Charles Pizzi - President & Chief Executive Officer Paul Ridder - Senior Vice President & Chief Financial Officer Autumn Bayles - Senior Vice President, Strategic Operations Chad Ramsey - Vice President, Financial Planning & Investor Relations

Mitchell Pinheiro - Janney Montgomery Scott Tom Graves - Standard & Poor’s

Good morning and welcome to the Tasty Baking Company’s second quarter 2009 conference call. Today’s conference is being recorded. To listen to a replay of this conference, please dial 888-203-1112 or 719-457-0820, and enter the pass code 3660944. You are currently in a listen only mode, and there will be a question-and-answer session following the introductory comments by Tasty Baking’s management. At this time, I would like to introduce your host for today’s conference, Mr. Chad Ramsey, Vice President of Financial Planning and Investor Relations at Tasty Baking Company. Please go ahead sir.

Good morning everyone. Thank you for joining us for Tasty Baking Company’s conference call to discuss second quarter 2009 results. You should have received a copy of this morning’s release; however, if for some reason you have not received a copy, please call 215-221-8538 and request a copy, which will be faxed to you immediately. Today’s call is also being broadcasted over the internet at www.tastykake.com in the investor section under the webcast and presentations subheading. This conference call may contain statements that are forward-looking, within the meaning of the applicable federal securities laws, and are based on Tasty Baking Company’s current expectations and assumptions, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Factors that could cause actual results to differ from those anticipated are detailed in the company’s press release, annual report to shareholders, and Securities and Exchange Commission filings. The company assumes no obligation to publicly update or revise any forward-looking statements. This discussion also includes certain non-GAAP measures as defined by SEC rules. We have provided a reconciliation of those measures to the most directly comparable measures. This is available in our press release which is on our website as well. With us today from Tasty Baking Company, are Charles Pizzi, President and Chief Executive Officer; Paul Ridder, Senior Vice President and Chief Financial Officer; and Autumn Bayles, Senior Vice President, Strategic Operations. Following the introductory comments from the management, we will open the call for your questions. Go ahead Mr. Pizzi.

Good morning. In the second quarter of ‘09 the company reported that gross sales increased 8.8% to $78.5 million, a volume increase of 3%. In terms of net sales, the company reported growth of 5.3% in the second quarter of ‘09, compared to the prior year period, which is the fifth consecutive quarter of net sales growth. The top-line performance in the second quarter of ‘09 was fueled by solid growth in both route and non-route markets. Within our route markets, net sales grew 5.4% versus the prior year period, driven by increased sales volumes particularly, from the family pack products, and higher selling prices. Within these markets, we also continue to increase market share for 13 weeks ended June 27th, the category grew by 1.6% and 2% year-over-year in terms of sales dollars and units respectively. Tasty outpaced the category on both measures. While continuing to increase market share it is an important objective, however, our goal is to do so profitably, as we did this past quarter. In our non-route markets, net sales were increased 4.9% compared to the prior year. This growth was driven by volume increases to direct retailers as well as the impact of higher selling prices. Operationally, we are pleased with our performance this quarter. We generated volume and net sales growth in both route and non-route markets, and we are able to translate this top-line group into meaningful expansion of gross margin and gross profit. Also helping us improve gross margin, were lower prices for key ingredients and packaging when compared to the same period a year ago. With the second quarter of ‘09, Tasty Baking generated $2.3 million in net income or $0.27 in earnings for fully diluted share compared to the net income of approximately a $100,000 or $0.01 in earnings per fully diluted share in the second quarter of ‘08. The results of the second quarter of ‘09 included approximately $2.1 million in after tax benefit or $0.24 per fully diluted share, resulting from the termination of the company’s post-retirement life insurance plan. In addition, we continue to record accelerated depreciation resulting from the change in useful lines of assets that will not be relocated to the new manufacturing and distribution facility at the Philadelphia Navy Yard. For the second quarter of both ‘09 and ‘08, this accelerated depreciation totaled $1.3 million or $800,000 on a net after tax basis. With regard to the new bakery and distribution center, I am pleased to report that the progress is well, and is progressing along a time schedule that is within our budget and a bit ahead of schedule. At the present time, we are installing equipment, making utility connections both of which are progressing well. Power has been connected to the site and all production ovens have been received and are installed in the facility. We are now focusing on installing product handling and packaging equipment, and we are preparing to enter an extensive equipment testing phase. During the commissioning and transition process, the company may experience an increase in operating cost above our normal run rate. These expenses may include higher production scrap during the start up, increased transportation cost as we balance production from two Philadelphia facilities. A temporary increase in employee cost, particularly as it relates to training, commissioning and startup. The impact of these costs on 2009 earnings will be heavily dependent on the timing of commissioning and transition process, which has the possibility of being accelerated from our original expectations. As such, at this time we do not believe it’s appropriate to arrive an estimate of the impact on our 2009 earnings. Now Paul will comment on some specifics regarding the second quarter financial results.

Thank you, Charlie. As Charlie detailed, we have strong sales performance this quarter, with gross and net sales increasing 8.8% and 5.3% respectively versus the second quarter of ‘08. Even as Easter sale on the second quarter of ‘09 compared to the first quarter of ‘08. This shift resulted in one last selling day in the second quarter of ‘09. This marks the third consecutive quarter the company has generated net sales and volume growth. The changes we made in our route market promotional programs towards the end of ‘08 created more balance between the depth and frequency of promotions, and it helps spur this growth. In addition, we generated a 4.9% increase in net sales in our non-route markets for the second quarter of ‘09, compared to the prior year, driven by incremental volume with direct retail customers, as well as the impact of higher selling prices. Some of this benefit however, was partially offset by cost associated with the transition to introduce third party distributors. For the overall business, we were pleased with the healthy balance between total volume growth and pricing benefit in this quarter versus last year. In addition to growing the top line, we were able to increase gross profit and expand gross margin measurably, when compared to the prior year period. Gross profit grew $3.9 million or 31.2% in the second quarter of ‘09 versus the same period a year ago, and gross margin expanded 6.8% points over the same period to 34.5% of net sales. A driver of the improvement in gross profit and margins was the benefit associated with the termination of the company’s post retirement life insurance plan. The termination of this plan resulted in $3.7 million in total benefit during the quarter, $2.2 million of which was recorded as an offset to cost of sales, with the reminder recorded as an offset to selling, general and administrative expenses. The $2.2 million in benefit recorded in cost of sales in the second quarter of ‘09, equates to approximately 4.7% points of margin expansion. The improvement in gross profit was also driven by higher volumes an increased selling process, which yielded approximately $1.7 million as compared to the prior year. In addition, the company had approximately $800,000 in lower cost for key ingredients and packaging when compared to the prior year period. While commodity costs still remain at relatively high levels, we were pleased to see some year-over-year benefit in the second quarter from lower input cost. Partially offsetting these benefits were higher depreciation expense and employee related cost when compared to the prior year period. SG&A expenses increased approximately $400 in the second quarter of ‘09 as compared to the prior year period. This increase was mainly attributable to $1 million and higher employee related costs resulting from increases in accrued incentive compensation, equity based compensation and pension related expenses. Other drivers of the increase were $300, 000 in non cash rental expense associated with the company’s new corporate office base at the Navy Yard Corporate Center. Despite the fact that there are no rental payments for the first six months of this lease which began in April of ‘09. The company is required to report a lease expense equally over the entire term of the lease. Also contributing to the increase in SG&A cost was, $300,000 in the incremental bad debt expense as compared to prior year. These higher costs were partially offset by $1.5 million in benefit associated with the termination of the company’s post retirement life insurance plan in the second quarter of ‘09. When measured as a percentage of sales, total SG&A cost dropped to 26.4% of net sales in the second quarter of ‘09, from 26.9% of the net sales in the second quarter of ‘08. In the second quarter of ‘09, the company favorably settled a state tax matter that resulted in a discreet tax benefit of approximately $450,000, which served to reduce the company’s effective tax rate for the period. Total capital expenditures for the second quarter of ‘09 were approximately $14.2 million, including $13.1 million of payments for equipment related to the new manufacturing and distribution facility. With respect to the financial benefits of the new bakery, we continue to project that it will have a significant impact to our operations, and result in $13 million to $15 million annually of incremental pretax cash savings, after taking into account the facility lease, but before any impact of debt service. Having said that, I would like to expand on Charlie’s comments regarding the financial impact of the new bakery. In the short-term there maybe incremental scrap, transportation, training and labor expense during the commissioning and transition period. Another important aspect of this project relates to the lease for the new bakery. While the lease term which is expected to begin in October of ‘09 provides for no rental payments in the first year of the lease, it is likely that there will be non-cash expenses similar to the corporate office lease, which would be reported during that period. These non-cash expenses would also negatively impact fiscal ‘09 earnings. That ends my financial discussion and I will now pass it back to Charlie.

Thanks Paul. As we draw closer to the beginning of our transition into the new manufacturing facility at the Navy Yard, we remain acutely focused on ensuring we have a smooth and successful start to this process. At the same time, it has been our practice to identify ways to grow our business profitably through a combination of top line performance, renewed brand support and improved operating efficiency. Our goal is and always has been improving long-term shareholder value, and we believe the plans we have in place and actions we are taking today, will ultimately do that. Now we will open up the call to your questions.

(Operator Instructions) Your first question comes from Mitchell Pinheiro - Janney Montgomery Scott. Mitchell Pinheiro – Janney Montgomery Scott: So, I am not sure you are allowed to do this, but if I take $0.27 reported, and I back out some of the one time the post retirement benefit there and backing out of the accelerated depreciation along with the tax benefits, is it roughly $0.03 per share or $0.13 per share? Am I missing anything?

: Mitchell Pinheiro – Janney Montgomery Scott: :

I think when you are thinking in terms of EBITDA, the only item that you talk about that would impact EBITDA would be the retire and life insurance impact, the depreciation and the taxes would already out of that calculation. Mitchell Pinheiro – Janney Montgomery Scott: So, EBITDA in the quarter was up slightly, is that correct or was it flat?

As we presented, the EBITDA includes the FAS 106 termination and is up to $7.2 million from $3.5 million. If you wanted to pull those items out, we can’t comment on that Mitch. Mitchell Pinheiro – Janney Montgomery Scott: You guys, not allowed to do the math for us anymore.

I’m terrible at that. Mitchell Pinheiro – Janney Montgomery Scott: So now, looking at the top line, real strong performance in your route sale, both businesses, but route seems encouraging along with your market share gains. You have pointed to the fact that family pack was the source of your volume improvement. Was the single serve weak or flat or if you could comment on that side of your business, I’d appreciate it.

: Mitchell Pinheiro – Janney Montgomery Scott: So single serve was up a little bit.

Yes. Mitchell Pinheiro – Janney Montgomery Scott: And driving family pack were what factors?

I just think overall, it was our promotional strategy together with real good execution in our core market areas, as well as we’ve had sustainable marketing support this year, over and above what we’ve seen in prior years and we think that marketing support has been gaining traction. Mitchell Pinheiro – Janney Montgomery Scott: I know you don’t have forward looking sort of guidance, but discounts and allowances as a percentage of gross sales has been pretty tight in this first half, around the 40% mark. From an expectation of point of view, why you can’t comment necessarily; are there any significant changes to your promotional strategy for the remaining quarters? What do you think it’s going to be? Without giving guidances, anything significant that would change the current kind of outlook?

Mitch, obviously you hit the nail right in the head that we can’t get forward looking guidance, and I think we’ve said that we’ve generated now five consecutive quarters of net sales growth and since change in our promotional strategy that we are operating under now, three consecutive quarters of volume and net sales growth. So we are particularly pleased with the changes that we have made. Mitchell Pinheiro – Janney Montgomery Scott: In terms of gross margin, you talked about having improving ingredient cost, and higher pricing. So you should get that lift, is there anything else in gross margin other than pricing and volume related efficiencies, is there any other factors driving the improvement?

Mitch, in addition to those, the plants continue to run well this year so far on a year-to-date basis. They are run well, we are pleased with that, and that has favorably impacted our gross margin. Mitchell Pinheiro – Janney Montgomery Scott: Talking about your new bakery, when you say it’s a bit ahead of schedule, what does that mean? Are you able to sort of take the proverbial keys earlier than expected or what does that do for you being ahead of schedule?

Mitch, it’s Autumn, what that essentially does, the building turnover is still as it was scheduled as a milestone, but it will allow us to start production earlier in the fourth quarter than we originally planned. Mitchell Pinheiro – Janney Montgomery Scott: Great. So when you start looking at it and I know under Paul’s comments, you can’t talk about a whole lot, but when do scrap transportation costs, the higher labor, would that be a fourth quarter issue or could there be a third quarter impact?

Mitch, once we bring the production up and we start recording that as part of our operation, that would be a fourth quarter event.

Okay. So third quarter should be more or less clean from some of this still, is that right?

Yes, we’ll still be executing the project.

Okay. Are there any costs now? Even though you are not producing there, but are there any other incremental costs in the current business, related sort of to the new bakery, whether it’s management attention or is there anything going on in that regard that you already have some cost in your current income statement? Do you follow what I am saying?

I think Mitch, one of the ones that you hit really is the opportunity cost and then there is a focus on the project and make sure that we eliminate risk associated with it, and that we get the project up and running, even hopefully ahead of time and there is a time opportunity cost associated with that. In terms of other costs, while there maybe some, we would expect those to be minimal until we get truly into the fourth quarter commissioning phase. Mitchell Pinheiro – Janney Montgomery Scott: Okay. When you look at getting back to sales, I don’t know if you break this out, but marketing expense, what was it this year compared to last year, in the second quarter?

It’s up from the prior year. It’s always been our intend, our story has been, we literally started with from nothing and every year we have been building on that. It’s the old consumer package, good theory, drive efficiencies and invest in the brand. So that’s what we have been trying to do. Mitchell Pinheiro – Janney Montgomery Scott: So it’s up year-over-year. What are your plans for the second half, will it still be up or does it flatten out because you did start increasing your marketing maybe a little over a year ago. How do you see your spending in the second half in light of having a new bakery etc; has anything changed there?

We haven’t gone out and given any public information based on how much we spend and we have been running I think at a relatively consistent to moderately increasing rate over the last several periods, and as Charlie said, for the second quarter we were up year-over-year. We haven’t announced any significant new programs and we will have to evaluate that dependent upon the timing of the facility comes up. So it’s difficult to comment how that will happen for the fourth quarter particularly in light of the new facility, because the timing is still in motion, while we said we are a bit ahead of schedule and there is the possibility of accelerating. We’ll have to see how the final plants come out.

But I think to Mitch’s point about our marketing program, it is our intend to continue our marketing support in the second half, which is once again building on the base that we started several years ago. So, we are going to see some additional spending in the second half. Mitchell Pinheiro - Janney Montgomery Scott: Okay. When I was down in the Carolina’s recently, and the good news is, I saw some of pastry cakes down in some convenience stores down there. I won’t say its bad news, but the not so good news is that, you don’t have a big presence. I spotted it because I am used to seeing it, but I’m not sure if you have enough skews or shelf space to really catch a new consumer’s attention. How do you guys think about that? I know it’s being driven by third party distributors, but is it just a little bit at a time and they just grow at it, they see it or is new distribution in these territories going to be that type of limited skews. I mean how do you guys view that and what do you think the plans are for not just South Carolina or North Carolina, but all your new territories?

Yes. Well given the size of our company, we have to do things in new markets that we enter from a guerilla marketing support effort, but then we grow from that base. So if you looked at like the State of Florida, we’ve made increases in our distribution, but we essentially started out with the use of some promotional activity, the turns and then it’s all about execution with our partners. Going forward Mitch, it’s really about, as I say, driving efficiency, we then can invest in the brand and certainly the new bakery coming online will give us the opportunity to be more supportive in these newer markets. We are pleased with reception in the Carolinas thus far, given it’s a brand new place, we do believe that we can grow our SKUs in that market place. Mitchell Pinheiro – Janney Montgomery Scott: Well, I helped out.

Okay, I appreciate that. Mitchell Pinheiro – Janney Montgomery Scott: I took one of the two packages off the shelf, so there’s only one left there.

I hope our sales people help out as well. Mitchell Pinheiro – Janney Montgomery Scott: So, I guess my related question to that is without the current excess funds to do that marketing support to help gain the recognition and awareness, is it possible at all that expansion of these new markets is too early where you can’t or where perhaps sales are disappointing to a retailer, and then now fast forward six, nine months when you have the capital, you might be getting pulled out of stores or is this all part of the plan. Your distributors understand it, the retailers understand it, how is that in terms of your strategy?

Well, I think we are following our strategy Mitch. We are not disappointed and our retailers are not disappointed. I think the key is we were going to Florida anyway, okay? So we are following, it is both on theory that we talked about several years ago. So instead of driving through North and South Carolina, we are actually making stops now on our way to Florida. So it’s very efficient from a transportation standpoint. We don’t oversell ourselves to our retailers, but we work with them. We make sure that we provide additional sales support. But currently we are very satisfied with the way we are doing this, but certainly with more efficiencies, we will be able to make more investments. The bottom line, generally this has been profitable for us and that’s what we said. We have a new mantra, one is volume and profitability, that’s what we are doing. We wouldn’t be going into any markets that we couldn’t see an opportunity in the out years. We are following this strategy we had, and we are moving cautiously, because as you know, Tasty’s expansion out of its core route area is all about sustainability, where there was Pittsburgh, Cleveland, Florida, New England, we want to have sustainability as opposed to the way in which it operated prior to us coming here.

(Operator Instructions) Your next question comes from Tom Graves - Standard & Poor’s. Tom Graves – Standard & Poor’s: You mentioned the prospects of some of the transition or duplication costs relating to the new facility coming on stream. Is that likely to be costs that are primarily seen in 2009 rather than 2010?

Those costs will begin in 2009 in the fourth quarter as we bring up production and we will continue until the transition is completed. Tom Graves – Standard & Poor’s: Okay, that’s what I assumed. Also following upon Mitch’s discussion of the geographic expansion, is it fair to assume that you would be looking after the new facility comes on stream to at least look at the prospect of accelerating the level of geographic expansion that you are doing through third party distributors?

I would say it will be more about penetration into these existing markets that we are now entering. Tom Graves – Standard & Poor: Okay. So, trying to get more shelf space in the market that you are already going into.

That’s correct, yes. Tom Graves – Standard & Poor: Okay, also want to check on the termination of the post retirement life insurance program that you got a benefit from in the second quarter, is there any ongoing impact from that going forward or is it entirely one time?

No, there is not any impact going forward and I think that we looked at it very carefully, difficult decision wanted to make sure that we had the right programs and policies in place to align the company for future growth and profitability, hence we took that action during the second quarter. Tom Graves – Standard & Poor: Okay. My last question has to do with, you mentioned that just because of the way things have to be accounted for, even though some of the items relating to the new facility are, you don’t actually have to make cash payment during the first six months or first year, in the case I guess of the bakery, is it starting in October that you would have to start recognizing some rental expense on the bakery?

Yes, the bakery at least beginning on October and depending upon the specific accounting it’s likely that we will have non-cash starting when that lease begins. Tom Graves – Standard & Poor: All right those are my questions, thank you.

Your next question comes from Mitchell Pinheiro - Janney Montgomery Scott. Mitchell Pinheiro – Janney Montgomery Scott: Yes, I missed a number. Paul, you gave out what your non-cash rental expense was for your new head quarters.

It was $300,000 in non-cash rental for the quarter. Mitchell Pinheiro – Janney Montgomery Scott: Is that a full quarter’s worth, I guess you moved in April, right?

That’s a full quarter’s worth Mitch. Mitchell Pinheiro – Janney Montgomery Scott: Okay. $300,000. How do you stand on your bank covenants?

We were in full compliance with all of our covenants at the end of the second quarter. Mitchell Pinheiro – Janney Montgomery Scott: Do you have a minimum EBITDA, remind me your minimum EBITDA coverage for ‘09?

At the end of the second quarter our minimum EBITDA was $15 million, our minimum EBITDA requirement.

(Operator Instructions) There are no further questions.

Thank you for joining us today, and I hope you have a productive day.

That concludes today’s teleconference thank you for your participation.