##### 



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 August 25, 2007
 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
(State or other jurisdiction of incorporation or organization)
    
    43-1470322
(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
 o þ o
 o þ




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##### 



INTERSTATE BAKERIES CORPORATION
FORM 10-Q
QUARTER ENDED August 25, 2007
 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
    
    
    40ITEM 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    44ITEM 4.
    
    Controls and Procedures
    
    
    44PART II  OTHER INFORMATION
    
    
    45ITEM 1.
    
    Legal Proceedings
    
    
    45ITEM 1A.
    
    Risk Factors
    
    
    46ITEM 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    48ITEM 6.
    
    Exhibits
    
    
    49Signatures
    
    
    
    
    56
  2




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##### 



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)
 August 25,
    
    
    June 2,2007
    
    
    2007ASSETSCurrent assetsCash
    
    $
    68,716
    
    
    $
    67,212Restricted cash
    
    
    17,698
    
    
    
    15,085Accounts receivable, less allowance for doubtful accounts of $2,448 and $2,315, respectively
    
    
    144,250
    
    
    
    152,175Inventories
    
    
    63,656
    
    
    
    65,682Assets held for sale
    
    
    997
    
    
    
    2,032Other current assets
    
    
    47,983
    
    
    
    49,649Total current assets
    
    
    343,300
    
    
    
    351,835Property and equipment, net
    
    
    521,079
    
    
    
    541,725Intangible assets
    
    
    160,033
    
    
    
    160,239Other assets
    
    
    26,368
    
    
    
    27,593Total assets
    
    $
    1,050,780
    
    
    $
    1,081,392LIABILITIES AND STOCKHOLDERS DEFICITLiabilities not subject to compromiseCurrent liabilitiesLong-term debt
    
    $
    453,689
    
    
    $
    451,515Accounts payable
    
    
    102,865
    
    
    
    129,137Accrued expenses
    
    
    229,710
    
    
    
    217,373Total current liabilities
    
    
    786,264
    
    
    
    798,025Other liabilities
    
    
    240,498
    
    
    
    236,766Deferred income taxes
    
    
    72,735
    
    
    
    74,789Total liabilities not subject to compromise
    
    
    1,099,497
    
    
    
    1,109,580Liabilities subject to compromise
    
    
    290,971
    
    
    
    290,553Stockholders 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,
45,242,000 and 45,249,000 shares outstanding, respectively
    
    
    816
    
    
    
    816Additional paid-in capital
    
    
    584,682
    
    
    
    584,503Accumulated deficit
    
    
    (275,201
    )
    
    
    (255,559
    )Treasury stock, 36,337,000 and 36,330,000 shares at cost, respectively
    
    
    (678,737
    )
    
    
    (678,721
    )Accumulated other comprehensive income
    
    
    28,752
    
    
    
    30,220Total stockholders deficit
    
    
    (339,688
    )
    
    
    (318,741
    )Total liabilities and stockholders deficit
    
    $
    1,050,780
    
    
    $
    1,081,392
  3




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##### 



INTERSTATE BAKERIES CORPORATION
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)  (dollars in thousands, except per share data)
 Twelve Weeks EndedAugust 25,
    
    
    August 26,2007
    
    
    2006Net sales
    
    $
    689,816
    
    
    $
    684,245Cost of products sold (exclusive of items shown below)
    
    
    343,231
    
    
    
    352,172Selling, delivery and administrative expenses
    
    
    321,043
    
    
    
    322,668Restructuring (credits) charges
    
    
    (48
    )
    
    
    529Depreciation and amortization
    
    
    15,648
    
    
    
    16,417Loss on sale or abandonment of assets
    
    
    13
    
    
    
    218Property and equipment impairment
    
    
    10,193
    
    
    
    690,080
    
    
    
    692,004Operating loss
    
    
    (264
    )
    
    
    (7,759
    )Other (income) expenseInterest expense (excluding unrecorded contractual
interest expense of $1,383 and $1,383,
respectively)
    
    
    11,020
    
    
    
    12,790Reorganization charges, net
    
    
    7,198
    
    
    
    6,655Other income
    
    
    (54
    )
    
    
    (31
    )18,164
    
    
    
    19,414Loss before income taxes
    
    
    (18,428
    )
    
    
    (27,173
    )Provision (benefit) for income taxes
    
    
    (2,435
    )
    
    
    (842
    )Net loss
    
    $
    (15,993
    )
    
    $
    (26,331
    )Loss per shareBasic
    
    $
    (0.35
    )
    
    $
    (0.58
    )Diluted
    
    $
    (0.35
    )
    
    $
    (0.58
    )
  4




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##### 



INTERSTATE BAKERIES CORPORATION
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)  (dollars in thousands)
 Twelve Weeks EndedAugust 25,
    
    
    August 26,2007
    
    
    2006Operating activitiesNet loss
    
    $
    (15,993
    )
    
    $
    (26,331
    )Depreciation and amortization
    
    
    15,648
    
    
    
    16,417Provision (benefit) for deferred income taxes
    
    
    (1,874
    )
    
    
    300Reorganization charges, net
    
    
    7,198
    
    
    
    6,655Cash reorganization items
    
    
    (5,679
    )
    
    
    (5,864
    )Non-cash bankruptcy-related charges (credits)
    
    
    206
    
    
    
    (113
    )Non-cash interest expense  deferred debt fees
    
    
    439
    
    
    
    (33
    )Non-cash restricted stock and deferred share compensation expense
    
    
    163
    
    
    
    196(Gain) loss on sale, write-down or abandonment of assets
    
    
    10,109
    
    
    
    (849
    )Change in operating assets and liabilities:Accounts receivable
    
    
    7,925
    
    
    
    6,021Inventories
    
    
    2,026
    
    
    
    (2,341
    )Other current assets
    
    
    (236
    )
    
    
    (422
    )Accounts payable and accrued expenses
    
    
    (15,395
    )
    
    
    (2,758
    )Long-term portion of self insurance reserves
    
    
    218
    
    
    
    4,453Other
    
    
    345
    
    
    
    (126
    )Net cash from (used in) operating activities
    
    
    5,100
    
    
    
    (4,795
    )Investing activitiesPurchases of property and equipment
    
    
    (5,093
    )
    
    
    (3,255
    )Proceeds from sale of assets
    
    
    2,226
    
    
    
    5,331Restricted cash deposit
    
    
    (2,536
    )
    
    
    (3,764
    )Restricted cash release
    
    
    
    
    
    
    89,222Acquisition and development of software assets
    
    
    (371
    )
    
    
    (307
    )Other
    
    
    4
    
    
    
    186Net cash from (used in) investing activities
    
    
    (5,770
    )
    
    
    87,413Financing activitiesReduction of long-term debt
    
    
    (247
    )
    
    
    (45,596
    )Increase in revolving credit facility
    
    
    2,421
    
    
    
    Net cash from (used in) financing activities
    
    
    2,174
    
    
    
    (45,596
    )Net increase in cash
    
    
    1,504
    
    
    
    37,022Cash at the beginning of period
    
    
    67,212
    
    
    
    78,178Cash at the end of period
    
    $
    68,716
    
    
    $
    115,200Cash payments (received)Interest
    
    $
    7,925
    
    
    $
    8,886Income taxes
    
    
    127
    
    
    
    (564
    )Non-cash investing and financing activitiesLong-term debt reduction from lease rejections
    
    
    
    
    
    
    359Asset disposals from lease rejections
    
    
    
    
    
    
    271Convertible note conversion to equity
    
    
    
    
    
    
    1Interest income earned on restricted cash deposit
    
    
    77
    
    
    
    598
  5




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##### 



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 June 2, 2007
    
    
    81,579
    
    
    $
    816
    
    
    $
    584,503
    
    
    $
    (255,559
    )
    
    
    (36,330
    )
    
    $
    (678,721
    )
    
    $
    30,220
    
    
    $
    (318,741
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,993
    )
    
    
    
    
    
    
    
    
    
    
    (1,468
    )
    
    
    (17,461
    )Cumulative effect of
change in accounting for
uncertainty in income
taxes pursuant to FIN
No. 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,649
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,649
    )Restricted share
compensation expense
    
    
    
    
    
    
    
    
    
    
    236
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    236Restricted share surrenders
    
    
    
    
    
    
    
    
    
    
    (57
    )
    
    
    
    
    
    
    (7
    )
    
    
    (16
    )
    
    
    
    
    
    
    (73
    )Balance August 25, 2007
    
    
    81,579
    
    
    $
    816
    
    
    $
    584,682
    
    
    $
    (275,201
    )
    
    
    (36,337
    )
    
    $
    (678,737
    )
    
    $
    28,752
    
    
    $
    (339,688
    )
  6




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##### 



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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##### 



8




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##### 



Financial Reporting by
Entities in Reorganization Under the Bankruptcy 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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##### 



Cash and Cash equivalents
  Contingencies
 Accounting for Contingencies
 Newly Adopted Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109
 Recently Issued Accounting Pronouncements
 The Fair Value Option for Financial Assets and
Liabilities
 Employers Accounting for Defined Benefit Pension
and Other Postretirement Plans
 Fair Value Measurements
 10




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##### 



3. Inventories
  August 25,
    
    
    June 2,2007
    
    
    2007(dollars in thousands)Ingredients and packaging
    
    $
    40,309
    
    
    $
    43,279Finished goods
    
    
    23,347
    
    
    
    22,403$
    63,656
    
    
    $
    65,682
 4. Property and Equipment
  August 25,
    
    
    June 2,2007
    
    
    2007(dollars in thousands)Land and buildings (lives ranging from 10 to 35 years)
    
    $
    389,886
    
    
    $
    390,147Machinery and equipment (lives ranging from 4 to 15 years)
    
    
    847,543
    
    
    
    865,3981,237,429
    
    
    
    1,255,545Less accumulated depreciation
    
    
    (716,350
    )
    
    
    (713,820
    )$
    521,079
    
    
    $
    541,725
 Accounting for the
Impairment or Disposal of Long-Lived Assets
  5. Assets Held for Sale
  11




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##### 



6. Lease Obligations
  Guarantors Accounting and Disclosure Requirements for Guarantees Including Indirect
Guarantees of Indebtedness of Others
 7. Intangible Assets
  August 25,
    
    
    June 2,2007
    
    
    2007(dollars in thousands)Intangible assets with indefinite lives(generally trademarks and trade names)
    
    $
    157,471
    
    
    $
    157,471Intangible assets with finite livesGross carrying amount
    
    $
    13,854
    
    
    $
    13,854Less: Accumulated amortization
    
    
    (11,292
    )
    
    
    (11,086
    )Net carrying amount
    
    $
    2,562
    
    
    $
    2,768
  12




---



##### 



8. Debt
  August 25,
    
    
    June 2,2007
    
    
    2007(dollars in thousands)SecuredPost-petition credit agreement
    
    $
    
    
    
    $
    Senior secured credit facility  pre-petition
    
    
    450,178
    
    
    
    447,757Unsecured6% senior subordinated convertible notes  pre-petition
    
    
    99,999
    
    
    
    99,999Capital lease converted to pre-petition debt
    
    
    6,125
    
    
    
    6,125Capital leasesReal estate
    
    
    3,511
    
    
    
    3,758559,813
    
    
    
    557,639Less:Current portion
    
    
    (453,689
    )
    
    
    (451,515
    )Pre-filing date claims included in liabilities subject to compromise
    
    
    (106,124
    )
    
    
    (106,124
    )Long-term debt
    
    $
    
    
    
    $
    
 Post-Petition Credit Agreement
    13




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##### 



Senior Secured Credit Facility
    6% Senior Subordinated Convertible Notes
  Other Matters
  Financial Reporting by
Entities in Reorganization under the Bankruptcy Code
 14




---



##### 



9. Derivative Instruments
    Accounting for Derivative
Instruments and Hedging Activities
   10. Liabilities Subject to Compromise
    15




---



##### 



August 25,
    
    
    June 2,2007
    
    
    2007(dollars in thousands)Accounts payable
    
    $
    130,732
    
    
    $
    130,732Taxes payable
    
    
    4,733
    
    
    
    5,741Retirement obligations (SERP and deferred compensation)
    
    
    15,063
    
    
    
    15,063Legal reserve
    
    
    13,822
    
    
    
    13,819Interest bearing debt and capital leases
    
    
    106,124
    
    
    
    106,124Other
    
    
    20,497
    
    
    
    19,074$
    290,971
    
    
    $
    290,553
  11. Employee Benefit Plans
 American Bakers Association Retirement Plan
     16




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##### 



Twelve Weeks EndedAugust 25,
    
    
    August 26,2007
    
    
    2006(dollars in thousands)Service cost
    
    $
    234
    
    
    $
    261Interest cost
    
    
    825
    
    
    
    776Expected return on negative plan assets
    
    
    168
    
    
    
    84Net pension expense
    
    $
    1,227
    
    
    $
    1,121
 Defined Benefit Pension Plan, Postretirement Health and Life Plans, and Supplemental Executive
Retirement Plan
 Defined Benefit Pension Plan
  Postretirement Health and Life Plans
   Supplemental Executive Retirement Plan
   17




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##### 



Pension
    
    
    Postretirement
    
    
    SERPTwelve Weeks Ended
    
    
    Twelve Weeks Ended
    
    
    Twelve Weeks EndedAugust 25,
    
    
    August 26,
    
    
    August 25,
    
    
    August 26,
    
    
    August 25,
    
    
    August 26,2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006(dollars in thousands)Service cost
    
    $
    195
    
    
    $
    213
    
    
    $
    263
    
    
    $
    298
    
    
    $
    
    
    
    $
    Interest cost
    
    
    932
    
    
    
    916
    
    
    
    746
    
    
    
    833
    
    
    
    319
    
    
    
    316Expected return on plan assets
    
    
    (1,290
    )
    
    
    (1,246
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service
cost (credit)
    
    
    63
    
    
    
    63
    
    
    
    (1,705
    )
    
    
    (1,706
    )
    
    
    
    
    
    
    Recognized net actuarial (gain)
loss
    
    
    
    
    
    
    7
    
    
    
    191
    
    
    
    242
    
    
    
    (17
    )
    
    
    Net periodic benefit cost (credit)
    
    $
    (100
    )
    
    $
    (47
    )
    
    $
    (505
    )
    
    $
    (333
    )
    
    $
    302
    
    
    $
    316
 12. Stock-Based Compensation
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
  1996 Stock Incentive Plan
   Weighted
    
    WeightedAverage
    
    AverageExercise Price
    
    Remaining
    
    AggregateShares
    
    Per Share
    
    Contractual Term
    
    Intrinsic Value(in thousands)
    
    
    
    
    
    
    
    
    
    (dollars in thousands)Outstanding, as of June 2, 2007
    
    
    3,264
    
    
    $
    15.69
    
    
    
    4.2
    
    
    $
    23,280Granted
    
    
    
    
    
    
    Surrendered
    
    
    (93
    )
    
    
    13.81Exercised
    
    
    
    
    
    
    Outstanding, as of August 25, 2007
    
    
    3,171
    
    
    $
    15.75
    
    
    
    4.0
    
    
    $
    22,655Exercisable at August 25, 2007
    
    
    3,171
    
    
    $
    15.75
    
    
    
    4.0
    
    
    $
    22,655
 18




---



##### 



WeightedAverageGrant DateShares
    
    Fair Value(in thousands)Nonvested, as of June 2, 2007
    
    
    73
    
    
    $
    14.46Granted
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    Surrendered
    
    
    (7
    )
    
    
    11.05Nonvested, as of August 25, 2007
    
    
    66
    
    
    $
    14.80
   13. Restructuring (Credits) Charges
  Twelve Weeks EndedAugust 25,
    
    
    August 26,2007
    
    
    2006(dollars in thousands)Severance (credits) charges
    
    $
    (56
    )
    
    $
    229Long-lived asset credits
    
    
    (97
    )
    
    
    (408
    )Other exit costs
    
    
    105
    
    
    
    708Total
    
    $
    (48
    )
    
    $
    529
 Fiscal 2008 Activity
   19




---



##### 



Long-LivedSeverance
    
    Assetand Related
    
    ChargesBenefits
    
    (Credits)
    
    Other
    
    Total(dollars in thousands)Fiscal 2005 Consolidation
& RIF PlanBalance June 2, 2007
    
    $
    10
    
    
    $
    
    
    
    $
    
    
    
    $
    10Expensed in Fiscal 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash Paid in Fiscal 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Noncash Utilization in 2008
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    (10
    )Balance August 25, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fiscal 2005 Profit Center Review PlanBalance June 2, 2007
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    4Expensed in Fiscal 2008
    
    
    
    
    
    
    (97
    )
    
    
    88
    
    
    
    (9
    )Cash Paid in Fiscal 2008
    
    
    
    
    
    
    
    
    
    
    (88
    )
    
    
    (88
    )Noncash Utilization in 2008
    
    
    (4
    )
    
    
    97
    
    
    
    
    
    
    
    93Balance August 25, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fiscal 2006 Profit Center Review PlanBalance June 2, 2007
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    60Expensed in Fiscal 2008
    
    
    (31
    )
    
    
    
    
    
    
    17
    
    
    
    (14
    )Cash Paid in Fiscal 2008
    
    
    (10
    )
    
    
    
    
    
    
    (17
    )
    
    
    (27
    )Noncash Utilization in 2008
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    (19
    )Balance August 25, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accounting Office ClosingsBalance June 2, 2007
    
    
    43
    
    
    
    
    
    
    
    9
    
    
    
    52Expensed in Fiscal 2008
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    (25
    )Cash Paid in Fiscal 2008
    
    
    (23
    )
    
    
    
    
    
    
    
    
    
    
    (23
    )Noncash Utilization in 2008
    
    
    5
    
    
    
    
    
    
    
    (9
    )
    
    
    (4
    )Balance August 25, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ConsolidatedBalance June 2, 2007
    
    
    117
    
    
    
    
    
    
    
    9
    
    
    
    126Expensed in Fiscal 2008
    
    
    (56
    )
    
    
    (97
    )
    
    
    105
    
    
    
    (48
    )Cash Paid in Fiscal 2008
    
    
    (33
    )
    
    
    
    
    
    
    (105
    )
    
    
    (138
    )Noncash Utilization in 2008
    
    
    (28
    )
    
    
    97
    
    
    
    (9
    )
    
    
    60Balance August 25, 2007
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 20




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##### 



Fiscal 2007 Activity
       Long-LivedSeverance
    
    Assetand Related
    
    ChargesBenefits
    
    (Credits)
    
    Other
    
    TotalFiscal 2005 Consolidation & RIF Plan
    
    $
    5,583
    
    
    $
    6,473
    
    
    $
    2,812
    
    
    $
    14,868Fiscal
2005 Profit Center Review Plan
    
    
    6,865
    
    
    
    19,192
    
    
    
    (3,996
    )
    
    
    22,061Fiscal 2006 Profit Center Review Plan
    
    
    5,892
    
    
    
    (20,620
    )
    
    
    3,662
    
    
    
    (11,066
    )Accounting Office Closings
    
    
    479
    
    
    
    
    
    
    
    55
    
    
    
    534
  Long-LivedSeverance
    
    Assetand Related
    
    ChargesBenefits
    
    (Credits)
    
    Other
    
    TotalFiscal 2005 Profit Center Review Plan
    
    $
    
    
    
    $
    
    
    
    $
    104
    
    
    $
    104
  21




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##### 



14. Reorganization Charges
  Twelve Weeks Ended
    
    
    Twelve Weeks EndedAugust 25, 2007
    
    
    August 26, 2006Reorganization
    
    
    Cash
    
    
    Reorganization
    
    
    CashCharges
    
    
    Payments
    
    
    Charges
    
    
    Payments(dollars in thousands)Professional fees
    
    $
    7,550
    
    
    $
    5,873
    
    
    $
    7,933
    
    
    $
    8,470Employee retention expenses (credits)
    
    
    (151
    )
    
    
    73
    
    
    
    350
    
    
    
    Lease rejection charges
    
    
    143
    
    
    
    
    
    
    
    83
    
    
    
    Interest income
    
    
    (344
    )
    
    
    (267
    )
    
    
    (1,159
    )
    
    
    (2,054
    )Gain on sale of assets
    
    
    
    
    
    
    
    
    
    
    (552
    )
    
    
    (552
    )Reorganization charges, net
    
    $
    7,198
    
    
    $
    5,679
    
    
    $
    6,655
    
    
    $
    5,864
 15. Income Taxes
  Twelve Weeks EndedAugust 25,
    
    August 26,2007
    
    2006Statutory federal tax rate
    
    
    35.0
    %
    
    
    35.0
    %State income tax, net
    
    
    2.6
    
    
    
    1.1Valuation allowance increase
    
    
    (21.8
    )
    
    
    (31.6
    )Other
    
    
    (2.6
    )
    
    
    (1.4
    )13.2
    %
    
    
    3.1
    %
    22




---



##### 



16. Commitments and Contingencies
    23




---



##### 



24




---



##### 



25




---



##### 



17. Earnings (Loss) per Share
 Earnings per
Share
  Twelve Weeks EndedAugust 25,
    
    August 26,2007
    
    2006(in thousands)Weighted average common shares outstanding:Basic and diluted
    
    
    45,185
    
    
    
    45,165
 26




---



##### 



18. Comprehensive Loss
  Twelve Weeks EndedAugust 25,
    
    
    August 26,2007
    
    
    2006(dollars in thousands)Net loss
    
    $
    (15,993
    )
    
    $
    (26,331
    )Other comprehensive loss:Amortization of pension and other postretirement net credits
    
    
    (1,468
    )
    
    
    Comprehensive loss
    
    $
    (17,461
    )
    
    $
    (26,331
    )
 19. Segment Information
 Disclosures about Segments of an Enterprise and Related Information
  Route sales
 Outlet sales
 27




---



##### 



Direct sales
   Twelve Weeks EndedAugust 25, 2007
    
    
    August 26, 2006 (A)(dollars in thousands)Net SalesRoute sales
    
    $
    599,280
    
    
    $
    596,331Outlet sales
    
    
    74,070
    
    
    
    79,200Direct sales
    
    
    16,466
    
    
    
    8,714Total net sales
    
    $
    689,816
    
    
    $
    684,245Segment IncomeRoute sales
    
    $
    23,257
    
    
    $
    7,114Outlet sales
    
    
    7,208
    
    
    
    2,837Direct sales
    
    
    1,473
    
    
    
    517Total
segment income
    
    
    31,938
    
    
    
    10,468Corporate
    
    
    (32,202
    )
    
    
    (18,227
    )Total operating loss
    
    
    (264
    )
    
    
    (7,759
    )Interest expense
    
    
    11,020
    
    
    
    12,790Reorganization charges, net
    
    
    7,198
    
    
    
    6,655Other income
    
    
    (54
    )
    
    
    (31
    )18,164
    
    
    
    19,414Loss before income taxes
    
    
    (18,428
    )
    
    
    (27,173
    )Provision (benefit) for income taxes
    
    
    (2,435
    )
    
    
    (842
    )Net loss
    
    $
    (15,993
    )
    
    $
    (26,331
    )
 
 (A)
    
    Prior years amounts have been revised to reflect the current fiscal years segment reporting presentation. 20. Subsequent Events
  28




---



##### 



29




---



##### 



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




---



##### 



31




---



##### 



OVERVIEW OF CERTAIN TRENDS AND EVENTS AFFECTING OPERATIONS, FINANCIAL POSITION AND LIQUIDITY
  CRITICAL ACCOUNTING POLICIES
 Critical Accounting Policies
 RESULTS OF OPERATIONS
  32




---



##### 



Twelve Weeks EndedAugust 25,
    
    August 26,2007
    
    2006Net sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of products sold (exclusive of items
shown below)
    
    
    49.8
    
    
    
    51.5Selling, delivery and administrative expenses
    
    
    46.5
    
    
    
    47.1Restructuring (credits) charges
    
    
    
    
    
    
    0.1Depreciation and amortization
    
    
    2.3
    
    
    
    2.4Loss on sale or abandonment of assets
    
    
    
    
    
    
    Property and equipment impairment
    
    
    1.5
    
    
    
    Operating loss
    
    
    (0.1
    )
    
    
    (1.1
    )Interest expense
    
    
    1.6
    
    
    
    1.9Reorganization charges, net
    
    
    1.0
    
    
    
    1.0Other income
    
    
    
    
    
    
    Loss before income taxes
    
    
    (2.7
    )
    
    
    (4.0
    )Provision (benefit) for income taxes
    
    
    (0.4
    )
    
    
    (0.1
    )Net loss
    
    
    (2.3
    )%
    
    
    (3.9
    )%
 Net Sales
 (dollars in thousands)
 Twelve Weeks Ended
    
    
    Twelve Weeks Ended
    
    
    %August 25, 2007
    
    
    August 26, 2006
    
    
    Increase /Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    (Decrease)Route sales
    
    $
    599,280
    
    
    
    86.9
    %
    
    $
    596,331
    
    
    
    87.1
    %
    
    
    0.5
    %Outlet sales
    
    
    74,070
    
    
    
    10.7
    
    
    
    79,200
    
    
    
    11.6
    
    
    
    (6.5
    )Direct sales
    
    
    16,466
    
    
    
    2.4
    
    
    
    8,714
    
    
    
    1.3
    
    
    
    89.0Total net sales
    
    $
    689,816
    
    
    
    100.0
    %
    
    $
    684,245
    
    
    
    100.0
    %
    
    
    0.8
    %
 Reportable Segments
    33




---



##### 



Consolidated Net Sales
  Route net sales.
 Outlet net sales.
 Direct net sales.
 Gross Profit (exclusive of depreciation and amortization)
   Selling, Delivery and Administrative Expenses
  34




---



##### 



Restructuring Charges (Credits)
   Property and Equipment Impairment
  Operating Loss
 (dollars in thousands)
 Twelve Weeks Ended
    
    
    Twelve Weeks EndedAugust 25, 2007
    
    
    August 26, 2006Amount
    
    
    %
    
    
    Amount
    
    
    %Route
segment income
    
    $
    23,257
    
    
    NM
    
    $
    7,114
    
    
    
    (91.7
    )%Outlet segment income
    
    
    7,208
    
    
    NM
    
    
    2,837
    
    
    
    (36.6
    )Direct segment income
    
    
    1,473
    
    
    NM
    
    
    517
    
    
    
    (6.6
    )Total segment income
    
    
    31,938
    
    
    NM
    
    
    10,468
    
    
    
    (134.9
    )Corporate
    
    
    (32,202
    )
    
    NM
    
    
    (18,227
    )
    
    
    234.9Total
operating (loss)
    
    $
    (264
    )
    
    NM
    
    $
    (7,759
    )
    
    
    100.0
    %
 
 NM
    
     Not meaningful. Consolidated Operating Loss
  Route operating income.
 35




---



##### 



Outlet operating income.
 Direct operating income.
 Reorganization Charges
   Interest Expense
  Provision for Income Taxes
 Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement No. 109
 CASH RESOURCES AND LIQUIDITY
 CASH FLOWS
  36




---



##### 



Cash From (Used In) Operating Activities
  Cash From (Used In) Investing Activities
  Cash From (Used In) Financing Activities
  SOURCES OF LIQUIDITY AND CAPITAL
     37




---



##### 



Voluntary Chapter 11 Bankruptcy Filing
        38




---



##### 



39




---



##### 



OFF-BALANCE SHEET FINANCING
  FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
      RECENT ACCOUNTING PRONOUNCEMENTS
  
 FORWARD-LOOKING STATEMENTS
  
    
    our ability to continue as a going concern;
    
    our ability to obtain court approval with respect to motions filed by us from time to time in the
Chapter 11 proceeding;
    
    our ability to operate pursuant to the covenants, terms and certifications of the DIP Facility;
 40




---



##### 




    
    our ability to negotiate an extension (if necessary) or refinance our DIP Facility, which, pursuant to
an extension, expires on February 9, 2008;
    
    our ability to implement our business plan developed as a basis for our discussion regarding one or
more plans of reorganization;
    
    our ability to obtain concessions from our unionized workforce to reduce costs and allow for greater
flexibility in the method and manner of distributing our products;
    
    our ability to develop, propose, confirm and consummate one or more plans of reorganization with
respect to the Chapter 11 proceeding;
    
    our ability to obtain the financing necessary to implement our
business plan and emerge from Chapter 11;
    
    risks associated with failing to obtain court approval for one or more extensions to the exclusivity
period for us to propose and confirm one or more plans of reorganization or with third parties seeking
and obtaining court approval to terminate or shorten any such exclusivity period, 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 in connection with our profit center restructuring and bakery and route consolidations
and desired results of the initiatives currently being implemented;
    
    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 hedge our exposure to price increases with respect to various
ingredients and energy;
    
    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;
    
    increased costs and uncertainties with respect to the ABA Plan;
    
    successful remediation of material weaknesses in our internal controls;
    
    changes to dietary guidelines;
    
    the continuing effects of changes in consumers eating habits;
    
    the performance of our recent 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.
  41




---



##### 



Bankruptcy-Related Factors
 
    
    our ability to evaluate various alternatives including, but not limited to, the sale of the
Company or some or all of our assets, infusion of capital, debt restructuring and the filing and
ultimate approval of a plan of reorganization with the Bankruptcy Court, or any combination of
these options;
    
    our ability to formulate a rational strategy for maximizing value of the bankruptcy estates,
including a sale of the Company and/or its assets in its entirety or in a series of transactions;
    
    our ability to develop and implement a successful plan of reorganization in the Chapter 11 process;
    
    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;
    
    the significant time that will be required by management to structure and implement a plan of
reorganization as well as to evaluate various alternatives including, but not limited to, the sale
of the Company or some or all of our assets, infusion of capital and debt restructuring or any
combination of these options;
    
    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
 42




---



##### 



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 consumer tastes or eating habits;
    
    costs associated with environmental compliance and remediation;
    
    our ability to obtain concessions from our unionized workforce to reduce costs and allow for greater
flexibility in the method and manner of distributing our products;
    
    obligations and uncertainties with respect to the ABA Plan;
    
    the impact of any withdrawal liability arising under our multi-employer pension plans as a result of
prior 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 our recent 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 our previously announced and other future
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.
   43




---



##### 



Item 3. Quantitative and Qualitative Disclosure about Market Risk
  Commodity Prices
  
 Item 4. Controls and Procedures
      44




---



##### 



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
   Sara Lee Corporation v. American Bakers Assn Retirement Plan, et
al.
 45




---



##### 



Accounting for Contingencies
 
 Item 1A. Risk Factors
 We face substantial uncertainty with respect to the outcome of our efforts to
maximize value of the bankruptcy estates, and there can be no assurance as to whether we will be
able to successfully implement any such strategy, including a sale of the Company and/or its
assets, in whole or in part, on terms and conditions acceptable to the Company or to our various
constituents in the bankruptcy or as to the ultimate recovery of value available to such
constituents.
   46




---



##### 



We
face significant challenges and uncertainties with respect to
reaching an agreement with the IBT and ratification of
the agreements with the BCTGM and IBT, if agreement is reached, as well as our ability to obtain
a funding commitment to provide debt financing and an equity capital infusion.
  47




---



##### 



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Issuer Purchases of Equity Securities (A)
 Maximum Number (orTotal Number of
    
    
    Approximate DollarShares (or Units)
    
    
    Value) of SharesPurchased as Part
    
    
    (or Units) that MayTotal Number of
    
    
    
    
    
    
    of Publicly
    
    
    Yet Be PurchasedShares (or Units)
    
    
    Average Price Paid
    
    
    Announced Plans or
    
    
    Under the Plans orPeriod
    
    Purchased(B)
    
    
    per Share (or Unit)
    
    
    Programs
    
    
    ProgramsPeriod 1
June 3-June 30, 2007
    
    
    4
    
    
    $
    2.90
    
    
    
    4
    
    
    
    7,396,627Period 2
July 1-July 28, 2007
    
    
    3
    
    
    $
    2.30
    
    
    
    3
    
    
    
    7,396,624Period 3
July 29-August 25, 2007
    
    
    2
    
    
    $
    1.30
    
    
    
    2
    
    
    
    7,396,622Total
    
    
    9
    
    
    $
    2.36
    
    
    
    9
    
    
    
    7,396,622
 
 (A)
    
    Since May 11, 1999, our Board of Directors has authorized the purchase
of approximately 11.0 million shares of our common stock. Prior to
the Chapter 11 filing, management had the discretion to determine the
number of the shares to be purchased, as well as the timing of any
such purchases, with the pricing of any shares repurchased to be at
prevailing market prices. As of August 25, 2007, 7,396,622 shares of
our common stock were available (or to be purchased) under this stock
repurchase program. As a result of our Chapter 11 filing and
restrictions imposed by the DIP Facility, however, the program has
effectively been suspended since the filing.(B)
    
    Repurchases resulted from the repurchase of fractional shares upon issuance of certificates
representing stock held in the Employee Stock Purchase Plan. This plan was terminated in
conjunction with the Chapter 11 filing in September 2004. 48




---



##### 



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
    
    Employment Agreement by and among Interstate Bakeries Corporation,
Interstate Brands Corporation and Craig D. Jung, dated January 30,
2007 (incorporated herein by reference to Exhibit 10.1 to Interstate
Bakeries Corporations Form 8-K filed on January 31, 2007).10.2
    
    Employment Agreement, dated as of April 25, 2007, by and among
Interstate Brands Corporation, Interstate Bakeries Corporation and
Kent B. Magill (incorporated herein by reference to Exhibit 10.1 to
Interstate Bakeries Corporations Form 8-K filed on June 6, 2007).10.3
    
    Employment Agreement dated as of March 8, 2003 by and between Michael
D. Kafoure and Interstate Brands West Corporation (incorporated herein
by reference to Exhibit 10.2 to Interstate Bakeries Corporations
Quarterly Report on Form 10-Q for the quarter ended March 8, 2003,
filed April 22, 2003).10.4
    
    Employment Agreement dated as of March 7, 2003 by and between Robert
P. Morgan and Interstate Brands Corporation (incorporated herein by
reference to Exhibit 10.3 to Interstate Bakeries Corporations
Quarterly Report on Form 10-Q for the quarter ended March 8, 2003,
filed April 22, 2003).10.5
    
    Employment Agreement dated as of March 18, 2003 by and between Richard
D. Willson and Interstate Brands West Corporation (incorporated herein
by reference to Exhibit 10.4 to Interstate Bakeries Corporations
Quarterly Report on Form 10-Q for the quarter ended March 8, 2003,
filed April 22, 2003).10.6
    
    Form of Management Continuity Agreement effective as of February 3,
2003 by and between Interstate Bakeries Corporation and Michael D.
Kafoure, Kent B. Magill, Robert P. Morgan and Richard D. Willson
(incorporated herein by reference to Exhibit 10.7 to Interstate
Bakeries Corporations Quarterly Report on Form 10-Q for the quarter
ended March 8, 2003, filed April 22, 2003).10.7
    
    Amended and Restated Credit Agreement among Interstate Bakeries
Corporation, as a Guarantor, Interstate Brands Corporation and
Interstate Brands West Corporation, each as a Borrower, the several
Lenders from time to time parties hereto, and The Chase Manhattan
Bank, as
 49




---



##### 



Exhibit No.
    
    ExhibitAdministrative Agent, dated as of April 25, 2002
(incorporated herein by reference to Exhibit 10.3 to Interstate
Bakeries Corporations Amendment No. 2 to its Registration Statement
on Form S-3, File No. 333-86560, filed May 8, 2002).10.7.1
    
    First Amendment, dated as of April 21, 2003, to the Amended and
Restated Credit Agreement among Interstate Bakeries Corporation, as a
Guarantor, Interstate Brands Corporation and Interstate Brands West
Corporation, each as a Borrower, the several Lenders from time to time
parties hereto, and The Chase Manhattan Bank, as Administrative Agent
(incorporated herein by reference to Exhibit 10.1 to Interstate
Bakeries Corporations Quarterly Report on Form 10-Q for the quarter
ended March 8, 2003, filed April 22, 2003).10.7.2
    
    Second Amendment, dated as of May 7, 2004, to the Amended and Restated
Credit Agreement among Interstate Bakeries Corporation, as a
Guarantor, Interstate Brands Corporation and Interstate Brands West
Corporation, each as a Borrower, the several Lenders from time to time
parties hereto, and The Chase Manhattan Bank, as Administrative Agent
(incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K of Interstate Bakeries Corporation filed on August
12, 2004).10.7.3
    
    Third Amendment, dated as of May 27, 2004, to the Amended and Restated
Credit Agreement among Interstate Bakeries Corporation, as a
Guarantor, Interstate Brands Corporation and Interstate Brands West
Corporation, each as a Borrower, the several Lenders from time to time
parties hereto, and The Chase Manhattan Bank, as Administrative Agent
(incorporated herein by reference to Exhibit 10.2 to the Current
Report on Form 8-K of Interstate Bakeries Corporation filed on August
12, 2004).10.7.4
    
    Fourth Amendment, dated as of June 17, 2004, to the Amended and
Restated Credit Agreement among Interstate Bakeries Corporation, as a
Guarantor, Interstate Brands Corporation and Interstate Brands West
Corporation, each as a Borrower, the several Lenders from time to time
parties hereto, and The Chase Manhattan Bank, as Administrative Agent
(incorporated herein by reference to Exhibit 10.3 to the Current
Report on Form 8-K of Interstate Bakeries Corporation filed on August
12, 2004).10.7.5
    
    Fifth Amendment, dated as of August 12, 2004, to the Amended and Restated Credit
Agreement among Interstate Bakeries Corporation, as a Guarantor, Interstate Brands
Corporation and Interstate Brands West Corporation, each as a Borrower, the several
Lenders from time to time parties hereto, and The Chase Manhattan Bank, as
Administrative Agent (incorporated herein by reference to Exhibit 10.4 to the Current
Report on Form 8-K of Interstate Bakeries Corporation filed on August 12, 2004).10.7.6
    
    Sixth Amendment, dated as of September 7, 2004, to the Amended and Restated Credit
Agreement, dated April 25, 2002, among Interstate Bakeries Corporation, as a
Guarantor, Interstate Brands Corporation and Interstate Brands West Corporation, each
as a Borrower, the several Lenders from time to time parties thereto, The Bank of Nova
Scotia, BNP Paribas, Cooperatieve Central Raiffeisen-Boerenleenbank B.A., Rabobank
International, New York Branch, and SunTrust Bank, each as a co-documentation agent,
Bank of America, N.A., as syndication agent and JPMorgan Chase Bank, as administrative
agent (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form
8-K of Interstate Bakeries Corporation filed on September 13, 2004).10.7.7
    
    Seventh Amendment to the Amended and Restated Credit Agreement dated as of March 18,
2005, by and among the Interstate Bakeries Corporation, Interstate Brands Corporation
(the Borrower), the several banks and other financial institutions or entities from
time to time parties thereto (the Lenders), The Bank of Nova Scotia, BNP Paribas,
Cooperatieve Central Raiffeisen-Boerenleenbank B.A., Rabobank International, New
York Branch, and SunTrust Bank, each as a co-documentation agent (the
Co-Documentation Agents), Bank of America, N.A., as syndication agent (the
Syndication Agent) and JPMorgan Chase Bank (JPMorgan), as administrative agent
 50




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##### 



Exhibit No.
    
    Exhibit(incorporated herein by reference to the Current Report on Form 8-K of Interstate
Bakeries Corporation filed on March 22, 2005).10.8
    
    Guarantee and Collateral Agreement made by Interstate Bakeries Corporation, Interstate
Brands Corporation, Interstate Brands West Corporation and certain of their
Subsidiaries, in favor of The Chase Manhattan Bank, as Administrative Agent, dated as
of July 19, 2001 (incorporated herein by reference to Exhibit 10.4 to the Annual
Report on Form 10-K of Interstate Bakeries Corporation filed on August 24, 2001).10.9
    
    Amended and Restated Interstate Bakeries Corporation 1996 Stock Incentive Plan
(incorporated herein by reference to Exhibit 10.1 to Interstate Bakeries Corporations
Quarterly Report on Form 10-Q for the quarter ended March 6, 2004 filed on April 19,
2004).10.10
    
    Interstate Bakeries Corporation Incentive Compensation Plan (incorporated herein by
reference to Interstate Bakeries Corporation Amendment No. 2 to its Registration
Statement on Form S-3, File No. 333-86560, filed on May 8, 2002).10.11
    
    Interstate Bakeries Corporation Amended and Restated Supplemental
Retirement Plan (incorporated herein by reference to Exhibit 10.15 to
Interstate Bakeries Corporations Annual Report on Form 10-K for the
year ended May 29, 2004, filed October 6, 2006).10.12
    
    Interstate Bakeries Corporation Rabbi Trust Agreement (incorporated
herein by reference to Exhibit 10.8 to the Annual Report on Form 10-K
of Interstate Bakeries Corporation filed on August 23, 2002).10.12.1
    
    First Amendment to the IBC Rabbi Trust Agreement effective August 8,
2003 (incorporated herein by reference to Exhibit 10.19.1 to
Interstate Bakeries Corporations Annual Report on Form 10-K filed on
August 23, 2003).10.13
    
    Form of Award Notice and Non-Qualified Stock Option Agreement pursuant
to the Interstate Bakeries Corporation 1996 Stock Incentive Plan
(incorporated herein by reference to Exhibit 10.9 to the Annual Report
on Form 10-K of Interstate Bakeries Corporation filed on August 23,
2002).10.14
    
    Form of Award Notice and Incentive Stock Option Agreement pursuant to
the Interstate Bakeries Corporation 1996 Stock Incentive Plan
(incorporated herein by reference to Exhibit 10.10 to the Annual
Report on Form 10-K of Interstate Bakeries Corporation filed on August
23, 2002).10.15
    
    Form of Indenture for 6.0% Senior Subordinated Convertible Notes Due
2014 (incorporated herein by reference to Exhibit 10.1 to the Current
Report on Form 8-K of Interstate Bakeries Corporation filed on August
12, 2004).10.16
    
    Form of Purchase Agreement for 6.0% Senior Subordinated Convertible
Notes Due 2014 (incorporated herein by reference to Exhibit 10.2 to
the Current Report on Form 8-K of Interstate Bakeries Corporation
filed on August 12, 2004).10.17
    
    Form of Registration Rights Agreement for 6.0% Senior Subordinated
Convertible Notes Due 2014 (incorporated herein by reference to
Exhibit 10.3 to the Current Report on Form 8-K of Interstate Bakeries
Corporation filed on August 12, 2004).10.18
    
    Letter Agreement, dated as of August 27, 2004, amended and restated as
of September 21, 2004 and further amended and restated on October 14,
2004, by and between Alvarez and Marsal, Inc. and Interstate Bakeries
Corporation, Armour & Main Redevelopment Corporation, Bakers Inn
Quality Baked Goods, LLC, IBC Sales Corporation, IBC Services, LLC,
IBC Trucking LLC, Interstate Brands Corporation, New England Bakery
Distributors, LLC and Mrs. Cubbisons Foods, Inc (incorporated herein
by reference to Exhibit 10.24 to Interstate Bakeries Corporations
Annual Report on Form 10-K for the year ended May 29, 2004, filed
October 6, 2006).
 51




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##### 



Exhibit No.
    
    Exhibit10.18.1
    
    Letter Agreement, dated as of July 18, 2005, by and between Alvarez
and Marsal, Inc. and Interstate Bakeries Corporation, Armour & Main
Redevelopment Corporation, Bakers Inn Quality Baked Goods, LLC, IBC
Sales Corporation, IBC Services, LLC, IBC Trucking LLC, Interstate
Brands Corporation, New England Bakery Distributors, LLC and Mrs.
Cubbisons Foods, Inc (incorporated herein by reference to Exhibit
10.24.1 to Interstate Bakeries Corporations Annual Report on Form
10-K for the year ended May 29, 2004, filed October 6, 2006).10.19
    
    Revolving Credit Agreement, dated as of September 23, 2004, among
Interstate Bakeries Corporation (Parent Borrower), a debtor and
debtor-in-possession in a case pending under Chapter 11 of the
Bankruptcy Code, and each of the direct and indirect subsidiaries of
the Parent Borrower party to this Agreement (each individually a
Subsidiary Borrower and collectively the Subsidiary Borrowers; and
together with the Parent Borrower, the Borrowers), each of which is
a debtor and debtor-in-possession in a case pending under Chapter 11
of the Bankruptcy Code (the cases of the Borrowers, each a Case and
collectively, the Cases), JPMorgan Chase Bank (JPMCB), and each of
the other commercial banks, finance companies, insurance companies or
other financial institutions or funds from time to time party hereto
(together with JPMCB, the Lenders), J.P. Morgan Securities Inc., as
lead arranger and book runner, JPMorgan Chase Bank, as administrative
agent (in such capacity, the Administrative Agent) for the Lenders,
and JPMorgan Chase Bank, as collateral agent (in such capacity, the
Collateral Agent) for the Lenders (incorporated herein by reference
to Exhibit 10.1 to the Current Report on Form 8-K of Interstate
Bakeries Corporation filed on September 27, 2004).10.19.1
    
    First Amendment, dated as of November 1, 2004, to the Revolving Credit
Agreement) dated as of September 23, 2004, among Interstate Bakeries
Corporation (Parent Borrower), a debtor and debtor-in-possession in
a case pending under Chapter 11 of the Bankruptcy Code, and each of
the direct and indirect subsidiaries of the Parent Borrower party to
this Agreement (each individually a Subsidiary Borrower and
collectively the Subsidiary Borrowers; and together with the Parent
Borrower, the Borrowers), each of which is a debtor and
debtor-in-possession in a case pending under Chapter 11 of the
Bankruptcy Code (the cases of the Borrowers, each a Case and
collectively, the Cases), JPMorgan Chase Bank (JPMCB), and each of
the other commercial banks, finance companies, insurance companies or
other financial institutions or funds from time to time party hereto
(together with JPMCB, the Lenders), J.P. Morgan Securities Inc., as
lead arranger and book runner, JPMorgan Chase Bank, as administrative
agent (in such capacity, the Administrative Agent) for the Lenders,
and JPMorgan Chase Bank, as collateral agent (in such capacity, the
Collateral) for the Lenders (incorporated herein by reference to the
Current Report on Form 8-K of Interstate Bakeries Corporation filed on
November 5, 2004).10.19.2
    
    Second Amendment, effective as of January 20, 2005, to the Revolving
Credit Agreement, dated as of September 23, 2004, among Interstate
Bakeries Corporation (Parent Borrower), a debtor and
debtor-in-possession in a case pending under Chapter 11 of the
Bankruptcy Code, and each of the direct and indirect subsidiaries of
the Parent Borrower party to this Agreement (each individually a
Subsidiary Borrower and collectively the Subsidiary Borrowers; and
together with the Parent Borrower, the Borrowers), each of which is
a debtor and debtor-in-possession in a case pending under Chapter 11
of the Bankruptcy Code (the cases of the Borrowers, each a Case and
collectively, the Cases), JPMorgan Chase Bank (JPMCB), and each of
the other commercial banks, finance companies, insurance companies or
other financial institutions or funds from time to time party hereto
(together with JPMCB, the Lenders), J.P. Morgan Securities Inc., as
lead arranger and book runner, JPMorgan Chase Bank, as administrative
agent (in such capacity, the Administrative Agent) for the Lenders,
and JPMorgan Chase Bank, as collateral agent (in such capacity, the
Collateral) for the Lenders (incorporated herein by reference to the
Current Report on Form 8-K of Interstate Bakeries Corporation filed on
February 1, 2005).10.19.3
    
    Third Amendment and Waiver, dated as of May 26, 2005, to the Revolving
Credit Agreement, dated as of September 23, 2004, as amended, among
Interstate Bakeries Corporation, a Delaware corporation (Parent
Borrower), a debtor and debtor-in-possession in a case pending under
 52




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##### 



Exhibit No.
    
    ExhibitChapter 11 of the Bankruptcy Code, each of the direct and indirect
subsidiaries of the Parent Borrower (each individually a Subsidiary
Borrower and collectively the Subsidiary Borrowers; and together
with the Parent Borrower, the Borrowers), 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 (formerly known as JPMorgan Chase Bank) (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 Credit Agreement (together with JPMCB, the Lenders),
JPMorgan Chase Bank, N.A., a national banking association (formerly
known as JPMorgan Chase Bank), as administrative agent (the
Administrative Agent) for the Lenders, and JPMorgan Chase Bank,
N.A., a national banking association (formerly known as JPMorgan Chase
Bank), as collateral agent (the Collateral Agent) for the Lenders
(incorporated herein by reference to the Current Report on Form 8-K of
Interstate Bakeries Corporation filed on May 27, 2005).10.19.4
    
    Fourth Amendment and Waiver, dated as of November 30, 2005, to the
Revolving Credit Agreement, dated as of September 23, 2004, as
amended, 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 direct
and indirect subsidiaries of the Parent Borrower (each individually a
Subsidiary Borrower and collectively the Subsidiary Borrowers; and
together with the Parent Borrower, the Borrowers), 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 (formerly known as JPMorgan Chase Bank) (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 Credit Agreement (together with JPMCB, the Lenders),
JPMorgan Chase Bank, N.A., a national banking association (formerly
known as JPMorgan Chase Bank), as administrative agent (the
Administrative Agent) for the Lenders, and JPMorgan Chase Bank,
N.A., a national banking association (formerly known as JPMorgan Chase
Bank), as collateral agent (the Collateral Agent) for the Lenders
(incorporated herein by reference to the Current Report on Form 8-K of
Interstate Bakeries Corporation filed on December 5, 2005).10.19.5
    
    Fifth Amendment, dated as of December 27, 2005, to the Revolving
Credit Agreement, dated as of September 23, 2004, as amended, among
Interstate Bakeries Corporation (Parent Borrower), a Delaware
corporation, a debtor and debtor-in-possession in a case pending under
Chapter 11 of the Bankruptcy Code, each of the direct and indirect
subsidiaries of the Parent Borrower, 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 (formerly known as JPMorgan Chase Bank) (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 Credit Agreement (together with JPMCB, the Lenders),
JPMorgan Chase Bank, N.A., a national banking association (formerly
known as JPMorgan Chase Bank), as administrative agent for the
Lenders, and JPMorgan Chase Bank, N.A., a national banking association
(formerly known as JPMorgan Chase Bank), as collateral agent for the
Lenders (incorporated herein by reference to the Current Report on
Form 8-K of Interstate Bakeries Corporation filed on December 30,
2005).10.19.6
    
    Sixth Amendment, dated as of March 29, 2006, to the Revolving Credit
Agreement, dated as of September 23, 2004, as amended, among
Interstate Bakeries Corporation (Parent Borrower), a Delaware
corporation, a debtor and debtor-in-possession in a case pending under
Chapter 11 of the Bankruptcy Code, each of the direct and indirect
subsidiaries of the Parent Borrower, 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 (formerly known as JPMorgan Chase Bank) (JPMCB), and
certain of the other commercial banks, finance companies, insurance
companies or other financial institutions or funds from time to time
party to the Credit Agreement (together with JPMCB, the Lenders),
JPMorgan Chase Bank, N.A., a national banking association (formerly
known as JPMorgan Chase Bank), as administrative agent for the
Lenders, and JPMorgan Chase Bank, N.A., a national banking association
(formerly known as
 53




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##### 



Exhibit No.
    
    ExhibitJPMorgan Chase Bank), as collateral agent for the
Lenders (incorporated herein by reference to the Current Report on
Form 8-K of Interstate Bakeries Corporation filed on March 29, 2006).10.19.7
    
    Seventh Amendment, dated as of June 28, 2006, to the Revolving Credit
Agreement, dated as of September 23, 2004, as amended, among
Interstate Bakeries Corporation (Parent Borrower), a Delaware
corporation, a debtor and debtor-in-possession in a case pending under
Chapter 11 of the Bankruptcy Code, each of the direct and indirect
subsidiaries of the Parent Borrower, 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 (formerly known as JPMorgan Chase Bank) (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 Credit Agreement (together with JPMCB, the Lenders),
JPMorgan Chase Bank, N.A., a national banking association (formerly
known as JPMorgan Chase Bank), as administrative agent for the
Lenders, and JPMorgan Chase Bank, N.A., a national banking association
(formerly known as JPMorgan Chase Bank), as collateral agent for the
Lenders (incorporated herein by reference to the Current Report on
Form 8-K of Interstate Bakeries Corporation filed on June 30, 2006).10.19.8
    
    Eighth Amendment, dated as of August 25, 2006, to the Revolving Credit
Agreement, dated as of September 23, 2004, as amended, among
Interstate Bakeries Corporation (Parent Borrower), a Delaware
corporation, a debtor and debtor-in-possession in a case pending under
Chapter 11 of the Bankruptcy Code, each of the direct and indirect
subsidiaries of the Parent Borrower, 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 (formerly known as JPMorgan Chase Bank) (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 Credit Agreement (together with JPMCB, the Lenders),
JPMorgan Chase Bank, N.A., a national banking association (formerly
known as JPMorgan Chase Bank), as administrative agent for the
Lenders, and JPMorgan Chase Bank, N.A., a national banking association
(formerly known as JPMorgan Chase Bank), as collateral agent for the
Lenders (incorporated herein by reference to the Current Report on
Form 8-K of Interstate Bakeries Corporation filed on August 30, 2006).10.19.9
    
    Ninth Amendment, dated as of February 16, 2007, to the Revolving
Credit Agreement, dated as of September 23, 2004, as amended, among
Interstate Bakeries Corporation (Parent Borrower), a Delaware
corporation, a debtor and debtor-in-possession in a case pending under
Chapter 11 of the Bankruptcy Code, each of the direct and indirect
subsidiaries of the Parent Borrower, 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 (formerly known as JPMorgan Chase Bank) (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 Credit Agreement (together with JPMCB, the Lenders),
JPMorgan Chase Bank, N.A., a national banking association (formerly
known as JPMorgan Chase Bank), as administrative agent for the
Lenders, and JPMorgan Chase Bank, N.A., a national banking association
(formerly known as JPMorgan Chase Bank), as collateral agent for the
Lenders (incorporated herein by reference to the Current Report on
Form 8-K of Interstate Bakeries Corporation filed on February 16,
2007).10.19.10
    
    First Amendment, dated as of October 1, 2007, to the Amended and
Restated Revolving Credit Agreement, dated as of February 16, 2007, 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 direct
and indirect subsidiaries of the Parent Borrower, 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 (formerly known as JPMorgan Chase Bank) (JPMCB), and
certain of the other commercial banks, finance companies, insurance
companies or other financial institutions or funds from time to time
party to the Amended and Restated Revolving Credit Agreement (together
with JPMCB, the Lenders), and JPMCB as administrative agent and
collateral agent for the Lenders (incorporated by reference to Exhibit
10.1 to Interstate Bakeries Corporations Form 8-K filed on October 2,
2007).
 54




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##### 



Exhibit No.
    
    Exhibit10.20
    
    Offer of Employment dated July 13, 2005 between Interstate Bakeries
Corporation and Mr. Richard C. Seban (incorporated herein by reference
to the Current Report on Form 8-K of Interstate Bakeries Corporation
filed on August 5, 2005).10.21
    
    Interstate Bakeries Corporation Key Employee Retention Plan
(incorporated herein by reference to Exhibit 10.27 to Interstate
Bakeries Corporations Annual Report on Form 10-K for the year ended
May 29, 2004, filed October 6, 2006).10.22
    
    Consulting Agreement dated July 27, 2007 by and among Interstate
Brands Corporation and Interim LLC*10.23
    
    Consulting Agreement dated July 27, 2007 by and among Interstate
Brands Corporation and Miller Management Group, Inc.*10.24
    
    Consulting Agreement dated July 27, 2007 by and among Interstate
Brands Corporation and Timpanagos Consulting LLC*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 55




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##### 



SIGNATURES
  INTERSTATE BAKERIES CORPORATIONDated: October 4, 2007
    By:
    /s/ Craig D. JungCraig D. JungChief Executive Officer
(Principal Executive Officer) Dated: October 4, 2007
    By:
    /s/ J. Randall VanceJ. Randall VanceChief Financial Officer
(Principal Financial and Accounting Officer) 56