Marta Turner - Executive Vice President of Corporate Relations George Deese - Chairman and Chief Executive Officer Allen Shiver - President Steve Kinsey - Executive Vice President and Chief Financial Officer

Farha Aslam - Stephens, Inc. Mitch Pinheiro - Janney Capital Markets Eric Katzman - Deutsche Bank Heather Jones - BB&T Capital Markets Timothy Ramey - D.A. Davidson & Co. John Morgan - KeyBanc Capital Markets Ann Gurkin - Davenport & Co. Amit Sharma - BMO Capital Markets Bill Chappell – SunTrust Douglas Thomas - JET Investment Research

Good day ladies and gentlemen and welcome to the Q2 2012 Flowers Foods Earnings Conference Call. My name is Grant and I will be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this call is being recorded for replay purposes. Now, I would like to hand the call over to Marta Turner, please proceed.

Thank you, Grant. Let me apologize for the slight delay. We had a little bit of a problem with our service provider and our phone numbers, so we apologize for the late start. Our second quarter results as you know were released this morning and the 10-Q was also filed as well. If you need copies of those you will both the documents are posted on the Flowers Foods website. During the call we will use the PowerPoint and you will find that on the webcast listen page. As we get started, you know that I must remind you that our presentation today may include forward-looking statements about our company’s performance. Although we believe our statements to be reasonable, they are subject to risks and uncertainties that could cause actual results to differ materially. In addition to the matters we’ll discuss during today’s call, important factors relating to Flowers Foods’ business are detailed fully in our SEC filings. Participating on our call today, we have George Deese, Flowers Foods’ Chairman and Chief Executive Officer; Allen Shiver, our President; and Steve Kinsey, Executive Vice President and Chief Financial Officer. Now, I am happy to turn the call over to George Deese, Chairman and CEO. George?

Thank you, Marta. Good morning to each of you and welcome to our second quarter conference call. As always, we appreciate your continued interest in Flowers Foods. In spite of challenges in the marketplace we were pleased with operating results for the quarter. Before Steve and Allen discuss the second quarter’s results, I want to comment on how I view Flowers Foods from my perspective. First, as I look at how we are tracking relative to the new vision for the company we announced in March of 2011, we are delivering the topline growth we told you to expect. Our long term goal for sales, including acquisitions is 5% to 10% annual growth and we are achieving that with last year’s acquisition of Tasty Baking Company and our recent acquisition of Lepage Bakeries, along with growth in our expansion and co-markets. We also told you that our goal was to have at least 75% of the US population with access to our fresh breads, buns, rolls and snack cakes by the year 2016. With Lepage bringing access to New England and other key markets in the north east, 70% of the US population now has access to our fresh baked products. We see more opportunities here with the acquisitions and market expansions that would help us reach or exceed our goal of 75%. It also important to realize the growth potential of the newer markets we have added in the past five years. Just as we have done for decades, our team will steadily grow our market presence in those markets by offering great customer service, outstanding quality, and products and brands that consumer’s want. That’s just to remind that when we do reach 75% of US population base, Flowers Foods will still have a tremendous growth potential within our newer markets. When we reset our visions of the future last year, we told you that we expect to deliver double-digit earnings growth over the long term. In the short term, our earnings remain under pressure from volatile commodity costs, volume is under pressure as consumers remain constraint by the weak economy, and the resulting higher competitive marketplace has also been a factor. Once the shorter term challenges are behind us, I believe Flowers Foods will achieve our long term earnings growth by leveraging our operational strengths, experiencing and proven strategies. When I look back to the decades of steady earnings growth Flowers has achieved, that gives me confidence that our team will achieve similar performance in the decades ahead. As I see it, the major issues we face today are commodities, industry consolidation, and competitive dynamics in the marketplace. The volatile swings in the commodities continue and that continues to challenge at us as we manage through highs and lows that are more dramatic than I have ever seen in my four decades in the business. Our team is focused on minimizing the impact bringing strategies that have been developed and continue to be developed. The industry consolidation continues and we believe that will additional growth opportunities for our company. Consolidation will bring change but we are confident in our ability to continue. While the industry is consolidating, it is and we will probably continue to be highly competitive in the near term. Looking longer term, our industry will need better margins for investments in bakeries, in products, brands, technology, and our people. As we think about the baked food industry, it is important when you realize that Flowers Foods feels very confident in our position as a strong number two player in the category. We don’t necessarily want to be the biggest; we will certainly want to be the best. From the strong number two position we have solid growth potential on our new markets, with acquisitions, opportunities to partner with key retail and food service customers, core market growth potential as we gained sales in our underdeveloped categories and the list goes on. You may ask, when do I have confidence Flowers Foods can overcome the challenges and outperform the industry over time? My confidence is based on our competitive advantages and the importance our team places on maintaining those advantages. The first competitive advantages are efficient bakers. For decades we have invested on bakeries and we have an advantage while others still have work to do. We will continue to invest in technology and talent to maintain our position, while being the low cost producer. Next, we have great quality products. We know that our products must be delicious and fresh and healthy every day in every market with every consumer purchases. We also have a very best customer service in our industry. This is a Flowers standard. We knock it out of the part in terms of how we meet our customers’ needs always. Another advantage is our wisdom to embrace innovation. We know that we must always look for ways to do everything we do just a little bit better than we did yesterday. The final competitive advantage is our team. Our best advantage is the experience and talent and determination found in our team members at all levels of the company. Yes, we do have challenges to overcome the short term and those challenges fail in comparison to the great confidence I have in our team, our growth strategies, and in our ability to create value for our shareholders over the long term. Let me say once again how pleased we are to have Lepage, the Lepage team members joining our company. And as always I would say thank you for Flowers team for working to make Flowers Foods the best in every way. Now, let’s hear from Steve regarding our financial performance in the quarter. Steve?

Thank you George and good morning everyone. As we move into the financials I just wanted to remind you that we did cycle the Tasty acquisition during the quarter. In spite of the marketplace challenges this quarter we were pleased overall with the operating results. As Allen will discuss in a minute, the marketplace was very competitive during the quarter. We experienced significant increases and promotional activity over last year’s second quarter, as well as over the first quarter of this year. Input costs during the quarter were up as we had planned year-over-year and the increase in the promotional activity coupled with these input cost increases did negatively impact our top line growth as well as our margins. During the quarter, we did absorb approximately $3.5 of unplanned interest expense related to the issuance of our bonds during the first quarter. Net sales during the quarter increased 6.1% over the prior year’s quarter and on a consolidated basis price mix contributed 2.3% to this growth, our volume was down 0.7% in the quarter and the Tasty acquisition contributed 4.5% to the growth. Overall, sales growth of the DSD segment was strong growing at 7.6%. Price mix contributed 1.5% of the growth, with DSD volumes up 0.6%. The Tasty acquisition contributed 5.5% to the DSD growth during the quarter. The DSD volume growth, excluding the acquisition contribution was driven by Nature’s Own soft variety cake, store brand and growth in non-retail. The non-retail growth in the quarter was due primarily to the food service. Sales in the warehouse group were down 0.7% over the last year’s second quarter. Price mix was up 3.8% and volume in the quarter was down 4.5% quarter-over-quarter. Our gains in the non-retail channel, primarily food service, were offset by volume declines in store brand cake. EBIT in the quarter was up $4.3 million or 10% over last year’s second quarter. Adjusted for one-time item, the EBIT was up $2 million, or roughly 4.3%. The DSD EBIT was up slightly in the quarter as a result of higher sales and improved manufacturing efficiencies. The warehouse EBIT was up $1.2 million, or just about 23% the result of improved price mix in the quarter coupled with improvement in manufacturing efficiencies. Earnings per share on a GAAP basis was flat quarter-over-quarter. On an adjusted basis, earnings per share was down $0.01 or roughly 4.3% compared to the prior year second quarter. This decline was the result of increased promotional activity, higher input costs, and higher interest expense. Turning to the gross margin. The gross margin did decline 50 basis points as a percent of sales compared to last year’s second quarter, again as a result of higher promotional activity and the higher input cost. Input cost, ingredient packaging, and natural gas were up approximately 4% quarter-over-quarter. Our DSD margin in the quarter was down 130 basis points to 50.8% and the warehouse segment gross margin in the quarter was up 130 basis points to 24.7%. Selling, distribution and administrative costs in the quarter as a percent of sales were down about 70 basis points. Excluding one-time costs, SG&A as a percent of sales was down roughly 30 basis points. The decrease as a percent of sales was driven primarily by lower employee-related costs. Our EBITDA in the quarter was up $5.7 million, or 8.8% from last year’s second quarter. And on an adjusted basis we were up $3.4 million, or roughly 4.9%. Turning to the balance sheet and cash flows. Cash flow from operations during the quarter improved significantly over last year’s second quarter. The primary driver of this improvement during the quarter was less cash allocated to hedging activities. During the quarter we spent $15 million on capital expenditures and $22 million on dividends. There were no share repurchases during the quarter as we were maintaining flexibility on our balance sheet to close the Lepage acquisition. We incurred net interest expense for the quarter. We did adjust the outlook for 2012 to now include Lepage Bakeries. Sales are expected to increase 79% with Lepage contributing approximately 2.5% to the total. I would say that we are tracking on the upper end of this sales range. Excluding one-time costs, earnings per share is expected to increase 3.5% to 8% over last year’s adjusted $0.96. Lepage will contribute $0.02 to $0.04 of this increase. Flowers’, excluding Lepage, earnings per share is now expected to be flat to slightly up over the prior year. Given that we now know our cost structure for the full year, the back half performance is dependent upon net pricing actions and volumes. I would also tell you that we are currently tracking on the lower end of the earnings guidance range. With regard to acquisition related cost, it is important to note that we anticipate approximately $4.5 million to $5 million of transaction cost will be incurred during the third quarter. This will bring the total acquisition related costs for the full year to approximately $8 million. The non-deductible portion of these costs will affect the full year tax rate by approximately 60 basis points and this is why we have adjusted the tax rate for our outlook in 2012. Thank you, and Allen will now update you on the overall operational performance.

Good morning everyone and thank you, Steve. Our sales increase was just over 6% for the quarter and 9.4% for the first half as evidenced that our growth strategy works. As George and Steve mentioned, acquisitions continue to be an important factor in our sales growth. Add that to the strength of our DSD business, the power of our Nature’s Own and Tastykake brands and our ability to grow successfully through expansion market concepts, you can see well we have confidence in the future of Flowers Foods. With Lepage coming onboard at the beginning of the third quarter, you will see us take full advantage of those new markets, new products and additional production and capacity. Both Lepage and Flowers have unique strengths. As we combine our companies, we will emerge even stronger than before. So, we are excited about these opportunities, we do have short-term challenges to overcome. In the retail marketplace, we are seeing a higher level of promotional activity as category volumes remain under pressure and competitors cease to maintain their sales. Like most food categories, fresh breads, buns and rolls are experiencing soft volume. In the fresh bread as with other food categories, we are confident that lower volumes are driven by consumers remaining under pressure from the weak economy. Categories that are complementary are also experiencing the same conditions. In addition to the economy, we feel the fresh bread category is down due to an overall reduction in the number of households, combined with a slight shift in store bakery products. In spite of the lower volume experienced by the category in the second quarter, our DSD business delivered increased volume, driven by sales growth with our Nature's Own and Tastykake brands. George mentioned the ongoing challenge of volatile commodity cost. Our bottom line in the quarter was impacted by headwinds from higher input cost and higher promotional activity. However, we improved operating income as our bakeries further improved their operational efficiencies. I want to again congratulate our manufacturing teams for increasing our productivity levels. In this time of volatile cost and marketplace pressures, we are adding advantage with the Flowers way, which put simply as getting the job done better. With our unique culture and spirit of determination, our team has achieved the highest efficiency levels in our company’s history. As we have said before, the improvements we have achieved in manufacturing efficiencies over the last few years is equal to the production capacity of two bakeries that we do not have to build. We are keenly focused on further improvements that will maximize production efficiencies and minimize our logistics cost. Other highlights of the quarter, our expansion markets delivered growth within our goal of 0.5% to 1% sales. We are pleased with the recent introduction of our Nature’s Own brand into the Philadelphia market. New products also performed within our expected 3% to 5% of sales growth. Tastykake continues to bring excitement to Flowers’ core territories. This is a win-win situation. Our distributors are growing their sales, retail customers are pleased with Tastykake’s contribution to their profitability, and of course, Tastykake is helping Flowers grow sales and profits as well. We are focused on innovative new products for the Tastykake brand, and we continue to use social media and product demos to build consumer demand. In our warehouse group, our cake business has now cycled a lot to the significant customer from a year ago, and we should show improved sales comparisons for the remainder of the year. As with Tastykake, we are very focused on growing our warehouse cake business through new products and new customers. Also this quarter, work is underway at our Oxford, Pennsylvania bakery, with our new bread line to be in production by mid-2013. Looking at IRI data, for the first time, we can share IRI as a MultiOutlet information, which captures about 85% of retail sales for the category. The new IRI data adds information from Wal-Mart and other mass merchandisers, select dollar stores, drug stores and selected club stores. Going forward, our reference to IRI data will represent their new MultiOutlet database. IRI data confirms that fresh bakery category under pressure, with the index down 3% in the south market and down 2.7% in the total U.S. Dollars were down 0.5% in the south market and down 1.6% in the total U.S. IRI reported Flowers’ branded sales were slightly down more than the category. This may be due in part to the pricing that we put into place in the market late last year, combined with the significant increase in competitive promotional activity. Our regional white bread brands accounted for most of our sales declines in the quarter. I am happy to report that the Nature’s Own soft variety breads performed well with the index up 2.1% and a dollar increase of 6.1%. This is a solid achievement in such a competitive environment. We continue to evaluate opportunities to leverage Nature’s Own brand strength as we develop new products that fit consumer need for more health conscious bakery foods. Nature’s Own Oatmeal Toasters are our newest product, introduced just two weeks ago. This is an innovative and delicious breakfast flavor for the toaster, offered in two flavors, Cinnamon Raisin and Cranberry Orange. IRI data for the quarter shows that Flowers’ branded market share delved relatively steady, which is encouraging under the market pressures that we have described. In the IRI south market, our dollar share was 25.3% and our unit share 20.7%. In the total U.S., our dollar share is just over 10%, and our unit share is 8.7%. IRI reported also that store brand share remained below that of prior years. Turning to food service, Technomics reports industry growth of just under 4% for the year. Flowers’ total food service sales were up 3.9% compared to last year sales, driven primarily by new business with existing customers and by the addition of new customers. In the warehouse segment, our food service business was up in both dollar sales and unit volume for the quarter. We are encouraged by new food service business that we have gained with our broad line of distributors as well as selected national accounts. As I close, I want to stress how excited our team is about our opportunities for continued growth, despite short-term category challenges. I would like to remind everyone of the tremendous size of the fresh bread and roll category. In fact, out of 260 different supermarket product categories monitored by IRI, fresh bakery is number 2 in total unit sales and number 3 in total dollar sales, only behind carbonated beverage and milk. With a category this large, we are confident in our plans to grow our company in our existing markets, our new expansion markets and through additional acquisitions, as industry consolidation continues to ramp up at an ever-increasing pace. This is truly an exciting time for Flowers Foods and our team. With that, I will turn the program back over to George.

Thank you Allen, and thank you Steve for your comments. Before we turn it to Q&A, I would like to say that I never felt better about the company. Overtime, we have certainly created tremendous way for our shareholders, we have increased sales, we have increased earnings, we have increased market share. We have developed new brands through innovation, through IP, and so, we continue as the same company that has been. There are short-term difficulties, but in long haul, we always win and we will win this time. So, with that, operator, I will open it up for Q&A.

(Operator Instructions) Our first question comes from the line of Farha Aslam from Stephens, Inc. Please go ahead. Farha Aslam - Stephens, Inc.: Hi, good morning.

Good morning. Farha Aslam - Stephens, Inc.: George, now that you have closed the Lepage acquisition and have really gotten under the hood, is there anything that you found notably that surprised you on the upside or downside?

I found no surprises, I would say though that we have known this company for a long time, we have always had a lot of confidence in their ability to do a wonderful job in the marketplace by being very efficient, having great products that consumers one of that New England market. So, at this point, no surprises, and just look forward for the future and adding some of our product lines to their DSD system, and grow in the marketplace with them. Farha Aslam - Stephens, Inc.: Okay. So, sounds like Lepage is going to be a relatively easy integration into Flowers. So, do you feel like your company is prepared for incremental acquisitions and how would you describe the M&A market today?

: : Farha Aslam - Stephens, Inc.: Thanks. And then just turning to Flowers, Steve, could you share with us how much you expect those input cost to be up for the full year this year, and kind of what pricing actions you might consider to offset those costs?

Hi Farha, we really haven’t changed our guidance from the 6% to 9%, but I would say we are on the lower end of that range. So, as you can tell, the first half, when you go back and look at the first half, we were up double digits. So, in the back half, even though cost or commodities have been pricing from our perspective, we know that cost and you can tell, we should see some relief from a cost perspective year-over-year, and it will gradually get better as the back half progresses. With regard to pricing actions, we are on schedule to do what we typically do. We typically target the fall, October timeframe, to move actions into the market, and we are in the middle of those negotiations as commodities have increased, and it seems business settling in at a higher level for the back half and as you look forward. Farha Aslam - Stephens, Inc.: Okay. Thank you very much.

Thanks Farha.

Thank you for your question there. Our next question comes from the line of Mitch Pinheiro from Janney Capital Markets. Please go ahead. Mitch Pinheiro - Janney Capital Markets: Hi, good morning.

Good morning Mitch. Mitch Pinheiro - Janney Capital Markets: So, George, you referenced heightened competitive environment, also softer volumes related to consumer weakness, these things seem to stay with the category.\, and they have been. When has the bread category been highly competitive? Is there anything, or are you seeing any differences in the type of competition, competitive strategy? And with that regard to that consumer, are they eating the ends of the bread, is that what’s driving volumes down or are we seeing a switch, just consumer had a switch away from bread? Can you talk about that how it’s different now than it was, say years back?

I would say a few words and I would like Allen to follow and Steve, if necessary on this question. I think from a competitive standpoint, you know, I think the whole issue is probably this. I think all of us know, anybody you see reporting on food today talk about weakness in volume. And I think the consumer continues to be under pressure, we know about the – you hear every day, how much of an importance we have – you hear about how many people are in poverty. So, I think with that unique jobs in the nation to help alleviate some of that, but I think in the meantime until that help comes, I think, while the food industry has continued to alleviate and steady, and those probably would have been all levels, volume is down, with tremendous price promotions, you are going to have to drive that volume, matter is down and it's down. That’s a tough question to answer, but most people are continuing to be very happy, hoping that we will get our volume back, but in our cases, the volume is just down and I am not sure how much you promote, does that drive the volume back. So, I think the consumer – get well, I think we have been sick, and that’s going to take some help. So, I hope that is coming, but like I said in the meantime, we got to make sure that, and the reason, (inaudible) more promotion driven, we saw little of our most volume distributed that we want to make sure we had to promote a little more, just for take share and be competitive. But in the long run, and I said that early on too, the long run, the food industry, in particular the baking industry, you look at the baking industry, you look at the margins and all companies are reporting, and you see being reported, are certainly not up to the standards we probably had three or four years ago. And to be able to be doing the best in the business with plans, with products, with innovations, we must have margins so we can reinvest in our industry. And I am confident that, that will come back. I think we are in a time of consolidation where everybody is fighting for that last loaf, but this too shall pass and we will get back to more normalized standpoint and see the consumer healthy. It will not stay this, in my opinion. The question is how long, and I can’t answer to that. Allen?

This is Allen, just a couple of other comments. I think evidence that the consumer is still under pressure from an economic standpoint, the first of the month, business has always been better than the end of the month. So, we continue to see polarization with the first of the month becoming even larger as consumers have more dollars in their hands. I think also you heard other food companies make the point that there are less households today. Population is up slightly, but there are less households. So, if you think about purchase of a loaf of bread, you are buying a loaf of bread for the household and not for specific individuals. There is a - if you really look closer to category, there is a slight uptick in the in-store bakery category, but again, that's a very small segment relative to the wholesale bakery, but there is a slight tick up there. And really, I think those are the big issues that we are dealing with. Consumer is looking for promotional activity and in a category, George said it well, in a category that is flat to down, additional promotional activity like we are seeing just doesn't really make sense for the long haul. So, again this will pass, and we look forward to the economy riding the boat, and the category getting back to the growth that we have seen in the past. Mitch Pinheiro - Janney Capital Markets: Great, thanks. Just two other quick questions. One is, you referenced store brand cake being down in the warehouse segment, but you would think that, that would be a positive, it would help margins. I was just curious why margins were weaker than I was looking for in that segment? And then the second question is that for Tastykake, is there or can you talk about sort of your – any incremental revenue you have seen from Tasty year-over-year now that you had it, what type of growth rate Tasty has had sort of on a same-store sales basis?

Mitch, on the store brand cake question, we did lose some significant business this time last year. We are seeing some growth and additional business in store brand cake. So, we are optimistic about the remainder of the year to improve our comps from a sales standpoint on store brand cake. We really can't provide you the details on Tastykake and what it's doing incrementally, but I will say that there is a tremendous amount of excitement from our independent distributors, tremendous excitement from our retail customers as well as our marketing group, who is excited to have a strong brand like Tastykake to be able to build for the future. But the Tastykake has been nothing but positive as we rolled it across the company. Mitch Pinheiro - Janney Capital Markets: Okay, thank you.

Thank you, Mitch.

Thank you for the question there. Our next question comes from the line of Eric Katzman from Deutsche Bank. Please go ahead. Eric Katzman - Deutsche Bank: Hi, good morning everybody.

Hi Eric. Eric Katzman - Deutsche Bank: Couple of quick questions. First, I guess, Steve, you asked or you made the comment about the tax rate, and I think you said it was going to be higher for the year. Can you just give me a little more details on that?

Yes, Eric, if you look at the cost incurred on the M&A activity, now that we have closed the deal and I said we are expecting about $8 million total for the year, a significant portion of that will be non-deductible for tax purposes. So, that's effective rate and that's what’s pushing it up to the 36.8 from roughly 36, originally planned. So, it's pretty significant obviously, since we closed the deal to third quarter, you will see a greater impact in the third quarter because quite a bit of costs coming in from the Lepage deal, but that is the primary driver of the rate increase. Eric Katzman - Deutsche Bank: But for those of us who exclude some of your one-time costs associated with M&A, how do we view – what? How do we view the ongoing tax rate as opposed to how the Lepage acquisition and the one-time items are affecting that rate?

I think you would look at the normalized rate around 36%, and that's really driven by the fact that when you look at the manufacturers deduction to Section 199, that's based on taxable income. So, as income being kind of flattish, if you will, and then we made some pension contribution that will affect the deductible tax that we have already expensed for book this year, so that just changed the rate slightly as well from the 35.5 that we had projected early on. Eric Katzman - Deutsche Bank: Okay. So, sorry to get so detailed on this, but, so your guidance of $0.99 to $1.04, is that including, that's obviously including Lepage, but does it or are you including the $8 million and then also are you using the 36.8 on the tax rate or -?

The guidance would exclude those one-time costs. So, we are using the normalized tax rate, not the 36.8. Eric Katzman - Deutsche Bank: Okay. All right. Second question had to do with the – I think you said that your sales guidance for the year was on track, but EPS would be at the lower end. And so, with your input costs being a benefit for the most part in the second half, I think that was an answer to Farha's question, is it the promotion or the mix that’s going the wrong way? Maybe you can kind of bridge those two?

Eric, it really is the promotional activity. It’s really gotten strong year-over-year and as the year has progressed, it's picked up. So, that’s what we are putting, we are factoring some of that into the back half. I did mention we are looking at some pricing actions in the back half as well. So, the back half will be – it’s all about what the net, getting price ends up and how the promotional activity carries through the back half and then the effect of that on volume. Eric Katzman - Deutsche Bank: Okay. And this is promotion, not on the – this is not I guess top line promotion, but more like SM&A related in-store activity or something?

It was really more like cents off at the point of sale. And you are seeing a lot of buy one get one frees in the marketplace, you are seeing a lot of rollbacks on price. So, it is kind of a combination, but it is all point of sales.

And Eric, that’s what I also said earlier. I am not sure that the overall food industry, let's try and push the volume needle up, and if the consumer is probably got so much money, that’s going to really drive the volume back up or we just given away a lot of sense and we try and measure that and use a good judgment, but it is very competitive. Eric Katzman - Deutsche Bank: Okay. And then, that kind of follows up over my last question, both George and Allen. It seems and this is something I have been trying to focus on a bit more, but it seems like the Nature's Own business is doing reasonably well in a competitive marketplace. Tasty seems to be on track etcetera, store brands are in check. So, it seems like the weakness in the category and to you as well as kind of these local and regional white bread product, how do you think, one, is that true? And two, how are you performing like in terms of, if you can, your market share of these local and regional brands versus the struggling players out there?

This is Allen. You are right about the strength of Nature's Own and the strength of Tastykake. Both of those brands are – they are commanding a premium in the market today. If you think about the regional white bread brands in the consumer profile, the consumer demographics of who is buying that product is middle to lower income in many cases. So, that's the economic group that is being approached most by the tough economy. So, you are correct that the regional brands of white bread and buns are being impacted more than Nature's Own and other stronger brands, but I think how do you deal with that is really looking specifically at pricing strategies for those categories, are there opportunities to adjust package sizes, are there are opportunities to do different things that can bring that consumer back, but we are really focusing on maintaining the very best quality that we possibly can and making sure that we continue to put emphasis at the sales level on those regional brands because they are very important.

Yes, also the good news about Nature's Own, I think some of those people are trading up because of the -- as they proceed healthier attributes. And as I have said, the IRI even though when private label and/or competitors and/or Flowers drops the price promotion, you drop somewhat of units, but not what you would think. So, we do see people trading somewhat up and some people just getting back and not consume as much. Eric Katzman - Deutsche Bank: Can you say how much these local and regional breads or however you want to kind of define that? Could you say how much are those down for the category and how much has yours declined?

I think the number is probably in the 5% neighborhood, 4% to 5% on white bread, and we are tracking along with that or a little below that. Eric Katzman - Deutsche Bank: Okay. I will pass it on. Thank you. Have a good end of summer.

Thank you.

Thank you for your question there. Our next question comes from the line of Heather Jones from BB&T Capital Markets. Please go ahead. Heather Jones - BB&T Capital Markets: Good morning.

Good morning, Heather. Heather Jones - BB&T Capital Markets: Real quick question, how much of your DSD sales are represented by this new IRI data?

85% of the total category is represented by the new data, and Heather, that will be pretty much true with our business as well. Heather Jones - BB&T Capital Markets: Okay. So, 85% of your retail DSD sales?

Yes. Heather Jones - BB&T Capital Markets: Okay. And follow-up to Eric's question, if I look at what your soft variety breads did during the quarter versus the numbers you gave for Flowers branded, my interpretation looks like the drag from these regional white breads got dramatically worse during Q2, and I am just wondering if I am interpreting that correctly?

I wouldn't say dramatically worse. We have seen a continued pattern of sales declines in regional white bread brands. So, I wouldn't say dramatically worse for the quarter. Heather Jones - BB&T Capital Markets: Okay. And looking as far as your input costs, have you guys fully implemented the new program of, I think its hedging four to seven months out, is that now fully implemented as we start considering 2013?

I would say, Heather, that was a guideline, it was a strategy to this guideline. What we also said that depending on markets and depending on time, we are not bound by that.

Again, it’s Allen. The development what we want to do is if the market is cheap, we will be longer, if it is higher than we think it should be we are going to be shorter, so therein lies the lemon and working through those issues. Heather Jones - BB&T Capital Markets: Okay. Is there any scenario where you would have got so aggressive that we wouldn’t be anticipating meaningful cost pressures in 2013?

I think at this point Heather we are still assessing 2013 and we are not ready to give much guidance, but you have seen what the market has done and we are sticking with our strategy to hedge but we are not willing to talk about our positions at this point. Heather Jones - BB&T Capital Markets: As far as going to the promotional environment, wheat cost did move down this year until June and some of your competitors have noted that they are hedged through the end of this year but really nothing beyond that. Do you think the industry has changed that even with higher input cost going into 2013 it will continue with this aggressive activity, or once they start to experience significant cost inflation, do you expect it to become more rationale?

I think with significant cost increase people have to be more rationale. You still might have signed a number of promotions, but normally what happens you would see a higher level, instead of 2 to 4, maybe 2 to 5, for instance. Heather Jones - BB&T Capital Markets: Okay. And my follow-up question is just to inquiry and I have heard some of this commentary from some other companies but just – the price elasticity seems to have increased over the last few years and so now that we are looking at another round of input cost inflation, do you still plan to stick with your strategy of passing that completely along in price, or given the impact on volumes, looking for other cost savings to maybe so you don’t pass it completely O&M price?

Guys, let me take it, this is Allen. I believe this wholeheartedly that first thing we do is work on the cost side and do everything we can to eliminate any waste in the company. And hopefully though, after you do that, if you have to pass along cost you got to be willing to do that. So we would plan to pass along the cost of commodities after we see how much more cost we can take out. Heather Jones - BB&T Capital Markets: Okay. Alright, I appreciate it. Thank you very much.

Thank you, Heather.

Thank you for your question there. Our next question comes from the line of Tim Ramey from D.A. Davidson. Please go ahead. Timothy Ramey - D.A. Davidson & Co.: Thanks. Steve, just following up on something -- I think I heard you say, it sounded like you said working capital due to reduced hedging was down, or maybe I interpreted that incorrectly, but it didn’t sound like just to follow-up on the last question as of 7/14 you probably weren’t very aggressively hedged at least, or didn’t have a lot of positions on?

Yes, when you look at the improvement in our working capital and cash flow last year we did have some hedges that turned against us, so we did have quite a bit of cash allocated to the hedge margin. This year as we have adjusted our strategy of 4 to 7 months, we are not prepared today to talk about where we are. We are covered for the rest of ‘12 and the levels of our hedges would obviously indicate that since we are not using as much cash there is not much margin requirement. Timothy Ramey - D.A. Davidson & Co.: Okay. But covered at least throughout the rest of this calendar year?

Yes. Timothy Ramey - D.A. Davidson & Co.: Then just kind of circling back, I think Allen touched on this and the questions have kind of been raised, I covered some of the infant formula like Mead Johnson and we have certainly seen household formation down, we have seen birth rates down and this doesn’t sound like something is coming to the rescue kind of issue. It sounds like we might have a quite a whole for an extended period of time, maybe a generational type of thing relative to fewer households and fewer babies kind of in the pipeline. I presume that when they graduate off the infant formula they go to bread. Have you thought much about that and how that should position you in the coming years?

(inaudible) he is on the market, I will let him answer. But I think what we have to do in the food industry we must do is continue to innovate. If you recognize this as an issue how do you innovate around people still eat. So, even though smaller families or less families, people still consume products. So we got to be innovative and define what are those products that we can bring to market that continues to attract all consumers. I am not trying to predict how many bakers will be born, I am more focused on how do we innovate to attract those consumers who are still in the market and buying products.

Tim, the only thing I would add is, as we know the reason for the reduction in households is the baby boomer generation is now moving into kind of that emptiness stage of their life. The good news is you got the millennials that are really starting to come in to the child-bearing years with their families. So, we do see that change taking place as we go into the years ahead with the millennials developing, hopefully a rebound to the overall food market. But I think the important thing and I mentioned in my comments earlier, the relative size of the fresh bakery category. Again, number three on dollars, relative to other product categories. And the marketplace is consolidating, I think it’s important to just remember that -- a huge category here that offers lots of opportunity for growth. Timothy Ramey - D.A. Davidson & Co.: Thank you.

Thanks, Tim.

Thank you for your question there. Our next question comes from the line of Akshay Jagdale from KeyBanc. Please go ahead. John Morgan - KeyBanc Capital Markets: Hi, this is John Morgan in for Akshay, good morning.

Good morning. John Morgan - KeyBanc Capital Markets: A quick follow-up relating to lot of the promotional activity you are experiencing. How much of that can you attribute to the (inaudible) bankruptcy?

I wouldn’t take a stab of that. We are just calling the marketplace without naming competitors. John Morgan - KeyBanc Capital Markets: Okay. And then maybe a quick -- second question would be is, with regard to your DSD business, it looks like the organic growth, revenue growth is looks lowest it’s been in several quarters. How did the performance of that segment overall compared to your expectations for the quarters?

You are looking at the DSD business? John Morgan - KeyBanc Capital Markets: Yes, DSD segment.

I think, again we talked about obviously or expectations probably would have been higher than what we actually experience in the quarter, John. But again, it's all driven by the promotional activity in the net selling price that kind of accelerated as the quarter progressed. Again, if you look at some categories, we were the price leaders, so we did have some volume effect from that as well. As we typically do, we start seeing dramatic volume effects and we get more promotional as well to try to protect our volumes. So, I would say revenue in that category probably is a little softer than we had planned as thought about the year.

George, it’s there with our brands Nature's Own and Tastykake, it was a good quarter. The other segments we talked about them earlier, some of them regional brands that are more susceptible to price promotional from competition, those were the areas that we are taking note off. John Morgan - KeyBanc Capital Markets: Great. Thank you very much.

Thank you.

Thank you for your question there. Our next question comes from the line of Ann Gurkin from Davenport. Please go ahead. Ann Gurkin - Davenport & Co.: Good morning.

Good morning. Ann Gurkin - Davenport & Co.: I wanted to start with innovation and you highlighted a new product this morning. What it sounds like Pepperidge Farm is stepping up their innovation in the back half of the year and so how do you anticipate competing against what could be a more kind of innovative environment?

I just read the Pepperidge Farm announcement and I think one problem maybe it was corrected at the fresh bread baking (inaudible) and western was probably on the cookie and cracker side. As I mentioned to Tim earlier, I think as the consumer changes we got to be more focused on not losing consumers to this category. I haven’t mentioned I think the toaster bagels, Allen you want to touch on that?

Yes. I thought the Nature’s Own new product, our Oatmeal Toasters are pretty unique product for the breakfast category. Again there is nothing like that in the market today. Just to comment about new products in general, even though the economy is dealing with some tough times, health and nutrition continues to be more important than ever. Our Nature’s Own brand is positioned perfectly to develop products that meet those health and nutrition concerns. Things like clean labels, reduced sodium, there are a lot of health attributes that are under evaluation now that can lead to new products. On the other side, Tastykake positions us with an exciting brand of cake that really lends itself to a new product development. So, we have got some really exciting new products in the queue that we will be talking about as we get later into the year under our Tastykake brand. So, the new product engine is loud and clear. Ann Gurkin - Davenport & Co.: Right. And then with respect to Tastykake, can you comment on repeat purchases and markets in which you have rolled out that brand?

Anytime we introduce a new brand to a marketplace where the brand awareness is not extremely high, you are going to have some sales issues in the very beginning. But we are pleased with the rate of growth of sales with Tastykake in new markets focusing a lot on product demonstrations to sample product to get into consumers hands and once they try Tastykake once many times we have a new customer. We are pleased with the progress. Ann Gurkin - Davenport & Co.: Okay. And then third, the price gaps between store brand white bread and branded white bread, can you comment on where that gap is now and do any adjustments need to be made?

Ann, I mentioned in my comments that the good news in this economy is the share of store brand is not increasing, in fact store brand continues to trend down. As far as the gap between store brand and our major brands it really varies by market and by customer, but the gap is still too wide and should be narrowed over time, but I think the good news again is we are not seeing growth in the share of store brand products. Ann Gurkin - Davenport & Co.: That’s great. Thank you all very much.

Thank you.

Thank you for your question there. Our next question comes from the line of Amit Sharma from BMO Capital Markets. Amit Sharma - BMO Capital Markets: Hi, good morning everyone.

Good morning. Amit Sharma - BMO Capital Markets: Steve, can you provide us a view on interest expense for the year. Is it still going to be approximately $11 million for the whole year?

The $11 million, I think we have talked about it in the last call was the increase. The total interest expense for the year is going to be roughly $20 million to $21 million. Amit Sharma - BMO Capital Markets: This is net of interest income?

No. That’s the total interest expense, then you will need to net out the interest income. Amit Sharma - BMO Capital Markets: That will be about $12 million?

Yes, net interest expense is about $8 million. Amit Sharma - BMO Capital Markets: $8 million, got it. Okay. And then George, can you please share your view on the grains market. Clearly we have plentiful wheat here, or wheat has clearly gone up in sympathy with corn. How do you view this playing out as we go towards the end of the crop cycle here?

Well, I think, looking at the USDA, they talk about corn. Their announcement last Friday, or this past Monday outlined another down trend on bushels per acre of corn. They decided plenty of wheat but it’s all in sympathy of soybeans and corn. I think the whole issue of corn is probably over for the year. Soybeans, I think, predictions could be even some rain could have that. I think corn is what is going to be. So if we look usually higher prices brings lower prices over time. What it means by that, I think we see farmers plant hedge-to-hedge, everything they possibly can do. I see it right here in Thomas County where farmers are taking woods and pines out of service and putting in fields to plant and with that, here in Thomas County it's probably happened in other parts of the United States. So, I think farmers are robust. I think they will be planting hedge-to-hedge. We'll see, quick planning first with the one (inaudible) what we mostly about. And I think by January or February we'll know all that’s planted and what it looks like. But I would, we've had two or three dry summers, we've often said we, it can’t be another fall, but we thought it is going to be the third and it has happened. But I'm confident though the farmers and the world will solve the problem, we know there is more people consuming more, but also between the farmers and the seed companies, I think they are continuing to develop ways that we in turn will get more yields per acre in the long haul. Amit Sharma - BMO Capital Markets: Okay, so it'll be as though you're not expecting another leg out from these levels. I mean, borrowing dreadful tone in weather again for soybeans as well?

Amit, I believe you said the question was, do we expect cheaper prices on wheat? Amit Sharma - BMO Capital Markets: No, I'm saying you're not expecting another leg out from where wheat prices are today?

Well, I think volatility is still out there.

We could see another run up, but then you can see a run down at some of the point. Amit Sharma - BMO Capital Markets: Got it, and then last question is, when you look at your competitive set on the independent baker side, not the public or large companies or independent baker. What's your view or what's your sense of where is their margin structure? How is their hedging policy? So, that if we do see this increased volatility in the Greece market, is that competitive set likely to get more promotional or their ability to get more promotional is just hindered by their margin structure and their hedging policies?

You know, we are doing not only this for fact, I would think that most independence are shorter term people than public companies. I would think they are probably shorter, lot of them do not use hedging. So, chances are they are using higher price wheat as we speak. I don't know that, but probably, so you would think with margins already compressed and with higher input costs that it could get less, we have not seen that yet. And I think as the year goes through we'll probably see, could see as many promotions but you could see at a different price level possibly. Amit Sharma - BMO Capital Markets: Got it, thank you very much.

Thank you.

Thank you for your question there. Our next question comes from the line of Bill Chappell from SunTrust, please go ahead. Bill Chappell – SunTrust: Good morning.

Good morning Bill. Bill Chappell – SunTrust: Just a few quick questions, one and you might have covered this. On the accretion from Lepage, it was originally $0.03 to $0.05, now $0.02 to $0.04. Is that just timing of the deal and financing costs?

Yes, some of that was timing but also since we announced that deal we have seen commodities move up and we are factoring in some, the possibility of higher commodities in the back half for that business. Bill Chappell – SunTrust: So was Lepage not as hedged as you were?

They had some coverage, I would say, but it would not have been as long as Flowers. Bill Chappell – SunTrust: Okay, then on that same kind of note, I assume when you come to October you're looking to do some pricing to offset these commodities for next year. Is that pricing kind of baked into your full year guidance in terms of what it would affect on the fourth quarter?

Yes as we look at the pricing actions as we turn the back half, we have estimated the affect of those and tried to estimate an effect on volume as well.

But Steve (inaudible) your comments it really won't come down to what the real net price for the back half for that one bad quarter. Bill Chappell – SunTrust: But we should know by the time you get to late October kind of whether you've covered the commodity cost for next year?

Yes. Bill Chappell – SunTrust: Okay. And finally saw on Tasty is there any kind of, I'm sorry, if I've missed it, update in terms of number of doors or market penetration or kind of where that we are in that stage?

Yeah, I can get that information for you. At this point we've expanded the Tasty brand to all markets with the exception of our Phoenix plant and our El Paso plant. So, the biggest percent of our DSD network is selling Tasty today and I could give the specific numbers for you and get that to you a little later Bill. Bill Chappell – SunTrust: Okay, great thank you.

Thank you.

Thank you for your question there. (Operator Instructions) Our next question comes from the line Doug Thomas from JET Investment Research, please go ahead. Douglas Thomas - JET Investment Research: Good morning.

Good morning Douglas. Douglas Thomas - JET Investment Research: Alright George, I don't know if this is going to help you out in the near term but I'm having toast, an English muffin, I'm about to have a tasty chocolate doughnut and I got a loaf of bread to feed the ducks this morning. So, I think, I don't know that's, sure that will help out.

Absolutely, thank you. Douglas Thomas - JET Investment Research: So George I had a couple of quick questions for you. One was nothing like the lowest interest rates in our lifetimes to I guess, make a person more willing to take on a little bit of debt and I'm just wondering from your advantage point as this consolidation continues in the industry, what is your and the Board's appetite for taking on debt here? What I considered to be absurdly low levels to continue to facilitate consolidation as your competitors, particularly the smaller ones find themselves under increasing pressure?

Thank you Doug, I'm going to let Steve take that.

Doug, this is Steve. I think we've said this before that our goal is to remain investment ready and based on our current levels of EBITDA and our current footprint and how we're viewed by the rating agencies about three times trailing 12 months EBITDA is really where things start to get nervous to allude your ratings, so somewhere, let's say, we're most comfortable somewhere around the two. But we could lever up to three to take advantage of these opportunities and still maintain our investment grade rating. Douglas Thomas - JET Investment Research: Okay, I appreciate that.

And if we reach to three I would tell you we would have a plan in place to quickly bring that back down. Douglas Thomas - JET Investment Research: Okay and then secondly, whenever I think when investors hear you guys talk they are always I think takeaway this cost reduction, continuous improvement, all the things that obviously great companies do all the time in terms of particularly improving their competitive positions during weak periods like this. But there are some offensive things in terms of I know some of these technology programs that your retail customers have in place, in terms of being able to identify particular demographics, right down to specific customers. And I'm just wondering Kroger has a program, Safeway is rolling out a program. I don't often, I don't recall getting promotional offers at retail or online or anything for bread or even Tastykake type of products. Everything seems to be at the store, but I'm just wondering, whether opportunities given the fact that you guys are really a national player now and in multi categories and they have to be viewed by your customers as a valued branded innovative partner. Are there opportunities to do a better job of tailoring programs that sort of create customer loyalty as opposed to for example, just giving sense off at the store?

Doug, we are probably involved with, and again it’s a customer-by-customer situation. Yeah, we're involved in many of their loyalty card programs not only on to deliver on say a coupon or deliver advertising, but we're also in Dunn Humvee information is a good example. We're buying that information to learn more about the consumer to help drive our marketing and new product development projects. But we are very involved and again it's a customer-by-customer situation with their social media activities, couponing, utilizing their loyalty card and other web based delivery vehicles. So we feel that that certainly is where the market is at currently and is going to become an even bigger factor in the future, so we are very much focused on that area. Douglas Thomas - JET Investment Research: And there again you would seem to have significant advantages over some of your smaller rivals. But for example the cross-selling opportunities to get people for example, who don’t realize that you make Nature's Own and they are buying Tastykakes, I think that will provide you with some synergies and some economies of scale that your competitors don’t have.

Yes, good point, thank you.

Doug, I just want to say we agree with your assessment. Douglas Thomas - JET Investment Research: Thanks George, good luck to you guys.

Thank you.

Thank you for your question. We have no further questions at this time, so I would now like to turn the call over to Mr. Deese for closing remarks.

Thank you, operator and I thank all of you for joining us today and look forward to seeing you (inaudible). Thank you.

Thank you ladies and gentlemen for your participation in today's conference, this concludes the presentation. You may now disconnect. Have a good day.