume increases of 8%. Looking at the volume growth, as we had planned, acquisitions accounted for 5% of the sales volume, week 53 was 2% of the volume, with remaining 1% of volume coming from existing and expansion markets. Again, both segments had strong year-over-year sales growth. Gross margin dollars in the quarter increased approximately 30%. The gross margin percentage however did decline 40 basis points to 48.3% compared to 48.7% in the fourth quarter last year. As has been true for the year, the primary driver of this decrease was an increase in ingredient cost quarter-over-quarter, primarily flower. The full year 2008 gross margin percentage was down 730 basis points at 47.7%. However, this was in line with our full year guidance of 47.5% to 48%. This has been compared to 49% margin for the same for 2007. The primary driver again of this decrease was higher ingredient costs year-over-year. Looking at cost to goods sold, the remaining components, all of these are relatively flat to down slightly as a percent of sales for the fourth quarter and the full year 2008. However, selling, marketing and admin expense as a percent of sales decreased to approximately 36.7% for the quarter and approximately 230 basis point improvement over the same year period, percentage of 39%. Again, this quarter-over-quarter improvement as a percent of sales was driven primarily by increased sales, continued benefits from our distribution rationalization and significant improvement in the selling and admin cost categories as a percent of sales as well. We also had lower stock based comp expense in the quarter as a result of the drop in our stock price. And we do still maintain one liability based award that moves with our stock price. For the full year 2008, selling, marketing and admin costs as a percent of sales were 37.1%, a 160 basis point improvement over 2007. We anticipate continuing to lever selling, marketing and admin expenses as a percent of sales in 2009 and look for another 50 basis point or so improvement as a percent of sales. The decrease in net interest income for the fourth quarter and full year 2008 is the result of the higher interest expense from the debt surface on the acquisition related loan and the outstanding balances on our revolver. The fourth quarter tax rate came in at 35.5%, and the full year rate was 35.6%, just slightly below our projected 36% rate due to some favorable discrete items in the quarter. Looking to 2009, we are projecting the rate to be in the 36% range, just slightly above where we finished the full year 2008. Moving to the balance sheet and liquidity, we are comfortable with our current leverage position to just about one-time trailing EBITDA 12-month trailing EBITDA and the ability to generate future cash flow. Cash provided for operations in the fourth quarter was $46 million and the full year cash from operations was $94.9 million. We ended the quarter and year with roughly $256 million in bank debt. $146 million of this debt is related to the term loan that we executed for the two acquisitions and the remaining $110 million is drawn on the revolver. We're excited that we're very pleased with our improvement and cash flows from operation in the fourth quarter over the third quarter. During the quarter, we get funded approximately 18 million in the capital expenditures and paid dividends of some $14 million. There were no share repurchases in the fourth quarter. For the full year we funded capital expenditures of 86.9 million, paid dividends of 53 million, and had share repurchases of $44 million or 1.7 million shares. This leaves about $9 million shares of the 30 million shares authorized that we repurchased under the current plan. Looking ahead, we are confident our operating cash flows will continue to be strong and will continue to be our primary source of cash flow. Now updating you on our 2009 guidance. We have updated our guidance based on our actual 2008 results. We're now projecting 2009 sales to increase by 12.6% to 14.5%. This equates to sales of roughly $2.72 billion or $2.765 billion. The two most recent acquisitions will add approximately 7 to 7% of this increase. Again, just a reminder, for time purposes, we'll be down one week in 2009 compared to 2008. Pricing and mix still expected to contribute 5, 6% of this growth, and volume, excluding the acquisitions will be 1% to 2%. This does reflect growth excluding acquisition of 6% to 7%, which is in line with our targeted long-term goals sustainable growth overtime. Based on these sales targets, net income for 2009 is now estimated to be $127.8 million to $138.3 million or 4.7% to 5% of sales. Using estimated average shares of roughly $93.3 million our earnings per share now is expected to be $1.37 to $1.48, an increase of 7% to 15.6% over 2008. This is up slightly from our preliminary guidance that we gave on the Q3 call. Our increased earning guidance takes into consideration several changes since our third quarter call. As you know since that call, energy costs have come down significantly, and as a result, our input costs for 2009 will be lower. The lower energy costs will equate to reduce resin costs and that means our packaging costs will be lower than we expected. We told you on the third quarter call that we expected about $75 million or so higher input costs for 2009. With the improvement I've mentioned we could have more than a $10 million improvement in input costs as coverage stands at this point from the preliminary guidance. If energy costs continue to be lower, we should also see an improvement in our distribution costs as well. There is also been a lot of focus on pension plans given the decline in equity markets. We were not immune. Looking at 2009, we expect pension and post retirement expense to be approximately $5 million. This is an $11 million movement from the $6 million or so of pension income recognized in 2008 and this is about a $7 million of movement from what we had in our preliminary guidance. We had originally estimated income of about $1.5 million and we would move to an extent, so $7 million change from our guidance in the third quarter. From a funding perspective, we do anticipate funding of $2 million to $3 million at this point. Capital spending is expected to be $75 million to $85 million for fiscal 2009 and we are scheduled to pay down $15 million on the term loan evenly over the calendar quarters. Any excess cash flow we anticipate will go to reduce the revolver and then as always in the past we'll opportunistically consider whether or not to make share repurchases. There is still a lot of volatility in the markets. But 2009 is likely to bring significant challenges. We believe we are well-positioned in the marketplace and we'll have earnings in a balance sheet that allows us to provide mid-growth, even in the down economic times. Thank you and now I'll turn it back to George.

Thanks, Steve. As you can see from our update guidance, we have confidence in our ability to deliver the plan for 2009. Our strategies are proven, our business model works and our team knows how to drive this business to achieve good results. As I said earlier, our plans for 2009 has been in place since October and our products and brands are performing well in the marketplace. I will say again that we are monitoring sales trends and if needed we will increase promotions and select markets to protect our market share and to continue growing our share. As Steve told you, our guidance takes into consideration the volatility of markets as well as some variables and other costs where we have benefits and the areas where have costs may be higher such as pensions. To help offset our costs, we continue to improve efficiencies and logistics and to reduce costs wherever possible. These efforts will continue. In our third quarter call, I said our costs would be the highest in the first quarter of 2009. That is still true, but we're making progress with our improvement and cost reduction efforts. A case in point is our 3% improvement in manufacturing efficiencies and our continued improvements in SG&A and the energy costs as Steve mentioned earlier. Our plan and our guidance for 2009 takes all that into consideration and we are confident in the ranges we have provided. As I have said before, we are fortunate to be in the food business and particularly in the baked food business. Sales of our branded products are solid and growing. Although there continues to be movement between channels, food service retail outlets and so forth. Our product line and our access to market makes us well positioned to address those changes. Looking ahead, we remain focused on delivering good results in 2009. We are managing costs out of the business through careful handling, analysis of our continuous profits improvement programs which is working very well for our company. We are tuned to customers and our consumer needs. We remain committed to investing in innovations to enhance our efficiencies, our products, our information and our team. As I mentioned, this year our newest bakery in Bardstown will come online. We continue our focus on integrating the Wholesome and on growing the Nature's Own brand in the Wholesome markets. We will continue to grow by building brand strength in our core markets and our expansion markets. As consolidation continues in the marketplace, we'll set a tune to potential acquisitions that fit strategically with Flowers Foods. Our strategies are sound. The flower's way works. Our team is focused on having the continuum in 2009 and beyond. Now, we will open the line for questions.

(Operator instructions). Our first question today comes from the line of Heather Jones with BB&T Capital Markets. Please proceed with your question. Brad – BB&T Capital Markets: Hi, guys, it's Brad [ph] speaking on behalf of Heather.

Hi Brad.

Hi, Brad.

Hi, Brad. Brad – BB&T Capital Markets: Hi, congratulations once again on a great job.

Thank you. Brad – BB&T Capital Markets: My first question just touching on what you were saying about your sales growth for fiscal year '09, removing acquisitions, and then taking out expected pricing, you're seeing flattish to up slightly or up volumes, and I'm just curious, so much being said about global slowdown, impacts on volume, if you would just walk us through your expectations, a large portion of your expected volumes depend on DSD expansions, depend on hanging in there existing markets, how should we think about your volume expectations?

Well, I think Steve reported 1% to 2% increase in volume projected for the year I believe is what we're looking at. We do know the marketplace has been affected by the economic slowdown, I don't think any of us know exactly where that is going. I think we – I've said many times, in good times the baking business is good and I'd say in bad times the baking business can be good. Because I think people do go back to the core of living, they go back to basics and certainly bread is a basic that has been around since creation. And even though you can see changes in shopping patterns, you can see changes from super premium to soft variety, you can see some change in some white bread to private label. Even though we have not seen huge changes in any of that at this point it can happen. But we remain confident that with our execution and plan that we have for the year, we continue to see our brands grow. We continue to execute well in the marketplace. And we still feel comfortable with that 1% to 2% increase. But also, looking back at overall thought pattern here. We said long-term we expect 5% to 8% growth on sales. And that's made up of price and mix, volume. So we really focus this year on that 5%, 8% plus acquisitions on top of that. And that's how we arrived at our guidance and we're very confident with the guidance at this point. Brad – BB&T Capital Markets: Okay. Thank you. And then we saw that one of your competitors is giving back some pricing it looks like. And I was just curious what you're seeing in regards to competitors and promotion and do you have an updated outlook on the pricing environment?

I have a policy really not talk about competition. That's an ongoing – competitions always been out there, they always been different philosophies, different companies. What I would say though that I think people do, depending on what their needs are, feature different levels and different activities, and different channels. That has been the history of this industry as long as I've been in it. And I don't see that changing. What I did say twice in my comments was that through our sales at warehouse, and hand held computer system, we see daily and weekly what's going on with our volumes and brands and we're committed to keeping, keeping our volume and keeping our brands growing, so we just have to make whatever adjustments we have to as we go down the route, but again, it's very competitive marketplace. Brad – BB&T Capital Markets: So you still feel very confident though in the pricing you have in place?

I'm comfortable with our pricing, but I did say that if we lose unexpected volumes, we would promote more with those particular products and brands that might have dropped off on market share. Brad – BB&T Capital Markets: Okay. Thank you. And then just one last question, looking at the sequential decline in food service sales, I guess we're now in February, and I was just wondering if you can speak to seeing any further deterioration in demand within food service.

Basically, what I've said all year is basically I think still true today. Casual dining seems to be the area that's been most affected. We have a good share of that market. That market seems to have traded down to fast food service and/or back to the retail marketplace. And we are well-positioned in both places as trade down to fast foods we have a great market penetration with the fast food arena and if I go to supermarket of course we're in all super markets throughout our geographic market. But definitely has been change and there could be further change if the environment gets tougher. We're in good shape in either position I feel. Brad – BB&T Capital Markets: Very well. Thanks, George.

Thank you.

Thank you ladies and gentlemen. Our next question comes from the line of Alton Stump of Longbow Research. Please proceed with your question. Alton Stump – Longbow Research: Good morning. Just had a quick question on IBC, looks like they might actually finally be pulling out chapter 11, and just want to get your take on if you think there'll be any impact good or bad?

The announcement did come out a thing day before yesterday, they were coming out of bankruptcy. Interstate has been a major competitor for us I guess since we've been in business. I can't, I don't, I don't have a clue to what their game plan is going forward. We'll work to stay focused on our business and hovel our business. I'm sure they're going to be working hard to keep their business and gain market share, but we're attuned to that. And we just have to stay tuned to what rolls out through the year and the years that follow. But we've always had strong competitors. Alton Stump – Longbow Research: Okay, that's helpful. And then one quick follow-up, obviously there's a lot of talk about private label and if there is any trade down, looks like you guys continue to see extremely strong demand for some other higher margin lines like Nature's Own or Cobblestone Mills. Just want to get an idea what is it that driving that success? Is it good promotions? Is it good customer relationships? Can you just give us a color on that?

All the above, but let me – all of our customers important. And that's how we have success is working with our customers. On the consumer – I've said many times, having been in business 44 years, I'd say I guess for the last 30 that private label has been a major factor in this industry unlike some other categories in the retail market. For as long as I could remember, private label has held roughly a 40% unit share of the bread market and roughly 25% share from a $1 perspective. That can change maybe a percent or two depending on times and toughness and not so tough, but we don't see huge leans in this business, the maturity of the private label market. I think the retailer and is focused more on trying to get other categories after the 25% level and not particularly on bread, even though they have a great share of the units, as I say some 40%. I think the consumers who have needed private label as their source of bread have made that choice and it's up to makers like Flowers to keep giving a reason for consumers with own brand keep buying that through promotion, through enhancements and quality and through better (inaudible) type products. And that's exactly what Flowers strategy has been to continue to be innovative and enhance our product quality and give you type products such as Nature's Own, such as Whitewheat, such as whole grains. 100% our Whitewheat has been with us since the late 70s, so we've been focused there and we continue to put that out to the consumer. Alton Stump – Longbow Research: Okay. Great. Thank you.

Thank you, Alton.

Thank you, Ladies and gentlemen. Our next question comes from the line of Farha Aslam of Stevens Inc. Please proceed with your question. Farha Aslam – Stevens Inc.: Good morning.

Good morning.

Hi. Farha Aslam – Stevens Inc.: Could you share with us some more detail about the 3% improvement that you found in production, how do you measure it? And what are the sources of that improvement?

Well, we do have measurements; I won't go into the detail of that specifically. But we know what. Based on the type of equipment you have in the bakery, what it's capable of running per hour so many units per minute per hour. And that's the basis of the foundation. And then we – I say we measure that day-to-day, week-to-week, period-to-period, quarter-to-quarter, year-to-year. So we got those measurements in place. And our capital investment program of the past two years that really has helped drive that. And I point to two areas, specifically, as we build new and larger more automated plants that always enhances our ability to increase efficiency. Second thing I would point to and using this prime example of that Denton has really helped. (inaudible) has helped that process. And Bardstown will help our overall efficiencies as we go down the road. But it's all newer, it's better and it's more efficient. The other thing I would point to on our capital investment program, maybe we let our rep in room get a little outdated. We – about 18 months ago, decided really update most of our packaging areas. Even though you have a wonderful product when it goes into the oven and route, sometimes rest of the route rooms, sometimes that can be the bar goal that the area that can really create inefficiencies and cripples in waste. We put a lot of focus there and have performed to those capital investments that we believe in, that has helped drive those efficiencies and we still like a few more of those but that has given the efficiency gains and reduced waste in the mine. Farha Aslam – Stevens Inc.: So those are sustainable?

Yes. Farha Aslam – Stevens Inc.: Okay.

Those are sustainable. Absolutely. Well, I say absolutely. Once you get to a certain level we'll sustain that increase but when you get to the point of – I guess we might be happy if we get to 98%, but we're not there yet. It’s try up the perfection, it's try up 100% that impossible. So we work in between that 90% and 100%, how can you get much better. And you focus lot on the plants who are not at the company average and what's causing them not to be there. And you work on those to correct that. As I correct that our averages keeps going on up. Farha Aslam – Stevens Inc.: And where would you think compared to that 98 you are right now? Are you maybe at 96? Or is there about 2% more improvement opportunity?

No, we are in the low 90s. Farha Aslam – Stevens Inc.: Low 90.

Low 90s. Farha Aslam – Stevens Inc.: And then when you look at that 40% that's private label, how much would you say is captive bakeries and how much is produced by outside bakeries?

I'd say majority of it would be, bakers baking for their customers. Farha Aslam – Stevens Inc.: So would you say about 80% is now baked at outside bakeries?

That would be an educated guess. I'd say 75% anyway. That is a guess. I'll check that out and give you the numbers. Farha Aslam – Stevens Inc.: Okay. Are you thinking that the 25% that are captive are going to try and win market share in this down market by really promoting private label heavily or do you think that they're going to have higher costs because their baking, bakeries might not be as efficient because overtime they haven't invested the CapEx?

I'm going to be careful because so there are customers well as competitor on the private label side. So they are indeed special customers even though they have their own captive bakery. One thing I will probably point toward I don't remember – long been since a brand new bakery has been built by someone in the super market industry. So that means possibly that even though I'm sure they operate well with the equipment and the bakeries they have, I'd have to say that overtime, equipment wears out, bakeries do wear out overtime, so either they will need to invest more to get up to standard or they may choose, and some other bakeries to produce product for them. I think they have the same issues we have, though. They have the same type cost structure, commodities and labor and everything that goes with cost. And I'd say they're in the same boat that the bakeries in, but they could always choose to let it be a leading loss leader, so to speak. I guess historical levels, it's not that often that you see that. This could be a different year. I hope not, but it could. Most of the time they're going to do what they need to do to protect their sales and margins. Farha Aslam – Stevens Inc.: And George, you already compete in the toughest kind of bread market in the U.S., because very few are, bread prices are lower than average in the rest of the U.S., right?

That is true. Farha Aslam – Stevens Inc.: Okay. So as you expand into newer markets, the pricing situation in newer markets could be easier than they are in some of your core markets. Could you say that?

I'd say that certainly, California and Arizona has higher prices in southeast. I wouldn't say it makes it any easier though, because lot of times you have higher cost in those markets. Farha Aslam – Stevens Inc.: Thank you very much.

Thank you.

Thank you. Our next question comes from the line of Mitchell Pinheiro with Janney Montgomery Scott. Please proceed with your question. Mitchell Pinheiro – Janney Montgomery Scott: Hello, good morning

Hello Mitch. Mitchell Pinheiro – Janney Montgomery Scott: So let's see, George, how has your private label business performed, in line with the category, better than the category.

I'd say it's in line with the category. Mitchell Pinheiro – Janney Montgomery Scott: When we look at pricing in mix you had a gain projected in your guidance of 5% to 6% is that weighted towards the first half? How should we think about that on a quarterly basis?

I think what we repeated – and let me repeat. Because we knew we had cost coming in toward the last of the fourth quarter, we knew we had costs coming in first quarter. We did take that price increase a little earlier than normal because we needed, felt like we needed it. The new costs coming. In our plan though, and that was October, so we did not anticipate at this moment, unless something really goes haywire, more price increases this year. That's not a promise to our customers because we don't know about that final quarter to bring as far as commodities or energy or other costs. But we feel like our plan, pricing is pretty well in place for the year. Mitchell Pinheiro – Janney Montgomery Scott: Okay. So the volume assumption in the sales guidance of 1 to 2%. Is the extra week this year kind of pushing that number down? In other words, is it really a 0.5 higher? And it’s adjusted or how do we think about that aspect of the guidance?

I think if you look at the volume for the week 53 of about 2%, I mean, if you take them our guidance taken into consideration that we're building off a stronger year, so. Mitchell Pinheiro – Janney Montgomery Scott: So that volume assumption of 1 to 2 might really be closer to 3, but adjusted downward for the comparison?

I think 3 would be extremely good volume growth. I think we'd be better to average that in 1.5 to 2. Mitchell Pinheiro – Janney Montgomery Scott: Okay. And I will ask you so but I mean implied in the 1 to 2 would be you've already accounted for that extra week

Correct. Mitchell Pinheiro – Janney Montgomery Scott: One of the brands you don't talk much about anymore is Cobblestone Mill. And I'm just curious the status of line, how was that fairing? These premium breads or super premiums in the market. Is there distribution gains or losses and how that's being handled out on the West Coast?

What I would say that Cobblestone, the brand was hurt somewhat because we took our full oval product, super premium of the Cobblestone, because we felt like it would have a better opportunity to compete under the Nature's Own brand. So Cobblestone is still very important to the company. If our brand managers listened on underlying that, it's really important to the company. And we still feel like even with all those moving out, this can be a $100 million brand of retail. $100 million always important. We are focused more on special occasion breads and rolls under the Cobblestone brand. Special occasion. For instance, in the south, people don't eat rye bread every day, it's more of a special occasion. Some particular buns are high end, higher priced, higher quality and more of special occasion, but it's still really important to the company. Mitchell Pinheiro – Janney Montgomery Scott: So when you look, what kind of mix shift do you think you had by shifting out of the ovals into Nature's Own?

We had a great pick-up. Mitchell Pinheiro – Janney Montgomery Scott: I'm sorry?

We had a very good pick-up in sales. Mitchell Pinheiro – Janney Montgomery Scott: So in other words, what you lost in units, in one end you actually picked up and then some on the Nature's Own side?

And then some, yes. Mitchell Pinheiro – Janney Montgomery Scott: And in terms of – just curious, does Cobblestone have higher rates than your typical line because of the maybe less frequent purchase of rye bread and Pumpernickel, et cetera?

Mitch, we don't give that out specifically. Mitchell Pinheiro – Janney Montgomery Scott: Okay. Alright. Breakfast breads, you said, obviously doing very well, are they – all your major accounts?

I'd say yes, but we still would not have the space in all the market that we'd like to have that is. In today's world especially with category management and the way the retailer, along with the baker, we feel like overtime we got to gain more space, we are in, to my knowledge, every major account though we do not have the space yet. So we got to promote, special displays that creates volume and sooner or later you are going to get more space on that field. Mitchell Pinheiro – Janney Montgomery Scott: So, but the breakfast breads, I don't know if you do the study, but the breakfast breads appear to be an incremental purchase for the Nature's Own buyer, being that you never had really breakfast, buying loaves of bread are different than buying English muffins and/or cinnamon raisin type of breads. Are you finding that? Is it an incremental buy?

I think it is an incremental buy. I agree with that. I think it can grow. Mitchell Pinheiro – Janney Montgomery Scott: On a price per pound basis breakfast breads above the average or below average or at average?

Above average. Mitchell Pinheiro – Janney Montgomery Scott: Okay. And last question is on your wheat coverage, can you – is there anything you can talk to us about in terms of are you covered for '09? How far out are you covered? Or what can you say about that? That you feel comfortable sharing with us?

I'd say that we're covered for most of the year. We're not covered for all the year. We still think there's some downside opportunity on the back end for our lower pricing and we have saved some of that for that reason. Mitchell Pinheiro – Janney Montgomery Scott: Okay. Alright. Thank you very much.

Thank you, Mitch.

Thank you. Our next question comes from the line of Eric Katzman with Deutsche Bank. Please proceed with your question. Eric Katzman – Deutsche Bank: Thanks, good morning, everybody.

Good morning. Eric Katzman – Deutsche Bank: A few questions. Could you just talk about, I guess probably in your core southeast market is best, what kind of like the average price point is for let's say private label versus your regional brand, versus Nature's Own, let's say versus Cobblestone?

Mitch, If I do it this way, it might be the easiest. Eric Katzman – Deutsche Bank: It's Eric.

Eric, I'm sorry. Eric Katzman – Deutsche Bank: Okay, I like Mitch.

I knew you're. In most cases, historically, especially for the past 20 years, you could roughly by two loaves of private label or one great branded quality product. That has not been true on the soft variety category. There has been a, the gap hasn't been nearly as wide on soft variety. On buns, I basically say the same has been true in the main on private label buns, you could almost buy two or one brand even though the brand might be a larger type bun, heavier weight, et cetera. If you look at eight buns versus eight buns, pretty well been true that you could get two for almost the price of one. Eric Katzman – Deutsche Bank: Okay. Maybe it's easier to do it on an index basis. Let's say Nature's Own is like 100. Private label you're saying would be about 50, maybe your regional would be 70 and Cobblestone Mills would be like 120? Something like that? Is that, is it possible to look at that? Maybe Marta call me back.

I think it will be best to –

Let's work on that I can – we can get back to you, Eric. Eric Katzman – Deutsche Bank: Okay. Next question. I don't know if, Steve, if you gave a total amount that you expected inflation for '09 built in. Was the 70 something million that you talked about, was that a total amount or was that just energy?

That was the input costs guidance we gave in Q3, but we –

The increasing.

That was the increase. But we are getting that we understood that we do expect that to drop and so – at least $10 million. Eric Katzman – Deutsche Bank: Okay, some of the things that some of the other food companies have talked about, so for example, General Mills gave a four year CAGR where they said for example, their cost inflation over the last four years was up about 25% but their pricing has only been up eight. And obviously, productivity has been the offset. Is there a way for you to kind of share with us, what that similar dynamic would be for you over the last couple years?

I'd say one thing and Steve can follow-up. What I've looked at over the last two years repeatedly, gross margin as Steve reported has been down last year and year prior. And we do have it on a slide and we probably presented it at some of the, at CAGNY and so forth, which shows historically we were at 49% to 50% gross margin, I think Steve reported this year, Steve we were 47.5. You can see that we have not kept up, price has not kept up with cost. On the other hand, because of the wonderful job that's been done in the marketplace on cost and selling, delivery, administrative type expense, in efficiency gains, we've been able to improve our margins piece of that and not miss getting all the price in that we needed to keep up. Steve, are you going to follow-up?

I agree with George, our gross margin has suffered because of the relative pricing didn't cover the cost from a relative basis. You're basically just covering your cost increases. So you have to work really hard on efficiency gains as well. But if you look at our EBIT margins, you'll notice they've been increasing quite nicely over the last four years or five years. But what I can do, I can pull that together for you as a compound annual growth. I can do that offline for you. Eric Katzman – Deutsche Bank: Okay, I think that would be helpful. And then maybe you could, I ask about this a lot, but I think at such a competitive advantage for you. I guess I just like hearing it, but the scan-based trading, how's that performing in the market and can you talk a little bit about that, George, vis-a-vis, the pricing that you put through and therefore, how effective it is.

Well, we still have to go to our customers to get through the pricing issue and to get price increases. But from an overall scan base trade I would say we're still very happy with it. We continue to expand it. We take on at least one or two big new customers each year. Steve, I think the number's probably up between $600 million and $700 million of DSD sales now or in scan-based trading. There will also be one big advantage for Flowers and Wholesome at in Arizona as well as our customer as well as our distributors as we put in SAP that's the big enhancement for that new market as well. So we really excited about that. But it's wonderful for our customers, I feel like they don't have to have extra labor to check in our distributors and spend a lot of time with that. They don't to have paper office staff to have to keep up with it. The advantage, of course that also is true for Flowers. We say through that same mechanism, our shared service, but we're efficient there by not having to go through every ticket that we did at once, years ago. I think the big win of course is for our distributor. A came up on a route, and it's really easy to standby on the supermarket, 30 minutes or an hour waiting, for someone to check in because all vendors are there early in the morning. That's what the X used to be there at X time, there's always a game of people waiting to get checked in. And our distributor can walk right by, due to scan based trading, and get on in the store, and build great displays, do a great job with customer relations, asking for more things. And it's a great help for our distributor. Eric Katzman – Deutsche Bank: Okay, thank you for that. Last question, passed on to Steve, did you talk about share repurchase? I know you said you didn't do anything in the fourth quarter. You got like 9 million shares left. Any sense as to how you're thinking about that in terms of timing in '09? Do you expect to do share repo or is it more of a debt pay down M&A opportunistic year?

What I did say was – as we look at our cash allocations, I think you will see us focused on the debt repayment as a priority. In the share repurchase, again, it'll be a more of an opportunistic type activity for us. Depending on how the cash flows are for on any given quarter. Eric Katzman – Deutsche Bank: Okay, thank you, pass it on.

Thanks, Eric.

Thanks, Eric.

Our next question comes from the line of Bill Chappell with SunTrust. Please proceed with your question. Bill Chappell – SunTrust: Good morning. Thank you.

Hey Bill. Bill Chappell – SunTrust: On the marketing stand, sounds like rates attract TV, radio all gone down year-over-year, how should we look at that in terms of the expansion of Nature's Own brand in west Arizona and southern California? Does that lessen the cost of extending the brand and maybe make the deal a little bit more accretive or do you use that lower cost to step up and accelerate the timing to integrate those businesses?

We try to use good judgment, in our mature market where Nature's Own is best known. When we feel like we need to advertise we do. And as you may know, we do a lot of cable, national cable, when we do, do and it goes throughout the marketplace on a national basis, but California, by the way or Arizona, we did advertise in the last quarter, we had a six-week, eight weeks flat advertisement of the Nature's Own brand in the market. I think have the brand and get in the marketplace and we'll monitor that as we go and advertise. We feel like it's needed to get that brand awareness to the consumer. And that will also be true, of course, throughout our market. Nature's Own is very important to us. And some years it's depending on a lot of times what the retailer sees as the best advantage and we work in conjunction whether it's a good time to advertise a lot or it's a good time promote a lot based on the consumers. Bill Chappell – SunTrust: Got it. Would you expect your, your dollar spend for advertising to remain flat from what you originally expected or should it come down with overall pricing?

We look at it as not advertised as one. We look at it as a whole. We've always invested 5% to 8% per year as a combination of media, newspaper, magazines, promotions, features. It's all includes into that one number. And we manage that based on what we feel is best for the brand and working with our retailers on promotions. Bill Chappell – SunTrust: Okay. Just a follow-up. Your comment on watching closely on the competitive market share, have you seen, since the Analyst Day in December, more price promotion from your competitors or has it been pretty stable?

I would say the fourth quarter was very similar to what it had been most of the year. Bill Chappell – SunTrust: Great. Thanks so much.

(Operator instructions). Our next question comes from the line of David Vidor [ph] with Farasid Assets [ph]. Please proceed with your question. David Vidor – Farasid Assets: Good morning.

Good morning, David. David Vidor – Farasid Assets: A few things, totally unrelated. One, the two acquisitions that are working so smoothly, is there an incremental earnings gain because of that to this year?

If you look at 2008, we had originally projected that would probably be dilutive. It actually came in slightly accretive. It wasn't anything significant, but it was, it was better than we had planned. David Vidor – Farasid Assets: Also, how many sales routes do you have with those two transactions and how many of them have you now put out there to the route salesmen to buy from you?

They were already in, in the Phoenix, Arizona plant. Our merger that we had with them, they were already distributors. David Vidor – Farasid Assets: Right.

And then Florida, I think they were some 60 to 70, 75 route, routes involved, territories. And since the acquisition, we have got the synergies and merged them in with other routes that were already in the marketplace. I think we probably gained an additional 30, 40 routes out of it. Great synergies for Florida and we're very excited also about what's going on in Arizona, Las Vegas and southern California. David Vidor – Farasid Assets: For calendar '09 then, are you going to have fewer routes you expect to sell than we did in '08?

You have your normal type turnover and we will have some routes. As we go into new markets, example, St. Louis and Wichita, we talk about today. Normally for the first year, we let the people know upfront when they come on and start serving the marketplace that they are prospective distributors, and most of the time within a year to 18 months, we'll sell them the rights to distribute our brands in those markets. So those are the type sales we'll have going forward is new markets because the rest of the company is already distributors. Outside of normal turnover – we do add, we do work with distributors now what we call route splits and we might have three routes, we try to create four, and you go through that process real often, trying to make sure distributors have plenty of time to enhance their market share and if it’s too loaded sometimes hard to gain market share we can do so we're vigilant in that all the times in that market. So that’s also an ongoing process. David Vidor – Farasid Assets: Also, this year versus last year, new product introductions do you think the number of new product introductions will be greater or less than last year?

We always have a pipeline and I would say we'll be equal to last year. David Vidor – Farasid Assets: Okay and will those products be primarily to the retail sector or the on-demand to your commercial accounts?

I would say the majority will be on the retail side even though we all, we have ongoing dialog with major food service customers at all times as they need new products, enhance their menus, it's an ongoing project. And that's why we were happy to invest in an R&D center here that really helps us along the customer build the new product they want for the menus. David Vidor – Farasid Assets: And the last question, if I may, the change in administration in Washington, is, that as you perceive it, going to have any impact one way or another on Flowers?

I just wish the new administration well. David Vidor – Farasid Assets: We all.

America needs help. And we're all Americans and I'm pulling for them. I just hope that we can find ways to straighten out our financial, financial mess we're in and come out of it. And depending on what economist you talk to, you hear different things, but the consequences to us will be, or do we get in a recession or depression I haven't say. But I'm an optimist. I've always been an optimist. And this too shall pass. The great American system will work if we let it work. And I believe it will. Therefore we feel optimistic about the future. David Vidor – Farasid Assets: Thank you very much.

Thank you, David.

Thank you. Our next question comes from Lars Munson [ph] with Pico Capital [ph]. Please proceed with your question. Lars Munson – Pico Capital: Hey, George, I know you don't talk about specific competitors, but can you say something about what you're seeing with industry-wide plant capacity for last year and then looking forward into this year and what if any implication that has for Flowers? Thanks.

I've not heard of, in no way I find that I would have to manage through people who supply us with equipment, occasionally, we hear of a new line or something that's going up. But in my recent memory, my memory gets short sometimes, but I don't recall any new bakery, except Flowers going up in the past quite some time. That's not to say somebody didn't put a new line in an ongoing bakery, but I think, I think everybody has been vigilant, especially thinking about the – because the industry has been in tough shape. We mentioned earlier about IBC, conditions there. As I've said often on these calls, the industry needs to do better to be able to be on new plants, we do have to have margins so that we can have a return to our owners. I do recall one of those things, we do have a new bakery by going up not too far from (inaudible) new bakery in Valdosta, Georgia. That's known by family up in Pennsylvania, on the – they specialize in the specialty potato top product, potato buns and rolls. But it’s far and few between that are putting up new bakeries today are new capacity. Lars Munson – Pico Capital: Okay. Do you have a sense for where industry wide capacity utilization is? And what is your capacity utilization?

Lars, I don't know industry wide, I can tell you though the Flowers continues – I will break it out by bread and bun. And we've been saying this for quite some time. We're between 100% and 110% capacity to us. 100% capacity to us is 40 hour shifts or 120 hours per week. It would be 100% capacity and we run basically 100% to 110% depending on the season. Same way with buns. We've added capacity, but our volume has continued to pick up over the past several years and it would be our new plants enabled over time to add volume to build it up. Lars Munson – Pico Capital: Thanks.

Thank you, Lars.

Thank you, ladies and gentlemen. We have no further questions at this time. I'd like to turn the floor back to Mr. George Deese for closing comments.

Thank you, Everett and thank you for all of you joined in our call today. I do want to thank Flowers team for delivering the wonderful results for quarter end and for the year. Your efforts to improve our efficiencies and reduce costs helped us to deliver these great results. Again, thank you all for joining our call today and your interest in Flowers Foods. Our strategies are all working. We've been innovative with our products and brands. And our team is experienced in-depth determined to win every day in the marketplace. Thanks for the confidence that you have in our team. Thank you.

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.