##### Table of Contents



UNITED STATES
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
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For the quarterly period ended November 15, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the transition period from  to
 Commission File Number 1-11165
 
 INTERSTATE BAKERIES CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
    
    43-1470322(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)12 East Armour Boulevard, Kansas City, Missouri
    
    64111(Address of principal executive offices)
    
    (Zip Code)
 (816) 502-4000
(Registrants telephone number, including area code)
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



INTERSTATE BAKERIES CORPORATION
FORM 10-Q
QUARTER ENDED November 15, 2008
 
 Description
    
    PagePART I  FINANCIAL INFORMATION (UNAUDITED)
    
    
    3ITEM 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Operations
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Condensed Consolidated Statement of Stockholders Deficit
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    30Forward-Looking Statements
    
    
    39ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    42ITEM 4. Controls and Procedures
    
    
    42PART II  OTHER INFORMATION
    
    
    44ITEM 1. Legal Proceedings
    
    
    44ITEM 1A. Risk Factors
    
    
    45ITEM 6. Exhibits
    
    
    46Signatures
    
    
    47EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 INTERSTATE BAKERIES CORPORATION
(DEBTOR-IN-POSSESSION)
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (UNAUDITED)
 (dollars in thousands, except share data)
 November 15,
    
    
    May 31,2008
    
    
    2008ASSETSCurrent assetsCash
    
    $
    24,664
    
    
    $
    25,071Restricted cash
    
    
    21,117
    
    
    
    21,052Accounts receivable, less allowance for doubtful accounts of $2,278 and $2,050, respectively
    
    
    134,607
    
    
    
    136,627Inventories
    
    
    60,140
    
    
    
    61,837Assets held for sale
    
    
    13,303
    
    
    
    17,562Other current assets
    
    
    48,480
    
    
    
    43,995Total current assets
    
    
    302,311
    
    
    
    306,144Property and equipment, net
    
    
    444,614
    
    
    
    464,455Intangible assets
    
    
    158,258
    
    
    
    158,285Other assets
    
    
    29,919
    
    
    
    29,473Total assets
    
    $
    935,102
    
    
    $
    958,357LIABILITIES AND STOCKHOLDERS DEFICITLiabilities not subject to compromiseCurrent liabilitiesPre-petition debt
    
    $
    2,405
    
    
    $
    2,759Post-petition debt
    
    
    113,191
    
    
    
    63,358Accounts payable
    
    
    106,032
    
    
    
    108,288Accrued expenses
    
    
    172,276
    
    
    
    205,411Total current liabilities
    
    
    393,904
    
    
    
    379,816Other liabilities
    
    
    186,448
    
    
    
    219,288Deferred income taxes
    
    
    68,295
    
    
    
    69,475Total liabilities not subject to compromise
    
    
    648,647
    
    
    
    668,579Liabilities subject to compromise
    
    
    829,731
    
    
    
    751,492Stockholders deficitPreferred stock, $0.01 par value, 1,000,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 120,000,000 shares authorized, 81,579,000 shares issued,
45,202,000 shares outstanding
    
    
    816
    
    
    
    816Additional paid-in capital
    
    
    584,485
    
    
    
    584,485Accumulated deficit
    
    
    (481,324
    )
    
    
    (403,038
    )Treasury stock, 36,377,000 shares at cost
    
    
    (678,740
    )
    
    
    (678,740
    )Accumulated other comprehensive income
    
    
    31,487
    
    
    
    34,763Total stockholders deficit
    
    
    (543,276
    )
    
    
    (461,714
    )Total liabilities and stockholders deficit
    
    $
    935,102
    
    
    $
    958,357
  3




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##### Table of Contents



INTERSTATE BAKERIES CORPORATION
(DEBTOR-IN-POSSESSION)
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
 (dollars in thousands, except per share data)
 Twelve Weeks Ended
    
    
    Twenty-Four Weeks EndedNovember 15,
    
    
    November 17,
    
    
    November 15,
    
    
    November 17,2008
    
    
    2007
    
    
    2008
    
    
    2007Net revenues
    
    $
    643,931
    
    
    $
    645,116
    
    
    $
    1,302,640
    
    
    $
    1,334,932Cost of products sold (exclusive of items shown below)
    
    
    334,626
    
    
    
    328,500
    
    
    
    690,689
    
    
    
    671,731Selling, delivery and administrative expenses
    
    
    292,685
    
    
    
    310,201
    
    
    
    603,616
    
    
    
    631,244Restructuring charges (credits)
    
    
    (1,778
    )
    
    
    7,929
    
    
    
    (6,179
    )
    
    
    7,881Depreciation and amortization
    
    
    13,650
    
    
    
    15,205
    
    
    
    27,325
    
    
    
    30,853Loss on sale or abandonment of assets
    
    
    892
    
    
    
    378
    
    
    
    1,194
    
    
    
    391Property and equipment impairment
    
    
    
    
    
    
    (351
    )
    
    
    
    
    
    
    9,842640,075
    
    
    
    661,862
    
    
    
    1,316,645
    
    
    
    1,351,942Operating profit (loss)
    
    
    3,856
    
    
    
    (16,746
    )
    
    
    (14,005
    )
    
    
    (17,010
    )Other (income) expenseInterest expense (excluding unrecorded contractual
interest expense of $1,367, $1,367, $2,750, and
$2,750, respectively)
    
    
    14,444
    
    
    
    11,263
    
    
    
    27,902
    
    
    
    22,283Reorganization charges, net
    
    
    34,083
    
    
    
    11,707
    
    
    
    40,109
    
    
    
    18,905Other (income) expense
    
    
    109
    
    
    
    128
    
    
    
    62
    
    
    
    7448,636
    
    
    
    23,098
    
    
    
    68,073
    
    
    
    41,262Income (loss) before income taxes
    
    
    (44,780
    )
    
    
    (39,844
    )
    
    
    (82,078
    )
    
    
    (58,272
    )Provision (benefit) for income taxes
    
    
    (3,360
    )
    
    
    (683
    )
    
    
    (3,792
    )
    
    
    (3,118
    )Net income (loss)
    
    $
    (41,420
    )
    
    $
    (39,161
    )
    
    $
    (78,286
    )
    
    $
    (55,154
    )Net income (loss) per shareBasic and diluted
    
    $
    (0.92
    )
    
    $
    (0.87
    )
    
    $
    (1.73
    )
    
    $
    (1.22
    )
  4




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##### Table of Contents



INTERSTATE BAKERIES CORPORATION
(DEBTOR-IN-POSSESSION)
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 (dollars in thousands)
 Twenty-Four Weeks EndedNovember 15,
    
    
    November 17,2008
    
    
    2007Operating activitiesNet income (loss)
    
    $
    (78,286
    )
    
    $
    (55,154
    )Depreciation and amortization
    
    
    27,325
    
    
    
    30,853Provision (benefit) for deferred income taxes
    
    
    (140
    )
    
    
    (1,725
    )Reorganization charges, net
    
    
    40,109
    
    
    
    18,905Cash reorganization items
    
    
    (16,646
    )
    
    
    (14,519
    )Non-cash bankruptcy-related charges
    
    
    87
    
    
    
    1,964Non-cash interest expense  deferred debt fees
    
    
    9,228
    
    
    
    1,023Non-cash restricted stock compensation expense
    
    
    
    
    
    
    375(Gain) loss on sale, write-down or abandonment of assets
    
    
    (5,955
    )
    
    
    9,559Change in operating assets and liabilitiesAccounts receivable
    
    
    2,023
    
    
    
    17,295Inventories
    
    
    1,697
    
    
    
    11,869Other current assets
    
    
    (5,527
    )
    
    
    (94
    )Accounts payable and accrued expenses
    
    
    (7,575
    )
    
    
    (14,351
    )Long-term portion of self insurance reserves
    
    
    1,164
    
    
    
    (292
    )Other
    
    
    (13,080
    )
    
    
    (100
    )Net cash provided by (used in) operating activities
    
    
    (45,576
    )
    
    
    5,608Investing activitiesPurchases of property and equipment
    
    
    (6,709
    )
    
    
    (10,155
    )Proceeds from sale of assets
    
    
    11,599
    
    
    
    3,771Restricted cash deposit
    
    
    
    
    
    
    (3,862
    )Acquisition and development of software assets
    
    
    
    
    
    
    (494
    )Other
    
    
    
    
    
    
    33Net cash provided by (used in) investing activities
    
    
    4,890
    
    
    
    (10,707
    )Financing activitiesReduction of long-term debt
    
    
    (354
    )
    
    
    (494
    )Increase in pre-petition debt
    
    
    1,239
    
    
    
    2,421Reduction of post-petition debt
    
    
    (11,485
    )
    
    
    Increase in post-petition debt
    
    
    61,318
    
    
    
    Debt and other commitment fees
    
    
    (10,439
    )
    
    
    (5,600
    )Net cash provided by (used in) financing activities
    
    
    40,279
    
    
    
    (3,673
    )Net increase (decrease) in cash
    
    
    (407
    )
    
    
    (8,772
    )Cash at beginning of period
    
    
    25,071
    
    
    
    67,212Cash at end of period
    
    $
    24,664
    
    
    $
    58,440Cash payments (received)Interest
    
    $
    19,942
    
    
    $
    19,629Income taxes
    
    
    228
    
    
    
    116Non-cash investing and financing activitiesInterest income earned on restricted cash deposits
    
    
    65
    
    
    
    209
  5




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##### Table of Contents



INTERSTATE BAKERIES CORPORATION
(DEBTOR-IN-POSSESSION)
 
 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS DEFICIT
 (UNAUDITED)
 (dollars and shares in thousands)
 Common
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedStock Issued
    
    
    Additional
    
    
    
    
    
    
    Treasury Stock
    
    
    Other
    
    
    TotalNumber
    
    
    Par
    
    
    Paid-in
    
    
    Accumulated
    
    
    Number of
    
    
    
    
    
    
    Comprehensive
    
    
    Stockholdersof Shares
    
    
    Value
    
    
    Capital
    
    
    Deficit
    
    
    Shares
    
    
    Cost
    
    
    Income
    
    
    DeficitBalance May 31, 2008
    
    
    81,579
    
    
    $
    816
    
    
    $
    584,485
    
    
    $
    (403,038
    )
    
    
    (36,377
    )
    
    $
    (678,740
    )
    
    $
    34,763
    
    
    $
    (461,714
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (78,286
    )
    
    
    
    
    
    
    
    
    
    
    (3,276
    )
    
    
    (81,562
    )Balance November
15, 2008
    
    
    81,579
    
    
    $
    816
    
    
    $
    584,485
    
    
    $
    (481,324
    )
    
    
    (36,377
    )
    
    $
    (678,740
    )
    
    $
    31,487
    
    
    $
    (543,276
    )
  6




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##### Table of Contents



INTERSTATE BAKERIES CORPORATION
(DEBTOR-IN-POSSESSION)
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 1. Voluntary Chapter 11 Filing
    
    
    authorize us to pay pre-petition and post-petition employee wages and salaries and related benefits during
our restructuring under Chapter 11;
    
    authorize us to pay trust fund taxes in the ordinary course of business, including pre-petition amounts; and
    
    authorize the continued use of our cash management systems.
   7




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##### Table of Contents



Financial Reporting by Entities in
Reorganization Under the Bankruptcy
 8




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##### Table of Contents



Code
 2. Description of Business and Significant Accounting Policies
 Description of Business
    Significant Accounting Policies
 Significant Accounting Policies
 Fiscal Year End
  Principles of Consolidation
  Use of Estimates
  9




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##### Table of Contents



Cash and Cash Equivalents
  Contingencies
 Accounting for Contingencies
 Certain Concentrations of Risk
  Newly Adopted Accounting Pronouncements
 The Fair Value Option for Financial Assets and
Liabilities
 The Hierarchy of Generally Accepted Accounting
Principles
 Recently Issued Accounting Pronouncements
 Determination of the Useful
Life of Intangible Assets Goodwill and Other Intangible Assets
 10




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##### Table of Contents



Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133
 Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No.51
 Business Combinations
 Fair Value Measurements
 3. Inventories
  November 15,
    
    
    May 31,2008
    
    
    2008(dollars in thousands)Ingredients and packaging
    
    $
    38,604
    
    
    $
    38,986Finished goods
    
    
    21,536
    
    
    
    22,851$
    60,140
    
    
    $
    61,837
 4. Property and Equipment
 11




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##### Table of Contents



November 15,
    
    
    May 31,2008
    
    
    2008(dollars in thousands)Land and buildings (lives ranging from 10 to 35 years)
    
    $
    358,778
    
    
    $
    359,133Machinery and equipment (lives ranging from 4 to 15 years)
    
    
    808,395
    
    
    
    820,4841,167,173
    
    
    
    1,179,617Less accumulated depreciation
    
    
    (722,559
    )
    
    
    (715,162
    )$
    444,614
    
    
    $
    464,455
   5. Assets Held for Sale
   6. Lease Obligations
   12




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##### Table of Contents



7. Intangible Assets
  November 15,
    
    
    May 31,2008
    
    
    2008(dollars in thousands)Intangible assets with indefinite lives(generally trademarks and trade names)
    
    $
    157,471
    
    
    $
    157,471Intangible assets with finite livesGross carrying amount
    
    $
    3,491
    
    
    $
    3,491Less: Accumulated amortization
    
    
    (2,704
    )
    
    
    (2,677
    )Net carrying amount
    
    $
    787
    
    
    $
    814
  8. Debt
  November 15,
    
    
    May 31,2008
    
    
    2008(dollars in thousands)SecuredPost-petition credit debt
    
    $
    113,191
    
    
    $
    63,358Pre-petition credit debt
    
    
    451,486
    
    
    
    450,248Unsecured6% senior subordinated convertible notes  pre-petition
    
    
    99,999
    
    
    
    99,999Capital lease converted to pre-petition debt
    
    
    6,125
    
    
    
    6,125Capital leasesReal estate
    
    
    2,405
    
    
    
    2,759$
    673,206
    
    
    $
    622,489Balance sheet classification:Pre-petition debt
    
    $
    2,405
    
    
    $
    2,759Post-petition debt
    
    
    113,191
    
    
    
    63,358Liabilities subject to compromise
    
    
    557,610
    
    
    
    556,372$
    673,206
    
    
    $
    622,489
 Post-Petition Debt
  13




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Pre-Petition Debt
  14




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##### Table of Contents



6% Senior Subordinated Convertible Notes
  Financial Reporting by
Entities in Reorganization under the Bankruptcy Code
 9. Derivative Instruments
    Accounting for Derivative
Instruments and Hedging Activities
  15




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##### Table of Contents



10. Liabilities Subject to Compromise
     November 15,
    
    
    May 31,2008
    
    
    2008(dollars in thousands)Accounts payable
    
    $
    130,092
    
    
    $
    130,828Taxes payable
    
    
    3,408
    
    
    
    4,637Retirement obligations (SERP and deferred compensation)
    
    
    20,200
    
    
    
    20,200American Bakers Association Retirement Plan obligations
    
    
    78,500
    
    
    
    Legal reserve
    
    
    14,493
    
    
    
    14,424Interest bearing debt and capital leases
    
    
    557,610
    
    
    
    556,372Other
    
    
    25,428
    
    
    
    25,031$
    829,731
    
    
    $
    751,492
   16




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##### Table of Contents



11. Employee Benefit Plans
 American Bakers Association Retirement Plan
  November 7,
    
    
    May 31,2008
    
    
    2008(dollars in thousands)Change in Benefit ObligationBenefit obligation at beginning of year
    
    $
    56,823
    
    
    $
    60,465Service cost
    
    
    369
    
    
    
    1,016Interest cost
    
    
    1,610
    
    
    
    3,573Actuarial gain
    
    
    (7,430
    )
    
    
    (3,812
    )Benefits paid and expenses
    
    
    (1,839
    )
    
    
    (4,117
    )Curtailment gain
    
    
    (954
    )
    
    
    (302
    )Benefit obligation at November 7, 2008
    
    $
    48,579
    
    
    $
    56,823Change in Fair Value of Negative Plan AssetsFair value of plan assets at beginning of year
    
    $
    (12,271
    )
    
    $
    (7,715
    )Actual return on plan assets
    
    
    3,298
    
    
    
    (816
    )Employer contributions
    
    
    212
    
    
    
    377Benefits paid and expenses
    
    
    (1,839
    )
    
    
    (4,117
    )Fair value of negative plan assets at November 7, 2008
    
    $
    (10,600
    )
    
    $
    (12,271
    )Funded Status at November 7, 2008
    
    $
    (59,179
    )
    
    $
    (69,094
    )
  November 7,
    
    May 31,2008
    
    2008Weighted-average actuarial assumptionsLiability discount rate
    
    
    8.1
    %
    
    
    6.7
    %Expense discount rate (immediate recognition)
    
    
    8.1
    %
    
    
    6.7
    %Expected return on plan assets
    
    
    7.5
    %
    
    
    7.5
    %
   17




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##### Table of Contents



November 15,2008Accrued liabilities
    
    $
    800Liabilities subject to compromise
    
    
    78,500Total liability recorded for claim settlements related to the ABA Plan
    
    $
    79,300
  Twelve Weeks Ended
    
    
    Twenty-Four Weeks EndedNovember 15,
    
    
    November 17,
    
    
    November 15,
    
    
    November 17,2008
    
    
    2007
    
    
    2008
    
    
    2007(dollars in thousands)Service cost
    
    $
    169
    
    
    $
    234
    
    
    $
    369
    
    
    $
    468Interest cost
    
    
    758
    
    
    
    825
    
    
    
    1,610
    
    
    
    1,650Expected return on negative plan assets
    
    
    223
    
    
    
    168
    
    
    
    475
    
    
    
    336Recognition of actuarial gain
    
    
    (11,204
    )
    
    
    
    
    
    
    (11,204
    )
    
    
    Total pension (credit) expense
    
    
    (10,054
    )
    
    
    1,227
    
    
    
    (8,750
    )
    
    
    2,454Curtailment gain recognized (1)
    
    
    (50
    )
    
    
    
    
    
    
    (50
    )
    
    
    Net pension (credit) expense recognized
    
    $
    (10,104
    )
    
    $
    1,227
    
    
    $
    (8,800
    )
    
    $
    2,454
 
 (1)
    
    Due to the complete curtailment of the ABA Plan, we realized a curtailment gain of
$0.9 million for the ABA Plan. However, due to service time credit granted in the
successor plan as well as out-of-plan replacement benefits granted, a significant portion
of this gain was reflected as non-ABA Plan benefit obligations which are included in other
liabilities at November 15, 2008. Defined Benefit Pension Plan, Postretirement Health and Life Plans, and Supplemental Executive
Retirement Plan
 Defined Benefit Pension Plan
  Postretirement Health and Life Plans
   18




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##### Table of Contents



Supplemental Executive Retirement Plan
    Twelve Weeks EndedPension
    
    
    Postretirement
    
    
    SERPNovember
    
    
    November
    
    
    November
    
    
    November
    
    
    November
    
    
    November15,
    
    
    17,
    
    
    15,
    
    
    17,
    
    
    15,
    
    
    17,2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(dollars in thousands)Service cost
    
    $
    197
    
    
    $
    195
    
    
    $
    200
    
    
    $
    263
    
    
    $
    
    
    
    $
    Interest cost
    
    
    988
    
    
    
    932
    
    
    
    605
    
    
    
    747
    
    
    
    341
    
    
    
    319Expected return on plan assets
    
    
    (1,212
    )
    
    
    (1,290
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service
cost (credit)
    
    
    76
    
    
    
    63
    
    
    
    (1,599
    )
    
    
    (1,706
    )
    
    
    
    
    
    
    Recognized net actuarial (gain)
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    191
    
    
    
    (116
    )
    
    
    (17
    )Net periodic benefit cost (credit)
    
    $
    49
    
    
    $
    (100
    )
    
    $
    (794
    )
    
    $
    (505
    )
    
    $
    225
    
    
    $
    302
 Twenty-Four Weeks EndedPension
    
    
    Postretirement
    
    
    SERPNovember
    
    
    November
    
    
    November
    
    
    November
    
    
    November
    
    
    November15,
    
    
    17,
    
    
    15,
    
    
    17,
    
    
    15,
    
    
    17,2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(dollars in thousands)Service cost
    
    $
    394
    
    
    $
    390
    
    
    $
    400
    
    
    $
    526
    
    
    $
    
    
    
    $
    Interest cost
    
    
    1,976
    
    
    
    1,864
    
    
    
    1,210
    
    
    
    1,493
    
    
    
    682
    
    
    
    638Expected return on plan assets
    
    
    (2,424
    )
    
    
    (2,580
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service
cost (credit)
    
    
    152
    
    
    
    126
    
    
    
    (3,198
    )
    
    
    (3,411
    )
    
    
    
    
    
    
    Recognized net actuarial (gain)
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    382
    
    
    
    (232
    )
    
    
    (34
    )Net periodic benefit cost (credit)
    
    $
    98
    
    
    $
    (200
    )
    
    $
    (1,588
    )
    
    $
    (1,010
    )
    
    $
    450
    
    
    $
    604
 12. Stock-Based Compensation
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
 19




---



##### Table of Contents



1996 Stock Incentive Plan
   Weighted
    
    WeightedAverage
    
    AverageExercise Price
    
    RemainingShares
    
    Per Share
    
    Contractual Term(in thousands)Outstanding, as of May 31, 2008
    
    
    2,560
    
    
    $
    14.61
    
    
    
    3.4Granted
    
    
    
    
    
    
    Surrendered
    
    
    (182
    )
    
    
    18.56Exercised
    
    
    
    
    
    
    Outstanding, as of November 15, 2008
    
    
    2,378
    
    
    
    14.30
    
    
    
    3.1Exercisable at November 15, 2008
    
    
    2,378
    
    
    
    14.30
    
    
    
    3.1
   13. Restructuring Charges (Credits)
  Twelve Weeks Ended
    
    
    Twenty-Four Weeks EndedNovember 15,
    
    
    November 17,
    
    
    November 15,
    
    
    November 17,2008
    
    
    2007
    
    
    2008
    
    
    2007(dollars in thousands)Severance (credits) charges
    
    $
    (8
    )
    
    $
    7,651
    
    
    $
    (28
    )
    
    $
    7,595Long-lived asset (credits) charges
    
    
    (2,148
    )
    
    
    (395
    )
    
    
    (6,923
    )
    
    
    (493
    )Other exit costs
    
    
    378
    
    
    
    673
    
    
    
    772
    
    
    
    779Total
    
    $
    (1,778
    )
    
    $
    7,929
    
    
    $
    (6,179
    )
    
    $
    7,881
 20




---



##### Table of Contents



Fiscal 2009 Activity
      Long-LivedSeverance
    
    Assetand Related
    
    ChargesBenefits
    
    (Credits)
    
    Other
    
    Total(dollars in thousands)Fiscal 2008 Southern CaliforniaBalance May 31, 2008
    
    $
    299
    
    
    $
    
    
    
    $
    
    
    
    $
    299Expensed in Fiscal 2009
    
    
    (16
    )
    
    
    (6,923
    )
    
    
    793
    
    
    
    (6,146
    )Cash Paid in Fiscal 2009
    
    
    (60
    )
    
    
    
    
    
    
    (793
    )
    
    
    (853
    )Noncash Utilization in 2009
    
    
    
    
    
    
    6,923
    
    
    
    
    
    
    
    6,923Balance November 15, 2008
    
    
    223
    
    
    
    
    
    
    
    
    
    
    
    223Fiscal 2008 Sales
ReorganizationBalance May 31, 2008
    
    
    40
    
    
    
    
    
    
    
    120
    
    
    
    160Expensed in Fiscal 2009
    
    
    (12
    )
    
    
    
    
    
    
    (21
    )
    
    
    (33
    )Cash Paid in Fiscal 2009
    
    
    (28
    )
    
    
    
    
    
    
    (23
    )
    
    
    (51
    )Noncash Utilization in 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance November 15, 2008
    
    
    
    
    
    
    
    
    
    
    76
    
    
    
    76ConsolidatedBalance May 31, 2008
    
    
    339
    
    
    
    
    
    
    
    120
    
    
    
    459Expensed in Fiscal 2009
    
    
    (28
    )
    
    
    (6,923
    )
    
    
    772
    
    
    
    (6,179
    )Cash Paid in Fiscal 2009
    
    
    (88
    )
    
    
    
    
    
    
    (816
    )
    
    
    (904
    )Noncash Utilization in 2009
    
    
    
    
    
    
    6,923
    
    
    
    
    
    
    
    6,923Balance November 15, 2008
    
    $
    223
    
    
    $
    
    
    
    $
    76
    
    
    $
    299
 Fiscal 2008 Activity
  21




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##### Table of Contents



Long-LivedSeverance
    
    Assetand Related
    
    ChargesBenefits
    
    (Credits)
    
    Other
    
    TotalFiscal 2008 Southern California
    
    $
    5,332
    
    
    $
    (9,942
    )
    
    $
    2,287
    
    
    $
    (2,323
    )Fiscal 2008 Sales Reorganization    
    
    1,086
    
    
    
    
    
    
    
    331
    
    
    
    1,417
  14. Reorganization Charges
  November 15, 2008Twelve Weeks
    
    
    Twenty-Four WeeksEnded
    
    
    EndedReorganization
    
    
    Reorganization
    
    
    CashCharges
    
    
    Charges
    
    
    Payments(dollars in thousands)Professional fees
    
    $
    14,275
    
    
    $
    20,677
    
    
    $
    16,852Employee retention (credits) charges
    
    
    (36
    )
    
    
    (189
    )
    
    
    23Lease rejection credits
    
    
    (210
    )
    
    
    (207
    )
    
    
    Interest income
    
    
    (41
    )
    
    
    (64
    )
    
    
    Gain on sale of assets
    
    
    (26
    )
    
    
    (229
    )
    
    
    (229
    )ABA Plan settlement (See Note 11. Employee Benefit Plans)
    
    
    20,121
    
    
    
    20,121
    
    
    
    Reorganization charges, net
    
    $
    34,083
    
    
    $
    40,109
    
    
    $
    16,646
 22




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##### Table of Contents



November 17, 2007Twelve Weeks
    
    
    Twenty-Four WeeksEnded
    
    
    EndedReorganization
    
    
    Reorganization
    
    
    CashCharges
    
    
    Charges
    
    
    Payments(dollars in thousands)Professional fees
    
    $
    12,404
    
    
    $
    19,954
    
    
    $
    15,215Employee retention (credits) charges
    
    
    
    
    
    
    (151
    )
    
    
    259Lease rejection charges
    
    
    123
    
    
    
    266
    
    
    
    Interest income
    
    
    (639
    )
    
    
    (983
    )
    
    
    (774
    )Gain on sale of assets
    
    
    (181
    )
    
    
    (181
    )
    
    
    (181
    )Reorganization charges, net
    
    $
    11,707
    
    
    $
    18,905
    
    
    $
    14,519
 15. Income Taxes
  Twenty-Four Weeks EndedNovember 15,
    
    November 17,2008
    
    2007Statutory federal tax rate
    
    
    35.0
    %
    
    
    35.0
    %State income tax, net
    
    
    2.0
    
    
    
    2.6Valuation allowance increase
    
    
    (30.5
    )
    
    
    (29.9
    )Adjustments to prior year tax accruals
    
    
    2.5
    
    
    
    Other
    
    
    (4.4
    )
    
    
    (2.3
    )4.6
    %
    
    
    5.4
    %
      23




---



##### Table of Contents



16. Commitments and Contingencies
  2 2 2
   24




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25




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##### Table of Contents



26




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##### Table of Contents



17. Earnings (Loss) per Share
 Earnings per
Share
 Twelve Weeks Ended
    
    Twenty-Four Weeks EndedNovember 15,
    
    November 17,
    
    November 15,
    
    November 17,2008
    
    2007
    
    2008
    
    2007(in thousands)Weighted average common shares outstanding:Basic and diluted
    
    
    45,212
    
    
    
    45,186
    
    
    
    45,212
    
    
    
    45,185
 27




---



##### Table of Contents



18. Comprehensive Loss
  Twelve Weeks Ended
    
    
    Twenty-Four Weeks EndedNovember 15,
    
    
    November 17,
    
    
    November 15,
    
    
    November 17,2008
    
    
    2007
    
    
    2008
    
    
    2007(dollars in thousands)Net loss
    
    $
    (41,420
    )
    
    $
    (39,161
    )
    
    $
    (78,286
    )
    
    $
    (55,154
    )Other comprehensive loss:Amortization of pension and other postretirement net credits
    
    
    (1,638
    )
    
    
    (1,468
    )
    
    
    (3,276
    )
    
    
    (2,936
    )Comprehensive loss
    
    $
    (43,058
    )
    
    $
    (40,629
    )
    
    $
    (81,562
    )
    
    $
    (58,090
    )
 19. Segment Information
 Disclosures about Segments of an Enterprise and Related Information
  Route revenues
 Outlet revenues
 Direct revenues
 28




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##### Table of Contents



Twelve Weeks Ended
    
    
    Twenty-Four Weeks EndedNovember 15,
    
    
    November 17,
    
    
    November 15,
    
    
    November 17,2008
    
    
    2007
    
    
    2008
    
    
    2007(dollars in thousands)Net RevenuesRoute revenues
    
    $
    552,136
    
    
    $
    555,257
    
    
    $
    1,122,086
    
    
    $
    1,154,537Outlet revenues
    
    
    69,256
    
    
    
    68,232
    
    
    
    141,548
    
    
    
    142,302Direct revenues
    
    
    22,539
    
    
    
    21,627
    
    
    
    39,006
    
    
    
    38,093Total net revenues
    
    $
    643,931
    
    
    $
    645,116
    
    
    $
    1,302,640
    
    
    $
    1,334,932Segment Profit (Loss)Route profit (loss)
    
    $
    13,038
    
    
    $
    6,401
    
    
    $
    5,039
    
    
    $
    29,658Outlet profit (loss)
    
    
    5,431
    
    
    
    5,232
    
    
    
    11,048
    
    
    
    12,440Direct profit (loss)
    
    
    2,678
    
    
    
    2,275
    
    
    
    3,470
    
    
    
    3,748Total segment profit (loss)
    
    
    21,147
    
    
    
    13,908
    
    
    
    19,557
    
    
    
    45,846Corporate
    
    
    (17,291
    )
    
    
    (30,654
    )
    
    
    (33,562
    )
    
    
    (62,856
    )Total operating profit (loss)
    
    
    3,856
    
    
    
    (16,746
    )
    
    
    (14,005
    )
    
    
    (17,010
    )Interest expense
    
    
    14,444
    
    
    
    11,263
    
    
    
    27,902
    
    
    
    22,283Reorganization charges
    
    
    34,083
    
    
    
    11,707
    
    
    
    40,109
    
    
    
    18,905Other (income) expense
    
    
    109
    
    
    
    128
    
    
    
    62
    
    
    
    7448,636
    
    
    
    23,098
    
    
    
    68,073
    
    
    
    41,262Income (loss) before income taxes
    
    
    (44,780
    )
    
    
    (39,844
    )
    
    
    (82,078
    )
    
    
    (58,272
    )Provision (benefit) for income taxes
    
    
    (3,360
    )
    
    
    (683
    )
    
    
    (3,792
    )
    
    
    (3,118
    )Net income (loss)
    
    $
    (41,420
    )
    
    $
    (39,161
    )
    
    $
    (78,286
    )
    
    $
    (55,154
    )
 20. Subsequent Events
  29




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Managements Discussion
and Analysis of Financial Condition and Results of Operations Forward-Looking Statements
 COMPANY OVERVIEW
  RECENT DEVELOPMENTS
    30




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES
 Critical Accounting Policies
 RESULTS OF OPERATIONS
 Twelve Weeks Ended
    
    Twenty-Four Weeks EndedNovember 15,
    
    November 17,
    
    November 15,
    
    November 17,2008
    
    2007
    
    2008
    
    2007Net revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of products sold (exclusive of items
shown below)
    
    
    51.9
    
    
    
    50.9
    
    
    
    53.1
    
    
    
    50.3Selling, delivery and administrative expenses
    
    
    45.5
    
    
    
    48.0
    
    
    
    46.3
    
    
    
    47.3Restructuring charges (credits)
    
    
    (0.2
    )
    
    
    1.2
    
    
    
    (0.5
    )
    
    
    0.6Depreciation and amortization
    
    
    2.1
    
    
    
    2.4
    
    
    
    2.1
    
    
    
    2.3Loss on sale or abandonment of assets
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    Property and equipment impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.7Operating profit (loss)
    
    
    0.6
    
    
    
    (2.6
    )
    
    
    (1.1
    )
    
    
    (1.2
    )Interest expense
    
    
    2.2
    
    
    
    1.8
    
    
    
    2.1
    
    
    
    1.7Reorganization charges
    
    
    5.3
    
    
    
    1.8
    
    
    
    3.1
    
    
    
    1.4Other (income) expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income (loss) before income taxes
    
    
    (6.9
    )
    
    
    (6.2
    )
    
    
    (6.3
    )
    
    
    (4.3
    )Provision (benefit) for income taxes
    
    
    (0.5
    )
    
    
    (0.1
    )
    
    
    (0.3
    )
    
    
    (0.2
    )Net income (loss)
    
    
    (6.4
    )%
    
    
    (6.1
    )%
    
    
    (6.0
    )%
    
    
    (4.1
    )%
 Net Revenues
 (dollars in thousands)
 Twelve Weeks Ended
    
    Twenty-four Weeks Ended%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    %November 15,
    
    
    
    
    
    November 17,
    
    
    
    
    
    Increase /
    
    November 15,
    
    
    
    
    
    November 17,
    
    
    
    
    
    Increase /2008
    
    %
    
    2007
    
    %
    
    (Decrease)
    
    2008
    
    %
    
    2007
    
    %
    
    (Decrease)Route revenues
    
    $
    552,136
    
    
    
    85.7
    %
    
    $
    555,257
    
    
    
    86.1
    %
    
    
    (0.6
    )%
    
    $
    1,122,086
    
    
    
    86.1
    %
    
    $
    1,154,537
    
    
    
    86.5
    %
    
    
    (2.8
    )%Outlet revenues
    
    
    69,256
    
    
    
    10.8
    
    
    
    68,232
    
    
    
    10.6
    
    
    
    1.5
    
    
    
    141,548
    
    
    
    10.9
    
    
    
    142,302
    
    
    
    10.7
    
    
    
    (0.5
    )Direct revenues
    
    
    22,539
    
    
    
    3.5
    
    
    
    21,627
    
    
    
    3.3
    
    
    
    4.2
    
    
    
    39,006
    
    
    
    3.0
    
    
    
    38,093
    
    
    
    2.8
    
    
    
    2.4Total net revenues
    
    $
    643,931
    
    
    
    100.0
    %
    
    $
    645,116
    
    
    
    100.0
    %
    
    
    (0.2
    )%
    
    $
    1,302,640
    
    
    
    100.0
    %
    
    $
    1,334,932
    
    
    
    100.0
    %
    
    
    (2.4
    )%
 Consolidated Net Revenues
  31




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Route net revenues.
  Outlet net revenues.
 Direct net revenues.
 Gross Profit (exclusive of depreciation and amortization)
    32




---



##### Table of Contents



Selling, Delivery and Administrative Expenses
    Restructuring Charges (Credits)
     33




---



##### Table of Contents



Property and Equipment Impairment
   Operating Profit (Loss)
 (dollars in thousands)
 Twelve Weeks Ended
    
    Twenty-four Weeks EndedNovember 15,
    
    
    
    
    
    November 17,
    
    
    
    
    
    November 15,
    
    
    
    
    
    November 17,2008
    
    %
    
    2007
    
    %
    
    2008
    
    %
    
    2007
    
    %Segment Profit (Loss)Route profit (loss)
    
    $
    13,038
    
    
    
    338.1
    %
    
    $
    6,401
    
    
    
    (38.2
    )%
    
    $
    5,039
    
    
    
    (36.0
    )%
    
    $
    29,658
    
    
    
    (174.4
    )%Outlet profit (loss)
    
    
    5,431
    
    
    
    140.9
    
    
    
    5,232
    
    
    
    (31.2
    )
    
    
    11,048
    
    
    
    (78.9
    )
    
    
    12,440
    
    
    
    (73.1
    )Direct profit (loss)
    
    
    2,678
    
    
    
    69.4
    
    
    
    2,275
    
    
    
    (13.6
    )
    
    
    3,470
    
    
    
    (24.7
    )
    
    
    3,748
    
    
    
    (22.0
    )Total segment profit (loss)
    
    
    21,147
    
    
    
    548.4
    
    
    
    13,908
    
    
    
    (83.0
    )
    
    
    19,557
    
    
    
    (139.6
    )
    
    
    45,846
    
    
    
    (269.5
    )Corporate
    
    
    (17,291
    )
    
    
    (448.4
    )
    
    
    (30,654
    )
    
    
    183.0
    
    
    
    (33,562
    )
    
    
    239.6
    
    
    
    (62,856
    )
    
    
    369.5Total operating profit
(loss)
    
    $
    3,856
    
    
    
    100.0
    %
    
    $
    (16,746
    )
    
    
    100.0
    %
    
    $
    (14,005
    )
    
    
    100.0
    %
    
    $
    (17,010
    )
    
    
    100.0
    %
 Consolidated Operating Profit (Loss)
   Route operating profit (loss).
 34




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Outlet operating profit (loss).
 Direct operating profit (loss).
 Reorganization Charges
     Interest Expense
  35




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##### Table of Contents



Provision (Benefit) for Income Taxes
  CASH RESOURCES AND LIQUIDITY
 CASH FLOWS
  Cash Provided By (Used In) Operating Activities
  Cash Provided By (Used In) Investing Activities
  Cash Provided By (Used In) Financing Activities
  36




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SOURCES OF LIQUIDITY AND CAPITAL
      DIP Facility
  37




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38




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OFF-BALANCE SHEET FINANCING
  FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
      RECENT ACCOUNTING PRONOUNCEMENTS
  
 FORWARD-LOOKING STATEMENTS
  39




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
    
    our ability to continue as a going concern;
    
    our ability to consummate the Plan, which was confirmed by the Bankruptcy Court on December 5, 2008;
    
    our ability to obtain the financing necessary to implement our business plan and emerge from Chapter 11;
    
    our ability to operate pursuant to the covenants, terms and certifications of the DIP Facility;
    
    our ability to successfully negotiate an extension and increase in the amount available under, or
refinance, our DIP Facility, if needed, which expires on February 9, 2009;
    
    our ability to implement our business plan;
    
    risks associated with third parties seeking and obtaining court approval for the appointment of a
Chapter 11 trustee or to convert the Chapter 11 proceeding to a Chapter 7 proceeding;
    
    risks associated with cost increases in materials, ingredients, energy, and employee wages and benefits;
    
    risks associated with our restructuring activities, including the risks associated with achieving the
desired savings;
    
    our ability to obtain and maintain adequate terms with vendors and service providers;
    
    the potential adverse impact of the Chapter 11 proceeding on our liquidity or results of operations;
    
    risks associated with product price increases, including the risk that such actions will not
effectively offset inflationary cost pressures and may adversely impact sales of our products;
    
    the effectiveness of our efforts to manage our exposure to price increases with respect to various
ingredients and energy through our hedging strategies and our ability to hedge given our financial
condition;
    
    our ability to attract, motivate and/or retain key executives and employees;
    
    changes in our relationship with employees and the unions that represent them;
    
    successful implementation of information technology improvements;
    
    successful remediation of material weaknesses in our internal controls;
    
    the performance of our recent and planned new product introductions,
including the success of such new products in achieving and retaining
market share; and
    
    the outcome of legal proceedings to which we are or may become a party.
  Bankruptcy-Related Factors
 
    
    the significant time that is and will be required by management to
consummate the Plan, as well as to continue to evaluate various
alternatives in the event the Plan is not consummated, including, but
not limited to, the sale of the Company or some or all of our assets,
infusion of capital, debt restructuring, or any combination of these
options;
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
    
    our ability to implement our business plan;
    
    our ability to operate our business under the restrictions imposed by
the Chapter 11 process and in compliance with the limitations contained
in the debtor-in-possession credit facility;
    
    the instructions, orders and decisions of the Bankruptcy Court and
other effects of legal and administrative proceedings, settlements,
investigations and claims;
    
    changes in our relationships with suppliers and customers, including
the ability to maintain those relationships and contracts that are
critical to our operations, in light of the Chapter 11 process;
    
    our ability to maintain adequate liquidity and working capital under
our DIP Facility, as well as our ongoing ability to purchase from
vendors on satisfactory terms throughout the reorganization;
    
    our reliance on key management personnel, including the effects of the
Chapter 11 process on our ability to attract and retain key management
personnel;
    
    our ability to successfully reject unfavorable contracts and leases; and
    
    the duration of the Chapter 11 process.
 General Factors
 
    
    the availability of capital on acceptable terms in light of the various factors discussed herein,
including our reorganization under the Chapter 11 process;
    
    the availability and cost of raw materials, packaging, fuels and utilities, and the ability to recover
these costs in the pricing of products, improved efficiencies and other strategies;
    
    increased pension, health care, workers compensation and other employee costs;
    
    actions of competitors, including pricing policies and promotional spending;
    
    increased costs, delays or deficiencies related to restructuring activities;
    
    the effectiveness of advertising and marketing spending;
    
    the effectiveness and adequacy of our information and data processing systems;
    
    changes in general economic and business conditions (including the bread and sweet goods markets);
    
    costs associated with increased contributions to single-employer, multiple employer or multi-employer
pension plans;
    
    any inability to protect and maintain the value of our intellectual property;
    
    future product recalls or food safety concerns;
    
    further consolidation in the retail food industry;
    
    changes in consumers eating habits and dietary preferences;
    
    costs associated with environmental compliance and remediation;
    
    the impact of any withdrawal liability arising under our multi-employer pension plans as a result of
prior
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actions or current consolidations;
    
    actions of governmental entities, including regulatory requirements;
    
    acceptance of new product offerings by consumers and our ability to expand existing brands;
    
    the performance of new product introductions, including the success of such new products in achieving
and retaining market share;
    
    the effectiveness of hedging activities;
    
    expenditures necessary to carry out cost-saving initiatives and savings derived from these initiatives;
    
    changes in our business strategies;
    
    unexpected costs or delays incurred in connection with facility closings;
    
    bankruptcy filings by customers;
    
    changes in our relationship with employees and the unions that represent them;
    
    the outcome of legal proceedings to which we are or may become a party, including without limitation
any litigation stemming from our sale of convertible notes on August 12, 2004 or events leading up to
our filing of a voluntary petition for protection under Chapter 11 of the Bankruptcy Code;
    
    business disruption from terrorist acts, our nations response to such acts and acts of war; and
    
    other factors.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 
 
 Item 4. Controls and Procedures
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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
 2 2
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Accounting for Contingencies
 
 Item 1A. Risk Factors
  There are significant issues remaining with respect to the satisfaction of the conditions to
our ability to emerge from Chapter 11 pursuant to our Plan.
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Item 6. Exhibits
 Exhibit No.
    
    Exhibit3.1
    
    Restated Certificate of Incorporation of Interstate Bakeries Corporation, as
amended (incorporated herein by reference to Exhibit 3.1 to Interstate
Bakeries Corporations Amendment No. 1 to its Quarterly Report on Form 10-Q
for the quarter ended March 9, 2002, filed on April 19, 2002).3.1.1
    
    Certificate of Amendment to the Restated Certificate of Incorporation of
Interstate Bakeries Corporation (incorporated herein by reference to Exhibit
3.1 to Interstate Bakeries Corporations Form 8-K filed on March 21, 2007).3.2
    
    Restated Bylaws of Interstate Bakeries Corporation (incorporated herein by
reference to Exhibit 3.1 to Interstate Bakeries Corporations Quarterly
Report on Form 10-Q for the quarter ended November 15, 2003 filed on
December 22, 2003).3.2.1
    
    Amendment Number One to the Restated Bylaws of Interstate Bakeries
Corporation (incorporated herein by reference to Exhibit 3.2 to Interstate
Bakeries Corporations Form 8-K filed on March 21, 2007).4.1
    
    Preferred Stock Purchase Rights Agreement effective as of May 8, 2000
(incorporated herein by reference to the Current Report on Form 8-K of
Interstate Bakeries Corporation filed on May 16, 2000).10.1
    
    Fee Letter, dated September 12, 2008, among Interstate Bakeries Corporation and IBC Investors I, LLC (incorporated herein by reference to the Current Report on Form 8-K filed on September 16, 2008).10.2
    
    Commitment Letter, dated September 12, 2008, among Interstate
Bakeries Corporation, Interstate Brands Corporation, General Electric Capital Corporation and GE Capital Markets, Inc. (incorporated herein by reference to the Current
Report on Form 8-K filed on September 16, 2008).10.2.1
    
    Amendment, dated as of December 5, 2008, to the Commitment
Letter, dated as of September 12, 2008, among General Electric Capital Corporation, Interstate
Bakeries Corporation, Interstate Brands Corporation and IBC Investors I, LLC (incorporated herein
by reference to the Current Report on Form 8-K filed on December 5, 2008).10.3
    
    Commitment Letter, dated September 12, 2008, among Interstate Bakeries Corporation,
Interstate Brands Corporation, Silver Point Finance, LLC and Monarch Master Funding Ltd.
(incorporated herein by reference to the Current Report on Form 8-K filed on September 16, 2008).10.3.1
    
    Amendment, dated as of December 4, 2008, to the Commitment
Letter, dated as of September 12, 2008, among Interstate Bakeries Corporation, Interstate Brands
Corporation, Silver Point Finance, LLC and Monarch Master Funding Ltd. (incorporated herein by
reference to the Current Report on Form 8-K filed on December 5, 2008).10.4
    
    Fee Letter, dated September 12, 2008, among Interstate Bakeries
Corporation, Interstate Brands Corporation, Silver Point Finance, LLC and Monarch Master Funding
Ltd. (incorporated herein by reference to the Current Report on Form 8-K filed on September 16, 2008).10.5
    
    First Amendment to the Second Amended and Restated Revolving
Credit Agreement, dated as of September 12, 2008, by and among Interstate Bakeries Corporation, a
Delaware corporation (Parent Borrower), a debtor and debtor-in-possession in a case pending
under Chapter 11 of the Bankruptcy Code, each of the wholly-owned direct and indirect subsidiaries
of the Parent Borrower party to the DIP Agreement, each of which is a debtor and
debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code, JPMorgan Chase
Bank, N.A., a national banking association (JPMCB), and each of the other commercial banks,
finance companies, insurance companies or other financial institutions or funds from time to time
party to the DIP Agreement (together with JPMCB, the Lenders), J.P. Morgan Securities Inc., as
lead arranger and book runner, and JPMCB as administrative agent and collateral agent for the
Lenders (incorporated herein by reference to the Current Report on Form 8-K filed on September
16, 2008).10.6
    
    Investment Agreement, dated as of September 26, 2008, between
Interstate Bakeries Corporation and IBC Investors I, LLC (incorporated herein by
reference to the Current Report on Form 8-K filed on September 30, 2008).10.6.1
    
    First Amendment, dated as of December 1, 2008, to the Investment
Agreement, dated as of September 26, 2008, between Interstate Bakeries Corporation and IBC
Investors I, LLC (incorporated herein by reference to the Current Report on Form 8-K filed on December 5, 2008).10.7
    
    Equity Contribution Agreement, dated as of September 26, 2008,
between Ripplewood Partners II, L.P. and Interstate Bakeries Corporation (incorporated herein by
reference to the Current Report on Form 8-K filed on September 30, 2008).10.8
    
    Amended Joint Plan of Reorganization of Interstate Bakeries
Corporation and its Affiliated Debtors and Debtors-in-Possession, dated October 31, 2008 LLC
(incorporated herein by reference to the Current Report on Form 8-K filed on December 11, 2008).31.1
    
    Certification of Craig D. Jung pursuant to Rule 13a-14(a)/15d-14(a)*31.2
    
    Certification of J. Randall Vance pursuant to Rule 13a-14(a)/15d-14(a)*32.1
    
    Certification of Craig D. Jung pursuant to 18 U.S.C. Section 1350*32.2
    
    Certification of J. Randall Vance pursuant to 18 U.S.C. Section 1350*
 
 *
    
    Filed herewith 46




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SIGNATURES
  INTERSTATE BAKERIES CORPORATIONDated: December 24, 2008
    
    By:
    
    /s/ Craig D. JungCraig D. JungChief Executive Officer(Principal Executive Officer)Dated: December 24, 2008
    
    By:
    
    /s/ J. Randall VanceJ. Randall VanceChief Financial Officer(Principal Financial and Accounting Officer)
 47