Stale Wonder Bread?

This morning, Interstate Bakeries (NYSE: IBC) announced that it would be adding a new product to its line of baked goods: financial reports.

(Can I get a rim shot?)

Low blow? Perhaps, but you have to wonder what's going on in the accounting offices of the firm that produces both Twinkies and Wonder Bread. This is the second time the firm has delayed its 10-K, and to judge by the 32% flop the stock took this morning, investors are not amused.

Let's face it: When both your marquee products exist in the public consciousness mostly as derogatory euphemisms, your brands are in danger. Interstate has really suffered the past few years, struggling to compete with peers such as Flowers Foods (NYSE: FLO), Tasty Baking (NYSE: TBC), and Sara Lee (NYSE: SLE), as well as a changed commercial landscape in which low-end bread is sniped by any number of brands at Wal-Mart (NYSE: WMT) and Target (NYSE: TGT), while large numbers of consumers also look for better fare at places such as Whole Foods Market (Nasdaq: WFMI).

Sales have been flat at $3.5 billion for half a decade, while earnings have eroded 65% over that period. Slim profit margins -- well below 1% -- and a dividend that exceeds earnings are just a few of the reasons that the balance sheets show no cash at all.

But, chin up. Maybe they got the numbers wrong! After all, the company blamed today's delay on accounting inadequacies stemming from "initial data entry and training deficiencies in the company's newly implemented financial reporting systems."

That's not a particularly confidence-inspiring explanation. Not only does the firm have dwindling earnings, it also doesn't even know how bad things are. Factor in the $478 million in long-term debt and management's dire predictions that its current troubles will slash its credit rating, and you have one of the best recipes for bankruptcy I've ever seen.

It may look like a bargain, trading well under listed book value, but this stock is as appealing as a squashed loaf. Management comments indicate that the captains have become fatalistic and are content to steer this ship straight toward the iceberg. Invest accordingly.

Seth Jayson has lived near a Wonder Bread bakery. Curiously enough, it was located close to an interstate. He has no position in any company mentioned. View his Fool profile here.