SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C. 20549

                          FORM 10-Q

             Quarterly Report Under Section 13 or 15(d)
               of the Securities Exchange Act of 1934

              For the Quarter Ended December 31, 1996

                   Commission file number 1-7554

                     THE EARTHGRAINS COMPANY
        (Exact name of registrant as specified in its charter)


        DELAWARE                            36-3201045
(State or other jurisdiction of          (I.R.S. Employer
incorporation or organization)          Identification No.)


                         314-259-7000
        (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
                       Yes [X ]  No [ ]


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

            $.01 Par Value Common Stock - 10,141,069
                 shares as of January 31, 1997


<PAGE>


                      THE EARTHGRAINS COMPANY

                              Index


                                                    Page No.

Part I.    FINANCIAL INFORMATION

Condensed Consolidated Balance Sheet                    2

Condensed Consolidated Statements of Earnings           3

Condensed Consolidated Statements of Cash Flows         4

Notes to Condensed Consolidated Financial Statements    5

   Management's Discussion and Analysis of Financial
   Condition and Results of Operations                  7

   Unaudited Pro Forma Financial Information           10

Part II.   OTHER INFORMATION

   Other Information                                   12

   Exhibits and Reports on Form 8-K                    12



<PAGE>


                   THE EARTHGRAINS COMPANY
             Condensed Consolidated Balance Sheet
                      (In millions)
                       (Unaudited)

<TABLE>
<CAPTION>

                                                        December 31,      March 26,
                                                            1996             1996
                                                            ----             ----

<S>                                                    <C>             <C>
Assets
Current assets:
   Cash and cash equivalents                            $    57.7       $    38.9
   Accounts receivable, net of allowance for
     doubtful accounts of $6.8 and $6.7, respectively       146.7           138.9
   Inventories                                               72.4            68.0
   Deferred income taxes and other                           25.2            24.0
                                                        ---------       ---------
          Total current assets                              302.0           269.8
Other assets                                                 27.6            38.6
Goodwill, net                                               140.8           130.3
Plant and equipment, net                                    726.9           727.0
          Total assets                                  $ 1,197.3       $ 1,165.7
                                                        =========       =========

Liabilities and Shareholders' Equity
Current liabilities:
   Accounts payable                                     $   132.3       $   98.1
   Accrued salaries, wages and benefits                      46.8           48.6
   Accrued taxes, other than income taxes                     8.7           11.4
   Accrual for restructuring and consolidation                5.2           15.4
   Other current liabilities                                 19.4           36.3
                                                        ---------       ---------
          Total current liabilities                         212.4          209.8

Postretirement benefits                                     122.3          123.1
Long-term debt                                              115.6           92.6
Deferred income taxes                                        93.7           87.2
Other noncurrent liabilities                                 60.8           72.2
Commitments and contingencies                                  --             --
Shareholders' equity                                        592.5          580.8
                                                        ---------       ---------
          Total liabilities and shareholders' equity     $1,197.3       $1,165.7
                                                        =========       =========

<FN>
    See accompanying Notes to Condensed Consolidated Financial Statements.
</FN>


</TABLE>

                                   2


<PAGE>


                    THE EARTHGRAINS COMPANY
         Condensed Consolidated Statements of Earnings
              (In millions except per share data)
                        (Unaudited)


<TABLE>
<CAPTION>

                                  Sixteen week                  Forty week
                                  period ended                 period ended
                            -------------------------    ------------------------
                            December 31,    January 2,   December 31,   January 2,
                                1996           1996          1996          1996
                                ----           ----          ----          ----

<S>                          <C>             <C>          <C>          <C>
Net Sales                     $522.7          $524.9       $1,275.0     $1,292.8
Cost of products sold          310.9           336.2          761.4        808.6
                              ------          ------       --------     --------
Gross Profit                   211.8           188.7          513.6        484.2
Marketing, distribution and
  administrative expenses      194.1           197.9          482.6        486.6
Provision for restructuring
  and consolidation, net          --            (0.4)           1.0          3.0
                              ------          ------       --------     --------
Operating income (loss)         17.7            (8.8)          30.0         (5.4)
Other income and expenses:
     Interest expense           (1.9)           (0.6)          (4.7)        (1.5)
     Other income, net           0.9             1.2            1.6          3.9
                              ------          ------       --------     --------
Income before income taxes      16.7            (8.2)          26.9         (3.0)

Provision for income taxes       7.5            (0.1)          12.6          3.4
                              ------          ------       --------     --------
Net income (loss)             $  9.2          $ (8.1)      $   14.3     $   (6.4)
                              ======          ======       ========     ========
Earnings (loss) per share     $ 0.91          $(0.79)      $   1.42     $  (0.63)
                              ======          ======       ========     ========
Weighted average shares
  outstanding (pro forma
  for prior year periods)       10.1            10.2           10.1         10.2
                              ======          ======       ========     ========

<FN>
      See accompanying Notes to Condensed Consolidated Financial Statements.
</FN>

</TABLE>

                                   3


<PAGE>



                    THE EARTHGRAINS COMPANY
          Condensed Consolidated Statements of Cashflows
                        (In millions)
                         (Unaudited)


<TABLE>
<CAPTION>
                                                     For the forty week period ended
                                                     -------------------------------
                                                        December 31,     January 2,
                                                           1996           1996
                                                           ----           ----

<S>                                                    <C>             <C>
Cash flow from operating activities:
   Net income/(loss)                                    $    14.3       $    (6.4)
   Adjustments to reconcile earnings to net cash flow
     provided by operations: 
       Depreciation and amortization                         62.1            63.7
       Deferred income taxes                                  6.5             4.5
       Provision for restructuring and consolidation,
         net                                                  1.0            (0.7)
   Loss on disposal of fixed assets                           0.4             0.5
   Changes in noncash working capital                        (7.8)           (2.7)
   Other, net                                                10.2            (3.4)
                                                        ---------       ---------
      Net cash flow from operations                          86.7            55.5
                                                        ---------       ---------
Cash flows from investing activities:
   Capital expenditures                                     (56.1)          (93.8)
   Acquisition                                              (38.5)             --
   Other, net                                                 4.8            31.6
                                                         --------        --------
      Net cash used by investing activities                 (89.8)          (62.2)
                                                         --------        --------
Cash flows from financing activities:
   Proceeds from (payments on) borrowings, net               23.0            (9.9)
   Dividends paid to shareholders                            (1.1)             --
   Net transactions with Anheuser-Busch                        --            11.3
                                                        ---------       ---------
      Net cash provided by financing activities              21.9             1.4
                                                        ---------       ---------
Net increase/(decrease) in cash and cash equivalents         18.8            (5.3)
Cash and cash equivalents, beginning of period               38.9            38.7
                                                        ---------       ---------
Cash and cash equivalents, end of period                $    57.7       $    33.4
                                                        =========       =========


<FN>
    See accompanying Notes to Condensed Consolidated Financial Statements.
</FN>

</TABLE>

                                   4

<PAGE>


Notes to Condensed Consolidated Financial Statements

-----------------------------------------------------------------

Note 1 -  Effective March 26, 1996, one share of The Earthgrains
Company (the Company or Earthgrains) $.01 par value common stock
was distributed to holders of Anheuser-Busch Companies, Inc.
(Anheuser-Busch) common stock for every 25 shares of Anheuser-
Busch common stock owned at the established record date (the
Distribution).  At the time of the Distribution, the Company
began operations as a separate, publicly owned company.

Note 2 - The Company has changed its fiscal year end from the
Tuesday closest to December 31 to the last Tuesday in March. 
This report reflects the Company's third quarter of its new
fiscal year for the sixteen week period ended December 31, 1996.

In the opinion of the Company, the accompanying unaudited
condensed consolidated financial statements contain all
adjustments (consisting of only normal recurring adjustments)
necessary for a fair presentation of the financial statements
pursuant to the applicable SEC rules and guidelines pertaining to
interim financial information.  Operating results for any quarter
are not necessarily indicative of the results for any other
quarter or for the full year.  These condensed consolidated
financial statements should be read in conjunction with the
combined financial statements and notes thereto included in the
Company's registration filing on Form 10.

Note 3 - Inventories are carried at the lower of cost or market. 
Cost is determined under the first-in, first-out method.

  Total inventories consisted of the following:
                             December 31,        March 26,
                                1996               1996
                             -----------        ----------

        Raw materials        $      56.9        $     53.6
        Finished goods              15.5              14.4
                             -----------        ----------
                             $      72.4        $     68.0
                             ===========        ===========

                                   5

<PAGE>


Note 4 - Earnings per share for the current period are based on
the weighted average number of shares of common stock outstanding
during the period.  For the year ago periods presented, earnings
per share were computed using the weighted average shares of
Anheuser-Busch common stock outstanding during the respective
period, adjusted for a 1 to 25 stock distribution ratio.


Note 5 - Effective November 30, 1996, the Company completed the
transaction to acquire the assets of Heiner's Bakery, Inc. of
Huntington, West Virginia.  Heiner's, a privately held, wholesale
bakery is the sales leader of branded bread, buns and rolls in
its marketing territory throughout West Virginia and in portions
of Ohio and Kentucky.  The acquisition has been accounted for
using the purchase method and, accordingly, the results of
operations are included in the consolidated statement of earnings
from the date of acquisition.  The impact for the current period
was not significant.

On January 27, 1996, the Company announced the decision to close
the refrigerated dough plant in Indianapolis, Indiana and
transfer production to the Company's existing plant in
Carrollton, Texas.  The production transfer will not have an
impact on revenues and is expected to generate cost savings.  An
after-tax charge associated with the plant closure is estimated
to be $6-8 million and will be reflected in the fourth quarter.

                                   6


<PAGE>


Management's Discussion and Analysis of Financial Condition and
Results of Operations

INTRODUCTION
------------

Effective at the close of business on March 26, 1996 (the
Distribution Date), shares of the Company were distributed to
shareholders of Anheuser-Busch Common Stock, based upon a ratio
of 1 to 25.  Following the distribution, the Company began
operations as an independent, publicly held company.  This
discussion summarizes the significant factors affecting the
consolidated operating results, financial condition and liquidity
of The Earthgrains Company for the sixteen and forty week periods
ended December 31, 1996 compared to the sixteen and forty week
periods ended January 2, 1996.  This discussion should be read in
conjunction with the combined financial statements and notes
thereto for the fiscal year ended January 2, 1996 included in the
Company's registration statement on Form 10.  

RESULTS OF OPERATIONS
---------------------

Net sales for the sixteen week period ended December 31, 1996, of
$522.7 million were consistent with $524.9 reported for the
comparable prior year period.  Net sales for the forty week
period December 31, 1996 were $1,275.0 million, a decrease from
comparable 1995 sales of $1,292.8 million.  The decrease can be
attributed to the planned consolidation and restructuring that
resulted in the closing or sale of underperforming and non-core
businesses.  This decrease was partially offset by the effect of
price increases taken for fresh baked goods earlier in the year
as well as selective price increases for domestic refrigerated
dough products initiated this quarter.  After adjusting sales for
the closed or sold facilities in both periods presented, sales
for the sixteen week period increased by $19.7 million, or 3.9%,
and $50.1 million, or 4.1%, on a year to date basis.

Gross margins increased significantly in the current period to
40.5% from 35.9% in the year ago period.  Profit margin
improvements were experienced across all operations.  These
margin improvements can be attributed to the achieved price
increases, benefits of the restructuring and consolidation
process, and improved operating efficiencies.

Marketing, distribution and administrative expenses reflect the
elimination of costs through the closing or sale of facilities
partially offset by costs associated with being an independent
company incurred during the current periods.

The net gain reflected in the prior year quarter is comprised of
two components.  $18.0 million of the fiscal 1995 provision for
restructuring and consolidation was recorded in the year ago
period to cover estimated expenses arising from the consolidation
of certain domestic bakery operations identified at that date. 
This charge was offset by an $18.4 million gain on the sale of a
non-core business.

The increase in interest expense is directly related to the
increased debt for the distribution payment to Anheuser-Busch in
conjunction with the spin-off.

The variance in the effective income tax rate reflects the
relative impact of the nondeductible fixed goodwill amortization
on the respective earnings levels.

                                   7

<PAGE>


Net earnings for the sixteen week period were $9.2 million or
$.91 per share, compared to a loss of $8.1 million, or a $.79
loss per share, computed on the basis of pro forma average shares
outstanding in the prior year's comparable period. Year to date
earnings were $14.3 million or $1.42 per share compared to a loss
of $6.4 million or $.63 per share in 1995.  

Coming off of the seasonally strong sales cycle for refrigerated
dough product lines, the upcoming fourth quarter is a typically
slower season for all business lines.  While continued
improvements from year ago performance in operating efficiencies
are expected, such benefits are likely to be offset by the charge
to be recorded in the fourth quarter in conjunction with the
announced Indianapolis plant closure.

The historical statement of earnings for the year ago period does
not reflect interest expense related to long-term debt assumed by
the Company upon the distribution at March 26, 1996 and certain
administrative expenses associated with operating as an
independent, stand-alone company.  For a presentation of the
potential effect these items and events may have had on the
Company's results for the year ago period see the Unaudited Pro
Forma Financial Information elsewhere in this document.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
 
Concurrent with the Distribution, the Company used borrowings
under a $215 million unsecured revolving credit facility with
several financial institutions to pay $80 million to Anheuser-
Busch as a partial payment of its intercompany payable and to
fund working capital needs and general corporate purposes.  Upon
the effective date of the distribution, the remaining
intercompany payables and receivables between the Company and
Anheuser-Busch was contributed to the capital of the Company.  A
separate $15 million committed line of credit is also maintained
for servicing funding requirements.

The Company's primary source of liquidity is cash flow from
operations, which increased to $86.7 million for the forty weeks
ended December 31, 1996.  Net working capital, excluding cash and
cash equivalents was $31.9 million at December 31, 1996 compared
to $21.1 million at March 26, 1996.  The increase is reflective
of working capital effects associated with the seasonality of the
business.

The funding for the acquisition of Heiner's, which was completed
in the current quarter, was sourced through the existing credit
agreement and cash generated from operations.  The Company's
primary routine cash requirements will consist of funding capital
expenditures and interest payments pursuant to the credit
facility.  The Company has invested $56.1 in capital expenditures
year to date.

The Board recently approved a proposal to build a bakery in
northern Portugal.  This new facility will allow the Spanish
operations to meet increased demand for baked goods and expand
their current market in Portugal and northwest Spain.  The
funding for the plant will be part of the Company's consolidated
capital expenditure plan in fiscal 1998 and will be provided
through cash from the Spanish operations.

Cash provided by operations and borrowings available under the
credit agreement should continue to provide the funding for
ongoing cash requirements.  

                                   8

<PAGE>


ENVIRONMENTAL MATTERS
---------------------

The Company is subject to Federal, state and local environmental
protection laws and regulations and is operating within such laws
or is taking action aimed at assuring compliance with such laws
and regulations.  Earthgrains has been identified as a
potentially responsible party ("PRP") at certain locations by the
EPA and may be required to share in the cost of cleanup with
respect to two sites.  While it is difficult to quantify with
certainty the financial impact of actions related to
environmental matters, based on the information currently
available it is management's opinion that the ultimate liability
arising from such matters, taking into consideration established
reserves, should not have a material effect on the Company's
results of operations or financial position. 

                                   9


<PAGE>


                   THE EARTHGRAINS COMPANY
           UNAUDITED PRO FORMA FINANCIAL INFORMATION

     The condensed consolidated statements of earnings of the
Company presented for the year ago periods reflect a period
during which the Company operated as a subsidiary of Anheuser-
Busch.  These historical financial statements of the Company may
not necessarily reflect the consolidated results of operations of
the Company or what the results of operations would have been if
the Company had been an independent, public company during such
period.

     The unaudited pro forma condensed consolidated statements of
earnings for the sixteen and forty week periods ended January 2,
1996 present the consolidated results of Earthgrains' operations
assuming that the Distribution had occurred as of March 29, 1995. 
Such statements of earnings have been prepared by adjusting the
historical statement of earnings for the effect of costs and
expenses and the recapitalization to reflect the Distribution as
if it had been effected on March 29, 1995.

     The consolidated financial statements as of and for the
periods ended December 31, 1996 and the consolidated balance
sheet of the Company as of March 26, 1996 reflect the effects of
the Distribution.

                                   10


<PAGE>



                       The Earthgrains Company
   Unaudited Pro Forma Condensed Combined Statements of Earnings
                 (In millions, except per share data)


<TABLE>
<CAPTION>
                            For the Sixteen Week Period                       For the Forty Week Period
                               Ended January 2, 1996                             Ended January 2, 1996
                          ----------------------------------        -------------------------------------


                                         Pro Forma       Pro                        Pro Forma       Pro
                           Historical   Adjustments     Forma        Historical     Adjustments     Forma
                           ----------   -----------     -----        ----------     -----------     -----

<S>                           <C>         <C>           <C>           <C>             <C>          <C>

Net Sales                      $524.9      $    --       $524.9        $1,292.8        $    --      $1,292.8

Cost of products sold           336.2         1.1(a)      337.3           808.6           2.7(a)       811.3
                                -----         ------      -----          ------          -------      ------

Gross profit                    188.7        (1.1)        187.6           484.2          (2.7)         481.5

Marketing, distribution and
  administrative expenses       197.9         6.3(a)      204.2           486.6          16.1(a)       502.7

Provision for restructuring
  and consolidation, net         (0.4)          --         (0.4)            3.0              --          3.0
                                -----         ------      -----          ------          -------      ------

Operating (loss)                 (8.8)       (7.4)        (16.2)           (5.4)        (18.8)         (24.2)

Other income and expenses:
     Interest expense            (0.6)       (1.8)(b)      (2.4)           (1.5)         (4.2)(b)       (5.7)

     Other income, net            1.2           --          1.2             3.9              --          3.9
                                -----         ------      -----          ------          -------      ------

(Loss) before income taxes       (8.2)       (9.2)        (17.4)           (3.0)        (23.0)         (26.0)
                                -----         ------      -----          ------          -------      ------

Provision (benefit) for
  income taxes                   (0.1)       (3.3)         (3.4)            3.4          (8.3)(c)       (4.9)
                                -----         ------      -----          ------          -------      ------

Net (loss)                    $  (8.1)     $ (5.9)      $ (14.0)         $ (6.4)      $ (14.7)       $ (21.1)
                              ========     ========     ========         =======      ========       ========

(Loss) per share(d)                                     $  (1.37)                                    $  (2.06)
                                                        ========                                     ========

Weighted average shares
   outstanding(d)                                          10.2                                         10.2
                                                        ========                                     ========

_______________________

<FN>

(a)     To reflect the estimated incremental costs associated with being an
        independent, public company.
(b)     To reflect interest expense on incremental debt and working capital            
        requirements.
(c)     To reflect tax effect of the proforma adjustments.
(d)     The number of shares used to compute earnings (loss) per share is based on the 
        weighted average number of shares of Anheuser-Busch common stock outstanding   
        during the period adjusted for the 1 for 25 stock distribution ratio.

</FN>
</TABLE>

                                               11

<PAGE>


                   PART II.  OTHER INFORMATION


Item 1.  Legal Proceedings.  The Company has no legal proceedings
which have become a reportable event in the current period.

Item 2.  Changes in Securities.  None.

Item 3.  Defaults Upon Senior Securities.  None.

Item 4.  Submission of Matters to a Vote of Security-Holders.  No
matters were submitted to a vote of security-holders during the
current period.

Item 5.  Other Information.  None.

Item 6.  Exhibits.

         (a)  27 - Financial Data Schedule

         (b)  On November 30, 1996, the Company filed with the
Securities and Exchange Commission a current report on Form 8-K
disclosing the consummation of the acquisition of Heiner's
Bakery, Inc.

         On February 13, 1997, the Company filed with the
Securities and Exchange Commission an 8-K to incorporate the
required financial statements for the report filed November 30.

                                   12


<PAGE>


                         SIGNATURES


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

                                  THE EARTHGRAINS COMPANY
                                  (Registrant)


Date:  February 14, 1997          By:  Mark H. Krieger


                                  
                                  Mark H. Krieger
                                  Vice President and
                                  Chief Financial Officer

                                   

<PAGE>